report,summary
"Economic factors, new technologies, environmental concerns and associated regulatory policies, and other developments are changing the energy sources used to generate electricity in the United States. One notable change is increased generation from variable renewable energy (VRE) sources such as wind and solar. According to the U.S. Energy Information Administration (EIA), combined generation from wind and solar sources increased from 1% of total electricity generation in 2008 to 9% of total electricity generation in 2018. These sources have weather-dependent availability, meaning that changing weather patterns can change available electricity supply from those sources. In contrast, conventional sources for electricity generation, such as coal, natural gas, or nuclear energy, are usually available under normal weather conditions. Power system operators have adjusted existing reliability standards and planning practices to accommodate weather-dependent wind and solar sources. Further adjustments are being discussed as generation from wind and solar sources continue to grow. Congress required the setting and enforcement of electric reliability standards in the Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ). These standards are developed by the North American Electric Reliability Corporation (NERC) and approved by the Federal Energy Regulatory Commission (FERC) in the United States. These mandatory standards apply to the bulk power system, which is comprised mostly of large-scale generators and electricity transmission systems. Small-scale generators (e.g., rooftop solar electricity generation), publicly owned utilities, and local electricity distribution systems are generally under the jurisdiction of state public utility regulatory commissions (PUCs). To date, generation from wind and solar sources does not appear to be causing electric reliability issues at the national level. NERC's 2018 annual report on reliability showed that, of the 13 metrics it uses to assess reliability, 9 were stable or improving over the 2013-2017 period and 4 showed trends that were, at least partly, inconclusive. Of the four metrics with inconclusive trends, three improved over this period for a subset of bulk power system components. Data from NERC also indicate that reliability performance is currently stable in regions such as the Midwest and California where the shares of generation from wind and solar sources are above the national average. Questions remain about how higher levels of generation from wind and solar sources might impact electric reliability moving forward. This report provides background on reliability planning in the United States with an emphasis on the effects of daily and seasonal variability in wind and solar sources on the bulk power system. Members of Congress might consider how reliability could be impacted if generation from wind and solar sources increases, as many analysts expect. Other reliability concerns, such as cyber and physical security, small-scale generators, and local distribution networks, may be of interest to Congress but are not discussed at length in this report. As shown in Figure 1 the electric power sector consists primarily of three systems. The generation system consists of power plants that generate electricity. The transmission system consists of high voltage transmission lines that move power across long distances. The distribution systems make final delivery of electricity to homes and businesses. This report will refer to the combined generation and transmission systems as the bulk power system, following the definition Congress established in EPACT05: The term ""bulk-power system"" means—(a) facilities and control systems necessary for operating an interconnected electric energy transmission network (or any portion thereof); and (b) electric energy from generation facilities needed to maintain transmission system reliability. The term does not include facilities used in the local distribution of electric energy. Notably, the discussion in this report generally excludes distributed energy resources such as rooftop solar electricity generation. These resources might pose separate reliability challenges that Congress might choose to consider. Ownership structures for bulk power system components vary across the country. In some regions, shown in Figure 2 , competitive markets exist for wholesale electric power, and regional transmission organizations (RTOs) and independent system operators (ISOs) manage the generation and transmission components of the power system. In RTO regions, electricity generators compete to sell power to distribution utilities. The RTO manages an auction process to select the sources for generation that distribution utilities resell to end-use customers. The RTO is also responsible for managing the transmission system and overseeing reliability within its boundaries. In RTO regions, market signals primarily determine investment decisions. Some RTOs operate separate auction processes specifically for essential reliability services. According to FERC, two-thirds of U.S. electricity demand comes from RTO regions. In non-RTO regions, vertically integrated electric utilities are largely responsible for power generation, transmission, and distribution of electricity to end-use customers. These utilities are regulated as natural monopolies and, unlike utilities in RTO regions, do not face competition for generation and transmission services. These utilities may also take responsibility for some aspects of reliability as discussed in the Appendix . State regulators generally oversee these utility operations and are responsible for authorizing new investments, including those related to reliability. Even in RTO regions, municipal utilities and rural electric cooperatives may own generation and transmission system components and oversee their operation. These systems and operation are generally outside of federal and state regulatory jurisdiction. A colloquial definition of electric reliability is ""having power when it is needed."" Operators of bulk power system components, though, require specific and highly technical definitions for reliability. For purposes of regulation, these definitions are provided in the form of NERC reliability standards. NERC develops individual standards for each set of power system components, which may include separate standards covering different reliability timescales for each set of components. As NERC defines ""reliability standard,"" it includes requirements for the operation of existing Bulk-Power System facilities, including cybersecurity protection, and the design of planned additions or modifications to such facilities to the extent necessary to provide for Reliable Operation of the Bulk-Power System, but the term does not include any requirement to enlarge such facilities or to construct new transmission capacity or generation capacity. When all bulk power system components meet reliability standards, NERC expects the vast majority of individuals to have the full amount of electricity they desire. NERC reliability standards do not apply to local electricity distribution system components and operations (see discussion in text box, ""Distribution System Reliability""), so localized outages could still occur when reliability standards are met. An analysis found that from 2008 to 2014, upwards of 90% of power outages originated in local distribution systems. This measure includes major events (e.g., hurricanes), but may not capture the full scope or severity of large-scale outages. NERC's reliability standards are meant to ensure an Adequate Level of Reliability (ALR) for the bulk power system during normal operating conditions and following localized disturbances such as lightning strikes. For economic reasons, some risk of occasional power loss is accepted in reliability planning. A common goal is to limit outages to no more than 1 day every 10 years under normal operating conditions. Achieving ALR is not the same goal as preventing all brownouts and blackouts. Bulk power system outages could still occur when reliability standards are fully met. These outages might follow a major event such as a hurricane affecting large areas of the bulk power system. Generally, factors that increase uncertainty reduce reliability, and factors that reduce uncertainty increase reliability. Wind and solar are types of variable renewable energy sources of electricity, and weather is a key source of uncertainty for forecasts of generation from these sources. In contrast, conventional sources such as coal and nuclear have long-lasting, on-site fuel supplies that reduce the uncertainty about their availability. This difference has raised questions about how to integrate large amounts of VRE sources into the existing bulk power system, since it was not originally designed to accommodate large amounts of weather-dependent sources of electricity. Figure 3 shows typical patterns for electricity generation for wind and solar sources in the United States. Wind generation tends to peak overnight and during winter months. Solar generation, on the other hand, tends to be highest during the middle of the day and during the summer. Though these typical patterns are well established for most of the United States, actual generation from wind and solar sources at any particular moment will depend upon specific weather conditions. The electric power sector is increasing its use of sources associated with more uncertainty in availability. According to the U.S. Energy Information Administration, combined generation from wind and utility-scale solar sources increased from 1% of total electricity generation in 2008 to 8% of total electricity generation in 2018. Of the generation in 2018 from wind and utility-scale solar sources, 80% came from wind. Conventional sources such as coal, natural gas, and nuclear comprised a large majority of generation over this time period. The annual share of generation from different sources from 2008 to 2018 in shown in Figure 4 . National-level data are not indicative of how generation from wind and solar sources varies across the country. Similarly, annual data do not show how electricity generation varies throughout the day or during different seasons. For example, during brief periods in some regions, wind and solar sources have provided a majority of the energy for electricity generation. Some examples are Generation from wind sources supplied 56% of electricity demand in ERCOT, the RTO covering most of Texas, at 3:10 am on January 19, 2019. Generation from solar sources supplied 59% of electricity demand in CAISO, the RTO covering most of California, at 2:45 pm on March 16, 2019. Generation from wind supplied 67.3% of electricity demand in SPP, the RTO covering many central states, at 1:25 am on April 27, 2019. These events all set records for maximum share of generation from renewable sources, and the bulk power system maintained reliability during them. Some advocates for increased use of wind and solar sources have pointed to events like these as evidence that VRE sources can be used to an even greater degree without impacting reliability. Extrapolating these events to scenarios of correspondingly high national levels of generation from wind and solar sources, however, is complicated by several factors. First, these events were all short lived, typically five minutes or less. Further, these events all occurred when electricity demand was relatively low, namely weekend days during cool months. During times of the year when electricity demand is high, such as the summer cooling season, the share of electricity generation from renewable sources is lower. For example, SPP has reported that during its peak demand hours in 2016, wind supplied 11% of generation while conventional sources such as coal (47%) and natural gas (33%) supplied the majority of electricity. The seasonality of VRE availability also likely contributed to these record-setting events, especially for wind, which tends to have maximum generation during winter and spring months. Electricity is essentially generated as a just-in-time commodity, due to limited energy storage capacities. If electricity supply and demand differ by too much, system components could be damaged, leading to system instability or potential failure. The operations that keep electricity supply and demand within acceptable levels are known as balancing. Balancing involves increasing or decreasing output from generators according to system conditions over timescales of minutes to hours, and it is a critical aspect of maintaining reliability. Balancing authorities, discussed in the Appendix , issue orders to generators to change their output as needed to maintain reliability. Balancing authorities can be utilities, or RTOs can act as balancing authorities in the regions where they exist. The rules for selecting which generators must increase or decrease output typically reflect an approach known as security-constrained economic dispatch (SCED). Under SCED, system operators ensure that electricity is produced at the lowest overall cost while respecting any transmission or operational constraints. When generation from a low-cost source would jeopardize reliability, a higher-cost source is used. In other words, SCED has two goals: affordability and reliability. SCED favors sources with low operating costs, and wind and solar sources do not have to pay for fuel. As a result, wind and solar sources typically generate the maximum amount of electricity they can at any moment. Balancing typically involves quickly increasing or decreasing output from other sources in response to variable output from wind and solar sources. The capability to quickly change output is known as ramping, and electricity sources differ in their ramping capability. System operators use a variety of electricity sources to balance generation from wind and solar sources. Some may be more commonly used in certain regions of the country, depending on local factors. Each has different benefits and limitations, some of which are summarized below. Reciprocating internal combustion engines (RICE) have seen an increase in installed capacity since 2000, partly in response to higher levels of generation from wind and solar sources. These sources have high ramping capabilities and use mature technologies. They usually use natural gas or fuel oil as fuel, so they have associated fuel costs and environmental impacts. Steam turbines, usually fueled by coal or nuclear energy , have historically been operated at steady, high output levels, barring maintenance needs, because that is the most efficient and lowest cost operational mode for them. These sources are capable of ramping to some extent. This operational mode may provide revenue for certain sources located in regions of the country with low wholesale electricity prices. It might also result in higher costs for electricity from these sources, compared to when they are not ramped. Wind and solar sources located in one area can balance wind and solar sources in other areas, since it is rare to have cloudy skies or calm winds over broad regions of the country simultaneously. This could have the benefit of using sources with zero fuel costs and zero emissions for balancing; however, existing electricity transmission system constraints limit the extent to which this is possible. Energy storage can be used for balancing because it stores electricity during periods of high supply and then provides electricity when supply is low. Many experts also see storage as a way to address the daily variability shown in Figure 3 and thereby expand the utilization of installed wind and solar sources. Many energy storage types are expensive and not currently deployed in large amounts. Energy storage can be co-located with wind or solar generators, or it can be located at other sites in the power system or the distribution system. Demand response, sometimes called demand-side management, involves adjusting electricity demand in response to available supply. This is counter to how the power system has historically been operated, but has become more commonly used. Demand response includes programs in which electricity consumers voluntarily reduce their usage in exchange for financial compensation. Demand response can be a low-cost balancing option because it does not require electricity generation; however, it comes at a social cost because consumers do not use electricity at their preferred time.The electric power sector is working to improve the use of weather and power forecasting in system balancing. For example, MISO changed its wholesale electricity market rules in 2011 to create a Dispatchable Intermittent Resources program. This program allows wind sources to make use of their own generation forecasts and offer generation at five-minute intervals. Previously, offers had to be made on an hourly basis. This was creating inefficiencies in using wind sources since their output can vary over the course of an hour. Improved forecasting could result in increased use of low-cost wind and solar sources, but forecasting methodologies are still being optimized for this purpose. The above considerations apply to bulk power system balancing today. Technological or policy developments could alter how system balancing is conducted in the future. Additionally, if wind and solar sources provided even larger shares of overall generation, new benefits or limitations for each balancing source type could emerge. Work at the federal level to address reliability needs associated with increased use of wind and solar sources has been underway for some time. For example, NERC created a task force in December 2007 to study the integration of VRE and identify gaps in reliability standards. The federal government undertakes actions in addition to the development and enforcement of reliability standards that affect electric reliability. FERC regulates interstate electricity transmission, which can be a key determinant of what sources are available to balance wind and solar. FERC also regulates wholesale electricity markets in most regions of the country. Market rules, including how SCED is implemented, can influence which individual generators are used for system balancing. Market prices can directly affect project revenues and influence investment decisions. Additionally, Congress funds projects and programs that support technology development and deployment, including for sources and operations that improve reliability. Some examples demonstrate the breadth of federal activities related to reliability. In EPACT05, Congress created Section 219 of the Federal Power Act that directs FERC to establish financial incentives for certain electricity transmission investments. FERC's resulting rule became effective in 2006 and includes provisions allowing higher rates of return, accelerated depreciation, and full cost recovery, all for investments and activities that FERC approves on a case-by-case basis. Transmission investment has increased since the passage of EPACT05, although there may be many factors driving this investment. On March 21, 2019, FERC opened an inquiry on potential changes to its transmission incentive policy. In 2011, FERC issued a rule, Order No. 1000, revising requirements related to new transmission projects. Among other revisions, Order No. 1000 increased the weight given to achieving public policy requirements when FERC considers approval of transmission projects. An example of a public policy requirement might be a state requirement that a specified share of electricity sales come from renewable sources, a policy commonly known as a renewable portfolio standard. New transmission capacity is often needed to access and balance wind and solar sources. Several FERC orders demonstrate how market rules are changing in response to increased need for balancing and ramping. Order No. 745 allows demand response to earn compensation from wholesale electricity markets for providing energy services to balance the power system in day-ahead and real-time markets. Order No. 841 allows energy storage systems to earn compensation from wholesale electricity markets for providing any energy, capacity, and essential reliability services they are capable of providing. Implementation of Order No. 841 might lead to greater deployment of energy storage which could improve balancing. Various grant programs administered by the Department of Energy (DOE) have supported the development of new technologies that can balance wind and solar sources or support reliability in other ways. These include research and development into electricity generators; wind forecast models and methodology; power electronics for solar sources; and standards for interconnection into the bulk power system. DOE's Office of Energy Efficiency and Renewable Energy (EERE) has funded research meant to improve short-term weather forecasting specifically related to wind power forecasts in two Wind Forecast Improvement Projects. DOE reports that advances made during this research include improved observations of meteorological data and improved methodologies for using those data in wind forecasts. Congress has held hearings related to the changes in the electricity generation profile of the country, and some Members raised concerns about reliability during these hearings. Members may continue to examine reliability issues moving forward, in light of projections that wind and solar will become an increasingly larger share of electricity generation. For example, EIA's projection of existing law and regulations shows wind and solar sources contributing 23% of electricity generation in 2050. Members may also choose to include reliability as part of any debate about policies to increase the generation from wind and solar sources. Preparing for higher levels of generation from wind and solar might require new approaches to maintaining electric reliability. The existing regulatory framework can accommodate some changes since FERC and NERC have authority to initiate development of new reliability standards. For example, NERC has raised the issue of whether it should develop new reliability metrics in light of the increasing use of VRE for electricity generation. In addition to its capacity supply assessment, NERC's Reliability Assessment Subcommittee should lead the electric industry in developing a common approach and identify metrics to assess energy adequacy. As identified in this assessment, the changing resource mix can alter the energy and availability characteristics of the generation fleet. Additional analysis is needed to determine energy sufficiency, particularly during off-peak periods and where energy-limited resources are most prominent. Congress could choose to provide guidance for FERC and NERC activities in this area. Congress could also assess whether the existing regulatory framework is sufficient to maintain reliability if generation from wind and solar sources increase above current projections. One area of discussion is the siting and approval of transmission projects, particularly those that might result in enhanced availability of wind and solar sources for system balancing. Currently, the siting of electricity transmission facilities is largely left to the states. Section 1221 of EPACT05 directs FERC to issue permits for the construction or modification of transmission facilities in certain circumstances in areas designated by the Secretary of Energy as ""National Interest Electric Transmission Corridors."" This authority was to be exercised only if the relevant state agency lacks the authority to permit the transmission facilities or has ""withheld approval for more than one year."" Shortly after passage of EPACT05, DOE set out to designate the National Interest Electric Transmission Corridors and FERC set up a framework for permitting transmission facilities on those corridors. However, federal courts vacated both agencies' actions, and neither agency has taken any significant action pursuant to their Section 1221 authority since that time. As noted above, most power outages occur on local electricity distribution systems, and these are regulated by state or local governments. Congress could consider expanding federal activities affecting distribution system reliability. This might involve studies of the factors (e.g., weather, aging infrastructure, VRE) that result in power outages. Such activities might also include federal financial support for projects or practices that improve reliability of distribution systems or encouraging new operational regimes such as independent distribution system operators (see earlier discussion of this issue in text box, ""Distribution System Reliability""). Congress might also consider acting on the emerging and related issue of electric resilience. Some support for an enhanced federal role in electricity system resilience exists. For example, the National Academy recommends Congress and the Department of Energy leadership should sustain and expand the substantive areas of research, development, and demonstration that are now being undertaken by the Department of Energy's Office of Electricity Delivery and Energy Reliability and Office of Energy Efficiency and Renewable Energy, with respect to grid modernization and systems integration, with the explicit intention of improving the resilience of the U.S. power grid. Many sources currently used to balance wind and solar have received federal financial support in the past, such as tax credits, grants to states or other entities, and DOE research programs. Congress might consider continuing or expanding this type of support if current activities affecting reliability were deemed insufficient. Electric reliability encompasses short-term and long-term aspects as shown in Figure A-1 . System operators and reliability planners, governed by reliability standards from the North American Electric Reliability Corporation (NERC), have different practices in place to address reliability over these various timescales. Reliability over Different Timescales At the smallest timescales, typically seconds or less, are factors such as frequency control, voltage support, and ramping capability. These are often automatic responses of power system components. NERC refers to these factors as Essential Reliability Services (ERS), and they are sometimes called ancillary services. Historically, many ERS were provided as a natural consequence of the physical operational characteristics of steam turbines. Wind and solar generators do not inherently provide ERS in the same way. They require additional electrical components to do so, and these are being more commonly deployed. In some cases, FERC has mandated the use of technologies that allow wind and solar to provide ERS. Balancing, described in the main body of this report, typically occurs over minutes to hours. Unlike ERS, balancing typically requires action by a system operator. Long-term aspects of reliability relate to planning for energy and transmission needs over months to years. This is sometimes referred to as resource adequacy. Policy goals, such as preferences for certain electricity sources over others, tend to influence long-term reliability planning more than shorter-term reliability aspects. Planning for resource adequacy involves forecasts of electricity supply and demand. For variable renewable energy (VRE) like wind and solar sources, these forecasts require assumptions about wind and solar availability. Reliability planners commonly use planning reserve margins to assess whether planned generation and transmission capacity will be sufficient to supply electricity demand. A planning reserve margin is the difference between expected peak demand and available generating capacity at the peak period in each forecast year. It is often expressed as a percentage where the difference is normalized by the peak demand value. According to NERC, reserve margins ""in the range of 10-18 percent"" are typically sufficient for ensuring reliability, although ""by itself the expected Planning Reserve Margin cannot communicate how reliable a system is."" Reserve margins are calculated months or years ahead as part of assessments of whether and where reliability concerns might exist. High planning reserve margins may indicate a likelihood that reliability will be maintained, but, especially when variable sources are present, they might not be predictive. That is, a high planning reserve margin does not guarantee reliability and a low planning reserve margin does not guarantee power disruptions. At the national level, NERC annually assesses resource adequacy over a 10-year forecasting window. NERC uses historic VRE generation data in its assessment and has noted ""methods for determining the on-peak availability of wind and solar are improving with growing performance data."" In its 2018 Long-Term Reliability Assessment, NERC recommended enhancing its reliability assessment process to account for events, like those noted in the "" Changing Electricity Generation Profile "" section above, during which VRE sources provided large shares of generation during off-peak periods. Solar eclipses, though rare events, provide opportunities to test the ability of grid operators to reliably operate the grid when solar sources are unavailable. The August 21, 2017, solar eclipse that affected many parts of the United States was one such opportunity. According to NERC, no reliability issues developed during the event, in part because of the measures implemented in advance by the electric industry. Electric Reliability Regulatory Framework Current electric reliability planning is a coordinated process involving multiple entities and spanning multiple jurisdictions. These reliability planning organizations share responsibility for, among other responsibilities, ensuring electricity from wind and solar sources are reliably integrated into the power system. Table A-1 summarizes these entities and their responsibilities. In the Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ), Congress gave FERC responsibility for reliability of the grid through the setting and enforcement of electric reliability standards. These standards are developed by NERC and approved by FERC in the United States. NERC has set over 100 reliability standards that cover all timescales of reliability planning. Congress gave NERC authority to enforce reliability standards in EPACT05. Per statute, NERC has delegated this authority to the Regional Entities shown in Figure A-2 . The jurisdiction for enforcing compliance with reliability standards includes ""all users, owners and operators of the bulk-power system"" within the contiguous United States. Separate from the tasks of setting and enforcing reliability standards is the task of reliably operating the power system in real time. Per NERC's reliability standards, balancing authorities carry most of the responsibility for matching generation levels with electricity demand. Balancing authorities can have different geographic footprints. RTOs act as balancing authorities and they may have a footprint spanning multiple states. Other balancing authorities might have a footprint spanning an area within a single state. Another class of entities with operational responsibilities are reliability coordinators. A reliability coordinator may operate over larger geographic areas than balancing authorities and can overrule real-time decisions by balancing authorities to preserve the larger scale power system reliability. RTOs typically also act as reliability coordinators. NERC has certified 66 balancing authorities and 11 reliability coordinators in the United States.","The share of wind and solar power in the U.S. electricity mix grew from 1% in 2008 to 8% in 2018. Wind and solar are variable renewable energy (VRE) sources. Unlike conventional sources, weather variability creates uncertainty about the availability of VRE sources. This uncertainty could potentially result in a lack of reliability. Some Members of Congress have expressed concerns about the reliability of the electric power system given recent growth in generation from wind and solar sources and projections that growth will continue. According to official metrics, electric reliability was generally stable or improving over the 2013-2017 period. In other words, generation from wind and solar sources does not appear to be causing electric reliability issues at the national level over this period. Questions remain, however, about maintaining reliability if generation from wind and solar should increase above current projections, as some Members of Congress have supported. Entities in the electric power sector and their regulators are evaluating changes to their approaches to reliability to prepare for this possibility. Congress might seek clarification on whether new or modified approaches are required. Under the current regulatory framework, the federal government oversees reliability for the generation and transmission systems of the electric power sector. These components comprise the bulk power system and include large-scale wind and solar sources. The Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ) authorized the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) to develop and enforce mandatory reliability standards for the bulk power system. Small-scale wind and solar sources, such as rooftop solar photovoltaic (PV) panels, are connected to the distribution system which is localized and under state jurisdiction. Federal mandatory reliability standards do not apply to the distribution system. The colloquial definition of reliability is ""having power when it is needed,"" but regulators and operators of power system components require a more precise statement of objectives and metrics. FERC and NERC have developed numerous technical standards to address reliability. These standards apply over the range of timescales over which reliability is measured, from milliseconds to years. FERC has approved approximately 100 reliability standards to date, and new standards are developed as needed to respond to changing conditions, including increasing generation from wind and solar sources. Multiple entities spanning multiple jurisdictions work together to maintain electric reliability. For economic reasons, wind and solar sources tend to be utilized to the maximum extent possible. When their availability changes, which can happen quickly, other sources must quickly respond to maintain reliability. Typically, other sources respond by increasing or decreasing their output, an operation known as balancing. Multiple types of electricity sources are used to balance wind and solar, including some fossil fuel-fired generators, some nuclear generators, other wind and solar sources (provided sufficient transmission availability), energy storage, and demand response. Each of these has benefits and limitations. Some sources and system operations that currently support balancing have received federal financial support in the past, such as tax credits, grants to states or other entities, and Department of Energy research programs. Congress might consider continuing or expanding such support, if lawmakers believed current activities affecting reliability were insufficient. Beyond developing and enforcing reliability standards, other federal government activities affect electric reliability. For example, FERC's regulation of interstate electricity transmission can be a key determinant of how effectively different electricity sources can meet demand. FERC's regulation of the wholesale electricity markets that operate in some regions of the country may also affect reliability, because market rules can influence which individual generators are used for system balancing. Market prices directly affect project revenues, influencing the kinds of sources that are developed. Additionally, some projects and programs Congress funds support reliability by enabling technology development and providing financial support for projects that support reliability."
"The national pipeline system consists of more than 2.7 million miles of networked pipelines transporting natural gas, oil, and other hazardous liquids. Natural gas and hazardous liquid pipelines—primarily buried underground in the continental United States—run under remote and open terrain, as well as densely-populated areas. There are three main types of pipelines based on the types of materials transported: Hazardous liquid: About 216,000 miles of hazardous liquid pipeline transport crude oil, diesel fuel, gasoline, jet fuel, anhydrous ammonia, and carbon dioxide. Natural gas transmission and storage: About 319,000 miles of pipeline—mostly interstate—transport natural gas from sources to communities. Natural gas distribution: About 2.2 million miles of pipeline—mostly intrastate—transport natural gas from transmission sites to consumers. Figure 1 depicts the network of hazardous liquid and natural gas transmission pipelines in the United States. More than 3,000 pipeline companies operate the nation’s pipeline systems, which can traverse multiple states and the U.S. borders with Canada and Mexico. Many pipeline systems are comprised of the pipelines themselves, as well as a variety of facilities, such as storage tanks, compressor stations, and control centers. Most pipeline systems are monitored through automated industrial control systems or Supervisory Control and Data Acquisition (SCADA) systems using remote sensors, signals, and preprogramed parameters to activate and deactivate valves and pumps to maintain flows within established tolerance levels. Pipeline accidents can occur from a variety of causes, including third- party excavation, corrosion, mechanical failure, control system failure, and operator error. Natural forces, such as floods and earthquakes, can also damage pipelines. Although pipeline releases have caused relatively few fatalities, a single pipeline accident can be catastrophic in terms of public safety and environmental damage. Figure 2 shows notable pipeline accidents since September 2010. According to TSA, pipelines are also vulnerable to physical attacks by crude or unsophisticated tactics, such as rudimentary explosives, arson, or equipment sabotage—largely due to their stationary nature, the volatility of transported products, and the dispersed nature of pipeline networks spanning urban and outlying areas. Threats to the nation’s pipeline systems include sabotage by activists, physical attack by terrorists, and cyber attack or intrusion by nations. In October 2016, environmental activists forced the shutdown of five crude oil pipelines in four states: Minnesota, North Dakota, Montana, and Washington State. Further, in January 2019, the Director of National Intelligence stated that China has the ability to launch cyber attacks that have caused localized, temporary disruptive effects on critical infrastructure—such as disruption of a natural gas pipeline for days to weeks—in the United States. Federal policy and public-private plans establish the roles and responsibilities for the protection of critical infrastructure, including pipelines. These policies and public private plans include Presidential Policy Directive /PPD-21 (PPD-21) and the National Infrastructure Protection Plan (NIPP). PPD-21, issued in February 2013, was developed to advance a national unity of effort to strengthen and maintain secure, functioning, and resilient critical infrastructure, which includes pipelines. PPD-21 reflects an all-hazards approach to protecting critical infrastructure, by accounting for the protection of critical infrastructure from natural or manmade threats or incidents. Examples of threats or incidents include natural disasters, cyber incidents, industrial accidents, pandemics, acts of terrorism, sabotage, and destructive criminal activity targeting critical infrastructure. PPD-21 also identifies the 16 critical infrastructure sectors and assigns roles and responsibilities for each sector among nine designated federal sector-specific agencies as shown in Figure 3. While PPD-21 identifies the critical infrastructure sectors and assigns responsibility for each sector’s sector-specific agency, the NIPP outlines critical infrastructure stakeholder roles and responsibilities regarding critical security and resilience. The NIPP describes a voluntary partnership model as the primary means of coordinating government and private sector efforts to protect critical infrastructure. As part of the partnership structure, the designated sector-specific agencies serve as the lead coordinators for security programs of their respective sector. For example, DHS and DOT are designated as co-sector-specific agencies for the transportation systems sector, which includes pipelines. Each sector also has a government coordinating council, consisting of representatives from various levels of government, and many have a sector coordinating council (SCC) consisting of owner-operators of these critical assets or members of their respective trade associations. For example, the Transportation Government Coordinating Council has been established, and the Pipeline Modal SCC has also been established to represent pipeline operators. Protecting the nation’s pipeline systems is a responsibility shared by both the federal government and private industry. As a result, several federal departments, agencies, and the private sector have significant roles in pipeline safety and security. The entities primarily responsible for pipeline safety and security are included below. Transportation Security Administration (TSA). TSA has primary oversight responsibility for the physical security and cybersecurity of transmission and distribution pipeline systems. Within TSA, the Policy, Plans, and Engagement’s Pipeline Security Branch is charged with overseeing its pipeline security program. Pursuant to the Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Commission Act), TSA’s Pipeline Security Branch issued voluntary Pipeline Security Guidelines in 2011, and released revised guidelines in March 2018. Further, in accordance with the 9/11 Commission Act, TSA’s Pipeline Security Branch also identifies the top 100 critical pipeline systems in the nation. TSA also ranks the relative risk among these top 100 systems. Additionally, the Pipeline Security Branch is responsible for conducting voluntary security reviews, which assess the extent to which these 100 pipeline systems are following the intent of TSA’s Pipeline Security Guidelines. Pipeline and Hazardous Materials Safety Administration (PHMSA). PHMSA, within DOT, is responsible for regulating the safety of hazardous materials transportation and the safety of pipeline systems, some aspects of which may relate to pipeline security. PHMSA develops regulations for domestic interstate and intrastate natural gas and hazardous liquid pipelines. Its regulatory programs are focused on ensuring safety in the design, construction, operation, and maintenance of pipelines. Under PHMSA’s pipeline safety program, pipeline operators have primary responsibility for ensuring the integrity of their pipelines. PHMSA and some state pipeline safety offices are responsible for conducting inspections to oversee operators’ compliance with federal pipeline safety regulations and other federal requirements. Inspectors from PHMSA’s five regional offices and states are responsible for inspecting nearly 3,000 companies that operate 2.7 million miles of pipelines. Private sector. Although TSA has primary federal responsibility for overseeing interstate pipeline security, private sector and publicly-owned pipeline operators are responsible for implementing asset-specific protective security measures. As we previously reported, since the September 11th terrorists attacks, operators have increased their attention on security by incorporating security practices and programs into their overall business operations. Pipeline operators’ interests and concerns are primarily represented by five major trade associations—the Interstate Natural Gas Association of America, American Gas Association, American Public Gas Association, American Petroleum Institute (API), and Association of Oil Pipe Lines. According to TSA officials, pipeline operators, and association representatives, these associations have worked closely with the federal government on a variety of pipeline security-related issues, including collaborating on TSA’s voluntary standards and information sharing. The MOU Annex delineates TSA and PHMSA mutually agreed-upon pipeline security roles and responsibilities, consistent with their respective missions, and acknowledges that both agencies benefit by sharing each other’s expertise, among other things. Specifically, the MOU Annex identifies 11 program areas, where TSA and PHMSA agreed to coordinate their respective roles and responsibilities. The first program area for example, calls for both agencies to coordinate efforts to identify critical infrastructure, and to share relevant data and observations found during respective safety inspections and security assessments. Another program area addresses coordination in developing transportation security standards, regulations, guidelines, or directives. The MOU Annex further provides that TSA and PHMSA are to seek early and frequent coordination in developing such standards, regulations, guidelines, or directives. They are also to review the adequacy of existing standards in the private and public sector, and identify any gaps that should be addressed through rulemaking, guidelines, or directives, among other items. For a complete listing of the MOU Annex’s 11 program areas, including TSA and PHMSA roles and responsibilities and agreed-upon actions, see appendix I. TSA and PHMSA have both noted various developments that have occurred since 2006 that may affect their roles and responsibilities related to pipeline security. However, the MOU Annex has not been updated since its inception in 2006 to consider incorporating these changes which includes subsequently issued presidential directives, the establishment of the Cybersecurity Infrastructure and Security Agency (CISA), and distinctions between current TSA and PHMSA current inspection operations. As a result, the Annex is not current and may not fully reflect the agencies’ pipeline safety and security-related activities. For example, Homeland Security Presidential Directive/HSPD-7 (HSPD-7), which is cited as an underlying authority in both the 2004 MOU and 2006 MOU Annex was revoked and replaced by PPD-21 in 2013. According to PPD-21, the directive advances a national unity of effort to strengthen and maintain secure, functioning, and resilient critical infrastructure by, among other things, refining and clarifying critical infrastructure-related functions, roles, and responsibilities across the federal government. PPD- 21 further provides, however, that plans developed pursuant to HSPD-7 shall remain in effect until specifically revoked or superseded. According to TSA and PHMSA officials, statements of Executive Branch policy including presidential directives such as PPD-21 include changes that could impact their pipeline security and safety roles and should be considered in any future revisions to the MOU Annex. Further, PHMSA officials also told us that TSA and PHMSA’s roles and responsibilities in identifying critical infrastructure should be reviewed given the establishment of the CISA in November 2018. CISA, formerly the DHS National Protection and Programs Directorate, is responsible for, among other things, coordinating a national effort to secure and protect against critical infrastructure risks. These responsibilities include coordinating with sector-specific agencies to carry out its cybersecurity and critical infrastructure activities. TSA and PHMSA officials stated that they have closely coordinated in identifying critical infrastructure when responding to past national emergencies. For example, TSA identified and provided PHMSA with information on the pipelines that supplied fuel to specific airports during the hurricane seasons in 2017 and 2018. However, PHMSA officials stated that both TSA and PHMSA should consider reviewing how these types of efforts may need to be coordinated with CISA in the future and whether any adjustments to respective roles and responsibilities in the MOU Annex are needed. In addition, representatives from all of the industry associations that we interviewed stated that the agreement should be revised to consider how the establishment of CISA may impact current TSA and PHMSA pipeline security roles and responsibilities. TSA officials stated that they do not believe that the establishment of CISA impacts TSA’s roles and responsibilities for identifying pipeline critical infrastructure. While CISA may or may not have impacts on TSA and PHMSA’s pipeline security roles, reviewing the MOU Annex in light of new developments, such as the CISA, would allow the TSA and PHMSA to determine whether updates are necessary. TSA and PHMSA officials stated that distinctions in current inspections and enforcement operations necessitate a revision to the MOU Annex. The MOU Annex states that agencies are to explore opportunities for collaboration in inspection and enforcement activities. According to TSA and PHMSA officials, they have since explored the possibility for conducting joint activities and found that distinctions in their respective operating environments and roles and responsibilities do not allow for joint inspection and enforcement activities. For example, PHMSA conducts physical inspections of facilities to assess pipeline operators’ compliance with pipeline safety regulatory requirements and relies on a range of enforcement activities, such as civil penalties to ensure that pipeline operators correct safety violations and prevent safety problems. TSA, however, conducts voluntary security assessments of pipeline’s corporate security programs and critical facilities and relies on pipeline operators’ willingness to participate and implement recommended changes to improve pipeline security. As a result, TSA and PHMSA officials stated that pipeline operators are reluctant to participate in a voluntary assessment that might include PHMSA inspectors because they represent a regulatory agency. TSA, PHMSA and industry association representatives we interviewed agreed that the annex should be updated to accurately reflect current distinctions in the agencies’ roles and responsibilities and their respective operating environments. PHMSA officials stated that they had planned to review the MOU Annex in 2018 to assess current roles and responsibilities and determine whether any updates to the MOU Annex were needed, but efforts were delayed because of competing priorities such as addressing the aftermath of major hurricanes in 2017 and 2018. Specifically, TSA and PHMSA had agreed to an initial list of timeframes for reviewing the MOU Annex and these timeframes called for the agencies to complete the MOU Annex revision in 2018. However, as of March 2019, TSA and PHMSA have yet to complete the review and although both agencies stated that the review is ongoing, neither agency could provide updated timeframes for completion. Furthermore, while the Annex recognizes that TSA and PHMSA may propose agreed-upon amendments or modifications to the agreement, it does not call for regular or periodic reviews to identify whether any updates or revisions are needed and, as appropriate, implemented. TSA and PHMSA officials, as well as the industry association representatives we interviewed all reported that the MOU Annex helped to coordinate pipeline security and safety efforts because: (1) it is a signed written agreement that can be readily consulted; (2) it memorialized respective TSA and PHMSA roles and responsibilities for government leaders and staff at the time; and (3) it can be modified or amended as needed. Standards for Internal Control in the Federal Government states that periodic review of policies, procedures, and related control activities should occur to determine their continued relevance and effectiveness in achieving identified objectives or addressing related risks. In addition, documentation of any changes made as a result of such reviews, such as changes to an entity’s roles and responsibilities or in technology, should occur to ensure that such controls are clear over time as staff change within an organization. Standards for project management state that managing a project involves, among other things, developing a timeline with milestone dates to identify points throughout the project to reassess efforts under way to determine whether project changes are necessary. By developing and implementing mutually agreed upon time frames for reviewing the annex and updating it, as appropriate, TSA and PHMSA could better ensure that the roles and responsibilities for TSA and PHMSA remain current. Additionally, including a provision in the annex for periodically reviewing for needed updates would help ensure the agreement consistently reflects relevant and updated information on TSA and PHMSA’s roles and responsibilities. TSA and PHMSA have communicated their respective pipeline safety and security roles and responsibilities by issuing pipeline security guidance and safety regulations, issuing a joint advisory bulletin, and maintaining informal contacts with pipeline stakeholders when conducting outreach activities, pipeline security assessments, or safety inspections. TSA security guidelines. TSA’s Pipeline Security Branch first issued its voluntary Pipeline Security Guidelines in 2011, and revised them in March 2018. The guidelines include TSA’s recommendations for pipeline industry security practices, such as establishing a corporate security program, conducting security vulnerability assessments, and identifying critical facilities. The guidelines also recommend facility security and cybersecurity measures, which serve as the basis for the pipeline security assessments conducted by TSA’s Pipeline Security Branch. PHMSA regulations. PHMSA’s Office of Pipeline Safety issues and enforces intrastate and interstate regulations covering aspects of pipeline safety, including the design, construction, operation and maintenance, and spill response for hazardous liquid and gas pipeline facilities, including liquefied natural gas facilities. Advisory bulletins. PHMSA also issues advisory bulletins to communicate safety-related conditions to pipeline operators, and can issue advisory bulletins in coordination with TSA to notify pipeline operators of a security incident. Such bulletins may include identifying the affected operators, describing the threat, and providing information on federal resources for assistance. For example, in response to physical intrusions on pipelines and a coordinated campaign by domestic saboteurs, and to remind pipeline operators of the importance of safeguarding and securing their pipelines from physical and cyber intrusion or attack, PHMSA, in coordination with TSA, issued an advisory bulletin in 2016. The bulletin also included a brief discussion of TSA’s and PHMSA’s roles on pipeline safety and security. Forums and routine interactions with operators. TSA and PHMSA officials also reported that they communicate their agencies’ respective roles and responsibilities for pipeline safety and security to stakeholders when conducting general outreach, information sharing efforts, or inspections or assessments. TSA and PHMSA officials noted that these activities provide opportunities for agency officials and pipeline stakeholders to clarify their roles and responsibilities should pipeline operators have questions. Examples of such community outreach activities include attending meetings of the Oil and Natural Gas subsector SCC or the Pipeline Modal SCC, and TSA’s annual International Pipeline Security Forum. TSA officials also said that TSA’s monthly and quarterly unclassified threat briefings provided TSA officials and pipeline stakeholders the opportunity to discuss and clarify their roles and responsibilities. Additionally, TSA produces classified and unclassified threat assessments on physical and cyber threats to pipelines, which according to agency officials can help to clarify TSA’s security role. Finally, TSA and PHMSA officials said that pipeline security assessments and safety inspections and other enforcement activities that the agencies regularly conduct are also opportunities to communicate their roles and responsibilities. For example, TSA officials reported that should an operator ask for assistance regarding a safety issue while TSA staff was conducting a security review, TSA staff would be able to refer the operator to PHMSA to address the issue. Similarly, PHMSA officials stated that inspectors would refer an operator to TSA or its pipeline security guidelines should the operator have questions regarding, for example, what security measures to implement. The representatives of the four pipeline associations we interviewed reported that TSA and PHMSA had clearly communicated their respective roles and responsibilities to pipeline stakeholders. Specifically, all of the association representatives said that their membership understood that TSA is responsible for pipeline security matters and PHMSA is responsible for pipeline safety matters. For example, one industry association representative stated that they had contacted their members to determine whether they were unclear regarding TSA’s and PHMSA’s respective roles and responsibilities and that members reported the roles were clear to them. Further, another association representative reported that the initial security reviews and outreach efforts that TSA conducted after the pipeline security program was created helped pipeline operators to understand that its role was to oversee pipeline security. In addition, all of the association representatives we interviewed stated that the MOU Annex helped ensure that TSA and PHMSA understood and respected each other’s roles and responsibilities. As a result, according to the association representatives, their pipeline operator membership had not experienced challenges associated with overlapping or duplicative efforts on the part of TSA and PHMSA pipeline safety or security programs. In accordance with the 9/11 Commission Act, TSA issued its Pipeline Security and Incident Recovery Protocol Plan in March 2010. The plan’s stated intent is to establish a comprehensive interagency approach to counter risks, coordinate federal agencies’ actions, and minimize the consequences of incidents involving pipeline infrastructure as well as recovery time from them. The plan also defines the roles and responsibilities of federal agencies; tribal, state, and local governments; and the private sector during a pipeline incident. It also defines the measures they may take related to pipeline infrastructure security incidents. According to the plan TSA, PHMSA, the Department of Energy (DOE), and the Federal Bureau of Investigation (FBI) have principal roles in pipeline incident response, while other agencies such as the U.S. Coast Guard, the Federal Emergency Management Agency (FEMA), and the National Transportation Safety Board (NTSB) have supporting roles. The following are examples of agencies’ roles and responsibilities in each of the plan’s three response phases. Prevention/protection. TSA is responsible for monitoring pipeline owner and operators’ implementation of its pipeline security guidelines, and PHMSA is responsible for enforcing its pipeline safety regulations. TSA, in addition to the FBI, is responsible for assessing the credibility of any physical or cyber threat information it receives and sharing any intelligence related to pipeline security with pipeline owners and operators. Response. TSA is responsible for coordinating information sharing between federal agencies and pipeline stakeholders, and PHMSA is responsible for coordinating federal agency activities with the affected pipeline operator and state pipeline safety agency. The plan also states that the FBI is responsible for investigating attempted or successful attacks on pipeline infrastructure including those that are believed to have a nexus to terrorism. Recovery. PHMSA is primarily responsible for working with the pipeline operator, along with other supporting federal agencies, to facilitate service restoration. DOE is responsible for monitoring flows of throughput in the affected pipeline system or systems, assessing regional, national, and global impacts of an incident on energy infrastructure throughout all three phases. Appendix I provides more details on key federal agencies’ and pipeline operators’ roles and responsibilities, as well as the actions they may take in response to an incident as detailed in the plan. TSA’s plan states that it will be updated periodically to address changes in pipeline security threats, technology, and federal laws and policies. Further, Standards for Internal Control in the Federal Government states that periodic review of policies, procedures, and related control activities should occur to determine their continued relevance and effectiveness in achieving identified objectives or addressing related risks. In addition, internal control standards also states that changes in an entity’s programs or activities, organizational structure, personnel, or technology can affect the operating environment and management can respond by revising internal controls on a timely basis to ensure effectiveness. However, TSA has not reviewed or revised its 2010 plan to ensure it addresses changes in at least three key areas: cybersecurity-related laws and policies, incident management policies, and DHS’s terrorism alert system as described below. TSA’s 2010 plan includes some discussion of cyber threats and refers operators to guidance they may use to better secure their SCADA and control systems. However, the plan does not identify the cybersecurity roles and responsibilities of federal agencies that are identified in the plan, such as DOE, Federal Energy Regulatory Commission (FERC), or the FBI, or discuss the measures these agencies should take to prevent, respond to, or support pipeline operators following a cyber incident involving pipelines. TSA’s 2010 plan also has not been updated to reflect current cybersecurity incident response guidance. In December 2016, DHS issued its National Cyber Incident Response Plan (NCIRP). The NCIRP is to be the primary framework for stakeholders, including pipeline operators, to understand how federal departments and agencies provide resources to support response operations for a significant cyber incident. NCIRP identifies the FBI and the National Cyber Investigative Joint Task Force as responsible for investigating reported cyber incidents. NCIRP also identifies the National Cybersecurity and Communications Integration Center (NCCIC), an agency within DHS, as responsible for providing technical assistance to affected entities, such as pipelines, to mitigate vulnerabilities and reduce impacts of cyber incidents. NCCIC is also to share information across the public and private sectors to protect against similar incidents in the future. In addition, NCIRP provides guidance detailing when and to which federal agencies or entities the public should report a cyber incident. These include the FBI, the National Cyber Investigative Joint Task Force, U.S. Secret Service, and NCCIC. For example, NCIRP states that any cybercrime—including computer intrusions or attacks, theft of trade secrets, criminal hacking, terrorist activity, espionage, sabotage, or other foreign intelligence activity—is to be reported to FBI field offices’ cyber task forces. However, TSA’s plan does not include this information or describe what measures, if any, the agencies with pipeline-related roles and responsibilities listed in NCIRP are to take in response to a pipeline cyber incident. Moreover, the 2010 plan does not account for other agencies whose roles and responsibilities are related to critical infrastructure, such as pipelines and cybersecurity. Specifically, the plan does not account for the role of NCCIC, which was established in 2009. In addition, TSA’s 2010 plan does not account for CISA’s role in cyber threat response activities or how it may affect other agencies’ roles and responsibilities for pipeline incident response. TSA officials acknowledged that reviewing and, as appropriate, revising the plan would be beneficial to ensuring the plan addresses current pipeline security threats, technology, and federal laws and policies. They stated TSA had not updated the plan to include cybersecurity response protocols because an overarching cybersecurity response protocol for all critical infrastructure sectors—not just pipelines—should first be developed. According to TSA officials, developing a pipeline cybersecurity response protocol would require a whole-of-government approach, as well as coordination with private sector and input from many sectors because of the challenges and complexity of critical infrastructure cybersecurity in general. However, through NCIRP, DHS provided a cybersecurity response protocol across all critical infrastructure sectors in December 2016. Further, NCIRP states that public and private sector entities should consider creating an operational cyber incident response plan to further organize and coordinate their efforts in response to cyber incidents. Therefore, TSA could potentially provide such an operational cyber incident response plan for the pipeline sector in its plan. TSA could also better ensure that pipeline operators understand how federal agencies may provide support in response to a cyber incident by periodically reviewing and, as appropriate, revising the plan to include its cyber incident response plan. Representatives of the four pipeline associations we interviewed told us that their membership more clearly understood federal agencies’ roles and responsibilities related to physical incidents than to cybersecurity. For example, for physical incidents the representatives stated that their members clearly understood that they are to first notify local first responders (often through the emergency 911 system) and appropriate state or federal regulators, and are to contact either the National Response Center or TSA’s Transportation Security Operations Center (TSOC), depending on the nature of the incident. However, they stated that they did not believe all of their members clearly understand that they are to report any actual or suspected cyber incidents that could impact pipeline industrial control systems or other information technology-based systems to the NCCIC. All of the association representatives told us that the process for reporting a cyber incident is less clear because, in part, of the large number of federal agencies with a cybersecurity-related role. One of the representatives also attributed the lack of clarity to the reorganization of NCCIC, and the establishment of CISA. Further, all of the representatives we interviewed indicated that clarifying the cybersecurity roles and responsibilities of DOE, Federal Energy Regulatory Commission (FERC), and TSA would, among other things, improve operators’ ability to appropriately report and respond to a cyber incident. TSA also has not updated the plan to address changes in federal incident management and response policies that have occurred since the plan was developed in 2010. The plan states that it is to be consistent with the National Response Framework (NRF) and the National Incident Management System (NIMS) incident command system procedures. The NRF was first issued in 2008 and described the roles, responsibilities and coordinating structures for delivering core capabilities during incident response. According to FEMA, it revised the NRF in 2013 and 2016 to reflect lessons learned from real world events and other experiences since the framework was first developed. Likewise, NIMS was developed in 2004 as a comprehensive, national approach to incident management that was to be applicable at all jurisdictional levels and across functional disciplines, such as law enforcement, public health, or public works. According to FEMA, it revised NIMS in 2017 to reflect and incorporate policy updates and lessons learned from exercises and real-world incidents. The revision was also intended to clarify that NIMS applies to all stakeholders with incident management roles, and to enhance guidance on information management processes, data collection plans, social media integration, and the use of geographic information systems. TSA officials acknowledged the benefit of periodically reviewing, and if necessary, revising the plan to reflect FEMA’s revisions to NIMS or the NRF, but had not done so because of competing priorities. TSA has also not updated the plan to address changes DHS made to its terrorist alert system in 2011. Consistent with the 9/11 Commission Act, the plan describes actions that federal agencies can take at each color- coded level of the Homeland Security Advisory System to ensure the increased security of pipeline infrastructure. For example, under the protect/prevent phase, the plan states that when there is a high risk of a terrorist attack (i.e., red: severe condition) and threat is general and not specific to pipelines, TSA and PHMSA are to coordinate to identify the potential for any related or cascading events that may impact the pipeline sector. However, if there is a specific threat to pipelines, TSA, in collaboration with pipeline operators, is to identify any immediate protective measures that pipeline operators are to implement. TSA is also to ensure pipeline operators have the information necessary to implement these measures, and, if necessary, to issue security directives. In 2011, DHS replaced the four color-coded alert system of the Homeland Security Advisory System with the National Terrorism Advisory System, which has only two alert levels (elevated threat and imminent threat). TSA issued revised protective measures that pipeline operators are to take under either threat condition in April 2011 and March 2018. However, TSA has not updated the plan to communicate the actions federal agencies can take at either level of the National Terrorism Advisory System to ensure the increased security of pipeline infrastructure. TSA officials acknowledged that periodically reviewing and, as appropriate, revising the plan would help to clarify federal agencies’ roles and responsibilities for addressing pipeline security. TSA officials reported that they have not updated the plan since 2010 because they faced competing priorities. However, as described earlier, TSA’s incident response plan was developed to provide a comprehensive interagency approach to important activities such as countering risks, coordinating federal agencies’ actions and minimizing the consequences of incidents involving pipeline infrastructure. Further, the plan itself states that it will be updated periodically to address changes in pipeline security threats, technology, and federal laws and policies. By periodically reviewing and, as appropriate, revising its Pipeline Security and Incident Recovery Protocol Plan, TSA could better ensure that the plan addresses all possible and relevant threats to pipeline systems, such as cybersecurity, and fully incorporates relevant changes, such as those related to incident management and DHS’s terrorism alert system. By doing so, TSA could also provide greater assurance that federal agencies understand the actions they are to take to prevent, respond to, or recover from a physical or cyber incident. TSA and PHMSA share responsibility for safeguarding the nation’s pipeline systems from catastrophic events. While the 2006 MOU Annex delineates TSA’s and PHMSA’s mutually agreed-upon pipeline security roles and responsibilities, it has not been reviewed since its inception to consider pipeline security developments. By developing and implementing a mutually agreed upon timeline with timeframes for reviewing the annex and as appropriate, updating it, TSA and PHMSA could better ensure that their roles and responsibilities are properly documented and updated in a timely manner to remain current. Furthermore, by revising the MOU Annex to include a provision for periodically reviewing the annex for needed updates, TSA and PHMSA could better ensure the agreement consistently reflects relevant and updated information on their roles and responsibilities. Similarly, TSA’s Pipeline Security and Incident Recovery Protocol Plan— which defines the roles and responsibilities of federal agencies; tribal, state, and local governments; and the private sector for responding to a pipeline incident—also has not been updated to reflect changes in federal laws or policies since the plan was issued in 2010. By periodically reviewing and, when appropriate, updating its Pipeline Security and Incident Recovery Protocol Plan, TSA could better ensure that the plan addresses and fully incorporates changes relevant to cybersecurity, incident management and DHS’s terrorism alert system, among others. By doing so, TSA could also better ensure that federal agencies’ actions are well coordinated in response to a pipeline-related physical or cyber incident, and that pipeline stakeholders understand federal agencies’ roles and responsibilities in preparing for, responding to, or supporting pipeline operators to restore service after a pipeline-related physical or cyber incident. We are making a total of five recommendations including three to TSA and two to PHMSA: The TSA Administrator should work with the PHMSA Administrator to develop and implement a timeline with milestone dates for reviewing and, as appropriate, updating the 2006 MOU Annex. (Recommendation 1) The PHMSA Administrator should work with the TSA Administrator to develop and implement a timeline with milestone dates for reviewing and, as appropriate, updating, the 2006 MOU Annex. (Recommendation 2) The TSA Administrator, in consultation with the PHMSA Administrator should revise the 2006 MOU Annex to include a provision requiring periodic reviews of, and as appropriate, corresponding updates to the Annex.(Recommendation 3) The PHMSA Administrator, in consultation with the TSA Administrator should revise the 2006 MOU Annex to include a provision requiring periodic reviews of, and as appropriate, corresponding updates to the Annex.(Recommendation 4) The TSA Administrator should periodically review, and as appropriate, update the 2010 Pipeline Security and Incident Recovery Protocol Plan to ensure the plan reflects relevant changes in pipeline security threats, technology, federal law and policy, and any other factors relevant to the security of the nation’s pipeline systems. (Recommendation 5) We provided a draft of this report to DHS and DOT. DHS and DOT provided written comments which are reproduced in appendices III and IV respectively. We also provided draft excerpts of this product to the American Petroleum Institute (API), the American Gas Association, the Interstate Natural Gas Association of America, and the American Public Gas Association. For those who provided technical comments, we incorporated them as appropriate. With regard to our first recommendation, that TSA work with the PHMSA to develop and implement a timeline with milestone dates for reviewing and, as appropriate, updating the 2006 MOU Annex, DHS stated that TSA will work with PHMSA to develop and implement a timeline with milestone dates for reviewing and updating, as appropriate, the 2006 MOU Annex. DHS estimated that this effort would be completed by August 31, 2019. This action, if fully implemented, should address the intent of this recommendation. With regard to our second recommendation, that PHMSA work with TSA to develop and implement a timeline with milestone dates for reviewing and, as appropriate, updating the 2006 MOU Annex, DOT concurred and stated it would provide a detailed response within 180 days of the issuance of this report. With regard to our third recommendation, that TSA, in consultation with PHMSA, revise the 2006 MOU Annex to include a provision requiring periodic reviews of, and as appropriate, corresponding updates to the Annex, DHS stated that TSA will, in consultation with PHMSA, revise the 2006 MOU Annex to include a provision requiring periodic reviews of, and as appropriate, corresponding updates to the Annex. DHS estimated that this effort would be completed by March 31, 2020. This action, if fully implemented, should address the intent of this recommendation. With regard to our fourth recommendation, that PHMSA, in consultation with TSA, revise the 2006 MOU Annex to include a provision requiring periodic reviews of, and as appropriate, corresponding updates to the Annex, DOT concurred and stated it would provide a detailed response within 180 days of the issuance of this report. With regard to our fifth recommendation, that TSA periodically review, and as appropriate, update the 2010 Pipeline Security and Incident Recovery Protocol Plan to ensure the plan reflects relevant changes to pipeline security threats, technology, federal law and policy, and any other factors relevant to the security of the nation’s pipeline systems, DHS concurred and estimated that TSA will complete its first review by December 31, 2019. DHS further stated that it will establish a timeline for updating the plan should the review determine that an update is necessary. This action, if fully implemented, should address the intent of this recommendation. We are sending copies of this report to the appropriate congressional committees; the Secretary of Homeland Security, Secretary of Transportation; and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact William Russell at (202) 512-8777 or russellw@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 report are listed in appendix V. The Transportation Security Administration (TSA) and Pipeline and Hazardous Materials Safety Administration (PHMSA),”the parties”, recognize that the following program areas are important to the development and deployment of an enhanced security strategy for the transportation of hazardous materials by all modes, including pipeline. This appendix summarizes the roles and responsibilities of key federal agencies as well as the actions that they may take in response to an incident as detailed in Transportation Security Administration’s (TSA) 2010 Pipeline Security and Incident Recovery Protocol Plan. A summary of pipeline stakeholder’s roles, responsibilities, and examples of actions that may be taken during each incident response phase is presented below. Prevention/Protection. During the prevention/protection phase, pipeline operators are to use TSA’s pipeline security guidance and the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) safety regulations as the framework to prepare and prevent against an incident. TSA is responsible for monitoring pipeline owners and operators’ implementation its security guidelines, and PHMSA is responsible for enforcing its safety regulations. The plan also states that during this phase TSA is to assume a primary role for ensuring federal agencies’ actions are coordinated through protective security advisors (PSAs). In addition, the Federal Bureau of Investigation (FBI) is responsible for assessing the credibility of a known threat, preparing and implementing a preliminary investigative plan, and, if necessary, disseminating public safety notifications. The Department of Energy (DOE) is responsible for assessing and monitoring pipeline systems for supply shortages. The prevention/protection section of the plan also describes how agencies are to share and assess threat information. For example, the plan states that TSA, PHMSA, or any federal agency that receives threat information regardless of the source, must immediately notify the FBI. It also states that if the FBI receives intelligence about a pipeline threat, it is to share this information with TSA. TSA is then to notify the pipeline operator and, if necessary, provide recommendations for additional protective measures. Finally, the prevention/protection section of the plan defines actions various agencies can implement during a heightened security threat level to increase protection from a potential attack. For example, when there is a high risk of a terrorist attack (i.e., red: severe condition) and threat is general and not specific to pipelines, TSA and PHMSA are to coordinate to identify the potential for any related or cascading events that may impact the pipeline sector. If there is a specific threat to pipelines, TSA is, in collaboration with pipeline operators, to identify any immediate protective measures that ought to be taken by pipeline operators, and ensure pipeline operators have the information necessary to implement them, and, if necessary issue security directives. Response. According to the plan, pipeline owners or operators are to notify local first responders and state regulators through the emergency 911 system. After the pipeline operator has notified local government, they are to contact the National Response Center (NRC) if the incident results in an unintentional release or causes significant damage. As we previously reported, pipeline operators are also requested to report any physical security incident that is indicative of a deliberate attempt to disrupt pipeline operations or activities that could be considered precursors to such an attempt to TSA’s Transportation Security Operations Center (TSOC). Once TSA has been notified of an incident by a pipeline operator, its Pipeline Security Branch is to monitor the incident, notify relevant federal agencies, and, if deemed appropriate, activate the Interagency Threat Coordination Committee (ITCC). PHMSA may also deploy on-scene pipeline inspectors and investigators which are to among other things, coordinate federal agencies’ activities with the affected pipeline operator and state pipeline safety agency, provide subject matter expertise to the incident command, and direct safe restoration of pipeline facilities and services. The plan also states that, during the response phase, responsibility for investigating the incident falls to NTSB or the FBI depending on whether the incident is determined to be the result of criminal activity. The FBI is solely responsible for investigating any pipeline security incident that appears to be an intentional criminal act. For example, if the incident were suspected to be the result of terrorist attack, the National Joint-Terrorism Task Force would conduct an investigation of the attack, and if appropriate, with assistance from other FBI assets. If, however, the incident resulted in fatalities, substantial property damage, or significant injury to the environment, NTSB would have responsibility for investigating the incident, and may issue safety recommendations to help prevent future accidents. Recovery. When response activities are complete, PHMSA is to have primary responsibility for overseeing pipeline operators’ safe restoration of service with TSA and other federal agencies serving primarily in support roles. PHMSA, for example, is to work with the owner/operator to facilitate restoration of service by, among other things, providing technical oversight, advice, and guidance to owner/operators; coordinating recovery activities with state pipeline safety agency, and evaluate whether to a special permit is necessary to facilitate an expedited restoration of services. Meanwhile, DOE is to continue to assess the impacts of an incident on energy infrastructure, and advise federal, state, tribal, and local authorities on priorities for energy restoration, assistance, and supply. In addition to the contact named above, Ben Atwater, Assistant Director and Michael C. Lenington, Analyst-in-Charge, managed this assignment. Nanette Barton, Eric Hauswirth, Susan Hsu, and Thomas Lombardi also made significant contributions to this report.","More than 2.7 million miles of pipeline transport natural gas, oil, and other hazardous liquids needed to operate vehicles and heat homes, among other things, in the United States. Responsibility for safeguarding these pipelines is shared by TSA, within the Department of Homeland Security (DHS); PHMSA, within the Department of Transportation (DOT); and pipeline operators. TSA oversees the security of all transportation modes, including pipelines. PHMSA oversees pipeline safety. DHS and DOT signed a MOU on their roles across all transportation modes in 2004. In 2006, TSA and PHMSA signed an annex to the MOU (MOU Annex) to further delineate their pipeline security-related responsibilities. The TSA Modernization Act includes a provision for GAO to review DHS and DOT roles and responsibilities for pipeline security. This report addresses, among other things: (1) the extent the MOU Annex delineates TSA's and PHMSA's pipeline security roles and responsibilities; and (2) the extent TSA has communicated federal incident response procedures for pipeline breaches to stakeholders. GAO reviewed the MOU annex and related documents and TSA's Pipeline Security and Incident Recovery Protocol Plan, and interviewed officials from PHMSA, TSA, and four pipeline associations. The memorandum of understanding (MOU) Annex signed by the Transportation Security Administration (TSA) and Pipeline and Hazardous Materials Safety Administration (PHMSA) in 2006 delineates their mutually agreed-upon roles and responsibilities for pipeline security, but has not been reviewed to consider pipeline security developments since its inception. As a result, the annex may not fully reflect the agencies' pipeline security and safety-related activities. Efforts to update the annex were delayed by other priorities. As of June 2019, there are no timeframes for completion. By developing and implementing timeframes for reviewing the MOU Annex and updating it, as appropriate, TSA and PHMSA could better ensure any future changes to their respective roles and responsibilities are clearly delineated and updated on a regular basis. TSA's Pipeline Security and Incident Recovery Protocol Plan, issued in March 2010, defines the roles and responsibilities of federal agencies and the private sector, among others, related to pipeline security incidents. For example, in response to a pipeline incident, TSA coordinates information sharing between federal and pipeline stakeholders and PHMSA coordinates federal activities with an affected pipeline operator to restore service. However, TSA has not revised the plan to reflect changes in at least three key areas: pipeline security threats, such as those related to cybersecurity, incident management policies, and DHS's terrorism alert system. By periodically reviewing and, as appropriate, updating its plan, TSA could better ensure it addresses changes in pipeline security threats and federal law and policy related to cybersecurity, incident management and DHS's terrorism alert system, among other things. TSA could also provide greater assurance that pipeline stakeholders understand federal roles and responsibilities related to pipeline incidents, including cyber incidents, and that response efforts to such incidents are well-coordinated. GAO is making five recommendations, including that: (1) TSA and PHMSA develop and implement a timeline for reviewing and, as appropriate, updating the 2006 MOU Annex; and (2) TSA periodically review, and as appropriate, update its 2010 pipeline incident recovery plan. DHS and DOT concurred with these recommendations."
"The primary source of federal aid in support of elementary and secondary education is the Elementary and Secondary Education Act (ESEA)—particularly its Title I-A program, which authorizes federal aid for the education of disadvantaged students. The ESEA was initially enacted in 1965 (P.L. 89-10) ""to strengthen and improve educational quality and educational opportunities in the Nation's elementary and secondary schools."" It was most recently comprehensively amended and reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), which was enacted ""to ensure that every child achieves."" The ESSA authorized appropriations for ESEA programs through FY2020. FY2020 appropriations for ESEA programs were $25.9 billion. The ESSA also enacted a series of revisions to educational accountability requirements that are applicable to recipients of ESEA funds. Under Title I-A of the ESEA, as amended by the ESSA, if a state accepts Title I-A funds then the state, its local educational agencies (LEAs), and its public schools are required to focus on educational accountability as a condition of receiving federal grant funds. States, LEAs, and individual public schools are held accountable for monitoring and improving achievement outcomes for students and closing achievement gaps. Each state is required to have content standards, academic achievement standards, and aligned assessments in reading/language arts (RLA), mathematics, and science for specific grade levels. States must also have an accountability system that incorporates (1) long-term and interim performance goals for specified measures; (2) weighted indicators based, in part, on these goals; and (3) an annual system for meaningful differentiation that is used to identify schools that need additional support to improve student achievement. These academic accountability requirements must be detailed in each state's Title I-A state plan. Each state educational agency (SEA) is required to submit a state plan delineating its academic accountability system, among other state plan requirements, for approval by the U.S. Department of Education (ED) in order to receive Title I-A funds. This plan must be developed by the SEA with ""timely and meaningful consultation"" with other education stakeholders, including the governor, the state board of education, members of the state legislature, school staff, and parents. The plan must be peer-reviewed through a process established by the Secretary of Education (hereinafter referred to as the Secretary) and then approved by the Secretary. The state plan will remain in effect for the duration of the state's participation in Title I-A and must be periodically reviewed and revised as necessary by the SEA to reflect any changes in the state's strategies or programs under Title I-A. As part of this plan, the SEA is required to provide information on its standards, assessments, and academic accountability system. State plans can be submitted for individual formula grant programs or, if permitted by the Secretary, the SEA may submit a consolidated state plan based on requirements established by the Secretary. Following the enactment of the ESSA, all SEAs submitted consolidated state plans. The Secretary has approved these plans for all 50 states, the District of Columbia, and Puerto Rico. This report discusses the Title I-A requirements related to academic standards, assessments, and state accountability systems that are in effect under current law. This is followed by a brief discussion of special rules that apply to schools operated or funded by the Bureau of Indian Education (BIE), and an examination of SEA and LEA report card and reporting requirements related to standards, assessments, and accountability systems. Frequently asked questions (FAQs) related to each of these areas are included at the end of the report. As a condition of receiving Title I-A funds, each state must have state standards in specific subject areas that meet certain requirements. This section discusses general requirements related to standards, as well as alternate achievement standards for students with the most significant cognitive disabilities and English language proficiency standards. Each state receiving Title I-A funds is required to provide an assurance in its state plan that it has adopted challenging academic content standards and aligned academic achievement standards in RLA, mathematics, and science (and any other subject selected by the state). The achievement standards must include at least three levels of achievement (e.g., basic, proficient, and advanced). Except as discussed below, the same standards and achievement levels must be applied to all public schools and all public school students. The standards must include the same knowledge, skills, and levels of achievement expected of all public school students in the state. In addition, states are required to demonstrate that these academic standards are aligned with entrance requirements for credit-bearing coursework in the state's system of public higher education and relevant state career and technical education standards. States may adopt alternate achievement standards for students with the most significant cognitive disabilities. The term most significant cognitive disabilities is not defined in federal legislation. States are required to define the term relative to a student's cognitive functioning and adaptive behavior. Alternate achievement standards must be aligned with state academic content standards, promote access to the general education curriculum, and reflect professional judgment as to the highest possible standards achievable by such students. The standards must be designated for use in the student's individualized education program (IEP) and developed in accordance with the Individuals with Disabilities Education Act (IDEA). Alternate achievement standards must also ensure that a student is on track to pursue postsecondary education or employment. States must adopt English language proficiency (ELP) standards that cover the four domains of language: speaking, listening, reading, and writing. The standards must address different proficiency levels of English learners (ELs) and be aligned with the state academic content standards. States must implement a set of high-quality academic assessments in mathematics, RLA, science, and any other subject chosen by the state. The assessments must be the same academic assessments used to measure the achievement of all public elementary and secondary schools in the state and be administered to all students in the state within the required grades and subjects. Academic assessments must be aligned with state academic content standards and provide coherent and timely information about student attainment of the academic standards and whether a student is performing at grade level. The state assessments must be the same for all public elementary and secondary school students in the state. Assessments must be used for purposes for which they are reliable and valid and be of adequate technical quality for each purpose required by the ESEA. Assessments must objectively measure academic achievement, knowledge, and skills without assessing personal or family beliefs and attitudes. They must involve multiple up-to-date measures of student academic achievement, including measures that assess higher-order thinking. Assessments may be administered through a single summative assessment or through multiple statewide interim assessments during the academic year that result in a single summative score. The format of assessments may be ""partially delivered"" in the form of portfolios, projects, or extended performance tasks. In general, a state is required to administer mathematics and RLA assessments in grades 3 through 8 and once in high school. For science, the assessment must be administered at least once in each of three grade spans (3-5, 6-9, and 10-12). For any other subjects chosen by the state, assessments are administered at the discretion of the state. Thus, for any given school year, a state must administer 17 assessments to comply with these Title I-A requirements but no student would be required by federal legislation to take more than 3 assessments (mathematics, RLA, and science). The assessments must allow for the participation of all students, including students with disabilities and ELs by using principles of universal design and allowing appropriate accommodations. States, however, may exempt students with the most significant cognitive disabilities, provided these students participate in an alternate assessment based on alternate achievement standards. States may provide the RLA assessment in another language or form for ELs if (1) a student has attended school in the United States for less than three consecutive years, and (2) doing so ""would likely yield more accurate and reliable information on what such student knows and can do."" Furthermore, an LEA may, on a case-by-case basis, extend the time period during which a student is assessed in a language other than English by up to an additional two years if the student has not reached a level of English language proficiency sufficient to yield valid and reliable results on a test administered in English. Under the ESEA, states are required to use assessment results for accountability purposes, reporting purposes, or both. Assessment results for accountability purposes inform the statewide accountability system. Some assessment results are used for reporting purposes only and have no bearing on the statewide accountability system. For accountability purposes, assessments must enable results to be disaggregated within the SEA, LEAs, and schools by the following groups (commonly referred to as subgroups ): (1) each major racial and ethnic group, (2) economically disadvantaged students compared to students who are not economically disadvantaged, (3) students with disabilities compared to students without disabilities, and (4) English proficiency status. For reporting purposes, in addition to the four aforementioned subgroups of students, assessment results must also be disaggregated by gender, migrant status, homeless status, foster care status, and whether a student has a parent who is a member of the Armed Forces on active duty, including a parent on full-time National Guard duty. For reporting purposes, assessments must also provide for timely individual student reports regarding achievement that allow parents, teachers, principals, and other school leaders to understand and address specific academic needs of a student. Individual student reports of achievement must allow for itemized score analyses to assist LEAs and schools in addressing the needs of students based on their responses to specific assessment items, provided that personally identifiable information is not publicly disclosed. States must include all ELs in their statewide assessment systems and disaggregate results for these students. Under certain circumstances, the ESEA allows ELs to participate in assessments in a language other than English. ELs also participate in other English language proficiency assessments. ELs participate in statewide assessment and accountability systems in different ways, depending on their level of language proficiency and number of years of schooling in the United States. The following sections describe the statutory requirements regarding the assessment of ELs. Each state plan must identify languages other than English that are spoken ""to a significant extent"" in the student population of the state and indicate the languages for which state assessments are not available and are needed. The state must make every effort to develop such assessments that are needed. The state may request assistance from the Secretary to identify appropriate assessments, but the Secretary shall not mandate a specific assessment. Each state plan must demonstrate that LEAs will administer an annual assessment of English proficiency of all ELs in the schools served by the SEA. Such assessments must be aligned with the state's ELP standards. Regulations reiterate that English proficiency assessments must be administered annually in each domain (reading, writing, speaking, and listening) for all ELs in kindergarten through grade 12 served by the LEA. ELP scores from previous years may not be banked and counted as proficient for a student in the following year. For example, proficient listening scores and speaking scores cannot be banked in first grade and allow for an EL to be administered only reading and writing assessments in the following year. All domains must be assessed annually. The ESEA includes provisions regarding recently arrived ELs. As was previously permitted prior to the enactment of the ESSA, a state may exclude an EL from one administration of the RLA assessment if the student has been enrolled in school in the United States for less than 12 months and may exclude the EL's performance on the mathematics or ELP assessment for the first year of the EL's enrollment in school for accountability purposes. However, the EL does still have to participate in the mathematics and ELP assessments. The ESSA added a second option regarding the assessment of recently arrived ELs. A state may choose to assess and report the performance of a recently arrived EL on the statewide RLA and mathematics assessments for each year of the student's enrollment. However, for the first year of the student's enrollment, the state may exclude his or her results on the RLA and mathematics assessments from the state's accountability system. In the second year of the student's enrollment, the state must include a measure of student growth on the RLA and mathematics assessments. In the student's third year of enrollment and all subsequent years, the state must include his or her performance on the RLA and mathematics assessments in the state's accountability system. The results of statewide academic assessments must be disaggregated for ELs. A state may include the scores of formerly identified ELs in the EL subgroup for a period of four years after the student ceases to be identified an EL. That is, once an EL becomes proficient in English, his or her score may still be included in the ""EL subgroup"" for RLA and mathematics assessment results for four years. States are required to include all students with disabilities in the statewide assessment system. Furthermore, states are required to disaggregate assessment results for students with disabilities. The majority of students with disabilities participate in the general academic assessment with their peers. However, the ESEA allows students with the most significant cognitive disabilities to participate in an alternate assessment based on alternate achievement standards. The following sections describe the statutory requirements regarding the assessment of students with disabilities. Students with the most significant cognitive disabilities may be eligible to participate in an alternate assessment. As mentioned above, the term most significant cognitive disabilities is not defined in federal legislation. States are required to define the term relative to a student's cognitive functioning and adaptive behavior. The IEP team for a student with a disability determines when the student shall participate in an alternate assessment, using guidelines provided by the state. In this situation, parents must be notified (1) that their child's achievement will be measured with an alternate assessment based on alternate achievement standards, and (2) how participation in an alternate assessment may affect the attainment of a regular high school diploma. A state must ensure that alternate assessments are administered in accordance with ESEA requirements. Alternate assessments must be aligned with alternate achievement standards. The ESEA requires that within a state, the number of students assessed in each subject with alternate assessments does not exceed 1% of the total number of students in the state who are assessed in that subject. A state may request a waiver from the Secretary to exceed the 1% cap. The 1% cap, however, does not apply at the LEA level. An LEA may administer alternate assessments to more than 1% of students, provided that the LEA submits information to the SEA justifying the need to exceed the cap. More specifically, if a state anticipates that it will exceed the 1% cap, it must submit a waiver request to the Secretary. The waiver request must meet the following criteria: It must be submitted at least 90 days prior to the start of the state's testing window. It must include (1) the number and percentage of students in each subgroup of students who took the alternate assessment, and (2) data demonstrating that the state has measured the achievement of at least 95% of students in the ""children with disabilities"" subgroup for all grades in which the alternate assessment is administered. It must include state assurances that the state is appropriately monitoring its LEAs. If an LEA anticipates that it will assess more than 1% of students with disabilities using an alternate assessment, the state must ensure that the LEA followed the state's guidelines and the LEA will address any issues of disproportionality in the percentage of students participating in alternate assessments. It must include a plan and timeline for improving the implementation of state guidelines regarding alternate assessments. Such a plan may include revising the definition of students with the ""most significant cognitive disabilities."" The state must take additional steps to support LEAs and describe how LEAs that assess more than 1% of students will be monitored and evaluated. The state will address any disproportionality in the percentage of students participating in alternate assessments. If the state is requesting to extend the waiver for an additional year, the state must meet all requirements described above and demonstrate substantial progress towards achieving each component of the prior year's plan and timeline. The use of alternate assessments must be consistent with tenets of IDEA that emphasize that students with disabilities have access to the general education curriculum. That is, if a student is selected to participate in an alternate assessment, he or she must not be excluded from involvement and progress within the general education curriculum. The state must also describe within the state plan (1) how it has incorporated universal design in alternate assessments, and (2) that general and special educators know how to administer the alternate assessment and provide appropriate accommodations. The ESEA, as amended by the ESSA, provides for some additional flexibility in assessment systems. New provisions allow states to (1) administer advanced mathematics assessments in middle school, (2) administer locally selected assessments in high school, (3) administer computer adaptive assessments, and (4) design an innovative assessment and accountability program. The following sections describe each flexibility. A state may exempt any 8 th -grade student from the regular mathematics assessment if the student participates in a more advanced end-of-course assessment that can be used to measure mathematics achievement within the state's Title I-A accountability system. This flexibility allows the state to avoid double testing students who take advanced mathematics courses in 8 th grade. When the student is in high school, however, he or she must take another mathematics end-of-course or other assessment that is more advanced than the assessment administered in middle school and is used to determine a student's mathematics proficiency in grades 9-12 for Title I-A accountability purposes. An LEA may administer a locally selected, nationally recognized high school academic assessment (hereinafter referred to as a locally selected high school assessment ) in lieu of the state test in high school, provided that the assessment has been approved by the state. Though specific locally selected high school assessments are not referenced in legislation, education groups posit that the term generally refers to the SAT and ACT, as well as several other types of assessments, such as Advanced Placement or International Baccalaureate exams, ACCUPLACER, and the Armed Services Vocational Aptitude Battery (ASVAB). If a state has already approved one of the above mentioned assessments as the high school assessment used for accountability, the LEA is not required to request using it. For example, if the SAT or ACT is already approved as the statewide assessment in high school, an LEA would not need to request its use as a locally selected high school assessment. In other cases where a state uses a state assessment, such as PARCC or Smarter Balanced, the LEA may request the use of another test like the SAT or ACT in lieu of the state test provided the assessment meets the requirements discussed below. Before LEAs may use this flexibility, the state must approve the assessment for use. The SEA is required to establish technical criteria to determine whether a locally selected high school assessment meets the requirements of the statutory flexibility. At a minimum, the SEA must (1) conduct a review of the assessment to determine whether it meets or exceeds the technical criteria established by the SEA, (2) submit evidence for peer review, and (3) approve such assessment for selection and use by any LEA that requests to use it. To receive approval from the SEA, a locally selected high school assessment must meet the following criteria: be aligned with the state's academic content standards, address the depth and breadth of the standards, and be equivalent to the state assessment with regard to content coverage, difficulty, and quality; provide comparable, valid, and reliable data on academic achievement as compared to the state assessment (for all students and each subgroup of students) and results must be expressed in terms consistent with the state academic achievement standards; meet the general requirements of assessment systems, including technical criteria, with the exception that the locally selected high school assessment need not be the same assessment used for all students in the state and administered to all students in the state; and provide unbiased, rational, and consistent differentiation between schools within the state. The LEA may choose to submit a locally selected high school assessment to the SEA for approval. If the LEA requests to use a locally selected high school assessment, it must notify parents of its request and, upon approval of the request and at the beginning of each subsequent school year in which the assessment is used, inform them that the locally selected high school assessment is different from the state high school assessment. States may develop and administer computer adaptive assessments, provided that these assessments meet the general requirements of state assessment systems. A computer adaptive assessment can measure a student's academic ability above and below the student's current grade level. Because of this assessment property, the ESEA specifies additional requirements to ensure compliance with the general assessment requirements. The provision allowing states to use computer adaptive assessments clarifies that the language in Section 1111(b)(2)(B)(i) requiring that all students participate in same academic assessment shall not be interpreted as requiring that all students be administered the same assessment items. The computer adaptive assessment must, at a minimum, measure each student's academic proficiency with respect to state academic standards for the student's grade level and growth toward such standards. Once the assessment has measured the student's proficiency at grade level, it may measure the student's level of academic proficiency above or below his or her grade level. States may use computer adaptive assessments for students with the most significant cognitive disabilities, provided that the assessments (1) meet the legislative requirements for alternate assessments, and (2) assess the student's academic achievement and whether the student is performing at grade level. States may also use computer adaptive assessments to assess English language proficiency, provided that the assessments (1) meet the requirements for the assessment of English language proficiency, and (2) assess the student's language proficiency, which may include growth towards proficiency. ESEA, Section 1204 includes a new demonstration authority for the development and use of an innovative assessment system . Over time, the innovative assessment system could replace assessments required by Title I-A. States or consortia of states may apply for the demonstration authority to develop an innovative assessment system that ""may include competency-based assessments, instructionally embedded assessments, interim assessments, cumulative year-end assessments, or performance based assessments that combine into an annual summative determination for each student"" and ""assessments that validate when students are ready to demonstrate mastery or proficiency and allow for differentiated student support based on individual learning needs."" A maximum of seven SEAs, including not more than four states participating in consortia, may receive this authority. Separate funding is not provided under the demonstration authority; however, states may use formula and competitive grant funding provided through the State Assessment Grant program to carry out this demonstration authority. States and consortia may apply for an initial demonstration period of three years to develop innovative assessment systems and implement them in a subset of LEAs. If the initial demonstration period is successful, states and consortia may apply for a two-year extension in order to transition the innovative assessment system into statewide use by the end of the extension period. If the SEA meets all relevant requirements and successfully scales the innovative assessment system for statewide use, the state may continue to operate the innovative assessment system. In general, applications for the demonstration authority must show that the innovative assessments meet all the general requirements of Title I-A state assessments discussed above. The only explicit differences between state assessment systems and innovative assessment systems are the format of the innovative assessment (i.e., competency-based assessments, instructionally embedded assessments, interim assessments, cumulative year-end assessments, and performance-based assessments) and that the reporting of results from the innovative assessments may be expressed in terms of student competencies aligned with the state's achievement standards. There are several additional considerations in the administration of state assessments. Specifically, there are provisions relevant to parent rights regarding student assessment, limitations on assessment time, and participation in the National Assessment of Educational Progress (NAEP). The ESEA does not preempt a state or local law regarding the decision of a parent not to have his or her child participate in an academic assessment. If a state or local law allows parents to permit their student to ""opt-out"" of an assessment, the student cannot be required to participate in a state assessment. There have been concerns over the amount of time schools spend on assessment and assessment preparation activities. Each state may set a limit on the total amount of time devoted to the administration of assessments for each grade, expressed as a percentage of annual instructional hours. As a condition of receiving Title I-A funds, a state must agree to participate in the biennial state NAEP assessments in reading and mathematics in grades 4 and 8 if the Secretary pays the costs of administering these assessments. NAEP is referred to as the ""Nation's Report Card"" because it is the ""largest nationally representative and continuing assessment of what America's students know and can do in various subject areas."" A sample of public schools and students are selected for the assessments to create a representative sample of students within each state. Participation in the NAEP assessments is voluntary at the individual level. Results are reported at the national and state levels, as well as at the LEA level for a limited number of LEAs that participate in the trial urban district assessment (TUDA). Results are not reported at the school or individual student levels. In order to receive funds under Title I-A, each state is required to submit a plan to ED that, among other items, describes its accountability system. The system must incorporate the state's academic standards and aligned assessments in RLA and mathematics. In addition, the system must meet numerous requirements discussed below. Each state's accountability system must disaggregate data by specified student subgroups. These subgroups, which must receive separate accountincludeability determinations, include (1) economically disadvantaged students, (2) students from major racial/ethnic groups, (3) children with disabilities, and (4) English learners, provided the number of students in each subgroup meets the state's minimum number of students (also referred to as minimum group size) for inclusion in accountability determinations. Each state establishes its own minimum group size. In selecting its minimum group size, each state is required to describe the minimum number of students that are necessary to implement requirements related to the disaggregation of data by subgroup and how the number selected is statistically sound. The state must explain how the minimum number of students was determined, including whether stakeholders were included in the determination process, and how the state ensures that the selected minimum number of students is sufficient to not reveal any personally identifiable information. The same state determined minimum group size number must be used for all students and for each subgroup of students in the state. The system must include state established long-term goals (and measures of interim progress) for all students, and separately for subgroups of students, for academic achievement as measured by proficiency on the state RLA and mathematics assessments and high school graduation rates. In addition, the goals for subgroups of students who are behind on any of these measures must take into account the improvement needed to close statewide achievement gaps. Also, the system must include long-term goals (and measures of interim progress) for increases in the percentage of English learners making progress in achieving English proficiency, as defined by the state. A state must then use a set of indicators that are based, in part, on the long-term goals established by the state to annually measure the performance of all students and each subgroup of students to evaluate public schools. These indicators must include the following: 1. Student Proficiency on RLA and Mathematics Assessments. For all public schools, student performance on the RLA and mathematics assessments as measured by student proficiency, and for high schools may also include a measure of student growth on such assessments. 2. Measure s of Student Growth or Another Indicator of School Performance . For public elementary and secondary schools that are not high schools, a measure of student growth or another indicator that allows for meaningful differentiation in school performance. 3. Graduation Rates. For public high schools only. 4. English Language Proficiency. For all public schools, ELs' progress in achieving English language proficiency. 5. School Quality or Student Success. For all public schools, at least one indicator of school quality or student success (e.g., measure of student engagement, postsecondary readiness, school climate) that allows for meaningful differentiation in school performance. Each state is required annually to measure the performance of not less than 95% of all public school students and not less than 95% of all public school students in each subgroup on the mathematics and RLA assessments. For example, assume a school had 100 students enrolled in grades where state RLA and mathematics assessments were required (e.g., grades 3-6), but only 80 students participated in the RLA assessment. The school's participation rate for the RLA assessment would be 80% (80/100). The state is required to provide a clear and understandable explanation of how it will factor the participation rate requirement into the state's accountability system. Thus, each state is able to determine the extent to which failing to meet the 95% participation rate will be factored into its accountability system for evaluating school performance. For example, a state might decide that failing to meet the 95% participation rate requirement only has consequences if a school fails to meet it for the all students group or a subgroup for multiple years. Alternatively, a state could decide that for any year, failing to meet the participation rate requirement means that a school cannot receive the highest rating level in the state's accountability system. For the purposes of measuring, calculating, and reporting student proficiency on the mathematics and RLA assessments, the state must use as the denominator the greater of either (1) 95% of all public school students or 95% of all public school students in the subgroup (whichever is applicable to the calculation), or (2) the number of students participating in the assessments. Returning to the previous example, the school's maximum proficiency rate for the RLA assessment would be calculated by dividing the 80 participating students by 95% of all students in the school (i.e., 95 students) as 95% of the students is higher than the number of participating students. This would mean that the school's proficiency rate on the RLA assessment could be no higher than 84.2%. Based on the aforementioned indicators, the SEA must establish an annual system for meaningfully differentiating all public schools that gives substantial weight to each indicator but in the aggregate provides greater weight to the first four indicators than to the measure of school quality or student success. The system must also identify any school in which any subgroup of students is ""consistently underperforming, as determined by the state,"" based on all the aforementioned indicators and the system for annual meaningful differentiation (AMD). Based on the state's system for AMD, each SEA must establish a state-determined methodology to identify schools for comprehensive support and improvement (CSI), beginning with school year 2018-2019, and at least once every three years thereafter, 1. at least the lowest-performing 5% of all schools receiving Title I-A funds, 2. all public high schools failing to graduate 67% or more of their students, 3. schools required to implement additional targeted support and improvement (see below) that have not improved in a state-determined number of years, and 4. additional statewide categories of schools, at the state's discretion. The first category of CSI schools is the only category strictly limited to Title I-A schools. High schools can be identified for CSI regardless of whether they receive Title I-A funds or not. The third category of schools only includes Title I-A schools that have been identified for additional targeted support and improvement (ATSI) but have failed to improve within a state determined number of years. States have the discretion to determine whether any other schools will be identified for CSI. The statutory language does not specify whether this category of schools must be limited to only schools receiving Title I-A funds. Non-Title I-A schools that are identified for CSI are eligible to receive school improvement funds under Section 1003. However, the receipt of school improvement funds does not make a non-Title I-A school a Title I-A school. Each SEA is required to notify each LEA in the state if any of the schools served by the LEA have been identified for CSI. The LEAs in which schools are identified for CSI are then required to work with stakeholders, including principals or other school leaders, teachers, and parents, to develop a comprehensive support and improvement plan that meets the following requirements: is informed by all of the aforementioned indicators; includes evidence-based interventions; is based on a school-level needs assessment; identifies resource inequities to be addressed through the comprehensive support and improvement plan; is approved by the school, LEA, and SEA; and upon approval and implementation, is monitored and periodically reviewed by the SEA. The ESEA includes a definition of evidence-based . In general, when the term is used with respect to a state, LEA, or school activity, it means an ""activity, strategy, or intervention"" that (1) demonstrates a statistically significant effect on improving student outcomes or other relevant outcomes based on one of three levels of evidence, or (2) demonstrates a ""rationale based on high-quality research findings or positive evaluation that such activity, strategy, or intervention is likely to improve student outcomes or other relevant outcomes."" The three levels of evidence for demonstrating a statistically significant effect are the following: 1. ""strong evidence from at least 1 well-designed and well-implemented study""; 2. ""moderate evidence from at least 1 well-designed and well-implemented quasi-experimental study""; and 3. ""promising evidence from at least 1 well-designed and well-implemented correlational study with statistical controls for selection bias."" For activities, strategies, or interventions funded under Section 1003 (School Improvement), which can be used to support CSI and other support and improvement activities, the term evidence-based only includes activities, strategies, or interventions that meet one of the three levels of evidence for a statistically significant effect. School improvement funds may not be used for activities, strategies, or interventions that are likely to improve outcomes based only on a rationale constructed from high-quality research findings or positive evaluations. For high schools that are identified for CSI, the SEA may permit differentiated improvement activities that use evidence-based interventions at a school that predominantly serves students who (1) have returned to high school after previously leaving secondary school without a regular high school diploma, or (2) ""based on the grade or age, are significantly off track to accumulate sufficient academic credits to meet high school graduation requirements."" In addition, if a high school serves fewer than 100 students, the SEA may permit the LEA to ""forego implementation"" of CSI activities. An LEA may offer students enrolled in a school identified for CSI the option to transfer to another public school served by the LEA, unless doing so is prohibited by state law. If an LEA offers public school choice, it must give priority to the lowest-achieving children from low-income families. A student who opts to transfer to another school must be permitted to remain in that school until he or she has completed the highest grade available at it. The student must also be permitted to enroll in classes and other activities in the same manner as all other students at the school. An LEA may use not more than 5% of its Title I-A allocation to pay for transportation costs associated with the public school choice option. States are also required to identify for targeted support and improvement (TSI) any school in which a subgroup of students is consistently underperforming. As previously discussed, the state has sole discretion to determine how the term consistently underperforming is defined. SEAs must notify each LEA in the state if a school served by the LEA has been identified as having at least one subgroup that is consistently underperforming and ensure that the LEA notifies such school with respect to which subgroup(s) is consistently underperforming. Once an LEA notifies a school that it has been identified for TSI, the school is required to work in partnership with stakeholders, including principals and other school leaders, teachers, and parents, to develop a school-level TSI plan to improve student outcomes based on the aforementioned indicators for each subgroup of students that was the subject of the notification provided by the SEA. The TSI plan must meet the following requirements: is informed by all of the aforementioned indicators; includes evidence-based interventions; is approved by the LEA prior to implementation; upon submission and implementation, is monitored by the LEA; and results in additional action, should implementation of the plan be unsuccessful after a number of years determined by the LEA. For a school in which one or more subgroups is performing at a level that, if reflective of an entire school's performance, would result in its identification for CSI as one of the lowest performing 5% of schools in the state, the school must be identified for additional targeted support and improvement (ATSI) activities. Schools identified for ATSI must include an identification of resource inequities as one of its activities. If a Title I-A school identified for ATSI does not improve within a state-determined number of years, the state is required to identify the school for CSI. Statutory language includes a special rule with respect to the identification of schools for ATSI. For the 2017-2018 school year, based on the state's system of meaningful differentiation, the SEA was required to notify an LEA if any of its schools met the ATSI identification requirements, as SEAs did not have to identify schools for TSI for the 2017-2018 school year. ED subsequently provided SEAs with an extra year to meet this requirement, so SEAs had to begin identifying schools for ATSI by the 2018-2019 school year. In some states, ATSI schools were identified prior to any TSI schools being identified, as statutory language did not include a requirement for when TSI schools had to be identified for the first time. For subsequent years, schools are required to be identified for ATSI following their initial identification for TSI based on the requirements of Section 1111(c)(4)(C)(iii). Thus, the frequency with which additional schools are identified for ATSI will depend on the frequency with which states identify schools for TSI. In determining which schools identified for TSI will also have to meet the additional ATSI requirements, each school is to be evaluated individually. If a school meets the ATSI criteria, then it is subject to the additional requirements and could ultimately be identified for CSI if it is a Title I-A school and fails to improve. There is no cap on the number of schools identified for TSI that may also be identified for ATSI. Thus, it is possible that every school identified for TSI could also be identified for ATSI, depending on how the state chooses to define consistently underperforming , when identifying TSI schools. However, if the state establishes a definition of consistently underperforming that is more restrictive than the ATSI requirement, it is possible that schools that would otherwise qualify for ATSI would not be identified for ATSI, as they would not be identified for TSI. If schools identified for CSI fail to improve in a state-determined number of years (not to exceed four years), the state must implement more rigorous State-determined action , and Title I-A schools identified for ATSI that fail to improve within a state-determined number of years must be identified for CSI. In addition, SEAs are required to periodically review the resource allocation to support school improvement in each LEA that serves a ""significant number"" of schools identified for CSI and a ""significant number"" of schools implementing TSI. SEAs are also required to provide technical assistance to each LEA serving a ""significant number"" of schools implementing CSI plans or TSI plans. SEAs have the option to initiate additional improvement in any LEA with (1) a ""significant number of schools that are consistently identified"" for CSI and are not meeting the exit criteria to be removed from this status, or (2) a ""significant number of schools"" implementing TSI plans. As part of these efforts, SEAs may establish alternative evidence-based state-determined strategies for use by LEAs to assist schools identified for CSI. The statutory language does not specify whether LEAs would have to use one or more of the strategies, or whether these would be the only strategies that could be used. Statutory language also does not address the state establishing alternative evidence-based state-determined strategies for LEAs to use to assist schools implementing TSI plans. Section 1003 of the ESEA provides for a state reservation of Title I-A funds for school improvement. An SEA is required to reserve the greater of (1) 7% of the amount the state receives under Title I-A, or (2) the sum of the amount the state reserved for school improvement under Title I-A in FY2016, and the amount the state received under the School Improvement Grants (SIG) program in FY2016. No LEA is permitted to receive less Title I-A funding than it received in the prior year as a result of this provision in FY2018 and subsequent fiscal years. Of the funds reserved for school improvement, states are required under ESSA provisions to provide at least 95% to LEAs through formula or competitive grants to serve schools that are implementing CSI activities or TSI activities. In allocating funds, an SEA must give priority to LEAs that serve high numbers or a high percentage of schools implementing CSI and TSI plans; demonstrate the strongest need for the funds, as determined by the state; and demonstrate the strongest commitment to using the funds to help the lowest-performing schools to improve student achievement and outcomes. Funds reserved by the SEA must be used for establishing the method by which funds will be allocated to LEAs; monitoring and evaluating the use of funds by LEAs; and, as appropriate, ""reducing barriers and providing operational flexibility to schools"" to implement CSI and TSI activities. In addition to the required reservation of Title I-A funds for school improvement, SEAs have the option of reserving up to 3% of the Title I-A funds they receive for direct student services. This optional reservation of funds was not included in the law prior to the ESSA. Of the funds reserved, states must distribute 99% to geographically diverse LEAs using a competitive grant process that prioritizes grants to LEAs that serve the highest percentages of schools identified for CSI or that are implementing TSI plans. Funds may be used by LEAs for a variety of purposes, including to pay the costs associated with the enrollment and participation of students in academic courses not otherwise available at the students' school; credit recovery and academic acceleration courses that lead to a regular high school diploma; activities that lead to the successful completion of postsecondary level instruction and examinations that are accepted for credit at institutions of higher education (IHEs), including reimbursing low-income students for the costs of these examinations ; and public school choice if an LEA does not reserve funds for this purpose under Section 1111. Title I-A also holds states accountable for teachers and paraprofessionals working in a program supported with Title I-A funds. These teachers or paraprofessionals must meet applicable state certification and licensure requirements. In addition, states participating in Title I-A must describe in their state plans how low-income and minority children enrolled in Title I-A schools are not served at disproportionate rates by ""ineffective, out-of-field, or inexperienced teachers."" The state must also describe the measures that will be used to measure and evaluate the state's success in this area. The BIE oversees a total of 183 elementary, secondary, residential, and peripheral dormitory (i.e., ""boarding"") schools across 23 states. Of these 183 schools, 130 are tribally controlled and 53 are operated by the BIE. There are special rules regarding standards, assessment, and accountability for schools operated or funded by the BIE included in Section 1111(k) that apply until the requirements of Section 8204 (discussed below) are met. The special rules are as follows: Each BIE school accredited by the state in which it is operating shall use the assessments and other academic indicators the state has developed and implemented to meet the requirements of Section 1111, or such other appropriate assessment and academic indicators as approved by the Secretary of the Interior. Each BIE school that is accredited by a regional accrediting organization (in consultation with and with the approval of the Secretary of the Interior, and consistent with assessments and academic indicators adopted by other schools in the same state or region) shall adopt an appropriate assessment and other academic indicators that meet the requirements of Section 1111. Each BIE school that is accredited by a tribal accrediting agency or tribal division of education shall use an assessment and other academic indicators developed by such agency or division, except that the Secretary of the Interior shall ensure that such assessment and academic indicators meet the requirements of Section 1111. ESEA, Section 8204 contains provisions related to the setting aside of funds for the Department of the Interior to participate in the development of standards, assessments, and accountability systems in BIE-funded schools. For the purposes of Title I-A, the Secretary of the Interior, in consultation with the Secretary of Education (if requested by the Secretary of the Interior), shall use a negotiated rulemaking process to develop regulations that define the standards, assessments, and accountability systems for schools funded by the BIE. Using the negotiated rulemaking process, the Secretary of the Interior was required to develop regulations for implementation no later than the 2017-2018 school year. The tribal governing body or school board of a school funded by the Bureau of Indian Affairs may waive the aforementioned requirements if they are determined by such body to be inappropriate. If the requirements are waived, the tribal governing body or school board must submit a proposal to the Secretary of the Interior for alternative standards, assessments, and accountability systems within 60 days. The Secretary of the Interior and the Secretary of Education shall approve such standards, assessments, and accountability systems unless the Secretary of Education determines that they do not meet the requirements of ESEA, Section 1111, while taking into account the unique circumstances and needs of the schools and students served. The Secretary of the Interior and the Secretary of Education shall provide technical assistance, either directly or through a contract, to a tribal governing body or school board (if requested by such body) to develop alternative standards, assessments, and accountability systems. Section 1111 includes specific requirements related to annual SEA, LEA, and school public report cards. It also includes requirements related to reporting data to the Secretary and Congress. This section discusses these requirements as well as privacy requirements that apply to Section 1111. States and LEAs are required to prepare and disseminate annual report cards that include a range of information. LEAs are also required to prepare and disseminate report cards for each of their public schools. Any state that receives Title I-A funding is required to prepare and widely disseminate an annual, overall state report card. The report card must be concise. It must be presented in an ""understandable and uniform"" format that is developed in consultation with parents. And, to the extent practicable, it must be made available in a language that parents can understand. With respect to the dissemination of the document, an SEA is required to have a single page on its website that includes the state report card, all LEA report cards, and the annual report that the SEA must submit to the Secretary. The state report card must include, at a minimum, several elements ranging from information about the state's accountability system to teacher qualifications. Each required element is discussed briefly below. In guidance issued in September 2019, ED included a table that summarizes subgroup disaggregation reporting requirements for each data element. Each state report card must include a ""clear and concise"" description of the state's accountability system required under Title I-A. This includes a description of the minimum number of students for each subgroup for use in the accountability system. The report card must also include the long-term goals and measures of interim progress for all students and the subgroups for which the SEA is held accountable. In addition, the report card must include a description of the state's system for meaningfully differentiating all public schools in the state, including the following: The specific weight assigned to each of the indicators in the state's system for meaningful differentiation. The methodology used by the state to differentiate among schools; The methodology by which a state differentiates a school as ""consistently underperforming"" for any subgroup of students for which the SEA is held accountable. The report card must also indicate the number of years used in determining whether a school is consistently underperforming. The methodology used by the state to identify a school for CSI. The report card must include the number and names of all public schools in the state identified for CSI or implementing TSI. There is no separate reporting requirement for schools implementing ATSI. The report card must also provide a description of the exit criteria established by the state for exiting CSI status and the number of years that ATSI schools have to fail to improve before being identified for CSI. Each state report card is required to include information about student performance. The report must include data for all students and data disaggregated by each major racial/ethnic group, economically disadvantaged students, children with disabilities, English proficiency status, gender, migrant status, homeless status, foster care status, and status as a student with a parent who is a member of the Armed Forces on activity duty on student achievement on the mathematics, RLA, and science assessments required under Title I-A at each level of achievement. Further, for the (1) ""all students"" group, (2) student subgroups with separate accountability determinations, (3) students who are homeless, and (4) students in foster care, the state report card must include information on performance on the other academic indicator included in the state's accountability system for elementary schools and secondary schools that are not high schools. For the same groups of students, the state report card must report on high school graduation rates, including the four-year adjusted cohort graduation rate and, at the state's discretion, any extended-year adjusted cohort graduation rates used by the state. The state report card must also include other student-specific data. For only students in the EL subgroup, state report cards must provide data on the number and percentage of ELs achieving English language proficiency. For the (1) ""all students"" group, and (2) student subgroups with separate accountability determinations (with the exception of ELs), the state report card must include information on performance on the indicator(s) of school quality or student success used in the state's accountability system, as well as their progress toward meeting the state's long-term accountability system goals, including interim progress. And for the (1) ""all students"" group, (2) student subgroups with separate accountability determinations, (3) gender subgroups, and (4) migrant status group, the state report card must include data on the percentage of students assessed and not assessed. The state report card is required to include information submitted by the SEA and each LEA in the state pursuant to Section 203(c)(1) of the Department of Education Organization Act (DEOA), which is a reference to data collected through the Civil Rights Data Collection (CRDC) administered by the Office of Civil Rights at ED. The CRDC is conducted every other year and the next CRDC is scheduled to collect data from the 2019-2020 school year. From the data reported on the CRDC, the state report card must include the following information: ""measures of school quality, climate, and safety, including rates of in-school suspensions, out-of-school suspensions, expulsions, school-related arrests, referrals to law enforcement, chronic absenteeism (including both excused and unexcused absences), incidences of violence, including bullying and harassment;"" the number and percentage of students in preschool programs; and the number and percentage of students in accelerated coursework to earn postsecondary credit while in high school (e.g., Advanced Placement, International Baccalaureate, dual or concurrent enrollment). For some of the reporting requirements related to the CRDC, the CRDC collects multiple measures from which SEAs and LEAs must select at least one to include on the required report cards. The ESEA requires that these data be included annually on report cards. As the CRDC reports data biennially, SEAs and LEAs are permitted to include the same information for consecutive years provided it is the most recent data provided by ED. SEAs and LEAs also have the option to report, in addition to the ED-provided data, more recent data that the SEAs and LEAs have provided to ED through a more recent CRDC data collection as long as the data provided are reported separately from the ED-provided data. Additional statutory language reinforces that the reporting requirement related to the aforementioned data elements is limited to data collected under the authority of Section 203(c)(1) of the DEOA and cannot require disaggregation for subgroups beyond economically disadvantaged students, students from major racial/ethnic groups, children with disabilities, and ELs, as well as by homeless status and foster care status. State report cards must provide data, in the aggregate, and disaggregated by high-poverty as compared to low-poverty schools, on the professional qualifications of teachers. More specifically, data must be provided on the number and percentage of inexperienced teachers, principals, and other school leaders; teachers teaching with emergency or provisional credentials; and teachers who are not teaching in the subject or field for which they are certified or licensed. Several of the terms related to the reporting of these data elements, such as high-poverty schools , low-poverty schools , and teachers who are not teaching in the subject or field for which the teacher is certified or licensed are not defined in statutory language. In its guidance, ED suggests that SEAs may want to develop uniform definitions for the undefined terms. The state report card must provide data on LEA- and school-level per-pupil expenditures of federal, state, and local funds, including actual personnel expenditures and actual nonpersonnel expenditures of these funds, disaggregated by the source of funds for the preceding fiscal year. The data reported to meet the requirements of Section 1111 cannot be based on average staff salary data. The data must be reported for every LEA and public school in the state. An SEA may provide LEAs with the flexibility to develop their own procedures for calculating per-pupil expenditures or could opt to establish uniform statewide procedures for making these calculations. Per-pupil expenditure data have not been reported for LEAs and public schools in the past. Based on guidance issued by ED, SEAs and LEAs may delay reporting per-pupil expenditures until they issue report cards for the 2018-2019 school year. However, if an LEA decides to delay the reporting of per-pupil expenditures, the SEA and its LEAs are required to provide information on their report cards for the 2017-2018 school year about the steps they are taking to provide such information on the 2018-2019 school year report card. ED has indicated that it expects SEAs and LEAs to make these data public by the end of the school year during which the other report card data are released. The state report card must include additional information related to student assessments. It must include the number and percentage of students with the most significant cognitive disabilities who take an alternate assessment (see previous discussion) by grade and subject. It must also include the results on the state's National Assessment of Education Progress (NAEP) for reading and mathematics in grades 4 and 8 compared to the national average. As NAEP is administered biennially, report cards should reflect the most recent data available. In states where data are available, SEAs must include data on the cohort rate for all students and disaggregated for economically disadvantaged students, students from major racial/ethnic groups, children with disabilities, and English learners who graduate from high school and enroll, for the first academic year following the students' graduation, (1) in public postsecondary education programs in the state, and (2) if data are available and to the extent practicable, in private postsecondary education programs in the state or in postsecondary education programs outside of the state. The state may include any additional information on its state report card that it believes will provide members of the public, including parents and students, with information about the progress of each of the state's elementary and secondary schools. Statutory language notes that this may include the number and percentage of students attaining career and technical proficiencies. SEAs are required to provide specific information included on the state report card to the public in an ""easily accessible and user-friendly manner"" that allows the data to be cross-tabulated by, at a minimum, each major racial and ethnic group, gender, English proficiency status, and children with or without disabilities. The ability to cross-tabulate data applies to data reported on student achievement on the RLA, mathematics, and science assessments at all achievement levels; performance on the other academic indicator used for public elementary schools and secondary schools that are not high schools; high school graduation rates, including the four-year adjusted cohort graduation rate and, at the state's discretion, any extended-year adjusted cohort graduation rates used by the state; and the percentage of students assessed and not assessed. SEAs may choose to include this information in the annual state report card. The data provided for cross-tabulation purposes must not reveal any personally identifiable information about an individual student and cannot include a number of students in any cross-tabulation that is insufficient to provide statistically reliable information or that would reveal any personally identifiable information about an individual student. It must also be consistent with the Family Educational Rights and Privacy Act (FERPA) of 1974. An LEA that receives Title I-A funds is required to prepare and disseminate an annual LEA report card that includes information on the LEA overall and each public school it serves. Similar to the requirements for state report cards, an LEA report card must be concise. It must be presented in an understandable and uniform format and, to the extent practicable, in a language that parents can understand. The report card must also be publicly accessible, including on the LEA's website. An SEA is required to ensure that each of its LEA collects necessary data and includes information on all of the items that are also required to be reported on the state report card, including the disaggregation of data as specified above, with one exception: the LEA report card does not have to include NAEP scores, as these scores are only available at the LEA level for a subset of all LEAs in the United States. In addition, requirements for the state report card that require comparisons between the state and the nation as a whole are modified to be a comparison between an LEA and the state as a whole in the case of LEA report cards, and a comparison between a school and the LEA as a whole and the state as a whole in the case of school report cards. LEAs are permitted to include additional information on their report cards that the LEA determines will provide members of the public, including parents and students, with information about the progress of each of the state's elementary and secondary schools, regardless of whether the information is also included on the state report card. Each SEA receiving Title I-A funds is required annually to report to the Secretary, and make several pieces of information ""widely available"" in the state. The SEA must provide information on student achievement on the mathematics, RLA, and science assessments required under Title I-A, and must disaggregate the results for student subgroups with separate accountability determinations. The report must also include information on the acquisition of English proficiency by ELs. The SEA must include the number and names of each public school in the state that has been identified for CSI and the number and names of each public school in the state that is implementing TSI. There is no separate reporting requirement for schools identified for or implementing ATSI. In addition, the report must include information on the professional qualifications of teachers, including the number and percentage of inexperienced teachers, teachers teaching with emergency or provisional credentials, and teachers who are not teaching in the subject or field in which they are certified or licensed. The Secretary is required annually to submit a report to the House Committee on Education and the Workforce and the Senate Committee on Health, Education, Labor, and Pensions that provides national and state-level data based on the data that were submitted to the Secretary by the states. The report must be submitted electronically only. There is no requirement that the report be made available publicly. Any information collected and disseminated in response to the aforementioned reporting requirements must be collected and disseminated in such a way that it protects the privacy of individuals consistent with FERPA. In addition, the report cards and reports shall only include data that ""are sufficient to yield statistically reliable information."" Data reported in the report cards and reports do not have to be disaggregated if doing so will reveal personally identifiable information about a student, teacher, principal, or other school leader. Data also do not have to be disaggregated if doing so will provide data that are insufficient to yield statistically reliable information. The last part of this report provides responses to frequently asked questions (FAQs) about various aspects of the educational accountability requirements enacted in the ESEA, as amended by the ESSA. In particular, FAQs related to academic content standards, assessment, accountability systems, and report cards are addressed. This section highlights two frequently asked questions with respect to the state standards requirements under Title I-A. The ESEA explicitly says that a state is not required to submit its challenging state academic standards, alternate achievement standards, or English language proficiency standards to the Secretary for review or approval. The Secretary also does not have the authority ""to mandate, direct, control, coerce, or exercise any direction or supervision over any of the challenging State academic standards adopted or implemented by a State."" Concerns related to the diversity of accountability systems, student mobility, consistent expectations for students, preparation of students for global competition, and skills students need for employment spurred an effort led by the National Governors Association and the Council of Chief State School Officers to develop common standards for English language arts/literacy and mathematics in grades K-12 (referred to as the Common Core State Standards). This effort is referred to as the Common Core State Standards Initiative (CCSSI). According to the CCSSI, The purpose of this state-led initiative ... is to create a rigorous set of shared standards that states can voluntarily adopt. The standards are crafted to ""define the knowledge and skills students should have within their K-12 education careers so they graduate from high school able to succeed in entry-level, credit-bearing academic college courses and workforce training programs."" Overall, 45 states, the District of Columbia, four outlying areas, and the Department of Defense Education Activity (DoDEA) adopted the Common Core State Standards at some point in time. Adoption of the Common Core State Standards has always been optional. However, some federal initiatives such as the Race to the Top (RTT) State Grant competition that began in 2009 provided substantial incentives to states that had adopted college- and career-ready standards that met specified requirements, and the Common Core State Standards was the most widely available set of standards that met such requirements. As discussed above, however, the Secretary does not have the authority to tell states what standards they must use to comply with the requirements of Title I-A. Thus, the decision to adopt (or not adopt) the Common Core State Standards as a state's standards rests solely with the state. This section discusses some examples of FAQs that have arisen as SEAs and LEAs implement the assessment requirements. The FAQs are related to the use specific assessments, assessment of students with disabilities, and the new assessment flexibilities. The ESEA contains multiple provisions that prohibit the Secretary from specifying the assessments that a state must use to comply with the requirements of Title I-A. As previously discussed, the Secretary is prohibited from prescribing which assessments a state must use, provided the assessments selected by the state meet statutory requirements. Through the Race to the Top Assessment Grant competition, the Partnership for the Assessment of Readiness for College and Careers (PARCC) and the SMARTER Balanced Assessment Consortium (Smarter Balanced) received grants to develop assessments aligned with the Common Core State Standards. Many states continue to use assessments developed by these organizations, but doing so is optional. A state may use the SAT or ACT for its high school assessment in its statewide accountability system, provided that the assessment is approved for use in the state plan. In short, the state must provide evidence that the SAT or ACT (1) is aligned with and equivalent to the state's academic content standards; (2) provides comparable, valid, and reliable data compared to the state assessment; (3) meets the general requirements of assessment systems with the exception that it need not be administered to all students in the state; and (4) provides unbiased, rational, and consistent differentiation between schools within the state. While the use of the SAT or ACT is a potentially viable option, the alignment evidence that must be collected and submitted to ED may be a barrier to implementing the flexibility. In March 2016, the SAT administered a newly redesigned assessment, which made a more focused effort to align itself with the Common Core Academic Standards. If there is a high degree of alignment between a state's academic content standards and the Common Core Academic Standards, the SAT may be suitable for use in accountability systems (provided the SAT meets the other requirements). The ACT was redesigned prior to the development of the Common Core Academic Standards; however, a representative from the ACT maintains that there is ""significant overlap"" between the common core and the college- and career-readiness constructs measured by the ACT. An Education Week survey of the states found that 25 require students to take the SAT or ACT, and 12 currently use the SAT or ACT for federal reporting and statewide accountability systems. If the SAT or ACT is not already used by the state in its accountability system, an LEA may request the use of a locally selected high school assessment (such as the SAT, ACT, Advanced Placement or International Baccalaureate exams, ACCUPLACER, or the ASVAB). The locally selected high school assessment must be approved by the state before an LEA uses it for accountability purposes. An Education Week article cites several reasons why states may not be adopting this flexibility more quickly, including the requirements that a state (1) figure out how to pay for the flexibility, (2) design a process for districts to apply for the flexibility, and (3) collect evidence that compares data from the statewide assessment and the locally selected high school assessment. Furthermore, an assessment expert explains in the article that it is difficult to have this flexibility and a comparable accountability system. By allowing the flexibility, states are opening the door to LEAs requesting different assessments from one year to the next. While the locally selected high school assessment must be comparable to the statewide assessment, it will not overlap 100% with the statewide assessment. If assessments continue to change from one year to the next, it may be more difficult to compare results across assessments and track progress over time than if only one assessment was allowed. Some states have applied for waivers of the locally selected high school assessments requirements. In one case, a state requested a waiver because an LEA requested to administer the ACT in lieu of the high school assessment before the state approval process was completed. The waiver was not approved, in part because the state had not submitted a timely request and did not demonstrate how the results of the ACT would be comparable to the results of the state test used in other high schools. For school year 2017-2018, 28 states requested a waiver to exceed the 1% cap for alternate assessments. Of the 28 states that requested waivers, 23 received them. At least 19 of the 23 states were granted a one-year extension of the waiver for school year 2018-2019, and 3 additional states were granted new waivers for school year 2018-2019. The National Center on Educational Outcomes (NCEO) tracks student participation in alternate assessments by state. The most recent NCEO publication reports on participation from school year 2015-2016, before the new alternate assessment requirements were in place. These data provide a baseline for expected rates of participation in alternate assessment in the short term. In general, most states reported alternate assessment participation rates between less than 1% and 2.5%; a participation rate of 2% is twice the allowable rate in statutory language. The ESEA, as amended by the ESSA, no longer allows the use of modified achievement standards (AA-MAS). Assessment options for students with disabilities have changed over the last several years. In the past, students with disabilities could participate in the general state assessment, alternate assessments based on alternate achievement standards (AA-AAS), or alternate assessments based on AA-MAS. States have been transitioning away from AA-MAS since around 2014. Therefore, students with disabilities who previously participated in AA-MAS are now required to participate either in the general state assessment or the AA-AAS (if they are determined to be students with the most significant cognitive disabilities and eligible to participate in an alternate assessment). The prohibition on the use of modified achievement standards (and therefore the AA-MAS option) may have led to an overidentification of students found eligible to participate in AA-AAS. As discussed above, approximately 40% of states have requested waivers to the 1% cap on AA-AAS, which may suggest that some of the students who were once eligible for AA-MAS are now eligible for AA-AAS. States may need to consider revising their definition of most significant cognitive disability and consider strategies for successfully transitioning students who took the AA-MAS to the general assessment. As of September 2019, the Secretary has granted innovative assessment and accountability demonstration authority to four states: Georgia, Louisiana, New Hampshire, and North Carolina. , , Georgia is piloting two technology-based assessments designed to provide educators with data that can be used to target instruction during the school year. Louisiana is developing a new format for the Louisiana Educational Assessment Program (LEAP) in ELA and social studies. New Hampshire is building on its Performance Assessment for Competency Education (PACE) system. North Carolina is using a customized, end-of-year assessment (referred to as the ""route""), which is developed for individuals based on their performance on two formative assessments administered during the school year. Excessive numbers of opt-outs may have consequences for both assessment and accountability purposes. In terms of assessment, excessive numbers of opt-outs may undermine the validity of the measurement of student achievement because they may create a scenario in which states are measuring student achievement that is not representative of the whole student population. When at least 95% of all students and 95% of students in each student subgroup participate in the assessments, the conclusions based on the results are more likely to be valid and reliable for differentiating schools based on academic achievement. In terms of accountability, excessive numbers of opt-outs may lead to states failing to meet the requirement that 95% of all students and 95% of students in each student subgroup are assessed in the Title I-A assessment and accountability system. The specific consequences for failing to meet this 95% threshold for accountability purposes are determined by the state. This section includes FAQs that have arisen as SEAs, LEAs, and schools implement ESEA accountability requirements. They cover topics such as the use of student growth measures, the identification of schools for improvement, and whether accountability requirements can be waived. No, but states have the discretion to do so. Statutory language requires that the proficiency of students on the RLA and mathematics assessments be included as an indicator for all public schools in a state. It provides states with the option to use measures of student growth on the state assessments for high school students. The use of these growth measures would be in addition to the use of the proficiency measures. Public elementary and secondary schools that are not high schools are required to use, in addition to the proficiency measures, either a measure of student growth, ""if determined appropriate by the state,"" or another ""valid and reliable statewide indicator that allows for meaningful differentiation in school performance."" Thus, the state also has the option to use student growth as measured by the RLA and mathematics assessments as an indicator for elementary and secondary schools that are not high schools. An LEA may use measures of student growth only for limited purposes if the state chooses not to use them. As previously discussed, the SEA is charged with developing and implementing the state accountability system, including selecting the indicators that will be included in the system. The use of student growth measures as indicators in the accountability system is left to the SEA's discretion. If an SEA does not choose to incorporate these measures into the accountability system that is used by the state to meaningfully differentiate schools and identify schools for CSI or TSI, then student growth is not an accountability system indictor. However, an LEA could choose to include student growth measures, for example, in the data that it uses at the LEA level for data analysis purposes or makes publicly available. An LEA may only use additional indicators for limited purposes. Statutory language requires SEAs to include specific indicators in the state accountability system and provides SEAs with some flexibility in including other indicators. The indicators included in the state accountability system are required to apply to all public schools in the state. The SEA is required to use its accountability system to determine which schools in the state will be identified for CSI or TSI. While an LEA could choose to add additional indicators, for example, in the data that it uses at the LEA level for data analysis purposes or makes publicly available, the LEA could not use these additional indicators as replacements for the SEA-selected indicators. Yes. Section 8401 provides the Secretary with the authority to waive various ESEA statutory and regulatory provisions. An SEA or Indian tribe that receives funds under any ESEA program may submit a request to the Secretary to waive any statutory or regulatory requirement pertaining to the ESEA, unless the Secretary is prohibited by law from waiving such provision. An LEA that receive funds under any ESEA program may also request a waiver of ESEA statutory and regulatory provisions, but the LEA must submit its request to its SEA. The SEA then has the option of submitting the LEA's waiver request if the SEA ""determines the waiver appropriate."" Thus, an SEA could request a waiver related to its accountability system. For example, an SEA could request that only measures of student growth rather than student proficiency be used in the accountability system or that the SEA be permitted to create a combined measure based on student proficiency and student growth. An LEA could submit a waiver request to operate under a modified accountability system, such as an accountability system where the LEA uses different indicators than those selected by the state. However, as the LEA waiver request would have to be approved by the SEA prior to being submitted to the Secretary, it is possible that an SEA would deny the request and require that all public schools be evaluated using the state established accountability system, as is currently required by statutory language. In identifying the lowest-performing 5% of Title I-A schools for CSI, statutory language requires each state to select these schools using a ""state-determined methodology"" that is based on the ""system of meaningful differentiation."" As there are no regulations clarifying the identification of schools for CSI, based on ED's approval of state plans it appears that a state can decide whether to use all of the data included in the system of meaningful differentiation, including data for subgroups, or use only selected elements from the system of meaningful differentiation in its state-determined methodology for identifying CSI schools. There are ED-approved state plans that include subgroup performance in the identification of the lowest performing 5% of schools for CSI and also approved state plans that do not include it. For example, the District of Columbia's state plan bases 25% of a school's overall accountability framework rating on student subgroup performance. Based on this accountability framework, the lowest performing 5% of schools are identified for CSI. On the other hand, North Carolina's state plan only considers a school's total score on the state accountability model for the all students group when identifying the lowest performing 5% of schools. For all years following the first school year in which schools are identified for ATSI, the methodology for identifying schools for TSI begins with an SEA's identification of schools with at least one subgroup that is ""consistently underperforming, as determined by the state."" As such, an SEA has the flexibility to define this group of schools as broadly or as narrowly as it chooses. This could result in a large group of schools being identified for TSI, of which only a subset will be identified for ATSI. It could also result in an SEA identifying schools for TSI in such a way that every one of these schools would also meet the requirements for being identified for ATSI. Because a school's designation for ATS I hinges on being identified for TSI afte r the first sc hool year in which schools are identified for ATSI , ATS I schools are a subset of TSI schools. Because the ESEA allows SEAs to define what a consistently underperforming subgroup of students means for designation as a TSI school, it appears that an SEA could use the ATS I criteria—a school having at least one subgroup of students whose level of performance, if reflective of the entire school's performance, would cause the school to be among the lowest-performing 5% of schools receiving Title I-A funds in the state—as its definition of a school having a consistently underperforming subgroup of student s. Under such circumstances, the SEA 's TSI and ATS I schools would be the same. A state could also choose to implement a more restrictive definition of a consistently underperforming subgroup of students than the ATSI definition, resulting in fewer schools being identified for ATSI than would otherwise be identified if schools did not have to be initially identified for TSI. As previously discussed, there are special rules regarding standards, assessment, and accountability for schools operated or funded by the BIE that apply until the requirements of Section 8204 are met. Section 8204 requires the Department of the Interior to participate in the development of standards, assessments, and accountability systems in BIE-funded schools using a negotiated rulemaking process. The process was required to result in the development of regulations for the implementation of standards, assessments, and accountability systems no later than the 2017-2018 school year. On June 10, 2019, the Bureau of Indian Education proposed a rule developed using a negotiated rulemaking process as required by the ESEA to meet the Secretary of the Interior's obligation to define standards, assessments, and accountability system consistent with the ESEA for BIE-funded schools. Comments on the rule were due on August 9, 2019. A final rule had not been issued as of February 14, 2020. This section includes two FAQs related to state and LEA report cards. SEA and LEA report cards for the 2017-2018 school year must include the information required by ESSA with the exception of the per-pupil expenditures data. ED is allowing SEAs and LEAs to delay reporting per-pupil expenditures data until report cards for the 2018-2019 school year. SEAs and LEAs are required to explain the delay in reporting per-pupil expenditures if the data are not being reported until the 2018-2019 school year. In addition, while the per-pupil expenditures data do not have to be reported at the same time as other report card data are released, ED expects SEAs and LEAs to make these data public by the end of the school year during which the other report card data are released. SEAs and LEAs are not required to say why a school was identified for CSI, TSI, or ATSI. For example, a report card does not have to indicate whether a school was identified for CSI because it was one of the lowest-performing 5% of Title I-A schools, had a graduation rate of 67% or less, or failed to exit ATSI status in a state-determined number of years. In its report card guidance, ED indicates that SEAs and LEAs ""may wish"" to provide this information on report cards and provides examples of the types of information that an SEA or LEA might consider including. For example, an SEA or LEA might indicate which subgroup(s) led to the school's identification for TSI.","The Elementary and Secondary Education Act (ESEA), as amended by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), provides federal aid for elementary and secondary education. The largest ESEA program is Title I-A, Improving the Academic Achievement of the Disadvantaged. As a condition of receiving Title I-A funds, states and local educational agencies (LEAs) must meet requirements related to academic standards, assessments, accountability, and reporting. Academic Standards Each state must adopt (1) challenging academic content standards in reading/language arts (RLA), mathematics, and science; and (2) achievement standards representing three levels of achievement. States must also adopt English language proficiency standards for English Learners (ELs), covering four domains: speaking, listening, reading, and writing. States may adopt alternate achievement standards for students with the most significant cognitive disabilities. Academic Assessments Each state must administer academic assessments in RLA, mathematics, and science. The state is required to administer RLA and mathematics assessments in grades 3 through 8 and once in high school, and it is required to administer science assessments once in each of three grade spans (3-5, 6-8, and 10-12). Each state may assess a certain percentage of students with the most significant cognitive disabilities with an alternate assessment based on alternate achievement standards. Each state must administer an annual assessment of English proficiency to all ELs. Accountability Systems Each state must submit a plan that describes its accountability system. Accountability systems must establish long-term goals and include indicators based on these long-term goals. The indicators must include (1) student performance on RLA and mathematics assessments in all public schools and may include a measure of student growth for public high schools, (2) a measure of student growth or another indicator that allows for meaningful differentiation in school performance for all public elementary and secondary schools that are not high schools, (3) graduation rates for public high schools, (4) progress in English language proficiency by English learners in all public schools, and (5) at least one indicator of student school quality or student success that allows for meaningful differentiation in all public schools. The accountability systems must provide data for all students and allow for the disaggregation of student performance by subgroups: (1) economically disadvantaged students, (2) students from major ethnic/racial groups, (3) children with disabilities, and (4) ELs. States must establish a system of meaningfully differentiating among all public schools in the state based on established indicators. The differentiation among schools must include any school in which any subgroup is consistently underperforming. Using the system of meaningful differentiation, a state must identify schools that require comprehensive support and improvement (CSI), including (1) the lowest performing 5% of all schools receiving Title I-A funds, (2) all public high schools failing to graduate 67% or more of their students, (3) schools required to implement additional targeted support and improvement that have not improved in a state-determined number of years, and (4) additional statewide categories of schools (at the state's discretion). Additionally, states are required to identify schools for targeted support and improvement (TSI), which includes any school in which a subgroup of students is consistently underperforming. Schools may also be identified for additional targeted support and improvement (ATSI), which includes any school in which one or more subgroups performs at a level that, if reflective of an entire school's performance, would result in its identification for CSI. Report Cards Each state is required to prepare and disseminate an annual r eport card . The report card must include (1) information about the s tate's accountability system; (2) schools identified for CSI or schools implementing TSI; (3) information on student performance dis aggregated by various subgroups; (4) teacher qualifications; (5) LEA- and school-level per pupil expenditures of federal, state, and local funds; and (5) additional information related to student assessments. Each LEA that receives Title I-A funds is required to prepare and disseminate an an nual LEA report card that includ es information on the LEA and each public school served by the LEA ."
"Local governments have traditionally played an important role in regulating cable television systems. Operators required municipal permission to place their cables above or beneath streets and other publicly owned land and to mount the cables on telephone/and or utility poles. Cities negotiated with cable operators over the services their systems would provide, including channels dedicated to public, educational, or government programming (PEG), and the payment of franchise fees. In exchange, the cable operators often received de facto exclusive local franchises to offer video distribution services. That changed in 1984, when Congress required local governments to allow competition. In the mid-2000s, as telephone companies (known as "" telcos "") sought to obtain their own video services franchises, state governments got involved to streamline the franchising process, in several instances preempting municipalities' authority. The states applied these laws to incumbent cable operators as well as to new entrants, to ensure legal parity. As technological developments and changes in business strategies and consumer behavior have reshaped the telecommunications industry, the Federal Communications Commission (FCC) has taken several steps to limit local regulatory authority over cable and telco video service providers. Many of these regulatory changes have caused controversy. Some local governments assert that, among other things, the FCC's actions will limit their ability to protect the public interest and deprive them of revenue. This report examines the evolving relationship between federal, state, and local regulators and identifies related policy issues that may be of interest to Congress. Cable television began operating in the 1940s as a means to receive broadcast signals in areas with trees or mountains that interfered with over-the-air signal transmission. Initially, municipalities, rather than states, made most decisions related to awarding cable franchises. As cable television developed, some states began to regulate the terms included in a cable franchise, or required state review or approval of a franchise agreement. The term local franchising authorities (LFAs) refers to municipal and/or state government entities that offer and negotiate video franchises. Today, agreements between LFAs and video service providers typically include provisions concerning the availability of channels for PEG programming; the amount of money due to the LFA in franchise fees, including in-kind contributions; and the rates charged to subscribers. The Communications Act of 1934 (referred to in this report as the Communications Act) created the FCC, but did not specifically set forth the FCC's authority to regulate cable. However, the U.S. Supreme Court found in 1968 that the agency's authority was sufficiently broad to do so. The FCC issued comprehensive regulations governing cable systems and cable franchising authorities in 1972. The FCC's rules directed cable operators to offer PEG services and LFAs to cap franchise fees. In the early days of cable television, a municipal government seeking to bring cable to its residents would, through a request for proposals, spell out the requirements that a cable operator would have to meet to win the franchise. Cable companies would bid against one another for the chance to wire the municipality. Renewal of an existing franchise might entail additional requirements. In 1972, the FCC directed cable operators to dedicate one channel for public access, one channel for educational use, and one channel for local government use by a certain date, and to add channel capacity if necessary to meet the requirement. Two years later, however, the commission reconsidered its stance, stating, Demands are being made not only for excessive amounts of free equipment but also free programming and engineering personnel to man the equipment. Cable subscribers are being asked to subsidize the local school system, government, and access groups. This was not our intent and may, in fact, hamper our efforts at fostering cable technology on a nationwide scale. Too often these extra equipment and personnel demands become franchise bargaining chips rather than serious community access efforts. We are very hopeful that our access experiment will work.... We do not think, however, that simply putting more demands on the cable operator will make public access a success. Access will only work, we suspect, when the rest of the community assumes its responsibility to use the opportunity it has been provided. Although the U.S. Supreme Court later struck down the FCC's rules requiring cable operators to set aside channels for PEGs, PEG access requirements became commonplace in local franchise agreements by the early 1980s. Congress encouraged this development. According to a 1984 report from the House Committee on Energy and Commerce Public access channels are often the video equivalent of the speaker's soapbox or the electronic parallel to the printed leaflet. They provide groups and individuals who generally have not had access to the electronic media with the opportunity to become sources of information in the electronic marketplace of ideas. PEG channels also contribute to an informed citizenry by bringing local schools into the home, and by showing the public local government at work. In addition to requiring cable system owners to obtain a franchise before operating, municipalities also required cable system owners to pay a franchise fee . In its 1972 Cable Order, the FCC stated, [M]any local authorities appear to have extracted high franchise fees more for revenue-raising than for regulatory purposes. Most fees are about five or six percent, but some have been known to run as high as 36 percent. The ultimate effect of any revenue-raising fee is to levy an indirect and regressive tax on cable subscribers. Second, and of great importance to the Commission, high local franchise fees may burden cable television to the extent that it will be unable to carry out its part in our national communications policy.... We are seeking to strike a balance that permits the achievement of federal goals and at the same time allows adequate revenues to defray the costs of local regulation. To accomplish this balance, the FCC capped the franchise fees at 3%-5% of a cable operator's revenues from subscribers. For fees greater than 3% of an operator's subscriber revenues, the FCC required a franchising authority to submit a showing that the specified fee was ""appropriate in light of the planned local regulatory program."" When cable television first developed as essentially an antenna service to improve over-the-air broadcast television signal reception in rural and suburban areas, many municipalities regulated the rates charged to subscribers. The municipalities viewed rate regulation, tied to the systems' use of public streets, as a means of preventing cable operators from charging unreasonably high rates for what they viewed as an essential service. In the 1972 Cable Order, the FCC required franchising authorities to specify or approve initial rates for cable television services regularly furnished to all subscribers and to institute a program for the review and, as necessary, adjustment of rates. In 1976, the FCC repealed those rules and instead made LFA regulation of rates for cable television services optional. In 1974, the FCC preempted LFAs from regulating rates for other so-called ""specialized services,"" including ""advertising, pay services, digital services, [and] alarm systems."" In the Cable Communications Policy Act of 1984 ( P.L. 98-549 , referred to in this report as the 1984 Cable Act), Congress added Title VI to the Communications Act to give the FCC explicit authority to regulate cable television. The 1984 Cable Act established the local franchising process as the primary means of cable television regulation. The act did not diminish state and local authority to regulate matters of public health, safety, and welfare; system construction; and consumer protection for cable subscribers. Congress enacted the 1984 Cable Act the same year that American Telephone and Telegraph Company (AT&T), which had an effective monopoly over most telecommunications services, spun off its regional operating companies as part of the settlement of a federal antitrust suit. The 1984 Cable Act generally prohibited telcos from providing video services in the same regions where they provided voice services. This prohibition prevented the former AT&T companies from competing with cable operators in communities where they controlled the local telephone system. The 1984 Cable Act confirmed the power of state and municipal governments to include requirements for PEGs, facilities and equipment, and certain aspects of program content within franchise agreements. It delineated federal limits on franchise fees, and restricted the FCC's power to regulate the amount of franchise fees or the use of funds derived from those fees. The law permits franchising authorities to charge franchise fees, but limits such fees to no more than 5% of the cable operators' gross revenues from ""cable services."" For the purposes of calculating gross revenues, the FCC included revenues from advertising and home shopping commissions, in addition to revenues from video service subscriptions. Subsequently, as described in "" FCC Actions Affecting State and Local Video Service Franchising Terms and Conditions ,"" defining the costs that are subject to the 5% statutory limit on franchise fees became a point of repeated controversy. The 1984 Cable Act allows local franchising authorities to enforce any PEG access requirements in a franchise agreement. Such terms and conditions can include providing video production facilities and equipment, paying capital costs related to PEG facilities beyond the 5% franchise fee cap, and paying costs associated with support of PEG channel use. In addition, the 1984 Cable Act permitted LFAs to require cable operators to designate channels for PEGs on institutional networks (I-Nets) provided for public buildings and other nonresidential subscribers. Section 623 of the 1984 Cable Act (47 U.S.C. §543) prohibits federal, state, or local franchising authorities from regulating the rates of cable operators that are ""subject to effective competition,"" as defined by the FCC. The 1984 Cable Act directs the FCC to review its standards for determining effective competition periodically, taking into account developments in technology. In 1985, the FCC determined that cable systems generally were subject to ""effective competition"" if they operated in an areas where three or more broadcast television signals were either ""significantly viewed"" by residents or transmitted with acceptable signal quality (as defined by the FCC) to the cable systems' franchise areas. In accordance with the timetable set by the 1984 Cable Act, the ""effective competition"" rule became effective on December 29, 1986. This rule effectively deregulated cable prices in most communities. In 1991, the FCC adopted a new definition of ""effective competition."" The FCC deemed effective competition to exist if either: 1. six unduplicated broadcast signals were available to the cable operator's franchise area via over-the-air reception, or 2. another multichannel video service, such as a satellite service, was available to at least 50% of homes to which cable services were available (homes passed), and was subscribed to by 10% of the cable operator's homes passed. Under this more restrictive definition, most systems were still subject to effective competition and therefore not subject to rate regulation. In the Cable Television Consumer Protection and Competition Act of 1992 ( P.L. 102-385 , referred to here as the 1992 Cable Act), Congress stated the policy goal of relying on market forces, to the maximum extent feasible, to promote the availability of a diversity of views and information through cable television and other video distribution media. Congress emphasized the importance of protecting consumer interests where cable systems are not subject to effective competition, and of ensuring that cable operators do not have undue market power vis-à-vis video programmers and consumers. The 1992 Cable Act revised Section 621(a)(1) of the Communications Act to codify restraints on local franchise authorities' licensing activities. While local authorities retained the power to grant cable franchises, the law provided that ""a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to award an additional competitive franchise."" Congress gave potential entrants a judicial remedy by enabling them to commence an action in a federal or state court within 120 days after a local authority refused to grant them a franchise. In addition, Congress made it easier for local authorities to regulate cable rates by adopting a more restrictive definition of ""effective competition"" than the FCC's. Pursuant to these changes, local authorities may not regulate cable rates if at least one of the following four conditions is met: 1. fewer than 30% of the households in the franchise area subscribe to a particular cable service; 2. within the franchise area, a. at least two unaffiliated multichannel video programming distributors (MVPDs) each offer comparable video programming to at least 50% of the households in the franchise area, and b. at least 15% of households subscribe to an MVPD other than the largest one; 3. an MVPD owned by the franchising authority offers video programming to at least 50% of the households in the franchise area; or 4. a telephone company offering local voice services (known as a ""local exchange carrier"" [LEC]) or its affiliate, ""(or any multichannel video programming distributor using the facility of such carrier or its affiliate)"" carries comparable video programming services directly to subscribers by any means (other than direct-to-home satellite services) in the franchise area of an unaffiliated cable operator that is providing video service in that franchise area. Congress directed the FCC to publish a survey of cable rates annually. Even as the 1992 Cable Act took effect, a combination of technological, economic, and legal factors was enabling the convergence of the previously separate telephone, cable, and satellite broadcasting industries. Digital technology, particularly the ability to compress digital signals, enabled both direct broadcast satellite (DBS) services and cable operators to offer dozens of channels. In 1993, the telephone company Bell Atlantic successfully challenged, on First Amendment grounds, the 1984 ban on cross-ownership of telephone and cable companies in the same local market. In the meantime, several cable operators sought to gain economies of scale by consolidating local systems into regional systems. In the Telecommunications Act of 1996 ( P.L. 104-104 ), Congress permitted LECs to offer video services and cable operators to offer voice services. Because laws and regulations pertaining to cable systems were quite different from those pertaining to LECs, the prospect of greater competition between those two types of providers led Congress to revisit video market regulation. Moreover, Section 601 rescinded the 1982 consent decree that required the breakup of AT&T, thereby allowing LECs to consolidate further by subsequently merging with long-distance service providers and each other. The act stipulated that cable operators do not need to obtain approval of local authorities that regulate their video services in order to offer ""telecommunications services,"" such as voice services. The Senate Commerce Committee noted that these changes did not affect existing federal or state authority with respect to telecommunications services. It stated that the committee intended that local governments, when exercising their authority to manage their public rights of way, regulate telecommunications services provided by cable companies in a nondiscriminatory and competitively neutral manner. Congress used the term ""open video systems"" (OVS) in the 1996 Telecommunications Act (§653) to describe LECs that soughtto compete with cable operators. The act explicitly exempted OVS service from franchise fees and other 1992 Cable Act requirements, including the requirement to obtain a local franchise. In 1999, the U.S. Court of Appeals for the Fifth Circuit interpreted the provision to mean that, while the federal government could no longer require OVS operators to obtain a local franchise, state and local authorities could nevertheless do so. In 2003, several telephone companies, most notably Southwestern Bell Company (now AT&T) and Verizon, began constructing fiber networks designed to bring consumers advanced digital services, including video. AT&T and Verizon branded these services as ""U-Verse"" and ""FiOS,"" respectively. Neither company launched video services under the OVS rules, claiming that federal requirements and potential local franchise requirements were too costly. In 2006, a federal district court in California dismissed AT&T's claims that municipalities were violating federal law by attempting to exercise franchise authority over the company's video services. The court declined, however, to rule on whether video delivered over internet protocol, the technology used by LECs, met the federal definition of a cable service. Two bills introduced that year in the 109 th Congress, H.R. 5252 and S. 2686 , would have declared that video service enabled via internet protocol is subject only to federal regulation. Congress did not vote on either bill. As the LECs sought to enter the video distribution market, they pursued statewide reforms to speed their entry, rather than seeking franchises in individual municipalities. The LECs' competitors, the incumbent cable operators, contended that state-level franchising would present new entrants with fewer obligations than cable companies had faced when they entered the market, specifically the obligation to build networks serving all parts of a community. In 2005, Texas became the first of several states to replace local franchising with a state-level regime for video service providers, with the express purpose of facilitating entry by new competitors. As Table 1 illustrates, many other states have since either replaced municipal franchising with state-level franchising or offered providers a choice. Since 2007, the FCC has repeatedly revisited the authority of states and LFAs to franchise and regulate video service providers. This process culminated in two orders issued in 2019. One (the ""2019 LFA 3 rd R&O"") sharply limits state and local authority over products offered by video service providers other than video programming. The other order (the ""2019 Effective Competition Order"") determined that AT&T's streaming service, AT&T TV NOW, meets the LEC test component of Congress's effective local competition definition and therefore provides effective competition to a local cable operator. In 2007, the FCC found that the local franchising process constituted an unreasonable barrier to new entrants in the marketplace for video services and to their deployment of high-speed internet service. The FCC adopted rules and guidance covering cities and counties that grant cable franchises. However, the agency stated that it lacked sufficient information regarding whether to apply the rules and guidance to state governments that either issued franchises at the statewide level or had enacted laws governing specific aspects of the franchising process. Consequently, the FCC stated that while it would preempt local laws, it would not preempt state laws covering video franchises. The FCC determined that unless certain specified costs, fees, and other compensation required by LFAs are counted toward the statutory 5% cap on franchise fees, an LFA's demand for such fees represents an unreasonable refusal to award a competitive franchise to a new entrant. In addition, the FCC found that some LFAs had required new entrants to make ""in-kind"" payments or contributions that are unrelated to the provision of cable services. The FCC stated that any requests by LFAs for in-kind contributions that are unrelated to the provision of cable services by a new competitive entrant are subject to the statutory 5% franchise fee cap. The FCC contended that disputes between LFAs and new entrants over LFA-mandated contributions in support of PEG services and equipment could lead to unreasonable refusals by LFAs to award competitive franchises. It determined that costs related to supporting the use of PEG access facilities, including but not limited to salaries and training, are subject to the 5% cap, but that capital costs ""incurred in or associated with the construction of PEG access facilities"" are excluded from the cap. The FCC stated that the LFAs' jurisdiction over LECs and other new entrants applies only to the provision of video services. Specifically, it stated that an LFA cannot use its video franchising authority to attempt to regulate a LEC's entire network beyond the provision of video services. In addition, the FCC found that the following LFA actions constitute an unreasonable refusal to award video franchises to new entrants: 1. failure to issue a decision on a competitive application within the time frames specified in the FCC's order; 2. refusal to grant a competitive franchise because of an applicant's unwillingness to agree to ""unreasonable"" build-out requirements; and 3. denying an application based upon a new entrant's refusal to undertake certain obligations relating to PEGs and I-Nets. In 2008, the U.S. Court of Appeals for the Sixth Circuit upheld the FCC's rules. In November 2007, the FCC issued a Second Report and Order that extended the application of several of these rules to local procedures to renew incumbent cable operators' franchises. Specifically, the FCC determined that the rules addressing LFAs' franchise fees, PEG and institutional network obligations, and non-cable-related services and facilities should apply to incumbent operators. It concluded, however, that FCC rules setting time limits on LFAs' franchising decisions and limiting LFA build-out requirements should not apply to incumbent cable operators. Several LFAs petitioned the FCC to reconsider and clarify its Second Report and Order. In 2015, the FCC issued an Order on Reconsideration in which it set forth additional details about its rules with the stated purposes of promoting competition in video services and accelerating broadband deployment. Following the 2015 Order on Reconsideration, the following policies were in place. The FCC clarified that its rules and regulations on franchising applied to city and county LFAs only, not to state-level laws or decisions. The FCC stated that it lacked sufficient information about the state-level franchising process, and suggested that if parties wished the agency to revisit this issue in the future, they should provide evidence that doing so would achieve Congress's policy goals. The FCC included in-kind contributions from incumbent cable operators that were unrelated to the provision of video services within the statutory 5% franchise fee cap. Likewise, the FCC found that payments made by cable operators to support PEG access facilities are subject to the 5% cap, unless they fall under the FCC's definition of ""capital costs"" associated with the construction of PEG facilities. The FCC made in-kind contributions related to cable services subject to the cap on franchise fees for new entrants as well as for cable incumbents. The FCC determined that LFAs' jurisdiction to regulate incumbent cable operators' services is limited to video services, and does not include voice or data services. In addition, the FCC found the following LFA actions do not per se constitute an unreasonable refusal to award video franchises to cable incumbents, although they did for new entrants: 1. denying an application based upon an incumbent's refusal to undertake certain obligations relating to PEGs and institutional networks; 2. failure to issue a decision on a competitive application within the time frames specified in the FCC's order; and 3. refusal to grant a competitive franchise because of an applicant's unwillingness to agree to unreasonable build-out requirements. In 2017, the U.S. Court of Appeals for the Sixth Circuit addressed challenges by LFAs to the 2007 Second Report and Order and the 2015 Order on Reconsideration. The court found that the FCC had made sufficiently clear that its rules only apply to city and county LFAs and did not bind state franchising authorities. It determined that the FCC had correctly concluded that noncash contributions could be included in its interpretation of ""franchise fee"" subject to the 5% limit. However, the court held that the FCC had neither explained why the statutory text allowed inclusion of in-kind cable-related contributions within the 5% cap nor defined what ""in-kind"" meant. It found that the FCC offered no basis for barring local franchising authorities from regulating the provision of ""non-telecommunications"" services by incumbent cable providers. It directed the FCC to set forth a valid statutory basis, ""if there is one,"" for applying its rule to the franchising of cable incumbents. The court used the term ""non-telecommunications"" service rather than ""non-video"" or ""non-cable"" service, differing from the distinctions the FCC made with respect to LFAs' authority. The FCC responded to the court's directives in 2018, and once again proposed rules governing the franchising of cable incumbents. On August 1, 2019, the FCC adopted its Third Report and Order (R&O). The FCC stated that its rules would ensure a more level playing field between new entrants and incumbent cable operators and accelerate deployment of ""advanced telecommunications capability"" by preempting local regulations that ""impose an undue economic burden"" on video service providers. The FCC stated that the franchise fees rulings are prospective. That is, video operators may count only ongoing and future in-kind contributions toward the 5% franchise fee cap after September 26, 2019, the effective date of its rules. To the extent franchise agreements conflict with the FCC's rules, the agency encourages the parties to negotiate franchise modifications within a ""reasonable timeframe,"" which it states should be120 days in most cases. Under the new regulations: The FCC oversees state franchising authorities for the first time. Cable-related in-kind contributions from both new entrants and incumbent cable operators are ""franchise fees"" subject to the 5% cap, with limited exceptions. Such contributions include any nonmonetary contributions related to the provision of video services by incumbent cable operators and LECs as a condition or requirement of a local franchise agreement. Examples include free and discounted cable video service to public buildings; costs in support of PEG access facilities other than capital costs; and costs associated with the construction, maintenance, and service of an I-Net. For purposes of calculating contributions toward the 5% franchise fee cap, video providers and LFAs must attach a fair market value to cable-related in-kind contributions, but the FCC declined to provide guidance on how to calculate fair market value. The definition of PEG ""capital costs"" subject to the 5% cap includes equipment purchases and construction costs, but does not include the cost of installing the facilities that LFAs use to deliver PEG services from locations where the programming is produced to the cable headend. Requirements that cable operators build out their systems within the franchise area and the cost of providing channel capacity for PEG channels may not be included under the 5% cap. Franchise authorities may not regulate nonvideo services offered over cable systems by incumbent cable operators. The services covered by this prohibition include broadband internet service, business data services, and Voice over Internet Protocol (VoIP) services. ""[S]tates, localities, and cable franchising authorities are preempted from charging franchised cable operators more than five percent of their gross revenue from cable [video] services."" Thus, LFAs may not include nonvideo service revenues when calculating the 5% cap. The communities of Los Angeles, CA, Portland, OR, and Eugene, OR, have filed a petition with the U.S. Court of Appeals for the Ninth Circuit challenging the FCC's rules. The Ninth Circuit has consolidated the various appellate court challenges, and in November 2019, granted an FCC motion to transfer the now-consolidated petition to the U.S. Court of Appeals, Sixth Circuit. Table 1 , as well as the following two tables, illustrate how the FCC's rules could potentially affect the franchising process in several states. The FCC's decision to extend its franchising rule to state governments for the first time will subject each of the states listed in the first three columns of Table 1 (i.e., those that issue franchises at the state-level in all or some circumstances) to the FCC's rules. Moreover, the FCC's rules will cover states that oversee municipal franchises via either statute or state-level agencies. Thus, the FCC's franchising rules will affect more video service providers, viewers, and municipal governments than ever before. Because the FCC is including cable-related in-kind contributions in its definition of franchise fees subject to the 5% cap, some states and municipalities may need to make a trade-off. Specifically, as Table 2 illustrates, several states require or allow LFAs to require video service providers to offer free and/or discounted video service to public buildings, support of PEG services (other than capital costs), and support of I-Nets. Affected states and municipalities may need to reevaluate the trade-off between in-kind cable-related contributions and general fund revenues. Note that Ohio and Wisconsin prohibit both PEG and I-Net contribution requirements, while Idaho prohibits I-Net contribution requirements. As Table 3 illustrates, some states define ""gross revenues"" more narrowly than the FCC, excluding, for example , revenues from advertising and home shopping commissions. In those states, as well as others in which municipal LFAs define gross revenues more narrowly than the FCC, PEGs may be able to continue to receive cable-related, in-kind contributions without reducing the monetary contributions they receive, while remaining within the 5% cap. As described in "" Franchise Fees and PEGs ,"" the FCC has included revenues from advertising and home shopping commissions, in addition to revenues from video service subscriptions, in its definition of ""gross revenues."" LFAs that use similar definitions of ""gross revenues,"" including those subject to state regulation, may already charge the maximum amount of franchise fees permitted by the FCC. Others, however, exclude these sources, and may therefore have more flexibility when evaluating whether or not to continue their cable-related in-kind contributions. Moreover, some states specifically exclude other items when calculating providers' revenue bases that are subject to the franchise fees. Several exclude government fees and/or taxes passed on to subscribers, while Missouri excludes fees and contributions for I-Nets and PEG support from its calculation. The FCC has not specifically addressed whether franchise authorities may include these items in their revenue base calculation. Thus, these states may also have more flexibility when evaluating whether to change video franchises' terms and conditions. Many states already exclude nonvideo revenues from the calculation of provider revenues subject to the franchise fee cap. New York, however, describes the gross revenues of a video provider subject to the franchising fees as including, among other things, ""carrier service revenue."" This section of the New York statute does not define ""carrier service revenue."" A current dispute between New York City and Charter Communications (d/b/a Spectrum) for service within Brooklyn concerns whether ""carrier service revenue"" received from ""additional provided services"" may be subject to franchise fees. The FCC's new rules may affect the outcome of this dispute. Moreover, in July 2019, the New York State Public Service Commission approved a settlement of a complaint that Charter has failed to comply with a requirement in its franchise agreement to expand high-speed service. Under the settlement, Charter may continue operating within the state, if it expands its high-speed internet service infrastructure to 145,000 residents in Upstate New York and invests $12 million in providing high-speed internet services to other areas of the state. If Charter contends that the FCC's rules preempt these provisions, it could seek to renegotiate the settlement. The FCC cited a decision by the Supreme Court of Oregon in City of Eugene v. Comcast as an example of states and localities asserting authority to impose fees and requirements beyond their authority. In the decision, the court upheld a local government's 7% license fee on revenue from broadband services provided over a franchised cable system. Thus, while states and municipalities may regulate both video and voice services of telcos, they may only regulate video services of cable operators. If a state or municipality may charge franchise fees to cable operators and telcos only with respect to video services, the total amount of fees received is likely to decrease over time. As Figure 1 indicates, the total number of U.S. households subscribing to cable and telco video services has declined over the past 10 years. In 2010, about 70.8 million households subscribed to either a cable operator or a telco, compared with about 60.1 million households in 2019. In place of cable, more households have elected to rely on video provided over broadband connections or broadcast transmission. For cable operators in particular, this substitution of alternative sources of programming has led to the pursuit of revenue from nonvideo services, such as voice and high-speed data. In 2010, video services represented about 63% of total cable industry revenue, whereas in 2019 video represented 46% of total industry revenue ( Figure 2 ). Pursuant to the FCC's proposed rules, these other sources of revenue are not subject to LFAs' jurisdiction. In addition, the U.S. Court of Appeals for the Eighth Circuit held that a cable operator's voice services are not a telecommunications service, and therefore not subject to state regulation. In October 2019, the U.S. Supreme Court denied the Minnesota Public Utility Commission's petition hear the case. In Missouri, the City of Creve Coeur and other municipalities filed a class action lawsuit against satellite operators DIRECTV, DISH Network, as well as online streaming services Netflix Inc., and Hulu LLC, claiming that the companies must pay a percentage of gross receipts from video services to the municipalities where they do business, pursuant to Missouri's Video Services Providers Act. The state law allows Missouri's political subdivisions to collect up to 5% of gross receipts from providers of video programming and requires providers to register before providing service in the state, according to court documents. The municipalities claim the defendants have not paid the required amounts. Other localities may follow suit. A bill before the Illinois General Assembly would impose a 5% tax (rather than a ""franchise fee"") on the video service revenues of direct broadcast satellite operators and online video services for the right to provide services to Illinois residents. Similarly, a bill before the Massachusetts House of Representatives would impose a 5% fee on revenues earned by streaming video services. Massachusetts would split the money collected from the fees between the state's general fund (20%), municipalities (40%), and PEG programmers (40%). If receipts from cable franchise fees continue to erode, more states and municipalities may respond by seeking alternative revenue sources. In 2014, Congress enacted the Satellite Television Extension and Localism Act Reauthorization Act (STELA Reauthorization Act; P.L. 113-200 ). Section 111 of the act directed the FCC to develop a streamlined process for the filing of ""effective competition"" petitions by small cable operators within 180 days of the law's enactment. A cable company filing such a petition bears the burden of proof to demonstrate that it faces effective competition for its video services. The FCC responded in 2015 by adopting a rebuttable presumption that cable operators are subject to effective competition. As a result, the FCC prohibited franchising authorities from regulating basic cable rates unless they can demonstrate that the cable system is not subject to effective competition. The FCC stated that the change in its effective competition definition was justified by the fact that direct broadcast satellite service was available as an alternative video services provider throughout the United States. Later in 2015, the FCC found that LFAs in two states, Massachusetts and Hawaii, demonstrated that cable systems in their geographic areas were not subject to effective competition, and permitted them to continue to regulate the rates of the basic tiers of cable services. However, in September 2018, Charter Communications (Charter), a cable provider, asked the FCC to find that AT&T's DIRECTV NOW, a streaming service that AT&T has since rebranded as AT&T TV NOW, provides effective competition to cable systems in Kauai, HI, and 32 Massachusetts communities. In October 2019, the FCC agreed and issued an order granting Charter's petition, finding for the first time that an online streaming service affiliated with a LEC meets the LEC test in Congress's definition of effective competition. The FCC found that [AT&T TV NOW] need not itself be a LEC and AT&T need not offer telephone exchange service in the franchise areas.... There is no requirement ... that a LEC provide telephone exchange service in the same communities as the competing video programming service. Thus, if even AT&T TV NOW's subscribers rely on internet service from Charter to receive AT&T TV NOW's programming, the FCC considers AT&T TV NOW to be a competitor to Charter with respect to the distribution of video programming. According to the FCC, Congress adopted the LEC test because LECs and their affiliates ""are uniquely well-funded and well-established entities that would provide durable competition to cable,"" and not because [Congress was] focused on facilities-based competition. Meanwhile, some localities have enacted legislation with the goal of reducing prices consumers pay for video services. A 2019 Maine law would require video service providers to offer networks and programs on an a la carte basis instead of offering subscribers only bundles of channels. Several cable operators, broadcasters, and content providers have sued to overturn the law. In January 2020, a federal judge blocked the implementation of the law as the parties prepare for trial. These regulatory developments and industry trends raise several potential issues for Congress to consider. First, Congress could consider whether the FCC's interpretation of the Communications Act is consistent with the policy goals set forth in Section 601 of the Communications Act (47 U.S.C. §521) and Section 706 of the Telecommunications Act. Specifically, Congress could explore the extent, if any, to which state and local regulations designed to promote the availability of PEG programming and I-Nets. Second, Congress could evaluate whether to create regulatory parity with respect to local regulation of nonvideo services of cable and telcos. While states and municipalities may regulate both video and voice services of telcos, they may only regulate video services of cable operators. Congress could address regulatory parity by either deregulating traditional telcos' nonvideo services or regulating cable operators' nonvideo services. Third, as the FCC and local governments include online video providers in their definitions of video providers for the purposes of evaluating competition and/or imposing franchise fees, Congress could clarify whether these actions achieve its stated policy goals. For example, if, in contrast to the FCC's interpretation of the LEC test for effective competition, Congress intends to include only facilities-based video services in its definition of video service competition, it could delineate the definition in communications laws. Likewise, as online video services become more prevalent and states and municipalities target them for franchise fees, Congress could specify the authority, if any, to regulate them. Finally, while the FCC has determined that competition among video programming distribution services has eliminated the need for rate regulation of the basic tier of cable services, Maine enacted a law to enable consumers to pay only for video programming they choose, in lieu of bundles of channels. In the past, some Members of Congress have proposed statutory changes to require video programming distributors to offer individual channels to consumers in addition to bundles of channels, and Congress could consider revisiting this issue, or alternatively clarifying that states and local governments lack authority to enact such laws.","Local and state governments have traditionally played an important role in regulating cable television operators, within limits established by federal law. In a series of rulings since 2007, the Federal Communications Commission (FCC) has further limited the ability of local governments (known as local franchise authorities ) to regulate and collect fees from cable television companies and traditional telephone companies (known as telcos ) offering video services. In August 2019, in response to a ruling by a federal court of appeals, the FCC tightened restrictions on municipalities' and—for the first time—on states' ability to regulate video service providers. The Communications Act of 1934, as amended, still allows local governments to require video service operators to provide public, educational, and government (PEG) channels to their subscribers. The FCC's August 2019 order, however, sets new limits on local governments' ability to collect fees from operators to support the channels. In addition, the FCC ruled that local franchise authorities could not regulate nonvideo services offered by incumbent cable operators, such as broadband internet service, business data services, and Voice over Internet Protocol (VoIP) services. In October 2019, also for the first time, the FCC concluded that a video streaming service was providing ""effective competition"" to certain local cable systems, thereby preempting the affected municipalities' ability to regulate local rates for basic cable service. These rulings have caused controversy. The FCC has asserted that they fulfill a statutory mandate to promote private-sector investment in advanced telecommunications and information services and to limit government regulation when competition exists. State and local governments, however, have objected that the regulatory changes deprive them of revenue and make it harder for them to ensure that video providers meet local needs. Against this backdrop of federal government actions limiting cable service regulation at the local level, consumer behavior continues to change. Specifically, an increasing number of consumers are substituting streaming services for video services provided by cable companies and telcos. As a result, the amount of revenue state and local governments receive from cable and telco providers subject to franchise fees is declining, which also reduces the amount cable providers can be required to spend to support PEG channels. In response, some municipalities and states have attempted to impose fees on online video services, such as Netflix and Hulu. Courts have not yet ruled on the legality of such fees. These regulatory developments and industry trends raise several potential issues for Congress. First, Congress could consider whether the FCC's interpretation of the Communications Act with respect to local regulation of video service providers is consistent with Congress's policy goals. Specifically, Congress could explore the extent, if any, to which, if any, it encourages or permits state and local regulations designed to promote the availability of PEG programming as well as subsidized voice, data, and video services for municipal institutions. Second, Congress could evaluate whether to create regulatory parity with respect to local regulation of cable and telcos' nonvideo services. While states and municipalities may regulate both video and voice services of telcos, they may only regulate video services of cable operators. Congress could address regulatory parity by either deregulating traditional telcos' nonvideo services or regulating cable operators' nonvideo services. Third, as the FCC and local governments include online video streaming services in their definitions of video providers for the purposes of evaluating competition and/or imposing franchise fees, Congress could clarify whether these actions achieve its stated policy goals. Finally, given the FCC's actions to reduce local government rate regulation of cable services and the State of Maine's legislation to enable video subscribers to seek alternatives to bundled programming, Members of Congress could reconsider past proposed statutory changes to require video programming distributors to offer individual channels to consumers. Alternatively, Congress could clarify that states and local governments lack authority to enact such laws."
"VA, HUD, and DOL are the federal agencies that provide programs specifically aimed at assisting homeless veterans. They are among the 19 federal member agencies of USICH—an independent establishment within the Executive Branch charged with coordinating the federal response to homelessness and creating a national partnership at every level of government and with the private sector to reduce and end homelessness nationally. USICH, VA, and HUD have jointly established criteria and benchmarks to guide communities that are taking action toward being certified as having ended veteran homelessness. USICH stated that an end to homelessness does not mean that no one will ever experience a housing crisis again, but that every community will have a systematic response in place to prevent homelessness whenever possible and ensure that homelessness is a rare, brief, and non-recurring experience. VA, HUD, and USICH coordinate their efforts towards this goal through a working group, Solving Veterans Homelessness as One, which was established in 2012. We identified 16 federal programs that target services specifically to veterans who are homeless or are at risk of becoming homeless. As shown in table 1, the programs provide permanent and transitional housing, health care, employment assistance, and supportive services, such as assistance with rent, utilities, and moving costs. Twelve of the programs are administered solely by VA, two are jointly administered by HUD and VA, and two are administered by DOL. VA’s and HUD’s homelessness programs follow the principles of “Housing First,” which is intended to provide housing without any preconditions and barriers to entry such as sobriety, treatment, or service participation requirements. The largest of these programs were HUD-VASH, GPD, and SSVF. In fiscal year 2019, HUD-VASH reported over $1 billion in obligations; GPD reported obligations of over $234 million; and SSVF reported $380 million in obligations. Homeless veterans can access program services in several ways, including through: VA Medical Centers (VAMCs). Program services can be provided to homeless and at-risk veterans at their local VAMCs. Service providers. Veterans may also obtain services through local, state, or nonprofit organizations in the community, some of which receive grants from federal agencies to fund program services. Public housing agencies (PHAs). Housing vouchers are administered to homeless veterans by PHAs, which are HUD-funded city, county, and state agencies. VAMCs, service providers, and PHAs may coordinate through Continuums of Care (CoC), which are composed of stakeholders in a geographical area that, among other things, coordinate to provide homeless services, apply for grants, set local priorities, and collect homelessness data for all homeless populations. Each year, HUD awards CoC program funding competitively to nonprofit organizations, states, and other local recipients. The CoC is responsible for its operation and developing and implementing its plan and strategies to prevent and end homelessness. Additionally, the CoC must choose an entity to operate the local information system used to collect client-level data and data on the provision of housing and services to homeless individuals and families and those at risk of homelessness (referred to as the Homeless Management Information System). The CoC also designates an entity that prepares and submits the CoC program application for HUD funding (referred to as the collaborative applicant). HUD requires each CoC to establish and operate a centralized or coordinated assessment system (referred to as Coordinated Entry). This system may include implementing a “no wrong door” approach in which a homeless family or individual can show up at any homeless housing and service provider in a geographic area and get screened for services using the same assessment tool (see figure 1). The goal of Coordinated Entry is to ensure that people experiencing a housing crisis within a CoC are quickly and consistently assessed and referred for services. HUD officials stated that Coordinated Entry is a process that was first developed by some CoCs based on best practices. In 2017, HUD adopted and codified requirements for all CoCs to participate in Coordinated Entry. That same year, VA published requirements for VAMCs to participate in Coordinated Entry. According to VAMC staff and service providers we interviewed, they faced challenges serving homeless veterans and those at risk of becoming homeless due, in part, to the additional level of service and support that some veterans need. For example: Substance use and mental illness. Substance use disorders and mental health issues such as post-traumatic stress disorder (PTSD) and depression, are among the most complex issues many homeless veterans face, according to USICH. In 2018, USICH reported that 28 percent of homeless veterans that receive VA-provided health care have been diagnosed with depression. Thirteen percent have been diagnosed with PTSD. Further, 19 percent struggle with alcohol abuse and 20 percent with drug abuse. VAMC staff and service providers told us that addressing the complex nature of these conditions is often a challenge for them. For example, one SSVF provider told us that it is challenging to find housing for veterans with mental health or substance use disorders; further, HVCES staff at one VAMC told us that employment programs for the general population may not be suitable for clients with these disorders. HUD-VASH staff at one VAMC told us that there are not enough mental health providers in the VA system. Overall, staff from three VAMCs from the GPD and HVCES programs, five GPD service providers, and three SSVF service providers cited challenges related to substance use and mental illness. Aging homeless veterans. In 2018, USICH reported that the number of homeless veterans who were 62 and older increased by 54.3 percent between 2009 and 2016. VA officials told us that this trend is expected to continue and that this population has increased, in part, because the services that VA offers are not targeted to aging veterans. According to VA officials, there is a similar aging trend in the general veteran population. HUD-VASH staff at three VAMCs, HVCES staff at one VAMC, and GPD staff at two VAMCs told us that aging veterans require a higher level of care than what existing programs may be able to fully address. Some of these veterans may suffer from ambulatory and cognitive issues and have difficulties living alone but cannot afford an assisted living arrangement. HUD-VASH staff at one VAMC we visited told us the VAMC was able to hire five occupational therapists to assist aging clients with their specialized needs. Further, VA officials told us that HUD-VASH is collaborating with VA’s Geriatrics and Extended Care programs office to explore how aging homeless veterans can be served through other programs, such as the Medical Foster Home and Community Residential Care programs. This collaboration would allow VA to provide funding for services while the HUD-VASH voucher would pay for housing costs. VA officials also told us that they are working to market HUD-VASH to developers and funders to increase the development of project-based HUD-VASH housing. This would give the program a dedicated housing stock and better serve subpopulations of veterans, such as veterans who are elderly or suffer from mental illness. Resistance to program participation. According to HCHV staff at two VAMCs, HVCES staff at three VAMCs, two PHAs that administer the HUD-VASH voucher program, and five service providers (two GPD, two HVRP, and one SSVF), a key challenge in addressing the needs of homeless veterans is their resistance to participating in a program, particularly if it places restrictions or requirements on them. This issue makes it challenging for outreach and treatment teams to deliver services. In addition to the challenges cited above, veterans must meet certain eligibility requirements to participate in homeless assistance programs which if not met can present challenges to VAMC staff and service providers when providing veterans with services. For example, veterans must meet certain criminal history requirements to be eligible for HUD- VASH. HVCES staff from one VAMC, DCHV staff from two VAMCs, HUD-VASH staff from another VAMC, and three service providers (one GPD and two SSVF) also told us that it is challenging to find housing and employment for homeless veterans with legal or criminal problems and landlords may be resistant to working with them. One PHA that works with HUD-VASH and one SSVF service provider told us that a veteran’s ineligibility for VA health care services also presents a challenge to them. This is because a number of VA homeless programs require a veteran to be eligible for VA health care benefits as a condition to enrollment. Generally, veterans are eligible to receive VA health care benefits if they served in the active military, naval, or air service and were discharged under conditions other than dishonorable. Therefore, according to VA officials, veterans with dishonorable discharges cannot access VA homeless assistance programs and veterans with other-than- honorable discharges may have limited access to them. In addition to meeting the discharge status requirement, a person must also meet the definition of “veteran” to be eligible for VA health services. However, the definition of “veteran” depends on factors including length of service and if the individual served on active duty or was part of the National Guard or the Reserves. Therefore, even if an individual has the appropriate discharge status to be eligible, they may not meet other eligibility requirements for VA health benefits. One service provider told us that they have to work on alternative solutions to help veterans that do not meet eligibility requirements. In 2017, VA in partnership with HUD implemented a flexibility within the HUD-VASH program—the HUD-VASH Continuum—which according to VA officials, will permit PHAs to make up to 15 percent of their total HUD- VASH allocation available to veterans who are ineligible for VA health care services, with some exceptions. According to VA officials, this expands the availability of permanent supportive housing to service members who are not eligible for VA health care. In addition, the House and Senate are considering bills to expand HUD-VASH eligibility. DOL has also implemented statutory changes to HVRP eligibility requirements to provide veterans with better access to job training programs. The program’s eligibility requirements have been broadened to include veterans participating in the HUD-VASH, Tribal HUD-VASH, and SSVF programs, and other veterans that were not previously eligible. VAMC staff and services providers cited broader challenges—not specific to veterans or the assistance programs themselves—as impacting their ability to provide assistance to homeless veterans. Those challenges include VA staffing issues and external factors, such as the lack of affordable housing and limited transportation options. VA staffing shortages. VA officials, HVCES staff at three VAMCs, and HUD-VASH and DCHV staff at two VAMCs told us they faced difficulties with recruitment and retention, which have led to persistent understaffing. For example, staff at four VAMCs for the HUD-VASH, DCHV, and HVCES programs told us that the hiring and onboarding process can often take a long time, and by the time an offer is finalized, qualified applicants have moved on to other jobs. DCHV staff at two VAMCs and HUD-VASH staff at three VAMCs cited understaffed human resources offices and a taxing approval process as contributing factors. HUD-VASH staff from one VAMC told us that it is difficult to fill some positions because the outreach work requires extensive travel within large geographic areas. Further, they told us that in high-cost areas, the VA’s local pay scale is not high enough to attract new recruits for case manager positions. HUD-VASH staff at one VAMC indicated that they have not been fully staffed for several years. Limited staffing may limit the number of veterans who can be served, according to VA officials. For example, DCHV program staff at one VAMC told us that they had to close 83 beds because there is not enough staff to keep them operational. One PHA working with the HUD-VASH program told us that VA’s staffing challenges create a bottleneck of services to clients while staff at one VAMC working with SSVF told us that high turnover of program staff is disruptive for clients. Overall, staffing shortages were cited as a challenge by VAMC staff for several programs: HUD-VASH, DCHV, HCHV, GPD, and HVCES. VAMC staff we interviewed have taken some steps to limit the impact of staffing issues. For example, at one VAMC, staff from the HCHV and GPD programs have conducted cross-training so they can back each other up when staffing shortages occur. Two other VAMCs have brought in staff from other locations to help with the workload or have developed an action plan to address employee burnout. Our past work has highlighted VA’s staffing challenges, including recruiting and retaining clinical staff. For example, we previously reported that difficulties in recruiting and retaining skilled health care providers and human resource staff at VAMCs make it difficult to meet the health care needs of more than 9 million veterans. We have also previously reported that, in addition to high attrition and increased workload, human capital shortfalls can lead to burnout among the staff whose job it is to implement these programs. Housing cost and availability. Limited and high cost housing exacerbate the other challenges VAMC staff and service providers identified. For example, HUD-VASH staff at one VAMC told us that even with subsidies, it is difficult for veterans to obtain housing because HUD-VASH vouchers may not be sufficient to cover rent. HUD-VASH staff from one VAMC and one PHA we interviewed told us that because housing costs are rising, and housing in metro areas remains limited, expensive, and competitive, veterans have fewer housing options available to them. Limited housing was cited as a challenge by VAMC staff and service providers for HUD-VASH and SSVF programs in all types of locations—urban, suburban, and rural areas. Finding and recruiting landlords is a significant challenge in getting veterans housed, according to HUD officials, HCHV staff at one VAMC, HUD-VASH staff from two VAMCs, two PHAs, and five SSVF service providers. According to HUD-VASH staff from one VAMC and SSVF staff from another VAMC, the demand for housing exceeds supply and landlords have few incentives to accept homeless veterans. HUD-VASH staff from one VAMC, one PHA, and one SSVF service provider also told us that some landlords perceive veterans to be risky because some have criminal records or substance use disorders, and may be reticent to work with them out of fear of incurring damages to their property. Some service providers have taken steps to create incentives for landlords to participate in VA’s programs. For example, HUD-VASH staff at one VAMC told us that local providers may partner to cover moving fees for veterans and encourage landlords to accept veterans’ housing vouchers. One PHA has put together landlord forums and is working to build relationships with landlords in their communities. Another PHA has held housing tours and fairs to bring landlords and clients together. VA has also implemented program changes to help address the lack of affordable housing. For example, the new Shallow Subsidies initiative that became effective in September 2019, allows SSVF service providers to provide very low-income veteran families a rental subsidy for a two-year period without requiring recertification. The two-year period ensures no reduction in subsidy even if a recipient’s income situation improves within that time frame and the family is no longer considered very low income. This provides a strong incentive for employment gains because the assistance is not dependent on income during this two-year period. Launched in 2018, VA’s Rapid Resolution initiative is another solution that is designed to prevent or resolve homelessness by providing immediate assistance when a veteran enters an emergency shelter system—such as by offering landlord mediation and conflict resolution, or connecting the veterans to support networks in other places. According to VA officials, Rapid Resolution is being implemented through VA’s SSVF program, in coordination with HUD and USICH. Limited resources (other than staffing). HUD-VASH staff at one VAMC told us they are short on equipment like laptops, office supplies, and office space. Additionally, HUD-VASH staff at another VAMC told us they do not have access to government cars for work- related travel. One HVRP service provider told us that case managers do not have enough vehicles to travel long distances or to remote locations to meet clients. To make up for shortages in resources, one SSVF service provider told us that it develops partnerships with local programs to meet the needs of the client. HUD-VASH staff at one VAMC indicated that they have communicated issues of insufficient resources to their leadership, but the issues have not been addressed to date. Resource limitations were cited as a challenge by HUD-VASH staff from two VAMCs, GPD staff from three VAMCs, DCHV staff at two VAMCs, HCHV staff at two VAMCs, and four service providers (two GPD and two HVRP). Transportation limitations. According to VAMC staff and service providers, the lack of transportation for veterans is a significant challenge for some programs. For example, according to DCHV and HVCES staff at one VAMC, HUD-VASH staff at another VAMC, and one GPD and two HVRP service providers, some veterans may not have vehicles or may live in areas with limited public transportation systems. This makes it difficult for the veterans to access resources, go to job interviews, or secure transportation for jobs. Some service providers told us they make alternative arrangements for their clients to help address these issues. For example, one HVRP service provider told us they might drive veterans to interviews or arrange for public transportation. DCHV staff at one VAMC and HVCES staff at another VAMC told us that they work with community partners to provide alternatives like shuttle services and bus passes. Additional challenges related to specific programs we reviewed are discussed in appendix II. We reviewed the services provided, eligibility requirements, and population served by the 16 programs that exclusively target homeless veterans to identify duplication and overlap. We determined that there is no duplication among the programs, but identified overlap across some program services. Specifically, we identified 18 main services that are commonly offered across the 16 programs and found that at least six of those services overlap across two or more programs (see figure 2). However, we also found these programs differed in meaningful ways, for example in terms of the different types of homeless veterans served or specialized services or focus. As we have previously reported, fragmentation, overlap, and duplication exists across the government, which can present benefits and challenges. Duplication occurs when two or more programs provide the same services to the same beneficiaries. Overlap occurs when two or more programs offer similar services to similar beneficiaries. As shown in figure 2, 15 of the 16 programs overlap in two or more of the following services that they offer. Case management is a process for managing a client’s care that includes assessing the needs of the veteran and evaluating health care options and services to ensure those needs are met while maintaining a primary focus on resolving the veteran’s homelessness through permanent housing. Eleven programs provide case management services: HUD-VASH, Tribal HUD-VASH, HCHV, HCRV, H-PACT, SSVF, GPD, DCHV, CWT-TR, HVRP and VJO. Supportive services might include providing meals, counseling, child care, housing assistance, transportation, and other services essential for achieving and maintaining independent living. Six programs provide supportive services: HUD-VASH, Tribal HUD-VASH, GPD, SSVF, HVRP, and Stand Down. Outreach involves directly contacting veterans in need of homeless services and connecting them with housing, health care, and supportive services. Six programs conduct outreach: HCHV, HVRP, SSVF, CRRCs, VJO, and HCRV. Referrals are the most common way for homeless veterans to find out about program services available to them. Referral services include conducting an assessment of the clients’ needs, connecting them to the appropriate programs, and following up with the clients as well as documenting all referral activities. Six programs provide referral services: HVRP, SSVF, CRRCs, NCCHV, HCRV, and Stand Down. Employment services include help with creating job opportunities for veterans, job searches, interviewing, and other employment assistance. Three programs provide employment-related services: HVCES, CWT-TR, and HVRP. Rental subsidies are offered to veterans through vouchers and grants, which help subsidize rental costs. Three programs offer rental subsidies: HUD-VASH, Tribal HUD-VASH, and SSVF. Although we identified overlap in these services across 15 of the 16 programs, the programs differ in meaningful ways. Specifically, some of these programs serve specific subpopulations of veterans and some provide a specialized service that other programs do not offer. For example, of the 11 programs that offer case management services, one program provides medical care (H-PACT), while others provide services in different areas such as transitional housing (GPD), housing subsidies (HUD-VASH), supportive services (SSVF), preparing veterans for employment (HVRP) and outreach (HCHV). Other programs that offer case management services serve unique subpopulations of homeless veterans such as those with mental health or substance use issues (CWT-TR and DCHV), American Indians and Alaskan Natives living in or near reservations or other Indian areas (Tribal HUD-VASH), or justice- involved veterans in local jails (VJO) and state and federal prisons (HCRV). According to a VA directive, more than one case manager may be involved in care planning and service delivery for veterans with complex needs. In addition, staff at the six VAMC locations we visited told us that clients may be co-enrolled in more than one program and can receive case management services from each of those programs. Figure 3 illustrates how case management may overlap across programs, but each program provides distinct services to the veteran. Similarly, of the three programs that provide employment services, HVCES focuses on establishing partnerships with employers to develop job opportunities for veterans and connect them with community services, while HVRP helps the veteran prepare to pursue and gain meaningful employment. The CWT-TR program, on the other hand, focuses on veterans with more complex issues such as substance use, mental health issues, and challenges in obtaining or sustaining employment that may accompany these conditions. Similar meaningful distinctions in subpopulations of beneficiaries and services exist across the programs that provide other types of services to homeless veterans that overlap— supportive services, outreach, referrals, and rental subsidies. Additional information on program differences, including information on program beneficiaries and services, can be found in appendix II. As we previously reported, in some cases it may be appropriate or beneficial for multiple agencies or entities to be involved in the same programmatic or policy area due to the complex nature or magnitude of the effort. Overlapping programs may also facilitate access to services because persons experiencing homelessness are not steered toward one specific point of entry and, in contrast, can access services through several entry points. However, when multiple programs overlap, there is also a risk of program administrators making inefficient use of available resources if they do not coordinate their efforts. For example, according to VA officials, overlap may result in operational costs if the overlapping services are not coordinated well. Table 2 describes some of the potential benefits and challenges of overlap in services for homeless veterans, as identified by agency officials, VAMC staff, and others we interviewed. Effective collaboration among agencies and service providers can help address some of these potential challenges and may help avoid the potential inefficiency that overlapping services may create. VAMC staff and service providers told us that they have taken steps to limit duplication where appropriate. Additionally, they told us that they collaborate and communicate with each other to avoid or mitigate overlap. VA has also issued guidance directed at enhancing coordination between its homeless programs and eliminating or reducing duplication of services, including the following: Veterans Health Administration (VHA) Directive 1110.04, Integrated Case Management Standards of Practice. This guidance states that case management services should be coordinated, collaborative, and veteran-centered throughout the VHA. It also directs case management teams to develop procedures and processes to support cost effective, high quality case management across the VAMC to eliminate duplication of services where appropriate. VHA Handbook 1162.09, Health Care for Homeless Veterans Program. Under the HCHV program, program coordinators are responsible for ensuring coordination of HCHV services with other homeless programs at the VAMC such as GPD, HUD-VASH, DCHV, VJO, HCRV, SSVF, and CRRCs. GPD’s Case Management Services Grant Program, Final Rule. This final rule stipulates that the case management grant may not be used for veterans receiving case management from certain other programs to ensure that there is no duplication of case management services. VHA Handbook 1162.01 (1), GPD. This guidance states that GPD liaisons are to ensure the coordination of care for homeless veterans in GPD-funded programs by following a plan that clearly delineates the roles of those responsible for the service provision to reduce duplication of services. VHA Handbook 1101.10 (1), Patient Aligned Care Team Handbook. This guidance directs staff to coordinate care in a manner that avoids unnecessary duplication. The following section of this report discusses how federal agencies collaborate more broadly on implementing federal homelessness assistance programs for veterans. We identified two key collaborative mechanisms that federal agencies use to help address veteran homelessness: (1) the Solving Veterans Homelessness as One (SVHO) working group, which coordinates VA, HUD, and USICH’s efforts at the national level, and (2) VA’s integration into Coordinated Entry, which seeks to ensure that homelessness services are coordinated at the local level. As shown in table 3 and as discussed in more detail below, both mechanisms follow leading practices for effective interagency collaboration we have identified in prior work, with some exceptions. According to USICH officials, in 2012, USICH convened the SVHO workgroup to coordinate with HUD and VA on key priorities and maximize efforts to end veteran homelessness. SVHO serves as an interagency decision-making body that plans and executes strategic actions through goal setting, policy gap identification, communication, and action. The SVHO working group fully followed all seven leading practices for effective interagency collaboration that we identified in prior work. A discussion of our assessment follows: Defining Outcomes and Monitoring Accountability. Ending veteran homelessness is one of the national goals listed in USICH’s Federal Strategic Plan to Prevent and End Homelessness. SVHO’s work is organized to support this goal. USICH reports SVHO’s efforts in its annual Performance and Accountability Reports. For example, USICH reported that in fiscal year 2019, SVHO’s efforts led to supplemental guidance and coaching to help sustain the efforts of communities that had been certified as having ended veteran homelessness. Bridging Organizational Cultures. To operate across agency boundaries, SVHO members hold regular meetings. During these meetings, SVHO members have updated one another on each agency’s efforts, discussed strategic objectives, shared program data, and coordinated on technical assistance for service providers. SVHO also held a strategic planning retreat to discuss SVHO’s priorities. Clarifying Leadership. SVHO has a Strategic Decision and Coordination Team that serves as the decision-making body and includes leadership from VA, HUD, and USICH. The team’s decisions are made by consensus, and the role for facilitating the team rotates every four months among the three agencies. The Strategic Decision and Coordination Team’s responsibilities, which include providing strategic guidance on cross-agency issues, providing joint oversight and decision-making, and facilitating the approval of decisions from the individual agencies are outlined in SVHO’s charter. Clarifying Roles and Responsibilities. The SVHO charter outlines the roles and responsibilities of the Strategic Decision and Coordination Team and the Support Team, whose responsibilities include responding to priority projects and elevating issues requiring decision and coordination to the Strategic Decision and Coordination Team. Including Relevant Participants. SVHO members (USICH, VA, and HUD) are the relevant participants because they are the agencies centrally involved in implementing veteran homelessness programs. Identifying Resources. USICH, VA, and HUD contribute staff resources to the working group. Representatives from each of the agencies attend regular SVHO meetings to ensure continuity, provide the necessary subject matter expertise, and make decisions. SVHO has also developed resources to facilitate the group’s meetings, such as agendas to guide discussions. Updating and Monitoring Written Guidance and Agreements. In March 2020, SVHO revised its charter to remove outdated information and to reflect the group’s current structure and operations. The revised charter describes the purpose of establishing SVHO as a formal structure for coordination and decision-making (to enable member agencies to execute joint activities necessary for the goal of preventing and ending veteran homelessness), SVHO’s structure (the group is comprised of a leadership team and support team with various responsibilities), and operating procedures (which involve holding regular meetings). USICH officials told us it was important to have an updated charter that solidified the commitments of the member agencies to the group. VA officials added that updating the charter would help serve as a reminder of the group’s purpose. Coordinated Entry is a process designed to help communities prioritize people who are most in need of assistance by standardizing the assessment process, defining community-wide prioritization policies, and coordinating referrals, among other things. HUD established minimal requirements for Coordinated Entry in a 2012 Continuum of Care Program Interim Rule. HUD officials said they established additional requirements in 2017 in coordination with other federal agencies, including VA. VA also issued a memo in 2017 stating that VAMCs must be actively engaged in their local Coordinated Entry. Efforts to integrate VAMCs into Coordinated Entry fully followed five of the seven leading practices on effective interagency collaboration and partially followed the other two (Bridging Organizational Cultures and Updating and Monitoring Written Guidance and Agreements). A discussion of our assessment follows: Defining Outcomes and Monitoring Accountability. VA established requirements for the VAMCs as they integrate into Coordinated Entry, which include active engagement with the CoC, involvement with case conferencing, and aligning standardized assessments. VA has a checklist that VAMCs use to assess their compliance with Coordinated Entry requirements. According to VA officials, they monitor VA integration into Coordinated Entry through self- assessment checklists that VAMCs are required to submit monthly through an internal VA system. VAMCs are also required to submit monthly operation plans to track their progress. Bridging Organizational Cultures. As we previously reported, collaborating agencies should establish ways to operate across agency boundaries and address their different cultures. VA requires VAMCs to actively engage with all coordinated entry systems within their catchment area. VA has provided some guidance to help VAMCs operate across organizational boundaries as they integrate into Coordinated Entry, but this guidance is broad in some areas. For example, it instructs VAMCs to collaborate with local CoC leadership to establish a clear process for making and receiving referrals and to share aggregate program data with each of their communities as needed. But the guidance does not describe steps that VAMCs can take to do so. In addition, two service providers and staff from two VAMCs told us that it can be challenging to work with multiple CoCs because each has their own processes. Additionally, staff from three VAMCs and one CoC entity told us that staff turnover creates challenges in their coordinated entry systems, including impeding relationship-building among partners. VA’s guidance acknowledges that VAMCs may be working with multiple CoCs, but the guidance does not provide any best practices to help address this issue, nor does it expressly address relationship-building in light of staff turnover. Clarifying Leadership. As previously discussed, VA oversees the integration of the VAMCs into Coordinated Entry. Additionally, USICH and HUD officials told us there was an interagency working group on Coordinated Entry, where several agencies, including USICH, VA, and HUD, convened to discuss, among other things, what was happening in the field and barriers to Coordinated Entry implementation across all homeless programs, including those for veterans. HUD officials told us they also worked closely with VA to fully integrate VAMCs into Coordinated Entry. Clarifying Roles and Responsibilities. VA issued guidance that defined VAMCs roles in Coordinated Entry. For example, one or more representatives must be involved in the community planning process and in case conferencing, with sufficient knowledge and decision-making power to actively engage in each activity. Including Relevant Participants. All homeless assistance organizations should be involved in Coordinated Entry, according to HUD guidance. Coordinated Entry includes CoCs, VAMCs, service providers, and public housing agencies, among others. Staff from one VAMC, one service provider, and one CoC entity that we spoke with described their coordinated entry systems as being inclusive of all relevant stakeholders, including veteran homeless service providers. Identifying Resources. VA funded 86 Coordinated Entry Specialist positions through the HCHV program, of which 81 had been filled, as of January 2020, according to VA officials. Staff from two VAMCs and two CoCs told us that these new positions play an important role in VAMCs’ integration into Coordinated Entry because they serve as a liaison between the CoCs and the VAMCs. Additionally, VA requires that VAMCs dedicate a portion of VA resources (such as HUD-VASH vouchers or VA Homeless Program Residential Treatment beds) for their inclusion into the greater pool of homeless service resources that are accessed by veterans through Coordinated Entry. Updating and Monitoring Written Guidance and Agreements. We previously reported that agencies can strengthen their commitment to working collaboratively by formally documenting their agreements, and that those written agreements are most effective when regularly monitored and updated. As discussed earlier, VA has issued some guidance to help VAMCs integrate into Coordinated Entry. VA has also held webinar trainings and issued some program-specific documents, such as an SSVF Coordinated Entry fact sheet and a “frequently asked questions” document for HUD-VASH. VA has also provided technical assistance by request, according to agency officials. However, as noted earlier, VA’s guidance is broad in some areas and neither provides best practices to help VAMCs working with multiple CoCs, nor expressly addresses relationship-building in light of staff turnover. VA officials told us they do not have plans to issue additional guidance on Coordinated Entry because they believe their current guidance provides sufficient direction. However, several interviewees (staff from three VAMCs, one service provider, and one PHA) told us they need additional guidance on Coordinated Entry, specifically about how to better collaborate among partners. For example, staff from one of the VAMC’s said that while they understood that implementing Coordinated Entry required some flexibility, it would be beneficial if VA provided common parameters that communities could follow. Further, some VA guidance (such as the “frequently asked questions” document for HUD-VASH) may not be accessible by all service providers for VA’s homeless programs because it is stored on the agency’s internal system (the Homeless Programs Hub) or provided via technical assistance only upon request. Staff from two VAMCs stated that VA could better disseminate guidance. Additionally, one service provider and one PHA told us it would be helpful for VA to share best practices on collaboration used in other parts of the country. By providing additional information on how VAMC staff and service providers can collaborate with local partners, such as best practices, and making available guidance readily accessible, VA can help ensure that VAMCs and service providers are able to more effectively collaborate with other local providers to serve homeless veterans. According to VA officials, since 2011, VA has focused on three primary outcome measures for the homelessness assistance programs we selected for review: 1) placement into permanent housing, 2) employment, and 3) negative exits from programs. DOL developed four critical measures for HVRP, including the placement rate for total enrollment, which tracks the total number of program participants employed in one or more jobs. VA and DOL officials told us they review their performance measures annually and adjust them as needed. National level performance data for fiscal years 2015 to 2019 show that five of the seven selected programs we reviewed have generally met their performance targets (see table 4). However, two programs, HUD-VASH and DCHV, have not met some of their targets. Specifically, in four of the last five years, HUD-VASH did not meet its targets for “percent housed in HUD-VASH housing” and “percent housed within 90 days.” In the last two years (2018 and 2019), HUD-VASH did not meet its targets for “negative exits”; however, VA had decreased the target for those years (making it more difficult to meet). DCHV did not meet its targets for “exits to permanent housing” for the last three fiscal years, and “negative exits” for two of the last five fiscal years. According to VA officials, factors that have affected VAMCs abilities to meet HUD-VASH performance targets—some of which are challenges identified by local VAMC staff and providers that we have discussed previously—include an insufficient number of case management staff, which has led to fewer veteran admissions into HUD-VASH and a lack of safe and affordable housing for veterans. VA officials told us that DCHV program outcomes have been affected by factors including discharges to other transitional housing programs (which would not be included under an exit to permanent housing) and limited affordable housing resources. To help improve program outcomes for HUD-VASH, VA officials told us they are focusing on increasing HUD-VASH voucher utilization, such as by using vouchers for non-Veteran Housing Administration eligible homeless veterans through the HUD-VASH Continuum program and expanding project-based HUD-VASH efforts (discussed previously). To improve DCHV program outcomes, VA officials said they are holding in- depth discussions with DCHV staff to highlight lessons learned from those VAMCs that are meeting performance targets. The performance measures used for the selected programs we reviewed reflected most of the attributes of successful performance measures that we identified in prior work (see table 5). VA’s measures fully reflected all six of these attributes. DOL’s measures fully reflected five attributes and partially reflected one, the reliability attribute. Performance measures that include these attributes are effective in monitoring progress and determining how well programs are achieving their goals. A discussion of our assessment of VA’s and DOL’s performance measures follows: Clarity. VA’s and DOL’s policies clearly state the names and descriptions of the performance measures we reviewed. The names and descriptions are also consistent with the methodologies that were used to calculate them. Measureable Target. VA and DOL have established quantifiable, numerical targets for their performance measures, which allows them to compare expected and actual results. VA officials told us they developed the targets for their measures by first obtaining baseline data and then looking at historical and projected performance. HVRP service providers identify their own targets during the annual grant competition process, according to DOL officials. DOL officials told us they provide some parameters, such as the national targets, to help providers develop their individual targets. Objectivity. VA’s and DOL’s performance measurement policies describe what is expected to be measured (for example, the percent housed and percent employed). They also indicate which specific population (veterans) and under what timeframes (the relevant reporting period). Baseline and Trend Data. Nearly all the measures have baseline and trend data for the last five fiscal years. The exceptions are measures that have been recently discontinued. Having baseline and trend data allows VA and DOL to monitor changes in program performance. Linkage. DOL’s performance measures for HVRP align with one of DOL’s agency-wide strategic objectives to provide veterans with resources and tools to gain and maintain employment. DOL officials told us that information about the measures is communicated to grantees through local officials, who review a data dashboard created by DOL officials at headquarters. VA’s performance measures are aligned with VA’s agency-wide goal to end veteran homelessness, as outlined in VA’s most recent strategic plan. VA officials told us they communicate information about the performance measures to the VAMCs and service providers through scorecards. Reliability. Measures reflect this attribute when they produce the same result under similar conditions. Reliability is increased when verification and validation procedures exist, such as checking performance data for significant errors by formal evaluation or audit. VA’s performance measures fully reflected the reliability attribute; DOL’s measures partially reflected it. VA officials told us they ensure data quality through the use of validation processes, error messages, and notifications that appear in real-time as data are entered. Additionally, there are dedicated program offices that work with the VAMC’s and service providers to monitor and reconcile data. Finally, VA’s policies describe steps that should be taken to review and verify the quality of the data. DOL officials told us they review HVRP performance data quality at different levels in the agency (regional and national) and use a data validation tool to identify potential errors. However, DOL officials acknowledge limitations with data quality, namely the lack of an electronic system to compile the data and the potential for human error when entering data into spreadsheets. Further, HVRP service providers may be unclear about the data quality steps to take because DOL’s performance measurement policies provide limited information on data reliability procedures. DOL officials stated that they have conducted webinar training on the data validation tool, but acknowledge that no written policy exits for the data validation process. Without guidance from DOL on the quality control processes that should be applied to performance data, service providers may not understand how to improve data quality and DOL may not have reasonable assurance that these performance data are the most accurate and reliable available. While VA’s measures reflected all the selected attributes of successful performance measures, including communicating linkage, we identified other areas where communication about these measures is not clear. For example, staff from three of the VAMCs we interviewed and two service providers described communication issues related to performance measures for four programs (HUD-VASH, GPD, HVCES, and DCHV). These issues included concerns that VA does not understand the realities on the ground that prevent VAMC staff and service providers from meeting the measures (such as limited housing availability) and VAMC staff being unaware they could use performance scorecards to drill down and learn more about why their performance targets were not met. Additionally, some VAMC staff and service providers we interviewed do not fully understand the measures. For example, DCHV and HCHV staff we interviewed from four VAMCs and three GPD service providers told us they have felt penalized for transitioning veterans from a VA homeless assistance program to another program or to substance abuse or mental health treatment because VA’s performance measures count these transitions as “negative exits.” According to VA officials, however, there are only three instances where participant program exits are counted as negative: 1) when participants are asked to leave for failure to follow rules; 2) when participants leave for failure to comply with program requirements; and 3) when participants leave without telling program staff. VA officials told us they have implemented processes to obtain quarterly feedback from VAMCs and service providers—through operation or actions plans—about the measures, including feedback about not meeting performance targets. However, HUD-VASH staff from one VAMC said that they have reported their concerns about not having information on how to improve performance to VA leadership and GPD staff from another VAMC and two GPD service providers said they have reported their concerns about how negative exits are measured, but the concerns have not been addressed. Additionally, staff from another VAMC were unaware that VA had a way for them to provide formal feedback about the performance measures, suggesting that VA’s feedback process and avenues of communication may lack clarity. We previously reported that improving the communication of performance information among staff and stakeholders can enhance or facilitate the use of performance information by agency managers. Performance information can be used to identify gaps in performance, improve organizational processes, and improve performance. Clearer communication by VA’s Homeless Programs Office about performance measurement—what performance measures capture and how to obtain and provide feedback—would help VAMCs and service providers better understand how their program data are used to measure performance and therefore how to improve performance, which could also help VA better assess program outcomes. VA, HUD, and DOL published some annual reports during the last five fiscal years that monitored the performance of some of the selected homelessness assistance programs for veterans we reviewed. In addition, they conducted a limited number of evaluations to assess their overall effectiveness or impact and conducted other studies that examined other aspects of the programs, such as characteristics of program participants. Program evaluations are systematic studies that use research methods to address specific questions about program performance. We identified two program evaluations conducted by or on behalf of HUD and VA that assessed the impact of HUD-VASH. Published in 2016, the Family Options study examined how the effects of three types of programs—permanent housing subsidies (such as HUD-VASH vouchers), community-based rapid rehousing, and project-based transitional housing—compared with one another and with the usual care available to homeless families. Findings from the Family Options study indicated that giving people experiencing homelessness priority access to deep permanent housing subsidies, such as housing choice vouchers, benefitted program participants by improving housing stability. However, as discussed in the study, heads of households that received permanent housing subsidies experienced a reduction in employment in comparison to participants in other programs. The permanent housing subsidy also cost more than the other programs. The second study was the HUD-VASH Exit study. Published in 2017, the study was part of an effort to improve program effectiveness. It assessed how and why veterans exit the HUD-VASH program, identified obstacles to their obtaining and maintaining housing with a HUD-VASH voucher, described the value of services, and identified barriers to successful collaboration between VA and HUD in administration of the program. Among other things, the study found that the program was successful, as demonstrated by high rates of retention in housing, and that relationships with community partners and the ability to connect veterans to community resources contributed to successful outcomes. While the several other studies and reports we identified did not assess the impact of programs, some did analyze program performance or outcomes (for example, the agencies’ annual performance plans and reports), and others assessed specific aspects of the programs (for example, factors associated with exiting homelessness programs and characteristics of program participants). VA officials noted that resource limitations constrain their ability to conduct impact evaluations. However, they stated that in the future, they plan to evaluate new programs and models, such as the SSVF’s rapid resolution program (discussed previously). DOL officials told us they have commissioned an impact evaluation for HVRP, which is scheduled to be completed in 2022. The study is assessing the effectiveness of the HVRP program on improving homeless veterans’ employment outcomes and will build knowledge about program models including variations. We found that HUD and DOL have developed plans outlining the evaluations they plan to conduct and the steps they used to create their plans, but VA did not. VA’s National Center on Homelessness Among Veterans, which conducts research and assesses the effectiveness of VA’s homelessness programs, has an evaluation agenda listed on its website that describes the Center’s planned studies, but not the steps taken to develop the agenda and prioritize what studies to conduct. HUD and DOL have also developed policies describing the steps the agencies take to ensure evaluation quality and rigor. VA’s National Center on Homelessness Among Veterans, on the other hand, does not have written policies on evaluation quality. VA officials told us they ensure the quality and rigor of the Center’s work by submitting study results for publication through a peer-reviewed standard scientific protocol, consistent with other VA research, but had not yet developed formal written policies as their processes are well known in the Center. However, the Foundations for Evidence-Based Policymaking Act of 2018—enacted in January 2019—will now require VA and other agencies to, among other things, designate an evaluation officer who is to establish and implement an agency evaluation policy and assess the coverage, quality, methods, consistency, effectiveness, independence, and balance of the portfolio of evaluations, policy research, and ongoing evaluation activities of the agency. The Act requires agencies to develop written annual evaluation plans—that discuss steps taken to develop the plan such as how studies were prioritized—to be submitted with their annual performance plan. In June and July 2019, the Office of Management and Budget released its initial guidance on implementing the Act, and additional guidance is forthcoming. The Act also includes provisions for GAO to conduct studies to review agency implementation efforts. VA, HUD, and USICH have taken significant steps to ensure effective collaboration between the agencies and among local service providers when addressing veteran homelessness. However, VA can help local agency staff and service providers better collaborate by fully incorporating leading practices for interagency collaboration. More specific and accessible information on how to collaborate with partners through Coordinated Entry, including on key activities such as making referrals and sharing data, could position local VA staff and service providers to better aid homeless veterans with services at the local level. Opportunities also exist for the agencies to improve some performance measurement procedures. Documenting its data quality processes can help give DOL reasonable assurance that these performance data are the most accurate and reliable available. Additionally, providing clearer communication about performance measurement—what the performance measures capture and how to obtain and provide feedback—can help VA ensure that VAMCs and service providers have a better understanding of how their program data are used in measuring performance (and how to improve performance), which may also help VA better assess program outcomes. We are making a total of three recommendations, two to VA and one to DOL. Specifically: VA’s Under Secretary for Health should provide additional information, such as best practices, about how VA medical centers and service providers participating in Coordinated Entry can collaborate with local partners on key activities (for example, making referrals and sharing data) and ensure that this information and other resources are accessible to VA medical center staff and service providers. (Recommendation 1) The Assistant Secretary for DOL’s Veterans’ Employment and Training Service should document its data quality validation processes for performance data for the Homeless Veterans’ Reintegration Program and disseminate these processes to service providers. (Recommendation 2) VA’s Under Secretary for Health should clearly communicate with local VA staff and service providers about how it measures performance and how to obtain and provide feedback about performance measures. (Recommendation 3) We provided a draft of this report to DOL, HUD, USICH and VA for review and comment. DOL and VA provided written comments, which are reproduced in appendixes III and IV, respectively. HUD and VA provided technical comments, which we incorporated as appropriate. A USICH official stated that USICH did not have concerns with the proposed recommendations and had no additional comments on the draft. In its comments, DOL neither agreed nor disagreed with our recommendation that it document and disseminate its data quality validation processes for performance data for HVRP (Recommendation 2). DOL stated that it agreed with the importance of data quality validation processes and noted that it uses a data validation tool (discussed earlier in our report). In addition, DOL provided new information in its comments on the draft report, stating that the agency released a user manual and training video for field staff and grantees on the validation tool and provided a hyperlink to additional information, including the user manual. While the user manual outlines the steps for downloading the validation tool and how to run validation tests, it does not describe what validation tests are run or the data quality reviews that DOL officials told us occurred at the regional and national level, as discussed earlier in our report. Therefore, we maintain our recommendation that DOL document all of its data quality validation processes for HVRP performance data and disseminate them to service providers to give the agency reasonable assurance that its performance data are the most accurate and reliable available. VA agreed with our recommendations in its written comments (Recommendations 1 and 3) and outlined actions it plans to take to address them, including: Providing additional information, such as successful strategies, about how VAMCs and service providers participating in Coordinated Entry can collaborate with local partners on key activities and enhancing communication through monthly calls on Coordinated Entry collaboration, including case conferencing, streamlined referral processes, and data sharing that will be recorded and accessible any time by staff. Clearly communicating with local VA staff and service providers about how it measures performance and how to obtain and provide feedback about performance measures. VA’s target completion date for these actions is May 2021. In addition, the draft report we originally sent the agencies included recommendations to VA, HUD, and USICH to revise their SVHO working group charter. However, the agencies informed GAO that they had issued a revised charter in late March and VA and HUD provided a copy of the final charter. Based on our review of the charter, we revised our discussion of the charter in the report and removed the recommendations. We are sending copies of this report to the appropriate congressional committees, the Secretary of the Department of Veterans Affairs, the Secretary of the Department of Housing and Urban Development, the Secretary of the Department of Labor, the Executive Director of the U.S. Interagency Council on Homelessness, and other interested parties. In addition, this report will be available at no charge on GAO’s website at https://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-8678 or cackleya@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix V. This report focuses on federal programs that provide services to veterans that are experiencing homelessness or are at risk of being homeless and their dependents. Our report (1) describes the challenges agencies and service providers reported experiencing in implementing selected programs that assist homeless veterans; (2) assesses the extent, if any, of overlap and duplication among programs; (3) evaluates how well federal agencies collaborate to address veteran homelessness; and (4) reviews what is known about the performance of selected programs. We identified a total of 16 programs that specifically target homeless veterans by reviewing agency reports, guidance, and other documentation and past GAO and Congressional Research Service reports. From these 16 programs, we selected 7 that we focused on for our first objective on program challenges and our fourth objective on program performance: Housing and Urban Development-Veterans Affairs Supportive Housing (HUD-VASH); Grant and Per Diem (GPD); Supportive Services for Veteran Families (SSVF); Health Care for Homeless Veterans (HCHV); Domiciliary Care for Homeless Veterans (DCHV); Homeless Veteran Community Employment Services (HVCES); and the Homeless Veterans’ Reintegration Program (HVRP). We selected these programs based on size (largest programs based on funding and the number of veterans served) and services offered (a mix of programs addressing a variety of needs). The results of our review of these programs are not generalizable. For all objectives, we selected and interviewed representatives from the following national advocacy organizations for homeless veterans and other knowledgeable groups to obtain subject matter context: the National Alliance to End Homelessness; the National Coalition for the Homeless; the National Coalition for Homeless Veterans; and American Legion. We judgmentally selected these groups based on their knowledge about homeless veteran policy issues, their ability to share perspectives on a variety of homeless veterans’ subpopulations, and their knowledge about federal homelessness grants. We also interviewed officials from the Department of Veterans Affairs (VA), Department of Housing and Urban Development (HUD), Department of Labor (DOL), and the U.S. Interagency Council on Homelessness (USICH). Additionally, we conducted semi-structured interviews with staff from local VA medical centers (VAMCs) and service providers implementing the selected programs we reviewed; public housing agencies (PHAs) that administer HUD-VASH vouchers; and Continuum of Care (CoC) entities across different locations. Specifically, we interviewed staff from six VAMCs (staff for the HUD-VASH, GPD, SSVF, HCHV, HVCES, and DCHV programs); six CoC entities; six PHAs; and 23 service providers (eight GPD providers, seven SSVF providers, two HVRP providers, two providers that were HVRP, SSVF, and GPD grantees, two providers that were HVRP and GPD grantees, and two providers that were HVRP and SSVF grantees). The results of these interviews are not generalizable. The locations where we conducted these interviews were: Atlanta, Georgia; Kansas City, Missouri; Long Island, New York; Los Angeles, California; Helena, Bozeman, Fort Harrison, and Box Elder, Montana; and Seattle, Washington. We judgmentally selected this sample of sites based on several factors. To select those locations, we started with the 67 communities that were designated as Priority 1 communities by VA in 2015. We then judgmentally selected six of those communities based on the following factors: (1) to reflect a mix of communities with high concentrations of homeless veterans and communities certified as having ended veteran homelessness; (2) to reflect geographic diversity (a mix of urban, suburban, and rural locations); (3) proximity of CoCs and VAMCs (to ensure we could interview both local VAMC staff and service providers); and (4) the presence of our selected programs (to cover as many programs as possible). To identify challenges agencies and service providers reported experiencing in implementing selected programs, we interviewed agency officials, VAMCs, service providers, and PHAs. Specifically, we first asked them a general question about what challenges they face. We then analyzed their responses to develop a list of challenges. A second analyst then verified the steps taken to develop the list of challenges. We also reviewed agency reports, program documentation, and available information on trends on homeless veterans and the general homeless population. To determine the extent of duplication or overlap across programs, we reviewed agency guidance, program descriptions, and other documentation to obtain information on program services and beneficiaries for the 16 veteran homelessness programs we identified, using the process we described above. We then applied GAO guidance on duplication and overlap by comparing the programs using the following definitions: duplication occurs when two or more programs provide the same services to the same beneficiaries; overlap occurs when two or more programs offer similar services to similar beneficiaries. To identify potential benefits and challenges of overlap, we reviewed past GAO reports, and conducted interviews, as outlined above. To assess how federal agencies collaborate to address veteran homelessness, we first identified two collaborative mechanisms—the Solving Veterans Homeless as One (SVHO) working group and VA’s integration into Coordinated Entry—by reviewing agency reports, guidance, and other documentation and interviewing agency officials. We then assessed the collaborative efforts against leading interagency collaboration practices identified in prior GAO work. Specifically, we assessed the extent to which the SVHO working group and VA integration into Coordinated Entry used each leading practice using three categories. “Fully follows” indicates that actions related to a practice reflected most or all of the issues to consider related to the practice; “partially follows” indicates that actions related to a practice reflect some, but not all, the issues to consider related to the practice; and “does not follow” indicates that there have been no actions taken related to the issues to consider for the practice. One analyst reviewed the reports, guidance, and other agency documentation related to the collaborative efforts and made the initial assessment. A second analyst then reviewed this information to make their own determination about the assessment and reach consensus with the first analyst. To determine what is known about the performance of the selected programs we reviewed, we analyzed national performance data for fiscal years 2015 to 2019 from VA and DOL. To assess the reliability of those data, we reviewed the data for obvious errors or inaccuracies by comparing the data to publicly available data from VA’s and DOL’s annual performance reports (to the extent the data were published). We also interviewed VA and DOL officials with knowledge of the systems and methods used to produce these data. We determined that the data we included in the report were sufficiently reliable for purposes of describing program performance for the selected programs we reviewed. To assess if the performance measures the agencies used are effective in monitoring progress, we reviewed VA’s and DOL’s performance measurement guidance. We then compared the measures against selected leading practices we identified in past GAO work. Specifically, our prior work identified ten key attributes for successful performance measures. Measures that include these attributes are effective in monitoring progress and determining how well programs are achieving their goals. We selected six attributes relevant to our analysis. We excluded the remaining four attributes because they are used to assess agency-wide performance and therefore were not applicable to our program-specific analysis. We assessed the performance measures as “fully reflects” if all the performance measures for the selected programs reflected most or all of the definition of the relevant key attribute; “partially reflects” if the measures reflected some, but not all, of the definition of the relevant key attribute; and “does not reflect” if the measures did not reflect the definition of the relevant key attribute. One analyst reviewed the performance measures and guidance and made the initial assessment. A second analyst then reviewed this information to make their own determination about the assessment and reach consensus with the first analyst. To determine the extent to which VA, HUD, and DOL had evaluated selected programs, we conducted a literature search for studies conducted during the last five fiscal years. We also obtained program evaluations from VA, HUD, and DOL. Additionally, we reviewed the agencies’ evaluation policies and interviewed agency officials to obtain additional information about the agencies’ program evaluation efforts. We conducted this performance audit from January 2019 to May 2020 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We identified 16 federal programs that target their services specifically to veterans who are homeless or are at risk of becoming homeless. These programs are funded through the Departments of Veterans Affairs (VA), Housing and Urban Development (HUD) and Labor (DOL). As shown in table 6, the programs provide permanent and transitional housing, health care, rehabilitation, employment assistance, and supportive services, such as assistance with rent, utility, or moving costs. Eligibility requirements vary by program. VA’s Grant and Per Diem (GPD) program awards grants to community- based agencies for transitional housing and case management for homeless veterans. In 2017, VA implemented changes to the program and, as seen in table 7, the program now has six housing models. Each model targets a different population of homeless veterans or focuses on different areas of service. Some VA medical centers (VAMCs), service providers, and public housing agencies (PHAs) we interviewed told us the homelessness programs for veterans we reviewed are working well. Others identified additional challenges that were specific to individual selected programs we reviewed, in particular the GPD program that underwent recent changes. For example, with respect to GPD’s new models, four service providers and staff from three VAMCs told us that the housing models and program guidelines are too restrictive and complex, which hinder the delivery of services. Staff from another VAMC told us that the new housing models are based on best practices but the implementation is challenging. For example, one of these models, Bridge Housing, generally limits the length of stay to 90 days which GPD staff from one VAMC and one provider told us is not enough time to meet the needs of some clients. However, VA officials said that veterans are not asked to leave Bridge Housing after 90 days if the housing plan has not been executed by this time. According to VA officials, GPD grantees can provide transitional housing and services to family members of a veteran, however, the program can only pay per diem for veterans, not their families. In addition, two GPD service providers told us that the bed reimbursement rate is inadequate to cover the cost of providing services to veterans, and GPD staff at one VAMC told us that the existing funding does not cover the full cost of the program. Despite these cited challenges, our review of national performance data shows that VA is generally meeting the performance targets for these six models. Finally, GPD staff at one VAMC told us that there is a shortage of shelters and beds in some areas, and as a result, they cannot accommodate all the homeless veterans that are referred to them. In addition to the contact named above, Allison Abrams (Assistant Director), Erika Navarro (Analyst in Charge), Kimberly Bohnet, Emily Bond, Evelyn Calderon, Lilia Chaidez, Jill Lacey, and Jessica Sandler made key contributions to this report. Also contributing to this report were Ryan Cirillo, Ben Licht, Marc Molino, Sarah Veale, James Whitcomb, and Michael Zose.","Despite a large decline over the past decade, an estimated 37,000 veterans in the United States experienced homelessness in 2019. GAO was asked to review federal assistance programs for homeless veterans. Among other objectives, this report (1) discusses challenges agencies and service providers cited in implementing selected programs; (2) evaluates how USICH, VA, and HUD collaborate; and (3) reviews selected programs' performance. GAO analyzed federal guidance and performance data; interviewed VA, DOL, HUD and USICH officials; and met with local VA staff and service providers from selected programs at six sites. Programs were selected based on size (the largest based on funding and veterans served) and the kinds of services they offer; sites were selected for geographic diversity, among other factors. The results of these interviews are not generalizable. The Departments of Veterans Affairs (VA), Housing and Urban Development (HUD), and Labor (DOL) provide programs aimed at assisting homeless veterans. Local VA staff and service providers—who receive grants from federal agencies—provide services to homeless veterans within their communities. In interviews with GAO, they cited challenges in implementing selected programs: Staffing shortages. Shortages in VA case managers may limit the number of veterans they are able to serve. Housing cost and availability. High housing costs and limited stock make it difficult to find affordable housing for homeless veterans. Transportation limitations . Service providers may cover large geographic areas and limited public transportation strains their ability to provide services. Steps that VA and other agencies are taking to address these challenges include contracting out for services to address limited staffing, offering rental subsidies for very low-income veterans, and working with community partners to assist with transportation. Two key federal collaboration mechanisms to address veteran homelessness are a U.S. Interagency Council on Homelessness (USICH) working group to coordinate agencies at the national level and a HUD initiative that coordinates stakeholders at the local level. Both efforts incorporate many leading practices for effective interagency collaboration identified by GAO in prior work. However, local VA staff and service providers stated that they would like additional information—such as on best practices—from VA on how to collaborate more effectively at the local level. While VA has issued some broad guidance, more specific information on effective collaboration on issues such as making referrals and data sharing could better position local VA staff and service providers to aid homeless veterans. VA and DOL have multiple measures in place to assess the performance of the programs GAO selected for review, and most of the measures met their national targets from 2015 to 2019. The measures incorporated most leading practices for performance measurement—such as having measureable targets. However, DOL does not have a written policy on its process for validating its performance data, and as a result may not have reasonable assurance that these are the most accurate and reliable performance data available. Further, some local VA staff and service providers misunderstood how program data were used in assessing performance while others were unaware of VA's feedback processes on performance measures. Additional clarity and communication about VA's performance measures would help local VA staff and service providers better understand how program data are used to measure—and can be used to improve—performance. GAO is making three recommendations: VA should provide additional information on how local providers can collaborate; DOL should document data quality validation processes for its homeless veterans program; and VA should clearly communicate with local VA staff and providers about how it measures performance and how to obtain and provide feedback. VA agreed with the recommendations. DOL neither agreed nor disagreed. GAO maintains that DOL should document its data quality processes, as discussed in the report."
"Congress is responsible for funding, establishing rules regulating the Army, and conducting oversight of a number of functions including manning, equipping, training, and readiness. On an annual basis, shortly after the President's Budget Request is transmitted to Congress, congressional defense authorizing committees and subcommittees typically hold three separate oversight hearings focused on (1). the Army's budget request; (2). the Army's posture; and (3). Army modernization. In addition to these three hearings, Congress sometimes conducts additional hearings on a wide variety of topics to include specific weapons systems under development and other Army efforts, programs, or initiatives. The Army's 2019 Modernization Strategy, intended to guide Army modernization efforts through at least 2035, is arguably ambitious and proposes the development of a number of new weapons systems and capabilities that could also have implications for force structure as well. In its oversight role of the Army's modernization process, Congress may consider a common oversight architecture that provides both an element of continuity for hearings and a standard by which Congress might evaluate the efficacy of the Army Modernization Plan. The 2019 Army Modernization Strategy (AMS) aims to transform the Army into a force that can operate in the air, land, maritime, space, and cyberspace domains (i.e. multi-domain), by 2035. The previous 2018 AMS Report to Congress introduced the Army's six materiel modernization priorities (see below). The 2019 AMS expands the Army's approach beyond those six priorities, outlining a more holistic approach to modernization while maintaining the Army's six Materiel Modernization Priorities from the 2018 AMS. Army Modernization involves modernizing 1) how they fight (doctrine, tactics, techniques, and procedures); 2) what they fight with (equipment); and 3) who they are (Army culture and personnel). This report will focus on the ""what they fight with"" component of Army Modernization as well as associated force structure issues. The Army wants to transform itself into a force capable of implementing its new proposed operational concept referred to as Multi-Domain Operations (MDO) described below. According to the Army, in order to successfully execute MDO, the Army will need to change how it physically postures the force and how it organizes units. In addition, the Army says it will require new authorities and the ability to employ new capabilities and emerging technologies. The Army, in addition to integrating fully with the other Services, will need access to national-level capabilities and require a high level of day-to-day Interagency involvement to successfully prosecute MDO. In this regard, MDO would require not only Department of Defense (DOD) ""buy in"" and resources, but would also need similar support from the other members of the Interagency and Congress as well. The Army's Modernization Strategy is part of a hierarchy of strategies intended, among other things, to inform the Service's respective modernization plans. These strategies include: National Security Strategy (NSS): published by the Administration, it is intended to be a comprehensive declaration of global interests, goals, and objectives of the United States relevant to national security. National Defense Strategy (NDS): published by DOD, it establishes objectives for military planning in terms of force structure, force modernization, business processes, infrastructure, and required resources (funding and manpower). National Military Strategy (NMS): published by the Chairman of the Joint Chiefs of Staff (CJCS), it supports the aims of the NSS and implements the NDS. It describes the Armed Forces' plan to achieve military objectives in the near term and provides the vision for ensuring they remain decisive in the future. The NMS is a classified document. The Army Strategy : articulates how the Army achieves its objectives and fulfills its Title 10 duties to organize, train, and equip the Army for sustained ground combat. The Army Strategy provides guidance for budget planning and programming across multiple Future Year Defense Programs (FYDP). All strategies share a common theme, that of ""return to great power competition"" which posits that ""Russia and China are competitors to the United States and both nations are looking to overturn the current rules-based international order."" This requires the U.S. military to focus its doctrine and resources on countering this perceived threat. In this regard, the aforementioned strategies also re-focus the Service's modernization efforts towards defeating the perceived Chinese and Russian military threat. As previously noted, the possibility exists for a variety of Army Modernization-hearings spanning a number of different Congresses. In this regard, a common oversight architecture could potentially provide both an element of continuity and a means by which Congress might evaluate the progress of the Army's modernization efforts. Such a potential architecture might examine: Is the Army's Modernization Strategy appropriate given the current and projected national security environment? Is the Army's Modernization Strategy achievable given a number of related concerns? Is the Army's Modernization Strategy affordable given current and predicted future resource considerations? To support this potential oversight architecture, a number of topics for discussion are provided for congressional consideration. The Army contends its modernization strategy addresses the challenges of the future operational environment and directly supports the 2018 National Defense Strategy's (NDS) line of effort, ""Build a More Lethal Force."" The congressionally established Commission on the National Defense Strategy for the United States (Section 942, P.L. 114-328 ) questions this assertion, noting: We came away troubled by the lack of unity among senior civilian and military leaders in their descriptions of how the objectives described in the NDS are supported by the Department's readiness, force structure, and modernization priorities , as described in the Future Years Defense Program (FYDP) and other documents. (Emphasis added.) While the Commission's finding is directed at DOD as a whole, it suggests there are questions concerning how modernization priorities and plans support the National Defense Strategy and, by association, the National Security and Military strategies as well. While the aforementioned strategic documents all feature the central theme of ""return to great power competition"" vis-à-vis Russia and China, it is not readily apparent to many observers how the Army's modernization priorities directly support this goal. In this regard, a more detailed examination of the Army's new Modernization Strategy's alignment with the National Security, National Defense, and National Military Strategies could prove beneficial to policymakers. While it can be considered essential that the Army's Modernization Strategy aligns with and supports the National Security, National Defense, and National Military strategies of the United States, it can be argued that of equal importance is whether the Army's Modernization Strategy takes into account the military strategies of peer competitors. A May 2019 study offers a summary of Russian and Chinese strategies and suggests a U.S. response: The core of both countries' challenge to the U.S. military lies in what are commonly called anti-access/area denial (A2/AD) systems: in more colloquial terms, a wide variety of missiles, air defenses, and electronic capabilities that could destroy or neutralize U.S. and allied bases, surface vessels, ground forces, satellites, and key logistics nodes within their reach. Both China and Russia have also developed rapidly deployable and fearsomely armed conventional forces that can exploit the openings that their A2/AD systems could create. Despite these advances, both China and Russia still know that, for now, they would be defeated if their attacks triggered a full response by the United States. The key for them is to attack and fight in a way that Washington restrains itself enough for them to secure their gains. This means ensuring that the war is fought on limited terms such that the United States will not see fit to bring to bear its full weight. Focused attacks designed to pick off vulnerable members of Washington's alliance network are the ideal offensive strategy in the nuclear age, in which no one can countenance the consequences of total war. The most pointed form of such a limited war strategy is the fait accompli. Such an approach involves an attacker seizing territory before the defender and its patron can react sufficiently and then making sure that the counterattack needed to eject it would be so risky, costly, and aggressive that the United States would balk at mounting it—not least because its allies might see it as unjustified and refuse to support it. Such a war plan, if skillfully carried out in the Baltics or Taiwan, could checkmate the United States. The U.S. military must shift from one that surges to battlefields well after the enemy has moved to one that can delay, degrade, and ideally deny an adversary's attempt to establish a fait accompli from the very beginning of hostilities and then defeat its invasion. This will require a military that, instead of methodically establishing overwhelming dominance in an active theater before pushing the enemy back, can immediately blunt the enemy's attacks and then defeat its strategy even without such dominance. From an operational perspective, new systems developed as part of the Army's Modernization Strategy would potentially need to not only provide a technological improvement over legacy systems but also support the Army's operational concept—in this case Multi Domain Operations (MDO)—intended to counter Russia and China. A detailed examination of how these systems directly counter Russian and Chinese military capabilities and strategies could prove beneficial to policymakers. In February 2011, then-Secretary of Defense Robert Gates told West Point Cadets; We can't know with absolute certainty what the future of warfare will hold, but we do know it will be exceedingly complex, unpredictable, and—as they say in the staff colleges—""unstructured."" Just think about the range of security challenges we face right now beyond Iraq and Afghanistan: terrorism and terrorists in search of weapons of mass destruction, Iran, North Korea, military modernization programs in Russia and China, failed and failing states, revolution in the Middle East, cyber, piracy, proliferation, natural and man-made disasters, and more. And I must tell you, when it comes to predicting the nature and location of our next military engagements, since Vietnam, our record has been perfect. We have never once gotten it right, from the Mayaguez to Grenada, Panama, Somalia, the Balkans, Haiti, Kuwait, Iraq, and more—we had no idea a year before any of these missions that we would be so engaged. If former Secretary of Defense Gates' admonition that we have never accurately predicted our next military engagement holds true, it is a distinct possibility that a direct conventional confrontation with Russia or China posited by the National Security Strategy might not come to pass. In the case of China, it has been suggested it is more likely U.S. and Chinese interests will clash in the form of proxy wars and insurgencies as opposed to a great power war. The recent U.S.—Iranian confrontation is an example of such a non-great power military challenge with the potential for a rapid escalation or a protracted proxy war. With this in mind, some may consider any strategy not relevant to other potential military challenges other than great power war to be ill-conceived. To insure the Army's new Modernization Strategy is relevant, an examination of how its applies to potential adversaries other than China and Russia as well as other possible military challenges not related to great power competition could be useful to policymakers. According to the Army's Strategy: The Army Mission—our purpose—remains constant: To deploy, fight, and win our Nation's wars by providing ready, prompt, and sustained land dominance by Army forces across the full spectrum of conflict as part of the Joint Force. As part of this Joint Force, it can be argued the Army's Modernization Strategy should complement the modernization strategies of the other Services and vice versa. In order for the Service's modernization strategies to complement one another, a joint war-fighting concept is essential and, at present, no such a concept is agreed by all Services. According to the Army: A Joint war-fighting concept would provide a common framework for experimentation and validation of how the joint force must fight, what capabilities each of the services must have, and how the Joint force should be organized—further allowing civilian leaders to make cross-service resource decisions. While the Army favors and is promoting MDO for adoption by the other Services, the Air Force is focusing on Multi Domain Command and Control, the Navy on Distributed Maritime Operations, and the Marine Corps on the Marine Corps Operating Concept. While these operating concepts share some common themes such as great power competition and a need to be able to operate in a variety of domains, they differ in approach but not to an extent where a common joint warfighting concept could not be agreed upon. Despite this lack of a common joint warfighting concept, the Army claims its modernization programs are aligned with the other Services. Army leadership has noted that ""the three of us [Army, Air Force, and the Department of the Navy] are completely aligned,"" citing the ""development of a hypersonic weapon as a good example."" While the Army might be collaborating now more than ever with the Air Force and Navy as it claims, collaborating at the programmatic level does not necessarily constitute a complementary relationship of the Service's modernization strategies. In this regard, Congress might decide to examine the relationship between the Service's modernization strategies to insure they are complementary. Army officials reportedly have identified 31 modernization initiatives—not all of them programs of record—intended to support the Army's six modernization priorities. The Army notes that ""there are interdependencies among the 31 initiatives which need to fit together in an overall operational architecture."" Examples of a few of the higher-visibility initiatives grouped by modernization priority include: Long Range Precision Fires: Strategic Long Range Cannon (SLRC). Precision Strike Missile (PrSM). Extended Range Cannon Artillery (ERCA). Next Generation Combat Vehicle: (NGCV) : Optionally Manned Fighting Vehicle (OMFV). Robotic Combat Vehicle (RCV): 3 variants. Armored Multi-Purpose Vehicle (AMPV). Mobile Protected Firepower (MPF). Decisive Lethality Platform (DLP). Future Vertical Lift: Future Attack Reconnaissance Aircraft (FARA). Future Attack Unmanned System (FUAS). Future Long Range Assault Aircraft. Air And Missile Defense: Maneuver Short-Range Air defense (M-SHORAD). Indirect Fire Protection Capability (IFPC). Soldier Lethality: Next Generation Squad Weapons – Automatic Rifle (NGSW-AR). Next Generation Squad Weapons – Rifle (NGSW-R). While some of these initiatives are currently in development and procurement, others are still in the requirements definition and conceptual phase. With so many initiatives and interdependencies, it is reasonable to ask ""can the Army's modernization effort survive the failure of one or more of the 31 initiatives?"" Another potential way of gauging if the Army is ""overreaching"" would be to establish how much modernization is required before the Army considers itself sufficiently modernized to successfully implement MDO as currently envisioned. One question for the Army might be ""What are the Army's absolute ""must-have"" systems or capabilities to ensure the Army can execute MDO at its most basic level?"" In March 2019 testimony to the Senate Armed Services Committee, then Secretary of the Army Mark Esper and Chief of Staff of the Army Mark Milley stated: To guide Army Futures Command, the Army established a clear set of modernization priorities that emphasize rapid maneuver, overwhelming fires, tactical innovation, and mission command. Our six modernization priorities will not change , and they underscore the Army's commitment to innovate for the future. We have one simple focus—to make Soldiers and units more capable and lethal. Over the last year, we identified $16.1B in legacy equipment programs that we could reinvest towards 31 signature systems that are critical to realizing Multi-Domain Operations and are aligned with these priorities. While the Army's prioritization of and commitment to its modernization initiatives can be viewed as essential to both resourcing and executing the Army's Modernization Strategy, some defense experts have questioned the Army's modernization priorities. For example, the Heritage Foundation's August 2019 report ""Rebuilding America's Military Project: The United States Army,"" suggests different modernization priorities: Given the dependence of MDO on fires and the poor state of Army fire systems, the inclusion and first placement of long-range precision fires is logical. Based on the importance of the network to MDO and the current state of Army tactical networks, logically the network should come next in priority. Third, based on the severely limited current capabilities, should come air and missile defense, followed by soldier lethality in fourth. Next-generation combat vehicles are fifth; nothing has come forward to suggest that there is a technological advancement that will make a next-generation of combat vehicles significantly better. Finally, the last priority should be future vertical lift, although a persuasive argument could be made to include sustainment capabilities instead. Nowhere in the MDO concept is a compelling case made for the use of Army aviation, combined with the relative youth of Army aviation fleets. Aside from differing opinions from defense officials and scholars, world events might also suggest the need to re-evaluate the Army's modernization priorities. One example is the September 14, 2019 attack against Saudi Arabian oil facilities, believed to have been launched from Iran, which employed a combination of unmanned aerial vehicles (UAVs) and cruise missiles. It has been pointed out U.S. forces are ill-prepared to address this threat although the Army has a variety of programs both underway and proposed to mitigate this vulnerability. If the September 14, 2019 attacks are replicated not only in the region but elsewhere by other actors, it might make a compelling case to reprioritize Army air and missile defense from fifth out of six modernization priorities to a higher level to address an evolving and imminent threat. Apart from the Army's stated modernization priorities, there might also be other technologies or systems that merit inclusion based on changing world events. First established in 2018, Army Futures Command (AFC) is intended to: Modernize the Army for the future-will integrate the future operational environment, threat, and technologies to develop and deliver future force requirements, designing future force organizations, and delivering materiel capabilities. According to the Army's 2019 Modernization Strategy: Modernization is a continuous process requiring collaboration across the entire Army, and Army Futures Command brings unity of effort to the Army's modernization approach. AFC, under the strategic direction of Headquarters, Department of the Army (HQDA), develops and delivers future concepts, requirements, and organizational designs based on its assessment of the future operating environment. AFC works closely with the Army's modernization stakeholders to integrate and synchronize these solutions into the operational force. While this broad statement provides a basic modernization management concept, it does not address specific authorities and responsibilities for managing Army modernization. Many in Congress have expressed concerns with the relationship between AFC and the Assistant Secretary of the Army for Acquisitions, Logistics, and Technology (ASA (ALT)) who has a statutory role in the planning and resourcing of acquisition programs. The Senate Appropriations Committee's report accompanying it's version of the Department of Defense Appropriations Bill, 2020, directs the Army to clearly define modernization responsibilities: ARMY ACQUISITION ROLES AND RESPONSIBILITIES The Committee has supported efforts by the Army to address modernization shortfalls and deliver critically needed capabilities to the warfighter through establishment of Cross-Functional Teams [CFTs] and ultimately the stand-up of Army Futures Command [AFC]. However, questions remain on the roles and responsibilities of AFC and the Assistant Secretary of the Army (Acquisition, Logistics & Technology) [ASA(ALT)]. As an example, the Committee recently learned of a newly created Science Advisor position within AFC, which seems to be duplicative of the longstanding role of the Deputy Assistant Secretary of the Army for Research and Technology. Additionally, the Committee was concerned to learn that funding decisions on investment accounts, to include science and technology programs, would be directed by AFC rather than ASA(ALT). While the Committee supports AFC's role in establishing requirements and synchronizing program development across the Army, it affirms that ASA(ALT) has a statutory role in the planning and resourcing of acquisition programs. The ASA(ALT) should maintain a substantive impact on the Army's long-range investments, not just serve as a final approval authority. Therefore, the Committee directs the Secretary of the Army to provide a report that outlines the roles, responsibilities, and relationships between ASA(ALT) and AFC to the congressional defense committees not later than 90 days after enactment of this act. The report shall include a clear description of the responsibilities of each organization throughout the phases of the planning, programming, budgeting, and execution of resources . (Emphasis added.) While the Army has placed significant emphasis on the ""revolutionary"" nature of AFC and its role in modernization, questions may remain about whether AFC will provide a significant level of ""value added"" to Army modernization and not encroach on the statutory responsibilities of the ASA (ALT) as well as other major Army organizations having a role in modernization. According to the Army's 2019 Modernization Strategy, the Army plans to build a ""MDO ready force by 2035."" In order for this goal to be achieved, the Army assumes that: The Army's budget will remain flat, resulting in reduced spending power over time. Demand for Army forces will remain relatively constant while it executes this strategy. Research and development will mature in time to make significant improvements in Army capabilities by 2035. Adversary modernization programs will stay on their currently estimated trajectories in terms of capability levels and timelines. It is not clear if ""MDO ready"" equates to a ""fully modernized"" Army or if a certain undefined level of modernization is sufficient for the Army to successfully execute MDO. Originally, Army officials were hoping to field the M-2 Bradley replacement—the Optionally Manned Fighting Vehicle (OMFV)—by 2026. They also planned to field one brigade's worth of OMFVs per year—meaning that it would have taken until 2046 to field OMFVs to all Armored Brigade Combat Teams (ABCTs). On January 16, 2020, the Army decided to cancel the current OMFV solicitation and revise and re-solicit the OMFV requirements on a competitive basis at an unspecified time in the future. Given this cancellation, it may take longer than 2046 to field all OMFVs unless significant budgetary resources are applied to the program. With the Army's somewhat optimistic assumptions about the budget, demand for forces, mature research and development, and the pace of adversary modernization, as well as the scope and complexity of overall Army Modernization, some policymakers may raise questions about whether a full realization of Army modernization initiatives is possible by 2035. In order to support MDO, Army officials reportedly noted in March 2019 that the Army was preparing to make major force structure changes within the next five years. These force structure changes will also be needed to support Army Modernization as new weapons systems could likely require new units and might also mean that existing units are deactivated or converted to different kinds of units. Potential questions for policymakers include: What kinds of new units will be required as a result of Army Modernization? Will existing units be deactivated or converted to support Army Modernization? Will additional endstrength be required to support Army Modernization or will fewer soldiers be needed? Will new Military Operational Specialties (MOSs) be required to support Army Modernization? How will new units be apportioned between the Active and Reserve Components? Where will these new units be stationed in the United States and overseas? Will new training ranges or facilities be required to support Army Modernization? Army officials have said they eliminated, reduced, or consolidated almost 200 legacy weapon systems catalogued in the Future Years Defense Program (FYDP) as part of an effort to shift more than $30 billion to programs related to the ""Big Six"" modernization priorities. The budget review process, known as ""Night Court,"" was initiated by then-Army Secretary Mark Esper. Army officials have said additional reviews will yield lower levels of savings. They have also acknowledged uncertainty in budget assumptions, including total projected funding for the service and long-term costs for modernization priorities as they shift from research, development, test, and evaluation (RDT&E) to procurement activities. Army Lieutenant General James Pasquarette, Deputy Chief of Staff of the Army for Programs (G-8), has said: Our strategy right now assumes a topline that's fairly flat. I'm not sure that's a good assumption. So, when the budget does go down ... will we have the nerve to make the hard choices to protect future readiness? Often that's the first lever we pull—we try and protect end-strength and current readiness at the cost of future readiness.... We don't really have a clear picture of what those bills are right now [for long-term costs of modernization priorities].... There are unrealized bills out there that we're going to have to figure out how to resource and so, right now, I think they're underestimated. Some policymakers and observers have raised questions about the affordability of the Army's modernization strategy. This section seeks to provide context to this question by detailing the Army's requested funding for programs related to its six modernization priorities for FY2020 and the accompanying FYDP, historical and projected funding for the service's RDT&E and procurement efforts in real terms (i.e., inflation-adjusted dollars), changes in the service's budget allocations over time, and planned funding for the service's major defense acquisition programs. According to information provided by the Army, the service requested $8.9 billion in RDT&E and procurement funding for programs related to its six modernization priorities in FY2020. This amount reflects an increase of $3.9 billion (78%) from the FY2019 enacted amount of $5 billion. See Table 1 for a breakdown of projected funding by priority. For FY2020, the Army requested a total of $38.7 billion for its acquisition accounts, including $12.4 billion for RDT&E and $26.3 billion for procurement. Notably, for FY2020, funding requested for programs related to the Army's six modernization priorities, $8.9 billion, accounted for less than a quarter (23%) of its overall acquisition budget request. Potential questions for policymakers include: How has the Army identified funding to pay for programs related to its six modernization priorities? What officials and organizations have been involved? What is the status of these reviews? How can the Army provide more transparency in identifying sources of funding from these reviews? Why does funding for programs related to the Army's six modernization priorities account for a relatively small share of its overall acquisition budget? Should the Army devote a larger share of its overall acquisition budget to its six modernization priorities? What would be some challenges in doing so? When does the Army expect to fully resource programs related to its modernization priorities? How much of the Army's overall acquisition budget should go toward modernization priorities, current acquisition programs, and legacy programs? Some programs related to the Army's six modernization priorities, such as Future Vertical Lift, saw a higher percentage increase in requested funding for FY2020 than others, such as Air and Missile Defense. Do the percentage increases reflect the level of priority the Army is assigning these individual programs—or rising costs associated with new stages of development? The Army's FY2020 unfunded priorities list included $242.7 million for ""modernization requirements"" and $403.9 million for ""lethality requirements,"" among funding for other requirements. Why was the service unable to fund these requirements in its regular budget request? The service projected $57.3 billion in RDT&E and procurement funding for programs related to its six modernization priorities over the FYDP from FY2020 through FY2024. This amount, if authorized and appropriated by Congress, would reflect an increase of $33.1 billion (137%) from projections for the five-year period in the FY2019 budget request. See Table 2 for a breakdown of the projected cost by program. For the five-year period through FY2024, the Army projected a total of $187.5 billion for its acquisition accounts (in nominal dollars), including $58.7 billion for RDT&E and $128.8 billion for procurement. Notably, for the FY2020 FYDP, funding for programs related to the Army's six modernization priorities accounts for less than a third (31%) of its overall acquisition budget. In addition to the previous list, potential questions for policymakers include: How realistic are the Army's assumptions for funding programs related to its six modernization priorities, given uncertainty about their long-term costs and the projected decrease in real terms (i.e., inflation-adjusted dollars) in Army procurement and RTD&E funding over the Future Years Defense Program? Should the level of planned funding change for certain programs to reflect different priorities? What additional tradeoffs or divestments does the Army plan to make to its current acquisition programs or legacy weapon systems in order to fund programs related to its six modernization priorities? What programs may be cut? Taken together and adjusted for inflation (in constant FY2020 dollars), the Army's acquisition accounts—including RDT&E and procurement—have experienced several buildup and drawdown cycles in past decades, with some of the biggest increases occurring during periods of conflict. See Figure 1 . For example, the service's acquisition budget spiked in FY1952 during the Korean War, again in FY1968 during the Vietnam War, and again in FY2008 during the wars in Afghanistan and Iraq. The FY2008 peak was driven in part by the service's procurement of Mine Resistant Ambush Protected (MRAP) vehicles and other programs intended to protect troops in combat zones from roadside bombs. In terms of a non-war peak, the Army received a combined total of $48.7 billion (in constant FY2020 dollars) for RDT&E and procurement in FY1985 during the Cold War—an era in which the service's ""Big Five"" acquisition programs entered service, including the UH-60 Black Hawk utility helicopter (1979), M1 Abrams tank (1980), M2 Bradley fighting vehicle (1981), Patriot air defense system (1981), and AH-64 Apache attack helicopter (1986). The Army projects combined RDT&E and procurement funding will continue to decline in real dollars. The combined level of funding for these accounts is projected to decline from $38.7 billion in FY2020 to $34.3 billion in FY2024 (in constant FY2020 dollars), a decrease over the FYDP of $4.4 billion (11%). Even so, the FY2024 level would remain higher than the Army's historical average of $32.2 billion (in constant FY2020 dollars) for RDT&E and procurement. Potential questions for policymakers include: How may the projected decrease in RDT&E and procurement funding in constant FY2020 dollars over the Future Years Defense Program impact the Army's ability to execute its modernization strategy? If the Army's overall acquisition budget is projected to decrease (in real terms), and funding for programs related to its modernization strategy is projected to increase, what kinds of tradeoffs or divestments does the Army plan to make to its current acquisition programs or legacy weapon systems? How much, if any, of the increase in RDT&E and procurement funding in FY2018 went to programs related to the Army's six modernization priorities? To what extent will projected costs for programs related to the Army's six modernization priorities increase as they shift from RDT&E to procurement activities? The share of funding that the Congress has allocated to Army appropriations accounts has changed over time. Because every dollar spent on military personnel, operation and maintenance, and military construction is a dollar that cannot be spent on RDT&E or procurement, Army budget allocation decisions may impact the service's ability to execute its modernization strategy. For example, the Army uses funds from its Operation and Maintenance (O&M) account to pay the salaries and benefits of most of its civilian employees, train soldiers, and purchase goods and services, from fuel and office supplies to health care and family support. (Today, the account also covers most of the service's costs for Overseas Contingency Operations, or OCO. ) In FY1985, during the Reagan-era buildup, O&M accounted for a smaller share of the Army budget (28%) than it does today (41%) and than it has historically (36%). In the same year, procurement accounted for a larger share of the Army budget (26%) than it does today (14%) and than it has historically (16%). See Figure 2 . Potential questions for policymakers include: What changes in spending on military personnel could impact the Army's ability to execute its modernization strategy, particularly if the service increases end-strength? What changes in spending on operations and maintenance could impact the Army's ability to execute its modernization strategy? What changes in spending on Overseas Contingency Operations (OCO) could impact the Army's ability to execute its modernization strategy? How is the Army reviewing potential ways to control military personnel or operations and maintenance costs to be able to spend more on RDT&E and procurement in support of programs related to its modernization strategy? Including funding planned for FY2020 and FY2021 as part of the FY2020 President's budget request, the Army has an outstanding balance of $120.6 billion (in then-year dollars) for current major defense acquisition programs. Programs with balances greater than $10 billion include the following: CH-47F . The CH-47F Chinook Block II modernization program is intended to increase the carrying capacity of the cargo helicopter in part by upgrading its rotor blades and flight control and drive train components (estimated balance: $25.9 billion); Joint Light Tactical Vehicle (JLTV) . 59 This program is intended to replace a portion of the Humvee fleet with a new light-duty vehicle (estimated balance: $20.8 billion, $3 billion of which is projected to come from services other than the Army); and Armored Multi-Purpose Vehicle (AMPV). 60 This program is intended to replace the M113 armored personnel carrier family of vehicles with a new armored vehicle (estimated balance: $11.7 billion). For the cumulative funding status of each of the Army's current major defense acquisition programs as of the FY2020 President's budget re quest, including prior-year amounts and outstanding balances, see Figure 3 . For projected funding for each of the Army's current major defense acquisition programs as of the FY2020 President's budget request, see Figure 4 . As part of the FY2020 President's budget request, the Army proposed reducing funding for some current modernization programs, including the Joint Light Tactical Vehicle (JLTV) and the Armored Multi-Purpose Vehicle (AMPV), in part to pay for modernization priorities. As previously discussed, DOD has not yet designated many of the programs related to the Army's six modernization priorities as major defense acquisition programs (MDAPs). However, DOD appears to have designated as pre-major defense acquisition programs (pre-MDAPs) some programs related to the Army's six modernization priorities, such as Future Vertical Lift. When possible, the Army plans to begin equipping units with technology on a limited basis in coming years in advance of fully equipping units to take advantage of new technologies as soon as practicable. See Table 3 . Potential questions for policymakers include: How do programs included in the Army's six modernization priorities relate to current major defense acquisition programs? Should the Army fund certain current major defense acquisition programs, such as Integrated Air and Missile Defense, at higher levels to better conform to programs related to its six modernization priorities? How may resourcing requirements for programs related to the Army's six modernization priorities impact funding for its current major defense acquisition programs? Given the rapidly changing and unpredictable security challenges facing the United States and the scope of the Army's modernization program, congressional oversight could be challenged in the future as the Army attempts to develop and field an array technologies and systems. A potential oversight framework which constantly evaluates the relevance, the feasibility, and affordability of the Army's modernization efforts could benefit both congressional oversight and related budgetary activities.","In October 2019, the Army published a new modernization strategy aimed at transforming the Army in order to conduct Multi-Domain Operations (MDO) which are intended to address the current and future actions of near-peer competitors Russia and China. The Army's Modernization Strategy is part of a hierarchy of strategies designed, among other things, to inform the Service's respective modernization plans. These strategies include the National Security Strategy (NSS), the National Defense Strategy (NDS), the National Military Strategy (NMS), and the Army Strategy. The Army's Modernization Strategy establishes six material modernization priorities: Long Range Precision Fires. Next Generation of Combat Vehicles. Future Vertical Lift. Army Network. Air and Missile Defense. Soldier Lethality. Because the Army's Modernization Strategy covers the years from 2020 to 2035, the possibility exists for a variety of Army modernization hearings spanning a number of different Congresses. In this regard a common oversight architecture could potentially provide both an element of continuity and a means by which Congress might evaluate the progress of the Army's modernization efforts. Such a potential architecture might examine: Is the Army's Modernization Strategy appropriate given the current and projected national security environment? Is the Army's Modernization Strategy achievable given a number of related concerns? Is the Army's Modernization Strategy affordable given current and predicted future resource considerations? For FY2020, funding requested for programs related to the Army's six modernization priorities, $8.9 billion, accounted for less than a quarter (23%) of its overall acquisition budget. The service projected $57.3 billion in research, development, test, and evaluation (RDT&E) and procurement funding for programs related to its six modernization priorities over the Future Years Defense Program (FYDP) from FY2020 through FY2024. This amount, if authorized and appropriated by Congress, would reflect an increase of $33.1 billion from spending projections for the five-year period in the FY2019 budget request. Meanwhile, the Army projected a total of $187.5 billion for its acquisition accounts (in nominal dollars) over this period, including $128.8 billion for procurement and $58.7 billion for RDT&E. Thus, for the FY2020 FYDP, funding for programs related to the Army's six modernization priorities accounts for less than a third (31%) of its overall acquisition budget. This report provides a number of possible questions and observations related to a potential Army modernization oversight architecture which could serve to provide both an element of continuity for hearings and a standard by which Congress might evaluate the efficacy of Army Modernization."
"As described in figure 1, to support U.S. exports, EXIM offers four major types of financing products: direct loans, loan guarantees, export-credit insurance, and working capital guarantees. Regardless of type, EXIM’s financing products generally have one of three maturity periods: Short- term transactions are for less than 1 year; medium-term transactions are from 1 to 7 years long; and long-term transactions are more than 7 years. As we reported in July 2018, for all financing types, EXIM currently conducts a number of preauthorization and postauthorization antifraud activities. See the examples shown in figure 2. Fraud and “fraud risk” are distinct concepts. Fraud—obtaining something of value through willful misrepresentation—can be challenging to detect and adjudicate because of its deceptive nature. Fraud risk exists when individuals have an opportunity to engage in fraudulent activity, have an incentive or are under pressure (e.g., financial pressures) to commit fraud, or are able to rationalize committing fraud. When fraud risks can be identified and mitigated, fraud may be less likely to occur. Although the occurrence of fraud indicates there is a fraud risk, a fraud risk can exist even if actual fraud has not yet been identified or adjudicated. According to the Standards for Internal Control in the Federal Government, executive-branch agency managers are responsible for managing fraud risks and implementing practices for combating those risks. Specifically, federal internal control standards call for agency management officials to assess the internal and external risks (including fraud risks) their entities face as they seek to achieve their objectives. The standards state that as part of this overall assessment, management should consider the potential for fraud when identifying, analyzing, and responding to risks. Risk management is a formal and disciplined practice for addressing risk and reducing it to an acceptable level. The leading practices in the Fraud Risk Framework call for agencies to identify inherent fraud risks affecting the program, examine the suitability of existing fraud controls, and then prioritize mitigating “residual” fraud risks—that is, risks remaining after antifraud controls are adopted. Specifically, according to the assess component of the Fraud Risk Framework, managers who effectively assess fraud risks attempt to fully consider the specific fraud risks the agency or program faces, analyze the potential likelihood and impact of fraud schemes, and then ultimately document prioritized fraud risks. Moreover, managers can use the fraud risk assessment process to determine the extent to which controls may no longer be relevant or cost-effective. Leading practices that are consistent with this component include conducting quantitative or qualitative fraud risk assessments at regular intervals, or both, of the likelihood and impact of inherent risks on the program’s objectives, and determining the agency’s risk tolerance for the inherent fraud risks; identifying specific sources for gathering information about fraud risks, including information on fraud schemes that are reflected in adjudicated cases of fraud; examining the suitability of existing fraud controls for preventing fraud and mitigating fraud risks identified; and documenting in the program’s fraud risk profile the analysis of the types of inherent fraud risks assessed, their perceived likelihood and impact, managers’ risk tolerance, and the prioritization of the inherent fraud risks and any residual fraud risks. As we reported in July 2018, the Fraud Reduction and Data Analytics Act of 2015 requires the Office of Management and Budget (OMB) to establish guidelines that incorporate the leading practices of GAO’s Fraud Risk Framework. The act also requires federal agencies to submit to Congress a progress report each year, for 3 consecutive years, on implementation of the risk management and internal controls established under the OMB guidelines. OMB published guidance under OMB Circular A-123 in 2016 affirming that federal managers should adhere to the leading practices identified in the Fraud Risk Framework. As we reported in December 2018, EXIM identifies itself as subject to the act, and, as such, follows it. The Fraud Risk Framework is also aligned with federal internal control standards, specifically Principle 8 (“Assess Fraud Risk”) of the Green Book. Federal internal control standards also state that excessive pressures, such as financial pressures (e.g., delinquent federal debt), can pose a fraud risk factor to agency programs as these pressures can provide an incentive or motive to commit fraud. Although the existence of financial pressure alone does not necessarily indicate that fraud exists or will occur, financial pressure is often present when fraud does occur. Applicants for EXIM programs who have delinquent federal debt may not be able to obtain certain types of financing until they resolve their debts. Specifically, under 31 U.S.C. § 3720B, applicants who are delinquent on federal nontax debts may not receive federal financial assistance, including such assistance provided by EXIM, until they satisfactorily resolve the delinquency (e.g., pay in full or negotiate a new repayment plan). However, 31 U.S.C. § 3720B also provides that an agency head may waive this restriction. Additionally, OMB’s Circular No. A-129, Policies for Federal Credit Programs and Non-Tax Receivables, prescribes to agencies the policies, procedures, and standards for screening program participants to determine whether they are delinquent on any federal debt when applying to federal credit programs. We identified fraud risks—generally involving four overall fraud risk factors—by examining EXIM-associated court cases of fraud adjudicated from calendar year 2012 through calendar year 2017. We then communicated these fraud risks to EXIM, and EXIM officials reported examples of existing controls it uses to help detect and mitigate these fraud risks. EXIM also provided documentation reflecting its efforts to conduct a fraud risk assessment that considered various fraud risks affecting its major financing product lines, including fraud risks we identified during this review. We identified fraud risks—generally involving four overall fraud risk factors—by examining 44 EXIM-associated closed court cases of fraud adjudicated from calendar year 2012 through calendar year 2017. Specifically, the various fraud risks we identified overall involved one or more of the fraud risk factors illustrated in figure 3 below: opportunities to falsify self-reported information on applications or financial pressures that potentially incentivized participants or employees to commit fraud; opportunities to circumvent or take advantage of EXIM or lender opportunities to circumvent the intent of EXIM’s programs by diverting loan proceeds and other EXIM financing for personal use or benefit instead of for the export of U.S. goods. See appendix I for a summary of these 44 cases we reviewed. These 44 cases illustrate the financial risks associated with fraud against EXIM. Federal and state courts combined have ordered restitution of $82.4 million in the 44 adjudicated cases, but much of that restitution has not yet been paid. For example, as of October 2018, the total remaining unpaid restitution amount is $71.6 million, or over 80 percent. In one fraud case we reviewed, which was adjudicated in 2013, a federal court ordered a convicted U.S. exporter to pay EXIM $8.6 million in restitution for the fraud that he committed in a loan guarantee program. Since 2013, the participant has paid back $25.00 of this amount. EXIM reported having existing antifraud controls to mitigate the fraud risks we identified. Specifically, we communicated to EXIM the fraud risks we identified from our review of the 44 adjudicated cases. In response, EXIM officials described general antifraud controls the agency currently uses to help detect and mitigate each of the fraud risks we identified. The officials stated that EXIM has experience with all the fraud risks we identified and stated that they were generally confident that EXIM’s antifraud controls were appropriate for mitigating the risks. EXIM officials consider many of the fraud risks that we identified as risks that could impact any of the agency’s financing programs (i.e., credit insurance, loan guarantees, direct loans, or working capital guarantee programs). EXIM officials provided examples of the general antifraud controls that they said EXIM uses to mitigate the fraud risks we identified across all agency financing products. According to EXIM officials and as illustrated in figure 4 below, these controls include: fraud prevention and detection procedures; due diligence standards; and a list of “red flags” that EXIM staff should be aware of and is used to identify indicators of potential fraud and corruption that may appear on EXIM transaction documents. Officials said that their confidence in the controls stems from seeing a reduction in fraud cases since the early 2000s after these antifraud controls were put in place. EXIM officials clarified that this confidence does not stem from completing a comprehensive fraud risk assessment of fraud risks impacting all of its financing products consistent with the leading practices in the Fraud Risk Framework. EXIM also provided documentation reflecting its efforts to conduct a fraud risk assessment that considered various fraud risks affecting its major financing product lines, including fraud risks we identified during this review. EXIM officials said that the fraud risks we identified were generally already known to EXIM as they relate to or are very similar to those fraud risk factors contained in EXIM’s list of red flags. EXIM officials acknowledged that assessing its fraud risks and evaluating the agency’s existing antifraud controls may indicate opportunities for EXIM to further adapt EXIM’s antifraud controls to mitigate any residual fraud risks within its tolerance level. Such assessments can further help EXIM mitigate fraud and the resulting effects across all product lines before they occur, which includes the length of time it can take for EXIM to fully recover from restitution losses after fraud has been perpetrated, as illustrated in the 44 cases presented in appendix I. EXIM has procedures for detecting delinquent federal debt owed by EXIM applicants and participants. However, EXIM is missing additional opportunities to use readily available SAM data to identify ineligible applicants or participants that may have delinquent federal debt, and to use such data to determine eligibility or assess repayment fraud risk. EXIM has procedures to detect delinquent federal debt owed by applicants and participants that include reviewing their credit reports and requiring applicants to certify that they and other participants do not have such delinquent debt. Under 31 U.S.C. § 3720B, applicants who are delinquent on federal nontax debts may not receive federal financial assistance, including direct loans, loan guarantees, or loan insurance until they satisfactorily resolve the delinquency (e.g., pay in full or negotiate a new repayment plan). 31 U.S.C. § 3720B does not address delinquent federal tax debt; however, such delinquent federal debt may also pose a fraud risk or repayment fraud risk to EXIM’s financing programs. Additionally, OMB Circular No. A-129 prescribes to agencies the policies, procedures, and standards for screening program participants to determine whether they are delinquent on any federal debt when applying to federal credit programs, including recommending that agencies ask applicants to self-certify on their applications that they have no delinquencies; requiring agencies to obtain and review applicants’ credit reports; and encouraging agencies to use appropriate databases, such as the Department of the Treasury’s Do Not Pay portal sources to identify delinquent federal debtors during the application screening process. According to EXIM officials, the agency employs procedures to ensure its policies and processes meet these requirements for applicable financing products. Specifically, and as illustrated in figure 5 below, these procedures include reviewing the following: Self-certifications: EXIM applications for relevant financing programs include a self-certification by the applicant that the applicant does not have delinquent federal debt. However, as we have reported in the past, relying on applicants to self-report adverse actions on their applications, instead of verifying such information, could cause an agency to miss opportunities to develop a more-complete picture of the applicants. Credit reports: EXIM obtains credit reports for applicants and participants in some financing products. In particular, EXIM’s internal Loan Guarantee and Credit Insurance Manual of 2015 communicates the 31 U.S.C. § 3720B restriction to loan officers and instructs them to review the borrower’s credit report to check whether the borrower is delinquent on any federal debt. If the loan officer finds that the credit report reflects such delinquent federal debt, the manual further instructs the loan officer to advise and request guidance from EXIM’s Trade Finance Director and the Office of General Counsel. However, as we have reported in the past, some delinquent federal tax debt may not appear on the credit reports unless the Internal Revenue Service has filed a lien on the delinquent federal tax debt. World Check: EXIM, through the assistance of a third-party vendor, also makes use of some data sources listed in the Do Not Pay sources as part of its prescreening application process and possibly during postauthorization risk-based reviews. Specifically, EXIM officials told us that EXIM uses Thomson Reuters’s World Check database to identify federal debts owed by applicants as part of its Character, Reputational, and Transaction Integrity (CRTI) review process that is managed by EXIM’s Credit Review and Compliance Division. The World Check database currently checks over 20 different watch lists and other databases, including lists of entities excluded from doing business with the federal government maintained in GSA’s SAM. According to EXIM, other sources in the World Check database that reveal such federal debts could also lead indirectly to the discovery of delinquent federal debt. However, as discussed below, this check of SAM does not involve a check of delinquent federal debt. This CRTI review process is conducted during the underwriting (i.e., the preauthorization review) phase and may occur throughout the life cycle of transactions, such as during EXIM’s postauthorization risk-based reviews. EXIM officials told us that, as part of this process, loan officers or other EXIM officials send the names of applicants to EXIM librarians, who perform a manual search of the World Check database, review results, and return relevant results to EXIM officials for their consideration. EXIM officials noted that this process can be challenging, particularly when librarians perform searches on applicants with common names, which produce many results that are not useful. EXIM officials told us that EXIM does not track information on instances in which an applicant’s delinquent federal debt prevents a transaction from moving forward or prevents a specific applicant’s participation in a transaction. Consequently, EXIM officials told us that EXIM has no records of this happening. However as described in greater detail below, EXIM does not make use of readily available SAM data to identify delinquent federal debts owed by applicants and participants, which could limit its ability to detect instances in which applicants and participants owe these debts. EXIM is missing additional opportunities to use readily available SAM registration data to identify potentially ineligible applicants and participants that may have delinquent federal debt or may otherwise pose a repayment fraud risk. Specifically, while EXIM employs procedures that may reveal applicants’ delinquent federal debts, as described above, EXIM’s procedures for identifying applicants and participants with delinquent federal debt do not include a search of a specific data element in the SAM database that can be used to detect delinquent federal debtors. The data element we refer to here is the Debt Subject to Offset flag, which may reflect both nontax and tax delinquent federal debts owed. As mentioned previously, SAM is a government-wide information system that federal agencies can use to obtain information on businesses that do business with the federal government, including an entity’s Debt Subject to Offset status. The Debt Subject to Offset data element in SAM indicates that the entity potentially has a delinquent federal debt subject to collection under the Treasury Offset Program. The GSA officials who maintain the SAM database told us that all federal agencies have the legal authority to use the SAM registration database free of charge. Specifically, all federal agencies can use this database to manually search by an entity’s name, Data Universal Numbering System number, or Tax Identification Number for the purpose of detecting whether the entity potentially has delinquent federal debt, such as by identifying whether an entity’s SAM record contains the Debt Subject to Offset flag. Further, GSA officials also told us that all federal agencies are able to request batches of SAM registration data free of charge, for the purpose of matching these data to agency data by entities’ names, Data Universal Numbering System numbers, or Tax Identification Numbers for the purpose of identifying entities that may have the Debt Subject to Offset flag in SAM, among other available data. Performing data analytics, such as batch matching, on available data is a leading practice cited in the Fraud Risk Framework that we have reported can help improve agency efforts to combat fraud. In particular, we have found in prior work that using available data to verify that EXIM’s transaction applicants are not delinquent on federal debt can help EXIM assure applicant eligibility is consistent with federal guidance, provide reasonable assurance of repayment, and help prevent fraud. We have also found that using available data to independently verify self-reported delinquent federal debt information, such as self-reported information on delinquent federal tax debt owed, is a key detection and monitoring component of fraud prevention. We identified additional opportunities for EXIM to manually use SAM’s online database or data-matching approaches to identify applicants or participants with potential delinquent federal debt. Specifically, we registered in SAM to conduct several manual searches (by entities’ Data Universal Numbering System numbers, Tax Identification Numbers, and names) and confirmed that it can be used to conduct such searches without incurring any external costs charged by GSA. For example, we conducted two Data Universal Numbering System number searches and found two active EXIM participants appearing in SAM’s registration database with a Debt Subject to Offset flag. We also obtained historical SAM data from GSA and EXIM transaction data and confirmed that these data sources could be used to identify EXIM applicants and participants with potentially delinquent federal debt in a batch match (rather than manual, case-by-case searches). As illustrated in our batch-matching results below, we found this data-matching process can provide an opportunity to match these data sets using the Tax Identification Numbers and Data Universal Numbering System numbers for the entities in both data sets. Our batch-matching analyses indicated that, from calendar year 2014 through calendar year 2016, EXIM authorized transactions that had an aggregate authorization value of approximately $34.3 billion. Of that amount, we found the following: An aggregate authorization value of about $1.7 billion was associated with 32 U.S.-based companies that had a delinquent federal debt indicator in SAM in the same month that these transactions were authorized. The transactions mostly involved U.S.-based applicants and exporters. As mentioned above, associated parties we reviewed included not only the applicant, but also participants involved, including the borrower, buyer, and exporter, which may or may not be the applicant. While the results of this analysis do not mean that EXIM should have suspended these transactions in accordance with 31 U.S.C. § 3720B, these results nonetheless indicate that the data in SAM that indicate delinquent federal debt could provide an opportunity for EXIM to identify important indicators of applicants or other transaction participants with potential delinquent federal debt when determining their program eligibility and assessing any related fraud risks or repayment risks they present during EXIM’s preauthorization CRTI reviews. Because the Debt Subject to Offset flag may indicate either nontax debts or tax debts, it is possible that some of these entities owed delinquent federal nontax debts that are applicable under 31 U.S.C. § 3720B, indicating EXIM should have considered suspending these transactions. However, it is also possible that some of these entities owed delinquent federal tax debts that are not applicable under 31 U.S.C. § 3720B, but that may pose a fraud risk or repayment risk nonetheless. By using the Debt Subject to Offset flag as an indicator of these delinquent federal debts and gathering additional information on the specific facts and circumstances of each case, EXIM would be better positioned to assess the relevant compliance, fraud, and repayment risks an applicant’s or participant’s delinquent federal debt may pose. An aggregate authorization value of about $4.1 billion was associated with 97 U.S.-based companies that had a delinquent federal debt indicator in SAM during the transaction maturity period (i.e., after the month they were approved, but before the transactions’ maturity date). These transactions mostly involved U.S.-based applicants and exporters. As mentioned above, associated parties we reviewed included not only the applicant, but also participants involved, including the borrower, buyer, and exporter, which may or may not be the applicant. 31 U.S.C. § 3720B may prevent applicants with federal financial debts from obtaining loans, guarantees, and insurance; thus, it does not apply to any delinquent federal debt accrued after loan approval. However, we looked at potential delinquent debt accrued after approval because delinquent debt accrued after approval and during the transaction maturity period might affect EXIM’s view of a financing product’s repayment risk. Further, EXIM already conducts similar postauthorization monitoring to identify such risks through its use of World Check as part of its CRTI process described above. Thus, these results nonetheless illustrate that EXIM can use SAM data during EXIM’s postauthorization CRTI reviews to identify transaction participants with potential delinquent federal debt and determine the extent to which they may pose a repayment fraud risk. Prior to sharing our results with EXIM, EXIM officials told us that they have access to SAM entity registration records, but they believe searching the SAM registration database is a time-consuming process that should be reserved for rare circumstances. Further, EXIM officials also told us that using the SAM registration database to identify applicants or participants that have the Debt Subject to Offset flag in SAM would yield few results because the vast majority of their financing program participants are foreign-based entities, and thus would not also be contractors for the U.S. government and registered in SAM. However, we identified many U.S.-based entities that had a delinquent federal debt indicator either in the month a transaction was approved, or during the transaction’s maturity period, by searching in the SAM database and analyzing SAM data for EXIM applicant and participants, as described above. Further, it is not clear whether performing manual searches or batch matches with SAM data to identify delinquent federal debtors would be any more time-consuming than EXIM’s current procedures for doing so, which include manual searches of World Check and obtaining and reviewing credit reports, as described above. When we met with EXIM officials to communicate our batch-matching results above, they expressed concern that these results could imply that EXIM is doing business with applicants or participants with delinquent federal debt. They then indicated that they were interested in obtaining SAM registration data so that they could determine whether it would be feasible for them to perform the same type of analysis that we performed. In a subsequent meeting, EXIM officials informed us that they were also able to obtain current SAM registration data, analyze the SAM data against active EXIM participant data, and find dozens of active EXIM participants with the Debt Subject to Offset flag in SAM. The results of our analyses, as well as EXIM’s own experience with the SAM data, suggest EXIM also has an additional and practical opportunity to incorporate searches of SAM entity registration data as part of its postapproval monitoring of transactions to enhance its monitoring of and response to risks in ongoing transactions. Standards for Internal Control in the Federal Government state that management should use quality data to achieve agency objectives. For example, this could include agencies obtaining relevant operational, financial, or compliance-related data from reliable internal and external sources in a timely manner based on identified information requirements, and then using such data to make informed decisions and evaluate performance in achieving program objectives and addressing risks. Without also pursuing available debt data in SAM’s registration database, as an additional layer of due diligence, to identify applicants with delinquent federal debt during underwriting and compliance reviews, EXIM is potentially forgoing practical opportunities to use such data when determining applicants’ program eligibility and to adopt leading practices for managing repayment fraud risks across EXIM’s financing programs. In particular, such available SAM data can provide opportunities to verify independently the applicants’ self-certification of delinquent federal debts they owe and assess whether the applicants may have misrepresented their delinquent federal debt status on their applications, which is a fraud risk in the application process; detect potential delinquent federal debts that are not apparent in credit make informed eligibility decisions during preauthorization CRTI reviews and assess repayment fraud risk during postauthorization CRTI reviews. EXIM assumes the credit and country risks that the private sector is unable or unwilling to accept, including the risk of losses due to fraud. EXIM’s financing products face various fraud risks, and EXIM has begun to take steps to consider these fraud risks as part of a full fraud risk assessment, as we recommended in July 2018. However, because it remains unclear whether EXIM’s actions fully respond to the recommendations of our July 2018 report, we will continue to monitor EXIM’s progress in fully assessing its fraud risks. EXIM also employs procedures to detect delinquent federal debt owed by EXIM applicants and participants. However, EXIM is missing opportunities to use readily available SAM data to identify applicants or participants that may misrepresent their delinquent federal debt status and pose a repayment fraud risk to EXIM financing programs. Applicants or participants with delinquent federal debt could be one of many repayment fraud risks that could indicate an increased risk of nonrepayment and incentives to commit fraud against EXIM. EXIM officials believe searching SAM is a time-consuming process that would yield few results. However, manually searching SAM’s online registration database for the purpose of determining whether an applicant or participant may have a Debt Subject to Offset flag may not be any more time-consuming than what EXIM currently performs through its preauthorization or postauthorization CRTI reviews. Nevertheless, we demonstrate in this report the practicality and illustrate results of using such data through multiple approaches, such as batch matching, without incurring any external costs charged by GSA. By assessing the practicality of searching SAM data, EXIM may determine that this source of data provides an additional tool for combating fraud. Implementing these antifraud activities could further help EXIM verify program eligibility, identify repayment fraud risk, and provide EXIM with reasonable assurance that it is effectively and efficiently carrying out its mission of supporting U.S. jobs and the export of U.S. goods. We are making the following two recommendations to EXIM: EXIM’s chief operating officer should direct EXIM’s Credit Review and Compliance Division to assess and document the practicality of incorporating into its preauthorization CRTI reviews searches of data elements in SAM that indicate delinquent federal debts owed by applicants, and, if practical, implement relevant approaches—such as manual searches or batch matching. (Recommendation 1) EXIM’s chief operating officer should direct EXIM’s Credit Review and Compliance Division to assess and document the practicality of incorporating into its postauthorization CRTI reviews searches of data elements in SAM that indicate delinquent federal debts owed by applicants and participants, and, if practical, implement relevant approaches—such as manual searches or batch matching. (Recommendation 2) We provided a draft of this report to EXIM for review and comment. In its written comments, reproduced in appendix II, EXIM concurred with our recommendations and stated that it will move forward to implement them. EXIM also provided technical comments, which we incorporated as appropriate. In its written comments, EXIM noted a number of points it referred to as “key concerns.” These points do not disagree with our findings, conclusions, or recommendations. Specifically, EXIM stated that the 44 cases we reviewed involved transactions that were approved between 2002 and 2012 and that it will continue to work with the Department of Justice to collect restitution payments. Additionally, EXIM stated that it is in full compliance with 31 U.S.C. § 3720B and the related provisions of OMB Circular A-129 guidance regarding restrictions on doing business with delinquent federal debtors. However, assessing EXIM’s compliance with 31 U.S.C. § 3720B or OMB Circular A-129 was outside the scope of this report. Finally, for the purpose of implementing our recommendations, EXIM requested the data pertaining to the U.S.-based companies that we found to have a delinquent federal debt indicator in SAM. To identify those companies, we used (1) an extract of data that EXIM provided to us, and (2) GSA SAM data, which EXIM told us it can and has already obtained directly from GSA. We will provide EXIM with a copy of the EXIM data it requested. However, we believe EXIM will be better positioned to assess the practicality of checking the SAM delinquent federal debt flag by continuing to obtain the SAM data directly from GSA. We are sending copies of this report to the appropriate congressional committees, the president and board chairman of EXIM, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staffs have any questions about this report, please contact me at (202) 512-6722 or bagdoyans@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III. The table below summarizes the information we reviewed during our review of the 44 Export-Import Bank of the United States (EXIM)- associated cases of alleged fraud that we were able to identify and determine were adjudicated from calendar years 2012 through 2017. Such information includes financing product types, dates adjudicated, fraud schemes, fraud risk factors involved, and the amount of EXIM restitution owed and paid to EXIM. As mentioned earlier, the fraud risks we identified in these 44 cases related to one or more of the following four fraud risk factors: (1) opportunities to falsify self-reported information on applications or transaction documents, (2) financial pressures that potentially incentivized participants or employees to commit fraud, (3) opportunities to circumvent or take advantage of EXIM or lender controls, or (4) opportunities to circumvent the intent of EXIM’s financing programs by diverting loan proceeds and other EXIM financing for personal use or benefit instead of for the export of U.S. goods. In addition to the contact named above, Jonathon Oldmixon (Assistant Director), Flavio Martinez (Analyst in Charge), Mason Calhoun, Marcus Corbin, Anthony Costulas, Adam Cowles, David Dornisch, Heather Dunahoo, Paulissa Earl, Colin Fallon, Dennis Fauber, Jennifer Felder, Dragan Matic, Maria McMullen, Christopher H. Schmitt, Albert Sim, Sabrina Streagle, and Steve Westley made key contributions to this report.","As the export credit agency of the United States, EXIM's mission is to help support U.S. jobs by facilitating the export of U.S. goods and services through direct loans, loan guarantees, working capital guarantees, and credit insurance. In September 2018, the total outstanding and undisbursed amount of these products and unrecovered default claims was about $60.5 billion, according to EXIM. The Export-Import Bank Reform Reauthorization Act of 2015 included a provision for GAO to review EXIM's antifraud controls. This report (1) describes key antifraud controls EXIM says it has for mitigating fraud risks identified by GAO, and describes EXIM's efforts to perform a fraud risk assessment that considers these fraud risks; and (2) identifies EXIM's procedures to detect delinquent federal debt owed by applicants and participants, and assesses additional opportunities to use readily available data to do so. GAO analyzed 44 EXIM-associated court cases of fraud adjudicated from calendar years 2012 through 2017, examined EXIM transaction data, and interviewed EXIM and GSA officials. GAO also analyzed data identifying delinquent federal debt as well as EXIM's procedures for doing so. The Export-Import Bank of the United States (EXIM) reported having antifraud controls in place for mitigating the fraud risks that GAO identified and communicated to EXIM officials. GAO reviewed 44 EXIM-associated court cases involving fraud and identified fraud risks involving the four fraud risk factors illustrated in the figure below. GAO communicated these fraud risks to EXIM officials, and they provided examples of antifraud controls they use to help mitigate these fraud risks for their major financing products. In February 2019, EXIM also provided documentation reflecting its efforts to conduct a fraud risk assessment that considered various fraud risks affecting its major financing product lines, including fraud risks GAO identified during this review. EXIM has procedures to identify applicants and participants with delinquent federal debt, such as obtaining applicants' credit reports that may indicate these debts when they apply to EXIM's financing programs. However, EXIM is missing additional opportunities to use readily available data containing delinquent federal debt indicators from the General Services Administration's (GSA) System for Award Management (SAM) to detect applicants and participants that may have delinquent federal debt. Federal law states that applicants who are delinquent on federal nontax debts may not receive federal direct loans, loan guarantees, or loan insurance until the delinquent debt is satisfactorily resolved. Using data from SAM, GAO found that, from calendar years 2014 through 2016, EXIM authorized transactions that had an aggregate authorization value of about $1.7 billion and were associated with 32 U.S.-based companies that had a delinquent federal debt indicator in SAM in the same month EXIM authorized these transactions . While these results alone do not mean EXIM should have suspended these transactions, they do indicate that there is a practical opportunity to use SAM data to help determine applicants' eligibility. Without assessing the practicality of pursuing such readily available data, EXIM is potentially forgoing opportunities to perform additional due diligence that would help inform its decisions about applicants' and participants' program eligibility and fraud risks. GAO is recommending that EXIM assess the practicality of using available SAM data and data-analytical approaches to detect applicants and participants with potential delinquent federal debt. EXIM concurred with GAO's recommendations."
"This report provides background information and potential issues for Congress for three types of large unmanned vehicles (UVs) that the Navy wants to develop and procure in FY2021 and beyond: Large Unmanned Surface Vehicles (LUSVs); Medium Unmanned Surface Vehicles (MUSVs); and Extra-large Unmanned Undersea Vehicles (XLUUVs). The Navy wants to acquire these large UVs as part of an effort to shift the Navy to a new fleet architecture (i.e., a new combination of ships and other platforms) that is more widely distributed than the Navy's current fleet architecture. The Navy is requesting $579.9 million in FY2021 research and development funding for these large UVs and their enabling technologies. The issue for Congress is whether to approve, reject, or modify the Navy's acquisition strategies and FY2021 funding requests for these large UVs. The Navy's proposals for developing and procuring them pose a number of oversight issues for Congress. Congress's decisions on these issues could substantially affect Navy capabilities and funding requirements and the shipbuilding and UV industrial bases. In addition to the large UVs covered in this report, the Navy also wants to develop and procure smaller USVs and UUVs, as well as unmanned aerial vehicles (UAVs) of various sizes. Other U.S. military services are developing, procuring, and operating their own types of UVs. Separate CRS reports address some of these efforts. UVs are one of several new capabilities—along with directed-energy weapons, hypersonic weapons, artificial intelligence, and cyber capabilities—that the Navy says it is pursuing to meet emerging military challenges, particularly from China. UVs can be equipped with sensors, weapons, or other payloads, and can be operated remotely, semi-autonomously, or (with technological advancements) autonomously. They can be individually less expensive to procure than manned ships and aircraft because their designs do not need to incorporate spaces and support equipment for onboard human operators. UVs can be particularly suitable for long-duration missions that might tax the physical endurance of onboard human operators, or missions that pose a high risk of injury, death, or capture of onboard human operators. Consequently UVs are sometimes said to be particularly suitable for so-called ""three D"" missions, meaning missions that are ""dull, dirty, or dangerous."" The Navy has been developing and experimenting with various types of UVs for many years, and has transitioned some of these efforts (particularly those for UAVs) into procurement programs. The Department of the Navy states, for example, that its inventory of 4,094 aircraft at the end of FY2019 included 99 UAVs, that its projected inventory of 3,912 aircraft at the end of FY2020 will include 45 UVs, and that its projected inventory of 4,075 aircraft at the end of FY2021 will include 57 UVs. Even so, some observers have occasionally expressed dissatisfaction with what they view as the Navy's slow pace in transitioning UV development efforts into programs for procuring UVs in quantity and integrating them into the operational fleet. As shown in Figure 1 and Figure 2 , the Navy organizes its USV acquisition programs into four size-based categories that the Navy calls large, medium, small, and very small, and its UUV acquisition programs similarly into four size-based categories that the Navy calls extra-large, large, medium, and small. The large UVs discussed in this CRS report fall into the top two USV categories in Figure 1 and the top UUV category in Figure 2 . The smaller UVs shown in the other categories of Figure 1 and Figure 2 , which are not covered in this report, can be deployed from manned Navy ships and submarines to extend the operational reach of those ships and submarines. The large UVs covered in this CRS report, in contrast, are more likely to be deployed directly from pier to perform missions that might otherwise be assigned to manned ships and submarines. Because the large UVs covered in this report can be deployed directly from pier to perform missions that might otherwise be assigned to manned ships and submarines, some observers have a raised a question as to whether the large UVs covered in this report should be included in the top-level count of the number of ships in the Navy. Navy officials state that they have not yet decided whether to modify the top-level count of the number of ships in the Navy to include these large UVs. The Navy wants to acquire the large UVs covered in this report as part of an effort to shift the Navy to a new fleet architecture that is more widely distributed than the Navy's current architecture. Compared to the current fleet architecture, this more distributed architecture is to include proportionately fewer large surface combatants (or LSCs, meaning cruisers and destroyers), proportionately more small surface combatants (or SSCs, meaning frigates and Littoral Combat Ships), and the addition of significant numbers of large UVs. Figure 3 provides, for the surface combatant portion of the Navy, a conceptual comparison of the current fleet architecture (shown on the left as the ""ship centric force"") and the new, more distributed architecture (shown on the right as the ""distributed/nodal force""). The figure does not depict the entire surface combatant fleet, but rather a representative portion of it. In the figure, each sphere represents a manned ship or USV. (Since the illustration focuses on the surface combatant force, it does not include UUVs.) As shown in the color coding, under both the current fleet architecture and the more distributed architecture, the manned ships (i.e., the LSCs and SSCs) are equipped with a combination of sensors (green), command and control (C2) equipment (red), and payloads other than sensors and C2 equipment, meaning principally weapons (blue). Under the more distributed architecture, the manned ships would be on average smaller (because a greater share of them would be SSCs), and this would be possible because some of the surface combatant force's weapons and sensors would be shifted from the manned ships to USVs, with weapon-equipped LUSVs acting as adjunct weapon magazines and sensor-equipped MUSVs contributing to the fleet's sensor network. As shown in Figure 3 , under the Navy's current surface combatant force architecture, there are to be 20 LSCs for every 10 SSCs (i.e., a 2:1 ratio of LSCs to SSCs), with no significant contribution from LUSVs and MUSVs. This is consistent with the Navy's current force-level objective, which calls for achieving a 355-ship fleet that includes 104 LSCs and 52 SSCs (a 2:1 ratio). Under the more distributed architecture, the ratio of LSCs to SSCs would be reversed, with 10 LSCs for every 20 SSCs (a 1:2 ratio), and there would also now be 30 LUSVs and 40 MUSVs. A January 15, 2019, press report states The Navy plans to spend this year taking the first few steps into a markedly different future, which, if it comes to pass, will upend how the fleet has fought since the Cold War. And it all starts with something that might seem counterintuitive: It's looking to get smaller. ""Today, I have a requirement for 104 large surface combatants in the force structure assessment; [and] I have [a requirement for] 52 small surface combatants,"" said Surface Warfare Director Rear Adm. Ronald Boxall. ""That's a little upside down. Should I push out here and have more small platforms? I think the future fleet architecture study has intimated 'yes,' and our war gaming shows there is value in that."" Another way of summarizing Figure 3 would be to say that the surface combatant force architecture (reading vertically down the figure) would change from 20+10+0+0 (i.e., a total of 30 surface combatant platforms, all manned, and a platform ratio of 2-1-0-0) for a given portion of the surface combatant force, to 10+20+30+40 (i.e., a total of 100 surface combatant platforms, 70 of which would be LUSVs and MUSVs, and a platform ration of 1-2-3-4) for a given portion of the surface combatant force. The Navy refers to the more distributed architecture's combination of LSCs, SSCs, LUSVs, and MUSVs as the Future Surface Combatant Force (FSCF). Figure 3 is conceptual, so the platform ratios for the more distributed architecture should be understood as notional or approximate rather than exact. The point of the figure is not that relative platform numbers under the more distributed architecture would change to the exact ratios shown in the figure, but that they would evolve over time toward something broadly resembling those ratios. Some observers have long urged the Navy to shift to a more distributed fleet architecture, on the grounds that the Navy's current architecture—which concentrates much of the fleet's capability into a relatively limited number of individually larger and more expensive surface ships—is increasingly vulnerable to attack by the improving maritime anti-access/area-denial (A2/AD) capabilities (particularly anti-ship missiles and their supporting detection and targeting systems) of potential adversaries, particularly China. Shifting to a more distributed architecture, these observers have argued, would complicate an adversary's targeting challenge by presenting the adversary with a larger number of Navy units to detect, identify, and track; reduce the loss in aggregate Navy capability that would result from the destruction of an individual Navy platform; give U.S. leaders the option of deploying USVs and UUVs in wartime to sea locations that would be tactically advantageous but too risky for manned ships; and increase the modularity and reconfigurability of the fleet for adapting to changing mission needs. For a number of years, Navy leaders acknowledged the views of those observers but continued to support the current fleet architecture. More recently, however, Navy have shifted their thinking, with comments from Navy officials like the one quoted above and Navy briefing slides like Figure 3 indicating that Navy leaders now support moving the fleet to a more distributed architecture. The views of Navy leaders appear to have shifted in favor of a more distributed architecture because they now appear to believe that such an architecture will be increasingly needed—as the observers have long argued—to respond effectively to the improving maritime A2/AD capabilities of other countries, particularly China; technically feasible as a result of advances in technologies for UVs and for networking widely distributed maritime forces that include significant numbers of UVs; and no more expensive, and possibly less expensive, than the current architecture. The more distributed architecture that Navy leaders now appear to support may differ in its details from distributed architectures that the observers have been advocating, but the general idea of shifting to a more distributed architecture, and of using large UVs as a principal means of achieving that, appears to be similar. The Navy's FY2020 30-year shipbuilding plan mentions a new overarching operational concept for the Navy (i.e., a new general concept for how to employ Navy forces) called Distributed Maritime Operations (DMO). A December 2018 document from the Chief of Naval Operations states that the Navy will ""continue to mature the Distributed Maritime Operations (DMO) concept and key supporting concepts"" and ""design and implement a comprehensive operational architecture to support DMO."" While Navy officials have provided few details in public about DMO, the Navy does state in its FY2021 budget submission that ""MUSV and LUSV are key enablers of the Navy's Distributed Maritime Operations (DMO) concept, which includes being able to forward deploy and team with individual manned combatants or augment battle groups. Fielding of MUSV and LUSV will provide the Navy increased capability and necessary capacity at lower procurement and sustainment costs, reduced risk to sailors and increased readiness by offloading missions from manned combatants."" The Navy wants to employ accelerated acquisition strategies for procuring large UVs, so as to get them into service more quickly. The Navy's desire to employ these accelerated acquisition strategies can be viewed as an expression of the urgency that the Navy attaches to fielding large UVs for meeting future military challenges from countries such as China. The LUSV and MUSV programs are building on USV development work done by the Strategic Capabilities Office (SCO) within the Office of the Secretary of Defense (OSD). SCO's effort to develop USVs is called Ghost Fleet, and its LUSV development effort within Ghost Fleet is called Overlord. As shown in Figure 4 , the Navy has identified five key enabling groups of technologies for its USV and UUV programs. Given limitations on underwater communications (most radio-frequency electromagnetic waves do not travel far underwater), technologies for autonomous operations (such as artificial intelligence) will be particularly important for the XLUUV program (and other UUV programs). In May 2019, the Navy established a surface development squadron to help develop operational concepts for LUSVs and MUSVs. The squadron will initially consist of a Zumwalt (DDG-1000) class destroyer and one Sea Hunter prototype medium displacement USV ( Figure 5 ). A second Sea Hunter prototype will reportedly be added around the end of FY2020, and LUSVs and MUSVs will then be added as they become available. The Navy envisions LUSVs as being 200 feet to 300 feet in length and having full load displacements of 1,000 tons to 2,000 tons, which would make them the size of a corvette. Figure 6 shows a detail from a Navy briefing slide showing images of prototype LUSVs and silhouettes of a notional LUSV and a notional MUSV. In unclassified presentations on the program, the Navy has used images of offshore support ships used by the oil and gas industry to illustrate the kinds of ships that might be used as the basis for LUSVs. The Navy wants LUSVs to be low-cost, high-endurance, reconfigurable ships based on commercial ship designs, with ample capacity for carrying various modular payloads—particularly anti-surface warfare (ASuW) and strike payloads, meaning principally anti-ship and land-attack missiles. The Navy wants LUSVs to be capable of operating with human operators in the loop, or semi-autonomously (with human operators on the loop), or fully autonomously, and to be capable of operating either independently or in conjunction with manned surface combatants. Although referred to as UVs, LUSVs might be more accurately described as optionally or lightly manned ships, because they might sometimes have a few onboard crew members, particularly in the nearer term as the Navy works out LUSV enabling technologies and operational concepts. LUSVs are to feature both built-in capabilities and an ability to accept modular payloads, and are to use existing Navy sensors and weapon launchers. In marking up the Navy's proposed FY2020 budget, some of the congressional defense committees expressed concerns over whether the Navy's accelerated acquisition strategies provided enough time to adequately develop concepts of operations and key technologies for large UVs, particularly the LUSV. In its report ( S.Rept. 116-48 of June 11, 2019) on the FY2020 National Defense Authorization Act ( S. 1790 ), the Senate Armed Services Committee stated: The committee is concerned that the budget request's concurrent approach to LUSV design, technology development, and integration as well as a limited understanding of the LUSV concept of employment, requirements, and reliability for envisioned missions pose excessive acquisition risk for additional LUSV procurement in fiscal year 2020. The committee is also concerned by the unclear policy implications of LUSVs, including ill-defined international unmanned surface vessel standards and the legal status of armed or potentially armed LUSVs. Additionally, the committee notes that the Navy's ""Report to Congress on the Annual Long-Range Plan for Construction of Naval Vessels for Fiscal Year 2020"" acknowledges similar issues: ""Unmanned and optionally-manned systems are not accounted for in the overall battle force[.] ... The physical challenges of extended operations at sea across the spectrum of competition and conflict, the concepts of operations for these platforms, and the policy challenges associated with employing deadly force from autonomous vehicles must be well understood prior to replacing accountable battle force ships."" The committee believes that further procurement of LUSVs should occur only after the lessons learned from the current SCO initiative have been incorporated into the next solicitation to enable incremental risk reduction. In addition, the committee believes that the LUSV program, which appears likely to exceed the Major Defense Acquisition Program cost threshold, would benefit from a more rigorous requirements definition process, analysis of alternatives, and deliberate acquisition strategy. S.Rept. 116-48 also stated: While recognizing the need for prototypes to reduce acquisition risk, the committee is concerned that the acquisition strategies for the Large USV, Medium USV, Orca UUV, and Snakehead UUV could lead to procurement of an excessive number of systems before the Navy is able to determine if the USVs and UUVs meet operational needs. Therefore, the committee directs the Secretary of the Navy to submit a report to the congressional defense committees, not later than November 1, 2019, that provides acquisition roadmaps for the Large USV, Medium USV, Orca UUV, and Snakehead UUV. In its report ( S.Rept. 116-103 of September 12, 2019) on the FY2020 DOD Appropriations Act ( S. 2474 ), the Senate Appropriations Committee stated that the Committee is concerned that for several unmanned programs the Navy is pursuing acquisition strategies that would limit future competitive opportunities by awarding system-level prototypes early in the acquisition process and failing to articulate capability, requirements or technology roadmaps to encourage industrial innovation. The Assistant Secretary of the Navy (Research, Development and Acquisition) is directed to submit to the congressional defense committees with the fiscal year 2021 President's budget request such acquisition roadmaps for each unmanned acquisition program that include no less than mission requirements, program requirements for each increment, key technologies, acquisition strategies, test strategies, sub-system and system-level prototyping plans, and cost estimates. S.Rept. 116-103 also stated The Committee fully supports additional investments in unmanned and autonomous technologies, systems and sub-systems, including surface and sub-surface vessels. However, the Committee is concerned with the proposed acquisition and funding strategies for the MUSV and LUSV in this budget request, to include the Future Years Defense Program. Therefore, the Committee recommends several adjustments, as detailed elsewhere in this report, and directs the Assistant Secretary of the Navy (Research, Development and Acquisition) to review the acquisition strategies for these programs to address congressional concerns, as appropriately balanced with warfighter needs. (Page 194) The explanatory statement for the final version of the FY2020 DOD Appropriations Act (Division A of H.R. 1158 / P.L. 116-93 of December 20, 2020) stated: The Secretary of the Navy is directed to comply with the full funding policy for LUSVs in future budget submissions. Further, the agreement recommends $50,000,000 for the design of future LUSVs without a vertical launch system [VLS] capability in fiscal year 2020. Incremental upgrade capability for a vertical launch system may be addressed in future fiscal years. It is directed that no funds may be awarded for the conceptual design of future LUSVs until the Assistant Secretary of the Navy (Research, Development and Acquisition) briefs the congressional defense committees on the updated acquisition strategy for unmanned surface vessels. In response to the markups from the congressional defense committees, the Navy's FY2021 budget submission proposes to modify the acquisition strategy for the LUSV program so as to provide more time for developing operational concepts and key technologies before entering into serial production of deployable units. Under the Navy's proposed modified LUSV acquisition strategy, the Navy is proposing to use research and development funding to acquire two additional prototypes in FY2021 and one more additional prototype in FY2022 before shifting in FY2023 to the use of procurement funding for the procurement of deployable LUSVs at annual procurement rates in FY2023-FY2025 of 2-2-3. The Navy's FY2021 budget submission states: Major changes [in the LUSV program] from [the] FY 2020 President's Budget request to [the] FY 2021 President's Budget request [include the following]: (1) The program will award Conceptual Design (CD) contracts to multiple vendors in FY20. The CD effort will support refinement of a LUSV Performance Specification that does not include the Vertical Launch System (VLS). The final Performance Specification will define a LUSV with reservations in the design to support integration of a variety of capabilities and payloads. This effort, which was originally planned to award in Q2 [the second quarter of] FY 2020 will be delayed until early Q4 [the fourth quarter of] FY 2020 in order to support amendment of the CD Request for Proposals (RFP), Performance Specification, and associated artifacts. (2) The delay in award of the LUSV CD effort will delay follow-on activities (RFP [Request for Proposals], [and] source selection) leading up to the award of the LUSV Detail Design and Construction (DD&C) contract. DD&C award will be delayed one year, from FY 2021 to FY 2022. The DD&C award will deliver a non-VLS LUSV prototype based on the Performance Specification developed during the CD effort. (3) In lieu of the FY 2020 President's Budget request plan of awarding the LUSV DD&C contract in FY21, the Navy is planning to procure up to two additional Overlord prototypes, building on the lessons learned through the Ghost Fleet program and advances in C4I and combat system prototyping efforts. (4) The Navy plans to transition LUSV to a program of record in FY 2023 and align [the program's] procurement funding to the Shipbuilding and Conversion, Navy (SCN) account. A January 13, 2020, press report stated that the Navy plans to submit a report on the Navy's concepts of operations for LUSVs and MUSVs in April 2020. The Navy defines MUSVs as being 45 feet to 190 feet long, with displacements of roughly 500 tons. The Navy wants MUSVs, like LUSVs, to be low-cost, high-endurance, reconfigurable ships that can accommodate various payloads. Initial payloads for MUSVs are to be intelligence, surveillance and reconnaissance (ISR) payloads and electronic warfare (EW) systems. The Navy is pursuing the MUSV program as a rapid prototyping effort under what is known as Section 804 middle tier acquisition authority. The first MUSV prototype was funded in FY2019 and the Navy wants fund the second prototype in FY2023. The MUSV program is building on development work by the Defense Advanced Research Projects Agency (DARPA) under its Anti-Submarine Warfare Continuous Trail Unmanned Vessel (ACTUV) effort and the Office of Naval Research (ONR) under its Medium Displacement USV effort. As shown in Figure 1 , this work led to the design, construction, and testing of the prototype Sea Hunter medium displacement USV, which has a reported length of 132 feet (about 40.2 meters) and a displacement of about 140 tons. The Navy's MUSV program is also to employ a fleet-ready command and control (C2) solution for USVs that was developed by the Strategic Capabilities Office for the LUSV program. The XLUUV program, also known as the Orca program, was established to address a Joint Emergent Operational Need (JEON). As shown in Figure 2 , the Navy defines XLUUVs as UUVs with a diameter of more than 84 inches, meaning that XLUUVs are to be too large to be launched from a manned Navy submarine. Consequently, XLUUVs instead will transported to a forward operating port and then launched from pier. The Navy wants XLUUVs to be equipped with a modular payload bay for carrying mines and other payloads. The first five XLUUVs were funded in FY2019 through the Navy's research and development appropriation account. The Navy conducted a competition for the design of the XLUUV, and announced on February 13, 2019, that it had selected Boeing to fabricate, test, and deliver the first four Orca XLUUVs and associated support elements. (The other bidder was a team led by Lockheed Martin.) On March 27, 2019, the Navy announced that the award to Boeing had been expanded to include the fifth Orca. Boeing has partnered with the Technical Solutions division of Huntington Ingalls Industries (HII) to build Orca XLUUVs. (A separate division of HII—Newport News Shipbuilding (NNS) of Newport News, VA—is one of the Navy's two submarine builders.) The Navy wants procure additional XLUUVs at a rate of two per year starting in FY2023. The Navy's FY2021 budget submission does not include funding for the procurement of additional XLUUVs in FY2021 or FY2022. The Navy is proposing to fund the procurement of XLUUVs in FY2023 and subsequent years through the Other Procurement, Navy (OPN) appropriation account. Boeing's Orca XLUUV design will be informed by (but likely differ in certain respects from) the design of Boeing's Echo Voyager UUV ( Figure 7 , Figure 8 , and Figure 9 ). Echo Voyager is 51 feet long and has a rectangular cross section of 8.5 feet by 8.5 feet, a weight in the air of 50 tons, and a range of up to 6,500 nautical miles. It can accommodate a modular payload section up to 34 feet in length, increasing its length to as much as 85 feet. A 34-foot modular payload section provides about 2,000 cubic feet of internal payload volume; a shorter (14-foot) section provides about 900 cubic feet. Echo Voyager can also accommodate external payloads. Table 1 shows FY2021-FY2025 requested and programmed funding for the large UV programs covered in this report. The Navy's proposals for developing and procuring the large UVs covered in this report pose a number of oversight issues for Congress, including those discussed below. One potential oversight issue for Congress concerns the analytical basis for the Navy's desire to shift to a more distributed fleet architecture featuring a significant contribution from large UVs. Potential oversight questions for Congress include the following: What Navy analyses led to the Navy's decision to shift toward a more distributed architecture? What did these analyses show regarding the relative costs, capabilities, and risks of the Navy's current architecture and the more distributed architecture? How well developed, and how well tested, are the operational concepts associated with the more distributed architecture? Another potential oversight issue for Congress concerns the accelerated acquisition strategies that the Navy wants to use for these large UV programs. Potential oversight questions for Congress include the following: What are the potential costs, benefits, and risks of pursuing these accelerated strategies rather than a more traditional acquisition approach that would spend more time developing the technologies and operational concepts for these UVs prior to putting them into serial production? How are those considerations affected by the shift in the international security environment from the post-Cold War era to the new era of renewed major power competition? Are the Navy's proposed changes to the LUSV's accelerated acquisition strategy appropriate and sufficient? To what degree, if any, can these large UV programs contribute to new approaches for defense acquisition that are intended to respond to the new international security environment? Another potential oversight issue for Congress concerns the amount of technical, schedule, and cost risk in these programs. Potential oversight questions for Congress include the following: How much risk of this kind do these programs pose, particularly given the enabling technologies that need to be developed for them? In addition to the Navy's proposed changes to the LUSV's acquisition strategy, what is the Navy doing to mitigate or manage cost, schedule, and technical risks while it seeks to deploy these UVs on an accelerated acquisition timeline? Are these risk-mitigation and risk-management efforts appropriate and sufficient? At what point would technical problems, schedule delays, or cost growth in these programs require a reassessment of the Navy's plan to shift from the current fleet architecture to a more distributed architecture? Another oversight issue for Congress concerns the Navy's planned annual procurement rates for the LUSV and XLUUV programs during the period FY2021-FY2025. Potential oversight questions for Congress include, What factors did the Navy consider in arriving at them, and in light of these factors, are these rates too high, too low, or about right? Another oversight issue for Congress concerns the potential industrial base implications of these large UV programs as part of a shift to a more distributed fleet architecture, particularly since UVs like these can be built and maintained by facilities other than the shipyards that currently build the Navy's major combatant ships. Potential oversight questions for Congress include the following: What implications would the more distributed architecture have for required numbers, annual procurement rates, and maintenance workloads for large surface combatants (i.e., cruisers and destroyers) and small surface combatants (i.e., frigates and Littoral Combat Ships)? What portion of these UVs might be built or maintained by facilities other than shipyards that currently build the Navy's major combatant ships? To what degree, if any, might the more distributed architecture and these large UV programs change the current distribution of Navy shipbuilding and maintenance work, and what implications might that have for workloads and employment levels at various production and maintenance facilities? Another oversight issue for Congress concerns the potential implications of large UVs, particularly large USVs, for the chance of miscalculation or escalation in when U.S. Navy forces are operating in waters near potential adversaries. Some observers have expressed concern about this issue. A June 28, 2019, opinion column, for example, states The immediate danger from militarized artificial intelligence isn't hordes of killer robots, nor the exponential pace of a new arms race. As recent events in the Strait of Hormuz indicate, the bigger risk is the fact that autonomous military craft make for temping targets—and increase the potential for miscalculation on and above the high seas. While less provocative than planes, vehicles, or ships with human crew or troops aboard, unmanned systems are also perceived as relatively expendable. Danger arises when they lower the threshold for military action. It is a development with serious implications in volatile regions far beyond the Gulf—not least the South China Sea, where the U.S. has recently confronted both China and Russia…. As autonomous systems proliferate in the air and on the ocean, [opposing] military commanders may feel emboldened to strike these platforms, expecting lower repercussions by avoiding the loss of human life. Consider when Chinese naval personnel in a small boat seized an unmanned American underwater survey glider in the sea approximately 100 kilometers off the Philippines in December 2016. The winged, torpedo-shaped unit was within sight of its handlers aboard the U.S. Navy oceanographic vessel Bowditch, who gaped in astonishment as it was summarily hoisted aboard a Chinese warship less than a kilometer distant. The U.S. responded with a diplomatic demarche and congressional opprobrium, and the glider was returned within the week…. In coming years, the Chinese military will find increasingly plentiful opportunities to intercept American autonomous systems. The 40-meter prototype trimaran Sea Hunter, an experimental submarine-tracking vessel, recently transited between Hawaii and San Diego without human intervention. It has yet to be used operationally, but it is only a matter of time before such vessels are deployed…. China's navy may find intercepting such unmanned and unchaperoned surface vessels or mini-submarines too tantalizing to pass up, especially if Washington's meek retort to the 2016 glider incident is seen as an indication of American permissiveness or timidity. With a captive vessel, persevering Chinese technicians could attempt to bypass anti-tamper mechanisms, and if successful, proceed to siphon off communication codes or proprietary artificial intelligence software, download navigational data or pre-programmed rules of engagement, or probe for cyber vulnerabilities that could be exploited against similar vehicles…. Nearly 100,000 ships transit the strategically vital Singapore Strait annually, where more than 75 collisions or groundings occurred last year alone. In such congested international sea lanes, declaring a foreign navy's autonomous vessel wayward or unresponsive would easily serve as convenient rationale for towing it into territorial waters for impoundment, or for boarding it straightaway…. A memorandum of understanding signed five years ago by the U.S. Department of Defense and the Chinese defense ministry, as well as the collaborative code of naval conduct created at the 2014 Western Pacific Naval Symposium, should be updated with an expanded right-of-way hierarchy and non-interference standards to clarify how manned ships and aircraft should interact with their autonomous counterparts. Without such guidance, the risk of miscalculation increases. An incident without any immediate human presence or losses could nonetheless trigger unexpected escalation and spark the next conflict. Another oversight issue for Congress concerns the potential personnel implications of incorporating a significant number of large UVs into the Navy's fleet architecture. Potential questions for Congress include the following: What implications might these large UVs have for the required skills, training, and career paths of Navy personnel? Within the Navy, what will be the relationship between personnel who crew manned ships and those who operate these large UVs? Another oversight issue for Congress concerns the funding amounts for these programs that the Navy has requested for these programs for FY2021. Potential oversight questions for Congress include the following: Has the Navy accurately priced the work on these programs that it is proposing to do in FY2021? To what degree, if any, has funding been requested ahead of need? To what degree, if any, is the Navy insufficiently funding elements of the work to be done in FY2021? How might the timelines for these programs be affected by a decision to reduce (or add to) the Navy's requested amounts for these programs? Table 2 summarizes congressional action on the Navy's FY2021 funding request for the LUSV, MUSV, and XLUUV programs and their enabling technologies.","The Navy in FY2021 and beyond wants to develop and procure three types of large unmanned vehicles (UVs). These large UVs are called Large Unmanned Surface Vehicles (LUSVs), Medium Unmanned Surface Vehicles (MUSVs), and Extra-Large Unmanned Undersea Vehicles (XLUUVs). The Navy is requesting $579.9 million in FY2021 research and development funding for these large UVs and their enabling technologies. The Navy wants to acquire these large UVs as part of an effort to shift the Navy to a more distributed fleet architecture. Compared to the current fleet architecture, this more distributed architecture is to include proportionately fewer large surface combatants (i.e., cruisers and destroyers), proportionately more small surface combatants (i.e., frigates and Littoral Combat Ships), and the addition of significant numbers of large UVs. The Navy wants to employ accelerated acquisition strategies for procuring these large UVs, so as to get them into service more quickly. The Navy's desire to employ these accelerated acquisition strategies can be viewed as an expression of the urgency that the Navy attaches to fielding large UVs for meeting future military challenges from countries such as China. The Navy envisions LUSVs as being 200 feet to 300 feet in length and having full load displacements of 1,000 tons to 2,000 tons. The Navy wants LUSVs to be low-cost, high-endurance, reconfigurable ships based on commercial ship designs, with ample capacity for carrying various modular payloads—particularly anti-surface warfare (ASuW) and strike payloads, meaning principally anti-ship and land-attack missiles. Although referred to as UVs, LUSVs might be more accurately described as optionally or lightly manned ships, because they might sometimes have a few onboard crew members, particularly in the nearer term as the Navy works out LUSV enabling technologies and operational concepts. In marking up the Navy's proposed FY2020 budget, some of the congressional defense committees expressed concerns over whether the Navy's accelerated acquisition strategies provided enough time to adequately develop concepts of operations and key technologies for these large UVs, particularly the LUSV. In response, the Navy's FY2021 budget submission proposes to modify the acquisition strategy for the LUSV program so as to provide more time for developing operational concepts and key technologies before entering into serial production of deployable units. Under the Navy's proposed modified LUSV acquisition strategy, the Navy is proposing to use research and development funding to acquire two additional prototypes in FY2021 and one more additional prototype in FY2022 before shifting in FY2023 to the use of procurement funding for the procurement of deployable LUSVs at annual procurement rates in FY2023-FY2025 of 2-2-3. The Navy defines MUSVs as being 45 feet to 190 feet long, with displacements of roughly 500 tons. The Navy wants MUSVs, like LUSVs, to be low-cost, high-endurance, reconfigurable ships that can accommodate various payloads. Initial payloads for MUSVs are to be intelligence, surveillance and reconnaissance (ISR) payloads and electronic warfare (EW) systems. The Navy is pursuing the MUSV program as a rapid prototyping effort under what is known as Section 804 acquisition authority. The first MUSV prototype was funded in FY2019 and the Navy wants fund the second prototype in FY2023. The first five XLUUVs were funded in FY2019; they are being built by Boeing. The Navy wants procure additional XLUUVs at a rate of two per year starting in FY2023. The Navy's FY2021 budget submission does not include funding for the procurement of additional XLUUVs in FY2021 or FY2022. The Navy's large UV programs pose a number of oversight issues for Congress, including issues relating to the analytical basis for the more distributed fleet architecture; the Navy's accelerated acquisition strategies for these programs; technical, schedule, and cost risk in the programs; the proposed annual procurement rates for the programs; the industrial base implications of the programs; potential implications for miscalculation or escalation at sea; the personnel implications of the programs; and whether the Navy has accurately priced the work it is proposing to do in FY2021 on the programs."
"The Federal Bureau of Investigation (FBI) administers a computer system of systems that is used to query federal, state, local, tribal, and territorial criminal history record information (CHRI) and other records to determine if an indiv idual is eligible to receive and possess a firearm. This FBI-administered system is the National Instant Criminal Background Check System (NICS). This system, or parallel state systems, must be checked and the transfer approved by an FBI NICS examiner or state point of contact (POC) before a federally licensed gun dealer may transfer a firearm to any customer who is not similarly licensed federally as a gun dealer. Under current law, persons who buy and sell firearms repeatedly for profit and as a principal source of their livelihood must be licensed federally as gun dealers. Federally licensed gun dealers—otherwise known as federal firearms licensees (FFLs)—are permitted to engage in interstate and, by extension, intrastate (i.e., within a state) firearms commerce with certain restrictions. For example, they may not transfer a handgun to an unlicensed, out-of-state resident. Conversely, persons who occasionally buy and sell firearms for personal use, or to enhance a personal collection, are not required to be licensed federally as a gun dealer. Those unlicensed persons, however, are prohibited generally from making interstate firearms transactions—that is, engaging in interstate firearms commerce—without engaging the services of a federally licensed gun dealer. On the other hand, current law does not require background checks for intrastate, private-party firearms transactions between nondealing, unlicensed persons, though such checks might be required under several state laws. Nevertheless, it is unlawful for anybody, FFLs or private parties, to transfer a firearm or ammunition to any person they have reasonable cause to believe is a prohibited person (e.g., a convicted felon, a fugitive from justice, or an unlawfully present alien). In the 116 th Congress, the House of Representatives has passed three bills that would significantly expand the federal firearms background check requirements and the current prohibitions on the transfer or receipt and possession of firearms related to domestic violence. Those bills are the Bipartisan Background Checks Act of 2019 ( H.R. 8 ), a bill to expand federal firearms recordkeeping and background check requirements to include private-party, intrastate firearms transfers; Enhanced Background Checks Act of 2019 ( H.R. 1112 ), a bill to extend the amount of time allowed to delay a firearms transfer, pending a completed background check to determine an individual's eligibility; and Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ), a bill to expand firearms transfer or receipt and possession prohibitions to include dating partners with histories of domestic violence and stalking misdemeanors. In addition, several multiple-casualty shootings have highlighted possibly systemic vulnerabilities in the NICS-related federal background check procedures, particularly with regard to making records on prohibited persons accessible to federal data systems queried as part of the federal background check process. This report provides an overview of federal firearms statutes related to firearms transactions in interstate and intrastate commerce, dealer licensing, receipt and possession eligibility, NICS background check procedures, analysis of recent legislative action, and discussion about possible issues for Congress. Two major federal statutes regulate firearms commerce and possession in the United States. The Gun Control Act of 1968 (GCA; 18 U.S.C. §921 et seq.) regulates all modern (nonantique) firearms. In addition, the National Firearms Act, enacted in 1934 (NFA; 26 U.S.C. §5801 et seq.), regulates certain other firearms and devices that Congress deemed to be particularly dangerous because they were often the weapons of choice of gangsters in the 1930s. Such weapons include machine guns, short-barreled rifles and shotguns, suppressors (silencers), a catch-all class of concealable firearms classified as ""any other weapon,"" and destructive devices (e.g., grenades, rocket launchers, mortars, other big-bore weapons, and related ordnance). Congress passed both the NFA and GCA to reduce violent crimes committed with firearms. More specifically, the purpose of the GCA is to assist federal, state, local, tribal, and territorial law enforcement in the ongoing effort to reduce crime and violence. It is not intended to place any undue or unnecessary federal restrictions or burdens on citizens in regard to lawful acquisition, possession, or use of firearms for hunting, trapshooting, target shooting, personal protection, or any other lawful activity. Many observers have long noted that the assassinations of President John F. Kennedy and his brother, Senator Robert F. Kennedy, and civil rights leader Martin Luther King provided the impetus to pass the GCA. Perhaps equally compelling were the August 1, 1966, University of Texas tower mass shooting and social unrest that accompanied the 1960s. Under the Attorney General's delegation, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is the principal agency that administers and enforces these statutes. In addition, ATF administers several provisions of the Arms Export Control Act of 1976 (AECA) with regard to the importation of certain firearms, firearms parts, and ammunition that are also regulated under the GCA and NFA. For the most part, however, the FBI maintains NICS and administers the background check provisions of the GCA. Nonetheless, as discussed below, ATF is charged with investigating whether denied persons made false statements in connection with a firearms transfer; when filling out federal firearms transaction forms. In addition, ATF is also charged with firearms retrieval actions, whenever delayed transactions and incomplete background checks possibly result in prohibited persons acquiring firearms. The GCA sets firearms eligibility age restrictions under certain circumstances, as well as prohibits various categories of persons from firearms receipt and possession, among other factors. For example, as enacted, the GCA prohibits federally licensed gun dealers (i.e., FFLs) from transferring a long gun (shoulder-fired rifle or shotgun) or ammunition to anyone under 18 years of age; and a handgun or ammunition suitable for a handgun to anyone under 21 years of age. In 1994, Congress amended the GCA to prohibit anyone from transferring a handgun to a juvenile, or anyone under 18 years of age. Congress also made it unlawful for a juvenile to possess a handgun. Congress also provided exceptions to these juvenile transfer and possession prohibitions. Exceptions include temporary transfers in the course of employment in ranching or farming, in target practice, or hunting, all with the written consent of the parents or guardians and in accordance with federal and state laws; for self- or household-defense; or in other specified situations. Under the GCA, as amended, there are 10 categories of persons prohibited from receiving firearms. For 9 of those categories, those persons are also prohibited from possessing a firearm. More specifically, under 18 U.S.C. §922(g), there are nine categories of persons prohibited from shipping, transporting, receiving, or possessing a firearm or ammunition, which has been shipped or transported in interstate or foreign commerce: 1. persons convicted in any court of a felony crime punishable by imprisonment for a term exceeding one year and state misdemeanors punishable by imprisonment for a term exceeding two years; 2. fugitives from justice; 3. unlawful users or addicts of any controlled substance; 4. persons adjudicated as ""a mental defective,"" found not guilty by reason of insanity, or committed to mental institutions; 5. unauthorized immigrants and nonimmigrant visa holders (with exceptions in the latter case); 6. persons dishonorably discharged from the U.S. Armed Forces; 7. persons who have renounced their U.S. citizenship; 8. persons under court-order restraints related to harassing, stalking, or threatening an intimate partner or child of such intimate partner; and 9. persons convicted of a misdemeanor crime of domestic violence. Under 18 U.S.C. §922(n), there is a 10 th class of persons prohibited from shipping or transporting firearms or ammunition, or from receiving (but not possessing) firearms or ammunition that had been shipped or transported in interstate or foreign commerce: 1. persons under indictment in any court of a crime punishable by imprisonment for a term exceeding one year. It is unlawful for any person under any circumstances to sell or otherwise dispose of a firearm or ammunition to any of the prohibited persons enumerated above, if the transferor (seller, federally licensed or unlicensed) has reasonable cause to believe that the transferee (buyer/recipient) is prohibited from receiving those items. Under the GCA as enacted, persons who, or firms that, are ""engaged in the business"" of importing, manufacturing, or selling firearms must be federally licensed. In 1986, Congress amended the GCA to define the term ""engaged in the business."" For dealers it means: a person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms, but such term shall not include a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms. ATF issues federal firearms licenses to firearms importers, manufacturers, dealers, pawnbrokers, and collectors. As summarized by ATF in January 2016 guidance: A person engaged in the business of dealing in firearms is a person who ""devotes time, attention and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms."" Conducting business ""with the principal objective of livelihood and profit"" means that ""the intent underlying the sale or disposition of firearms is predominantly one of obtaining livelihood and pecuniary gain, as opposed to other intents, such as improving or liquidating a personal firearms collection."" Consistent with this approach, federal law explicitly exempts persons ""who make occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms."" Under the GCA, only FFLs are allowed to transfer firearms commercially from one state to another, that is, to engage in interstate (or foreign) firearms commerce. At the same time, it would be highly improbable for any firearms business to compete successfully in the U.S. civilian gun market by only selling firearms manufactured in the state in which it does business; that is, to engage exclusively in intrastate commerce. As a practical matter, any person who deals in firearms as a business, either in interstate or intrastate commerce, needs to be federally licensed firearms manufacturer, importer, or dealer. FFLs may transfer a long gun—a shoulder-fired rifle or shotgun—to unlicensed persons from another state as long as such transfers are legal in both states and they meet in person to make the transfer. However, FFLs may not transfer a handgun to any unlicensed resident of another state. Since 1986 there have been no similar restrictions on the interstate transfer of ammunition, because Congress repealed those restrictions at the request of ATF. Furthermore, a federal firearms license is not required to sell ammunition; however, such a license is required to either manufacture or import ammunition. In addition, FFLs are required to maintain bound logs of firearms acquisitions and dispositions to and from their business inventories by date, make, model, and serial number of individual firearms and transactions records for firearms sales to unlicensed, private persons. ATF periodically inspects these FFLs to monitor their compliance with federal and state law. Under current law, there are statutory prohibitions against ATF, or any other federal agency, maintaining a registry of firearms or firearms owners. Nevertheless, the system of recordkeeping described above allows ATF agents to trace, potentially, the origins of a firearm from manufacturer or importer to a first retail sale and buyer. ATF agents assist other federal agencies, as well as state and local law enforcement, with criminal investigations. The ATF also makes technical judgements about firearms, including the appropriateness of manufacturing and importing certain makes and models of firearms and firearms parts. As described in greater detail below, since November 30, 1998, all FFLs are required to initiate a background check for both handguns and long guns on any prospective firearms purchaser who is otherwise unlicensed federally to engage in firearms commerce as a business. The FBI facilitates these background checks nationwide through NICS. However, for some states, these FBI-facilitated background checks are routed to state or local authorities (points of contact, or POCs) for all firearms (handguns and long guns), or just for handgun transfers or permits for other states. For the most part, the GCA does not regulate firearms transactions between two unlicensed persons, who reside in the same state; that is, private-party, intrastate firearms transfers. Such transfers are not covered under current federal law as long as the parties are: not ""engaged in the business"" of dealing in firearms ""as a regular course of trade or business with the principal objective of livelihood and profit""; residents of the same state, where the transfer is made; not prohibited from receiving or possessing firearms; and the recipients are of age (at least 18 years old). It follows, therefore, that private firearms transactions between persons who are not ""engaged in the business"" of firearms dealing and, thus, who are not required to be federally licensed, are not covered by the recordkeeping or the background check provisions of the GCA if those parties reside in the same state. The meaning of ""state of residence"" is not defined in the GCA, but ATF has defined the term to mean: The State in which an individual resides. An individual resides in a State if he or she is present in a State with the intention of making a home in that State. If an individual is on active duty as a Member of the Armed Forces, the individual's State of residence is the State in which his or her permanent duty station is located. An alien who is legally in the United States shall be considered to be a resident of a State only if the alien is residing in the State and has resided in the State for a period of at least 90 days prior to the date of sale or delivery of a firearm. However, these intrastate, private firearms transactions and other matters such as possession, registration, and the issuance of licenses to firearms owners may be covered by state laws or local ordinances. As noted above, unlicensed persons are prohibited generally from engaging in interstate and intrastate firearms commerce as a business; however, they are permitted to change state residences and take their privately owned non-NFA firearms with them under federal law, but they must comply with the laws of their new state of residence. The GCA generally prohibits an unlicensed person from directly transferring any firearm—handgun or long gun—to any other unlicensed person who resides in another state. Similarly, it is unlawful for an unlicensed person to receive a firearm from any unlicensed person who resides in another state. On the other hand, the GCA does not prohibit an unlicensed person from transferring a firearm to an out-of-state FFL, who may be willing to serve as a proxy for an unlicensed person to transfer a firearm or firearms to another unlicensed person who resides in the state where the FFL is licensed federally to do business. The facilitating, out-of-state FFL, in turn, must treat that firearm as if it were part of his business inventory, triggering the recordkeeping and background check provisions of the GCA. Generally, the facilitating FFL will charge a fee for such transactions conducted on behalf of an unlicensed person, which would likely be passed on to the unlicensed buyer/transferee in most cases. According to a 2015 survey, about one-in-five firearms transfers (22%) are conducted privately between unlicensed persons. In addition, a 2016 survey of state and federal prisoners—conducted by the Department of Justice (DOJ), Bureau of Justice Statistics (BJS)—who possessed a firearm during the offense for which they were serving time suggested that more than half (56%) had either stolen the firearm (6%), found it at the scene of the crime (7%), or obtained it off the street or from the underground market (43%); most of the remainder (25%) had obtained the firearm from a family member or friend, or as a gift; and seven percent had purchased the firearm under their own name from a licensed firearm dealer, or FFL. Based on this survey data, private firearms sales at gun shows or any similar venue did not appear to be a significant source of guns carried by these offenders, while private transfers among family members, friends, and acquaintances did appear to account for a significant source of such firearms. The ATF Form 4473 and bound log of firearms acquisitions and dispositions are the essential federal documents underlying the recordkeeping process mandated by the GCA. Both FFLs and prospective, federally unlicensed purchasers must truthfully and completely fill out, and sign, an ATF Form 4473. Prospective purchasers attest to three things: 1. they are not prohibited persons, 2. they are who they say they are, and 3. they are the actual buyers. Straw purchases are a federal crime. It is illegal for anybody to pose as the actual buyer, when in fact he is buying the firearm for someone else. Making any materially false statement to an FFL is punishable by a fine and/or up to 10 years imprisonment. There is also a lesser penalty for making any false statement or representation in any record (e.g., the Form 4473) that an FFL is required to maintain. Some straw purchases are also prosecuted under this provision. Violations are punishable by a fine and up to five years imprisonment. For their part, FFLs must verify a prospective purchaser's name, date of birth, state residency, and other information by examining government-issued identification, which most often include a state-issued driver's license. FFLs must also file completed Form 4473s in their records. If a purchased firearm from FFLs should be recovered at any crime scene, ATF can trace a firearm from its original manufacturer or importer to the first-time FFL retail seller and the first-time private buyer (by the make, model, and serial number of the firearm). Successful firearms traces have generated leads in criminal investigations. In addition, aggregated firearms trace data provide criminal intelligence on illegal firearms trafficking patterns. After six years of debate, Congress passed the Brady Handgun Violence Prevention Act, 1993 (Brady Act). Sponsors of the Brady Act initially proposed requiring a seven-day waiting period for handgun transfers. Instead, Congress amended the GCA with the Brady Act to require electronic background checks on any federally unlicensed individual seeking to acquire a firearm from an FFL. The Brady Act included both interim and permanent provisions. Under the interim provisions, FFLs were required to contact local chief law enforcement officers (CLEOs) to determine the eligibility of prospective customers to be transferred a handgun. CLEOs were given up to five business days to make such eligibility determinations. From February 28, 1994, to November 29, 1998, under the interim provisions, 12.7 million firearms background checks (for handguns) were completed, resulting in 312,000 denials. The permanent provisions of the Brady Act became effective when the FBI activated the National Instant Criminal Background Check System (NICS) on November 30, 1998. Under these provisions, FFLs are required to initiate a background check through NICS on any prospective unlicensed customer, who seeks to acquire a firearm from them through a sale, trade, or redemption of firearms exchanged for collateral. Failure to conduct a NICS check is punishable by a fine of up to $1,000 and one year imprisonment, or both. FFLs may engage in firearms transfers among themselves without conducting background checks. The Brady Act includes a provision that prohibits the establishment of a registration system of firearms, firearms owners, or firearms transactions or dispositions with NICS-generated records, except for records on NICS denials for persons who are prohibited from receiving or possessing firearms under the GCA. In addition, in the FY2012 Consolidated Appropriations Act, Congress included a permanent appropriations limitation that requires the FBI to destroy background check records within 24 hours on persons who are eligible to receive firearms. From November 30, 1998, through 2018, the FBI NICS Section facilitated nearly 305 million firearms-related background checks transactions. Corresponding data on individual background checks and denials under the permanent provisions of the Brady Act are given and discussed below for both the FBI and for point of contact states that have chosen to either fully or partially implement the Brady Act. Building on the GCA firearms transaction recordkeeping process, the completed and signed ATF Form 4473 serves as the authorization for an FFL to initiate a check through NICS. The FFL submits a prospective firearms transferee's name, sex, race (or ethnicity), complete date of birth, and state of residence to the FBI through NICS. Social security numbers and other numeric identifiers are optional, but the submission of these data could possibly increase the timeliness of the background check and reduce misidentifications. The NICS Section is to respond to an FFL or POC state official with a NICS Transaction Number (NTN) and one of four outcomes as follows, as described in greater detail below: 1. ""proceed"" with transfer or permit/license issuance, because a prohibiting record was not found; 2. ""denied,"" indicating a prohibiting record was found; 3. ""delayed proceed,"" indicating that the system produced information that suggested the prospective purchaser could be prohibited; or 4. ""canceled"" for insufficient information provided. In the case of a ""proceed,"" the background check record is purged from NICS within 24 hours; ""denied"" requests are kept indefinitely. Under the third outcome, ""delayed proceed,"" a firearms transfer may be ""delayed"" for up to three business days while NICS examiners or state designees (i.e., POCs) attempt to ascertain whether the person is prohibited. ""Delayed proceeds"" are often the result of partial, incomplete, and/or even ambiguous criminal history records. The FBI NICS Section often must contact state and local authorities to make final firearms eligibility determinations. Under federal law, at the end of the three-business-day period following a ""delayed proceed,"" FFLs may proceed with the transfer at their discretion if they have not heard from the NICS Section about those matters. The NICS Section, meanwhile, will continue to work the NICS adjudications for up to 30 days, at which point the background checks will drop out of the NICS examiner's queue if unresolved. At 88 days, all pending background check records are purged from NICS, even when they remain unresolved. About two-thirds of FBI NICS Section-administered background checks are completed within hours, if not minutes. Nearly one-fifth are delayed, but are completed within the three-business-day delayed transfer period. If the FBI ascertains that the person is not in a prohibited status at any time within this 88-day period, then the FBI contacts the FFL through NICS with a ""proceed"" response. If the person is subsequently found to be prohibited, the FBI also contacts the FFL to ascertain whether a firearms transfer had been completed following the three-business-day ""delayed transfer"" period. If so, the FBI makes a referral to ATF. In turn, ATF initiates a firearms retrieval process. Such circumstances are referred as a ""delayed denial,"" or more colloquially described as ""lying and buying."" By comparison, standard denials are known as ""lying and trying,"" under the supposition that most persons knew they were prohibited before they filled out the ATF Form 4473 and underwent a background check. ATF is also responsible for investigating standard denials based on FBI NICS Section referrals. As noted above, making any false statement to an FFL in connection with a firearms transfer is punishable under two GCA provisions. As part of the NICS process, under no circumstances are FFLs informed about the prohibiting factor upon which denials are based. However, denied persons may challenge the accuracy of the underlying record(s) upon which their denials are based. They would initiate this process by requesting (usually in writing) the reason for their denial from the agency that initiated the NICS check (the FBI or POC). Under the Brady Act, the denying agency has five business days to respond to the request. Upon receipt of the reason and underlying record for their denials, the denied persons may challenge the accuracy of that record. If the records are found to be inaccurate, the denying agency is legally obligated under the Brady Act to correct that record. If the denials are overturned within 30 days, the transfers in question may proceed. Otherwise, FFLs must initiate another background check through NICS on the previously denied prospective purchaser. The feasibility of establishing NICS was largely founded upon the interstate sharing of federal, state, local, tribal, and territorial criminal history record information (CHRI) electronically through FBI computer systems and wide area network (WAN). Based on the prospective customer's name and other biographical descriptors, NICS queries four national data systems for records that could disqualify a customer from receiving and possessing a firearm under federal or state law. Those systems include the: Interstate Identification Index (III) for records on persons convicted or under indictment for felonies and serious misdemeanors; National Crime Information Center (NCIC) for files on persons subject to civil protection orders and arrest warrants, immigration law violators, and known and suspected terrorists; NICS Indices for federal and state record files on persons prohibited from possessing firearms, which would not be included in either III or NCIC; and Immigration-related databases maintained by the Department of Homeland Security's Immigration and Customs Enforcement (ICE) for non-U.S. citizens. An internal FBI inspections report found that access to N-DEx could have helped reveal that the individual, who later shot and killed nine people in a Charleston, SC, church, had an arrest record that was possibly sufficient grounds to deny him a firearms transfer. N-DEx is a repository of unclassified criminal justice files that can be shared, searched, and linked across jurisdictional boundaries. For more information about these computer systems and files see Appendix B . As shown in Figure 1 , under the Brady Act, states may opt to conduct firearms-related background checks entirely or partially for themselves through state and local agencies serving as POCs, or they may opt to have such checks handled entirely by the FBI, through its NICS Section, which is part of the FBI's Criminal Justice Information Services (CJIS) Division. In 13 full POC states, an FFL initiates a firearms-related background check under the Brady Act by contacting a state or local agency serving as a POC for both long gun- and handgun-related transfers. These states are CA, CO, CT, FL, HI, IL, NJ, NV, OR, PA, TN, UT, and VA. In four partial POC states, an FFL initiates a firearms-related background check by contacting the state and local agencies serving as POCs for handgun transfers, and by contacting the NICS Section through a call center for long gun transfers. These states are MD, NH, WA, and WI. In three partial POC states, an FFL initiates a firearms-related background check under the Brady Act by contacting the state and local agencies serving as POCs for handgun permits, and contacts the NICS Section through a call center for long gun transfers. These states include IA, NC, and NE. In 36 jurisdictions (30 states, the District of Columbia, and the five U.S. territories), an FFL initiates a firearms-related background check by contacting the NICS Section through a call center for all firearms-related background checks, both long gun and handgun transfers. These thirty states are AK, AL, AR, AZ, DE, GA, ID, IN, KS, KY, LA, MA, ME, MI, MN, MO, MS, MT, ND, NM, NY, OH, OK, RI, SC, SD, TX, VT, WY, and WV. The five territories are AS, GU, MP, PR, and VI. Twenty-five states are ""Brady exempt,"" meaning that certain valid, state-issued handgun and concealed carry weapons (CCW) permits may be presented to the FFL in lieu of a background check for firearms transfers through the NICS Section or state and local agencies serving as POCs. Those states are AK, AR, AZ, CA, GA, HI, IA, ID, KS, KY, LA, MI, MS, MT, NC, ND, NE, NV, OH, SC, SD, TX, UT, WV, and WY. For further information, see Appendix C . Figure 2 shows annual NICS transactions from November 30, 1998, through 2018 (20 years and one month). FBI transactions are shown on the base of the columns and the state and local POC transactions are shown on the top of the columns. Over this period, the FBI NICS Section and state and local agencies serving as POCs made 304.6 million NICS transactions. The NICS Section handled 128.6 million of these transactions (42.2% of all NICS transactions), whereas POCs initiated 176 million transactions (57.8% of all NICS transactions). There is a one-to-one correspondence between FBI NICS transactions and individual background checks, and the 128.6 million FBI transactions—that is, background checks—resulted in 1.6 million denials (1.24%). Some of these FBI NICS Section-administered background checks were for firearms transactions involving multiple firearms; consequently, NICS transactions/background checks serve as an imperfect proxy for firearms sales. Unlike FBI NICS background checks, some state background checks involved more than one background check transaction. In some states, for example, there may be permitting or licensing processes that could take several weeks and administrators would run multiple NICS queries on a single applicant. In other cases, a background check administrator might be unclear about an applicant's first and last name and would run two NICS queries on the applicant, reversing both names as first and last names. More fundamentally, some states are running periodic NICS queries on concealed carry permit holders. These periodic rechecks are not considered individual background checks. The FBI does not have the state data to report on how many state and local background checks correspond with those transactions. Nor does the FBI report the total number of state and local firearms transfer or license denials. The Bureau of Justice Statistics (BJS), however, collects and analyzes the data as part of its Firearm Inquiry Statistics Program and reports annually on the total number of firearms-related background checks and related denials conducted under the Brady Handgun Violence Prevention Act ( P.L. 103-159 ). In June 2017, BJS reported that state and local POCs had conducted 81.7 million firearms-related background checks from November 30, 1998, through 2015. According to the FBI, these POC-conducted background checks corresponded with 123.3 million NICS transactions. About 54.9% of these state transactions involved background checks related to firearms permits/licenses, an unreported percentage of which were for concealed carry permits. It is also noteworthy that some state-issued concealed-carry permits exempt the holder from any further background checks for non-NFA firearms. Hence, state and local NICS transactions also serve as an imperfect proxy for firearms sales. See Appendix C for a list of state permits that have been certified by ATF as Brady exempt. From 2006 through 2018, total NICS transactions more than doubled from 10 million to 26 million or more, peaking in 2016 at 27.5 million and then dropping to 25.2 million in 2017, and rising again to 26.2 million in 2018. For the same years, total NICS transactions/checks handled entirely by the FBI NICS Section increased from 5.3 million to 9.4 million from 2006 to 2016, then dropped to 8.6 million in 2017, and dropped again to 8.2 million in 2018. In addition, NICS transactions handled by state and local agencies increased from 4.8 million to 18.2 million from 2006 to 2016, then dropped to 16.6 million in 2017, but rose again to 17.9 million in 2018. In Figure 2 POC transactions account for an increasing proportion of all NICS transactions, but as discussed above some POC background checks involve more than one NICS transaction, whereas each NICS Section transaction corresponds with a single background check. As shown in Figure 3 , for the years 1999 through 2015, the FBI CJIS Division's NICS Section conducted as many or more background checks than state or local POC agencies. Figure 3 also shows the number of annual denials made pursuant to federal or state law. As noted above, over the 20 years and one month, the FBI CJIS Division's NICS Section conducted 128.7 million background checks, resulting in nearly 1.6 million denials, for an overall initial denial rate of 1.2%. As discussed below, about 2.7% of those denials were appealed and eventually overturned. BJS reported that state and local POC agencies conducted nearly 81.7 million background checks from November 30, 1998, through 2015 for firearms transfers and permits. To date, BJS has not published any data for state and local POC agencies for 2016, 2017, and 2018. Nevertheless, for those 17 years and one month, POC checks resulted in nearly 1.46 million denials, for an overall denial rate of 1.8%, according to BJS. For the same years (and one month), the FBI NICS Section processed 102.4 million background checks, resulting in 1.27 million denials of firearms transfers, for an overall denial rate of 1.2%. See Appendix A for the data shown in Figure 3 , as well as FBI and POC denials by prohibiting categories. As with other screening systems, particularly those that are largely name-based, false positives occur as part of the NICS process, but the frequency of these misidentifications is unreported. Nevertheless, the FBI has taken steps to mitigate false positives (i.e., denying a firearms transfer to an otherwise eligible person). In July 2004, DOJ issued a regulation that established the NICS Voluntary Appeal File (VAF), which is part of the NICS Indices (described above). DOJ was prompted to establish the VAF to minimize the inconvenience incurred by some prospective firearms transferees (purchasers) who have names or birth dates similar to those of prohibited persons. So as not to be misidentified in the future, these persons agree to authorize the FBI to maintain personally identifying information about them in the VAF as a means to avoid future delayed transfers. As noted above, current law requires that NICS records on approved firearm transfers, particularly information personally identifying the transferee, be destroyed within 24 hours. Figure 4 shows annual NICS Section denials, denials appealed but sustained, and denials overturned from November 30, 1998, through 2018. During this time, it appears that about one-fifth of NICS Section denials were appealed, and about one-tenth of those appealed denials were overturned, or an estimated 2.7% of NICS Section denials, according to the annual CJIS Division's NICS operations reports. The majority of these overturned denials were due to misidentifications. In any screening system, such as NICS, there is a balance between false positives and false negatives. Misidentifications and improperly interpreted criminal history and other records would constitute false positives. Allowing an otherwise prohibited person to acquire a firearm would constitute a false negative. Under the GCA, there is also a provision that allows the Attorney General (previously, the Secretary of the Treasury) to consider petitions from a prohibited person for ""relief from disabilities"" and to have his firearms transfer and possession eligibility restored. Since FY1993, however, a limitation (or ""rider"") on the ATF annual appropriations for salaries and expenses has prohibited the expenditure of any appropriated funding for ATF to process such petitions from individuals. Conversely, under the NICS Improvement Amendments Act of 2007 ( P.L. 110-180 ), any federal agency that submits any records on individuals considered to be too mentally incompetent to be trusted with a firearm under the GCA must provide an avenue of administrative relief to those individuals, so if their mental health or other related conditions improve, their firearms rights and privileges may be restored. As a condition of grant eligibility, as described below, states must provide similar administrative avenues of relief for those purposes, that is, ""disability relief."" See Appendix D for a list of states that have enacted and implemented ATF-certified relief from disability programs under P.L. 110-180 . Figure 5 shows annual NICS denials and firearm retrieval action from November 30, 1998, through 2018. For the 20 years and one month, the NICS section made an average of 3,600 firearm retrieval action referrals to the ATF annually for follow-up. In many of these cases, an otherwise prohibited person had been transferred a firearm. According to the Government Accountability Office (GAO), following up on these possibly illegal firearms receipts—or ""delayed denial investigations""—consumes an increasing and considerable amount of ATF resources. For example, such investigations accounted for 32% of ATF investigations opened in FY2003 and 53% in FY2013. It appears that in a relatively small percentage of cases the suspected offenders have been prosecuted federally for what is commonly known as either ""lying and buying"" or ""lying and trying."" According to the Government Accountability Office (GAO), ATF processed 3,933 delayed denials in FY2017. Of those denials, 38 cases were referred to U.S. Attorney's Offices for prosecution. Nine of those cases were federally prosecuted. Also in a relatively small percentage of cases, an FFL could potentially proceed with a firearms transfer after the three-business-day delayed transfer period has expired, but never receive a final NICS determination; or the FFL could potentially decline to transfer the firearm to an unlicensed customer until he received a definitive NICS Section response, which the FFL may not receive from the FBI. NICS is maintained and administered by the FBI Criminal Justice Information Services (CJIS) Division and its NICS Section, located in Clarksburg, WV. Recent increases in the volume of firearms-related commerce and attendant background checks have strained the NICS Section and additional staff and funding has been requested by the FBI, which Congress has provided through appropriated funding. For FY2016, the NICS Section program budget allocation was $81 million and 668 funded permanent positions. As described below, for FY2019, the FBI anticipated that the NICS Section program budget would be allocated $103 million and 679 positions, representing a $22 million and 11 position increase over FY2016. The Administration's FY2020 request would increase FY2020 NICS Section program budget to $115 million and 719 positions. For FY2017, the Obama Administration requested $121.1 million for the NICS program, including an additional $35 million. Of this budget increase $15 million was requested to sustain 75 professional support positions funded for FY2016; and another $20 million was requested to hire 160 contractors to support NICS firearms background checks and related activities. The remaining $5.1 million was requested to annualize operational costs associated with the NICS base budget. Report language accompanying both the Senate- and House-reported FY2017 Commerce, Justice, Science, and Related Agencies appropriations bills ( S. 2837 and H.R. 5393 ) indicated that those bills would have provided the requested $35 million for NICS. The Explanatory Statement accompanying H.R. 244 , submitted by the House Committee on Appropriations Chair, Representative Rodney Frelinghuysen, indicated that P.L. 115-31 included $511.3 million for CJIS, and that this amount would fully support CJIS programs, including NICS. For FY2018, the Trump Administration requested $79.2 million for the NICS program, including an additional $8.9 million to fund an additional 85 permanent positions. Such an increase would have brought the number of funded permanent positions for the NICS program to 676. According to the FBI, the enacted NICS budget allocation for FY2018 was $111.3 million and 679 positions. For FY2019, the Administration did not request any budget increases for the FBI or NICS. The FBI anticipated that the FY2019 NICS budget and staff allocation would be about $103 million and 679 positions. For FY2020, the Administration has requested a NICS budget increase of $4.23 million and 40 positions and $7.8 million in base budget increases, which would bring the total FY2020 NICS budget to $115 million and 719 positions. House-report language accompanying the FY2020 Commerce, Justice, Science, and Related Agencies Appropriations Act ( H.R. 3055 ) indicates that this bill would fully support the NICS Section operations and activities for the upcoming fiscal year. The efficacy of NICS and firearms-related background checks is dependent in large part on state and local governments making criminal history record information (CHRI), as well as other disqualifying records (e.g., mental incompetency records), accessible electronically to several different national data sharing systems maintained by the FBI. As described above, those systems include principally the III, NCIC, and the NICS Indices. Congress, meanwhile, has authorized two grant programs to incentivize state and local governments to maintain CHRI and other disqualifying records and make them accessible to NICS in a timely manner. Under the Brady Act, Congress authorized a grant program known as the National Criminal History Improvement Program (NCHIP), the initial goal of which was to improve electronic access to firearms-related disqualifying records, felony indictment, and conviction records, for the purposes of both criminal and noncriminal background checks. Congress passed the NICS Improvement Amendments Act (NIAA) of 2007 ( P.L. 110-180 ) following the April 16, 2007, Virginia Tech tragedy. Along the lines of the Brady Act, the NIAA included provisions designed to encourage states, tribes, and territories to make available to the Attorney General certain records related to persons who are disqualified from acquiring a firearm, particularly records related to domestic violence misdemeanor convictions and restraining orders, as well as mental health adjudications. As a framework of incentives and disincentives, the Attorney General was authorized to make grants, waive grant match requirements, or reduce law enforcement grant assistance depending upon a state's compliance with the act's goals of bringing firearms-related disqualifying records online. The Attorney General was required to report annually to Congress on federal department and agency compliance with the act's provisions. The Attorney General, in turn, has delegated responsibility for grant-making and reporting to DOJ's Bureau of Justice Statistics (BJS). BJS designated the grant program under the act as the ""NICS Act Record Improvement Program (NARIP),"" although congressional appropriations documents generally referred to it as ""NICS improvement"" or the ""NICS Initiative"" program. Figure 6 shows annual congressional appropriations for NCHIP and NARIP for FY1995-FY2019. Over this 25-year period, Congress has appropriated nearly $859 million for NCHIP and $201 million for NARIP, for a total of $1.06 billion. During this time period, NCHIP grants were made available to states for purposes other than just identifying persons ineligible to receive firearms, such as identifying persons ineligible to hold positions involving vulnerable populations (e.g., children, disabled, and elderly). Nevertheless, the principal purpose of NCHIP was to improve the accuracy and timeliness of background checks, particularly those administered pursuant to the Brady Act. For FY2009 through FY2013, Congress authorized $1.3 billion in appropriations for NARIP. Actual appropriations, however, fell short of such authorizations. For those fiscal years, Congress appropriated $63.6 million for NARIP, although neither the House nor Senate Committee on Appropriations adopted ""NARIP"" as a grant program designation. Instead, the appropriations statute provided such funding for the grant-making activities authorized under P.L. 110-180 . For FY2014 through FY2019, Congress continued to appropriate funding for both NCHIP and the grant-making activities authorized under P.L. 110-180 (i.e., NARIP) under the ""NICS Initiative,"" even though the authorization for appropriations under P.L. 110-180 had lapsed. For those years, Congress appropriated $429.5 million for NCHIP and NARIP, or the ""NICS Initiative,"" of which $137 million was set aside for purposes authorized under NIAA, bringing total appropriated NARIP funding for FY2009 through FY2019 to $200.6 million. Under the NICS Initiative, BJS has awarded a total of $142 million in NARIP grants to 30 states and one Native American tribe from FY2009 through FY2018. To date, however, BJS has not levied any of the reward and penalty provisions of NIAA, possibly because of methodological difficulties in ascertaining state progress towards meeting the goals of this act. With NICS Initiative grants (NCHIP and NARIP) in part, state and local governments have increased the availability of mental health- and domestic violence-related records to NICS Indices and other data systems queried by NICS. For example, from CY2007 to CY2018, the number of mental health records in the NICS Indices increased from 518,499 to 5,419,894, a 9.5-fold increase. The number of misdemeanor crime of domestic violence (MCDV) records in the NICS Indices increased from 46,286 to 175,376, nearly tripling (a 278.9% increase). Many instances domestic violence misdemeanor crimes are serious enough in nature that the records are deposited in the III, meaning the offenders were fingerprinted. A Department of Justice-sponsored report found that in many cases such criminal records are not adequately flagged in the III for firearms eligibility determination purposes, leading to NICS delayed transfers in some cases. Inadequately flagged records in the III increase the possibility that a prohibited person might be transferred a firearm after the NICS three-business-day delayed transfer period expires. Similarly, it was reported that domestic violence protection orders are increasingly being placed in the NICS Indices, even though the authors of the report argued that it would probably be most appropriate to place such records in the National Crime Information Center (NCIC), so that such records would be available to law enforcement for purposes besides firearms-related background checks. Responding to these issues in part, Congress passed the Fix NICS Act of 2018 ( P.L. 115-141 ). The act reauthorized NARIP, as well as authorized appropriations of $125 million annually for FY2018 through FY2022. It also reauthorized NCHIP itself, as well as authorized appropriations of $250 million annually for FY2018 through FY2022. For FY2018, Congress appropriated $75 million for the ""NICS Initiative,"" of which $25 million was set aside for purposes authorized under NIAA, as amended by the Fix NICS Act (or NARIP). For FY2019, Congress appropriated the same amount and set aside. For FY2020, the Administration has requested $65 million for NCHIP and $10 million for NARIP. The House-reported Commerce, Justice, Science, and Related Agencies Appropriations bill ( H.R. 3055 ; H.Rept. 116-101 ) would provide $80 million for these grant programs under the ""NICS Initiative,"" of which $27.5 million would be set aside for purposes authorized under NIAA, as amended by the Fix NICS Act (or NARIP). This final section of the report briefly summarizes NICS-related legislative action to date in the 116 th Congress. It then provides a summary and some analysis of three bills that have passed the House and await Senate action. In the 116 th Congress, the House has passed three bills that would expand federal firearms-related background check requirements. On January 8, 2019, Representative Mike Thompson introduced the Bipartisan Background Checks Bill of 2019 ( H.R. 8 ), a bill that would require a background check for most private-party, intrastate firearms sale, or ""universal"" background checks. On February 6, 2019, the House Committee on the Judiciary held a hearing on ""Preventing Gun Violence in America."" On February 8, 2019, Representative James Clyburn introduced the Enhanced Background Checks Act of 2019 ( H.R. 1112 ), a bill to lengthen the number of days a firearms transfer could be delayed pending a final firearms eligibility determination. On February 13, 2019, the House Committee on the Judiciary amended and ordered reported both bills: H.R. 8 ( H.Rept. 116-11 ) and H.R. 1112 ( H.Rept. 116-12 ). On February 27 and 28, 2019, respectively, the House amended and passed H.R. 8 and H.R. 1112 . On March 7, 2019, Representative Karen Bass introduced the Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ). On March 27, 2019, the House Committee on the Judiciary amended and reported H.R. 1585 . This bill includes provisions that would expand existing firearms transfer/receipt and possession prohibitions to include dating partners with histories of domestic violence and persons convicted of stalking-related misdemeanor offenses. The House passed H.R. 1585 on April 4, 2019. Also, of note, on March 13, 2019, the House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies held a hearing on ""Gun Violence Prevention and Enforcement."" On March 18, 2019, the Federal Bureau of Investigation (FBI) released its FY2020 congressional budget request that includes a $4.2 million increase for the NICS, which would bring the total program budget to $114.7 million for FY2020. On the same date, the Office of Justice Programs (OJP) released its congressional budget request that includes $75 million for state, local, tribal, and territorial governments to upgrade criminal and mental incompetency records and make those records accessible to NICS for firearms eligibility determination purposes. On June 3, 2019, the House Committee on Appropriations reported an FY2020 Commerce, Justice, Science, and Related Agencies (CJS) Appropriations bill ( H.R. 3055 , H.Rept. 116-101 ). House report language indicates that the bill would fully support the FBI request for increased NICS funding. The bill would also provide $80 million for OJP-administered NICS improvement grants under NCHIP and NARIP. On September 26, 2019, Senate Committee on Appropriations reported an FY2020 CJS Appropriations bill ( S. 2584 ; S.Rept. 116-127 ). Senate report language indicates that the bill $131 million to increase NICS capacity and efficacy. This amount is $16.3 million above the Trump Administration's FY2020 request. The bill would also provide $78.3 million for OJP-administered NICS improvement grants under NCHIP and NARIP, of which $25 is for the latter program. In addition, on March 26, 2019, the Senate Committee on the Judiciary held a hearing on ""Red Flag Laws: Examining Guidelines for State Action."" Seventeen states and the District of Columbia have passed ""Red Flag"" laws. These laws essentially allow concerned persons, including family members in some cases, to petition a court to file an extreme risk protection order against an individual that would allow for the suspension of that individual's firearms eligibility under certain circumstances. These state laws vary considerably from state to state. Related proposals in the 116 th Congress would make subjects of such protective orders ineligible to receive or possess firearms under federal law in any state or would establish grant programs to encourage states to adopt such laws. On September 10, 2019, the House Committee on the Judiciary ordered reported such a bill, the Extreme Risk Protection Order Act ( H.R. 1236 ). In addition, this Committee also ordered reported the Disarm Hate Act ( H.R. 2708 ), which make persons convicted of a misdemeanor hate crime ineligible to receive or possess a firearm or ammunition. The Bipartisan Background Checks Act of 2019 ( H.R. 8 ), a ""universal"" background check bill, would expand federal firearms background checks and, hence, recordkeeping requirements under the Gun Control Act of 1968 (GCA; 18 U.S.C. §921 et seq.) to include firearms transfers made in the same state (intrastate) between unlicensed persons. H.R. 8 would essentially prohibit unlicensed persons from transferring a firearm to any other unlicensed person, unless a federally licensed firearms dealer, or FFL, takes possession of such firearm and facilitates such a transaction by running a background check on the unlicensed prospective transferee (buyer). H.R. 8 includes exceptions for transfers between immediate family members; U.S. military, law enforcement members, or armed private security professionals in the course of official duties; temporary transfers under circumstances involving an imminent threat of bodily harm or death; and legitimate activities involving target shooting, hunting, trapping, or fishing. H.R. 8 would prohibit any implementing regulations that would (1) require FFLs to facilitate private firearms transactions; (2) require unlicensed sellers or buyers to maintain any records with regard to FFL-facilitated background checks; or (3) place a cap on the fee FFLs may charge for facilitating a private firearms transfer. H.R. 8 would also prohibit FFLs from transferring possession of, or title to, any firearm to any unlicensed person, unless the FFL provides notice of the proposed private firearm transfer prohibition under this bill. Further, H.R. 8 would extend a provision of current law that prohibits the DOJ from charging a fee for a NICS background check. Under H.R. 8 , facilitating FFLs would be required to treat firearms to be transferred on behalf of any unlicensed persons as if they were part of their business inventory. Thus, they would be required to comply with the GCA recordkeeping and background check requirements. As part of this process, FFLs would enter the firearm(s) to be exchanged into their bound log of firearms acquisitions and dispositions. The FFLs and unlicensed prospective transferees would then complete and sign a firearms transaction forms (ATF Form 4473) under penalty of law that everything entered onto that form was truthful. FFLs would then initiate a background check on the intending transferee through NICS. And either the FBI NICS Section or a state or local authority—point of contact (POC)—would conduct a background check to determine an intending transferee's firearms eligibility. Such a requirement, if enacted, would close off what some have long characterized as the ""Gun Show loophole."" For the past two decades, many gun control advocates have viewed the legal circumstances that allow individuals to transfer firearms intrastate among themselves without being subject to the licensing, recordkeeping, and background check requirements of the GCA as a ""loophole"" in the law, particularly within the context of these intrastate, private transactions at gun shows and other public venues or through the internet. Gun control advocates also maintain that expanding background checks to cover intrastate, private-party firearms sales would help stem gun trafficking; that is, the illegal diversion of firearms from legal channels of commerce to the black market, where federal, state, local, tribal, and territorial laws could be evaded. They maintain that prohibited persons or their friends or acquaintances could easily buy a firearm at a gun show, from an online seller, or in a person-to-person ""private"" sale. They also point to studies that suggest that there is moderate evidence that expanded background checks might reduce firearms-related homicides and suicides. Gun control advocates underscore that 20 states and the District of Columbia (DC) currently have laws that require background checks for certain types of firearms transfers not currently covered by federal law. Although these laws vary considerably from state to state, 11 states and DC require background checks for nearly all firearms transfers. Gun rights advocates contend that intrastate, private transfers are regulated already under federal law, in that it is a felony to transfer a firearm or ammunition knowingly to an underage or prohibited person. They contend further that most criminals would not submit to a background check. They ask, ""Why would anyone submit to a background check unless they believed they were not prohibited and would pass?"" Moreover, they argue that making private-party, intrastate transfers subject to the recordkeeping and background check provisions of the GCA could potentially criminalize firearms transfers under circumstances that could be characterized as legitimate and lawful. For example, it has been argued that H.R. 8 might prohibit a person from sharing a firearm with another person while target shooting on one's own property. Although H.R. 8 would provide exceptions for ""temporary transfers"" for target shooting and other related activities, some gun rights advocates argue that such exceptions are too narrow. For example, they argue further that H.R. 8 would prohibit a person from loaning a neighbor a firearm for a hunting trip with a background check being required for both the loan to the neighbor and the return of the firearm to its lawful owner. Perhaps more fundamentally, H.R. 8 would prohibit a person from loaning a firearm to another person—who may be facing some threat of death or serious bodily injury—for self-defense purposes, unless that threat were ""imminent."" Gun rights advocates might also see such a measure as a significant step towards a national—albeit decentralized—registry of firearms and firearms owners, since its practical implementation would likely necessitate recordkeeping on such transfers. Such advocates cite an Obama Administration, Department of Justice official who observed that ""universal background checks"" are unenforceable without a comprehensive registry of firearms. Legislation to expand federal recordkeeping and background check requirements to cover private, intrastate firearms transfers saw action in the 106 th and 108 th Congresses following the April 20, 1999, Columbine, CO, high school mass shooting; in the 113 th Congress following the December 14, 2012, Newtown, CT, elementary school mass shooting; and in the 114 th Congress following the December 2, 2015, San Bernardino, CA, social services center all-staff meeting and June 12, 2016, Orlando, FL, Pulse night club mass shootings. Over time, related legislative proposals have varied in the scope and type of intrastate, private party (nondealer) firearms exchanges between federally unlicensed persons that would fall under their respective background check provisions. Since the 113 th Congress, such proposals fall under two basic types that, respectively, have been labeled as either ""Universal"" or ""Comprehensive"" background check bills. ""Comprehensive"" background checks would cover transfers at gun shows and similar public venues (e.g., flea markets and public auctions) and firearms that are advertised via some public fora, including newspaper advertisements and the Internet. ""Universal"" background checks would cover private transfers under a much wider set of circumstances (sales, trades, barters, rentals, or loans), with more limited exceptions. In the Senate, from the 113 th Congress forward, the principal sponsors of ""universal"" background check bills have been Senators Charles Schumer, Christopher Murphy, and Richard Blumenthal. The principal sponsors of ""comprehensive"" background check amendments have been Senators Joe Manchin and Pat Toomey. ""Universal"" background check bills were introduced in the House in the 113 th and 114 th Congresses. While Representatives Peter King and Mike Thompson introduced proposals that were similar to Manchin-Toomey ""comprehensive"" background check bills in the past three Congresses, they have sponsored and supported a ""universal"" background check proposal ( H.R. 8 ) in the 116 th Congress. The House-passed Enhanced Background Checks Act of 2019 ( H.R. 1112 ) would revise the GCA background check provision to lengthen the delayed sale period, which is three business days under current law. Under H.R. 1112 , for background checks that do not result in a ""proceed with transfer"" or ""transfer denied,"" the FBI NICS Section and POC state officials would have 10 business days to place a hold on a firearms-related transaction. At the end of 10 business days, the prospective transferee could petition the Attorney General for a final firearms eligibility determination. If the FFL does not receive a final determination within 10 days of the date of the petition, he or she could proceed with the transfer. The timeliness and accuracy of FBI-administered firearms background checks through NICS—particularly with regard to ""delayed proceeds""—became a matter of controversy following the June 17, 2015, Charleston, SC, mass murder at the Emanuel African Methodist Episcopal Church. The assailant had acquired a handgun from an FFL in the Columbia, SC, area. According to press accounts, the NICS check on the assailant was initiated on April 11, 2015 (a Saturday). The FBI found an arrest record for him, but the arrest record was ambiguous with regard to the arrest's final disposition and the assailant's firearms receipt and possession eligibility. Therefore, the NICS response to the FFL was to delay the transfer for three business days as required under federal law. At his discretion, the FFL made the transfer on April 16, 2015 (a Thursday) as allowed under federal law. According to FBI, the NICS check would have remained active in the NICS examiner's queue for 30 days (until May 11, 2015), and would have remained in an ""active status"" in the NICS system for 88 days (until July 8, 2015). According to the assailant's arrest record, he had been processed for arrest by the Lexington County, SC, Sheriff's Department, so the FBI contacted the Lexington County court, sheriff's department, and prosecutor's office. The Lexington County Sheriff's Department responded that it did not have a record on the alleged assailant and advised the NICS examiner to contact the City of Columbia, SC, Police Department. However, the NICS examiner contacted the West Columbia, SC, Police Department, because it was listed on the NICS contact sheet for Lexington County. In turn, the West Columbia Police Department responded that it did not have a record on the alleged assailant either. The NICS examiner reportedly focused on Lexington County and missed the fact that the City of Columbia, SC, Police Department was listed as the contact for Richland County, the county in which most of the City of Columbia, SC, is located. Consequently, the NICS examiner did not contact the Columbia, SC, Police Department, the agency that actually held the arrest record for the assailant. If the FBI had ascertained during the 88 days that this person was prohibited, the NICS examiner would have likely contacted the FFL to verify whether a firearms transfer had been made after the three-business-day delay, and then would have notified the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and a firearms retrieval action would have possibly been taken by that agency. In this case, the FBI did not ascertain that the assailant was possibly a prohibited person until after the June 17, 2015, mass shooting. Some gun control advocates have characterized these circumstances as the ""Charleston loophole."" In addition to the ""Charleston loophole,"" gun control advocates sometimes refer to ""delayed proceeds"" that could result in a possibly prohibited person acquiring a firearm after three business days have expired as ""default proceeds."" They argue that extending the delayed proceed period would reduce the chance that an otherwise prohibited person might inadvertently be transferred a firearm, a circumstance that would likely necessitate an ATF firearms retrieval action had more time been allotted to complete the background check. According to data acquired by a gun control advocacy group, about 3.59% of FBI-administered background checks in 2017 were unresolved after a delayed proceed response and the three-business-day window had passed. To this advocacy group, this suggested that a relatively small number of people (310,232) would be affected, and any inconvenience to them would be outweighed by increasing the probability that a prohibited person might be prevented from acquiring a firearm. According to the FBI, it referred 6,004 ""delayed denial"" cases to the ATF in 2017 that could have possibly resulted in a finding of ineligibility and subsequent firearms retrieval action. In addition, the FBI reported that 4,864 of those cases involved individuals who were possibly prohibited and had probably acquired a firearm. Gun rights advocates would counter that a large percentage (98.1%) of background checks that resulted in a delayed proceed response involved persons who were not actually ineligible, prompting them to refer to such default proceed responses as ""default infringements."" They maintain that the ""delayed proceeds"" should be viewed as an indicator of understaffing and incomplete recordkeeping on prohibited persons. Gun rights advocates underscore further that if the overall timeliness and accuracy of FBI background checks were improved, the process would be less likely to inconvenience an otherwise eligible person and, at the same time, less likely to allow a firearm to be transferred to a prohibited person. According to the GAO, ATF processed 3,933 delayed denials in FY2017. Of those denials, 38 cases were referred to U.S. Attorney's Offices for prosecution. Nine of those cases were federally prosecuted. The House-passed Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ) includes several provisions that seek to reduce firearms-related intimate partner violence (homicides and injury) by amending federal law to prohibit persons convicted of misdemeanor stalking crimes from receiving or possessing a firearm or ammunition. This bill would also revise provisions related to domestic violence protection orders and a definition of ""intimate partner"" under current law. The bill also includes other provisions related to leveraging state, local, tribal, and territorial resources to increase federal investigations and prosecutions of firearms-related eligibility offenses related to domestic violence and stalking. As discussed earlier, there are nine categories of persons prohibited under current law (18 U.S.C. §922(g)) from receiving or possessing firearms or ammunition (e.g., convicted felons, fugitives from justice, and unlawfully present aliens). Under 18 U.S.C. §922(n), a tenth category of prohibited persons—those under felony indictment—are prohibited from receiving, but not possessing firearms. In addition, under 18 U.S.C. §922(d), it is unlawful for any person to transfer or otherwise dispose of a firearm or ammunition to any person, if the transferor has reasonable cause to believe the transferee would be prohibited under one of those 10 categories. Two of the categories speak directly to domestic violence: persons under court-order restraints related to harassing, stalking, or threatening an intimate partner or child of such intimate partner (18 U.S.C. §§922(d)(8) and (g)(8)); and persons convicted of a misdemeanor crime of domestic violence (MCDV) (18 U.S.C. §§922(d)(9) and (g)(9)). According to ATF, a qualifying DVPO order includes the following elements. The defendant/respondent must receive actual notice and opportunity to participate in a hearing before a judge, magistrate, or other judicial official. After such hearing, a DVPO may be issued by a criminal or civil court, such as a divorce court, family court, magistrate, or general jurisdiction court. The plaintiff/petitioner is an ""intimate partner"" of the defendant/respondent (subject). An intimate partner includes: 1. a spouse or former spouse of the subject; a person who cohabitates or cohabitated with the subject, who resides or resided in a sexual/romantic relationship with the subject, or 2. a person with whom the subject has or had a child in common (regardless of whether they ever married or cohabitated). A qualifying court order must also restrain the subject from harassing, stalking, or threatening an intimate partner or child of that intimate partner, or engaging in conduct that would place either of them in reasonable fear of bodily injury. There must also be a finding that the subject is a credible threat to the physical safety of the intimate partner or child, or explicitly prohibit the use of physical force. According to ATF, a qualifying misdemeanor conviction of domestic violence (MCDV) must include the following elements. Such offense is a misdemeanor crime under federal, state, or tribal law and involves the use or attempted use of physical force, or the threatened use of a deadly weapon. At the time of the offense, the offender must have been: 1. A current or former spouse, parent, or guardian of the victim; 2. A person with who the victim shared a child in common; 3. A person who was cohabitating with or had cohabitated with the victim as a spouse, parent, or guardian; or 4. A person who was or had been similarly situated to a spouse, parent, or guardian of the victim. Under current law, the term ""intimate partner"" means, with respect to a person, the spouse of the person, a former spouse of the person, an individual who is a parent of a child of the person, and an individual who cohabitates or has cohabitated with the person (18 U.S.C. §921(a)(32)). H.R. 1585 would expand the ""intimate partner"" definition to include a dating partner or former dating partner (as defined in section 2266 [of Title 18, United States Code]); and any other person similarly situated to a spouse who is protected by the domestic or family violence laws of the State or tribal jurisdiction in which the injury occurred or where the victim resides. Under 18 U.S.C. §2266(a)(10), the term ""dating partner"" refers to a person who is or has been in a social relationship of a romantic or intimate nature with the abuser; and the existence of such a relationship is based on a consideration of (1) the length of the relationship; (2) the type of relationship; and (3) the frequency of interaction between the persons involved in the relationship. H.R. 1585 would make any person convicted of a ""misdemeanor crime of stalking"" a tenth category of persons prohibited from receiving and possessing a firearm under 18 U.S.C. §922(g). The bill would define such a crime as any misdemeanor stalking offense under federal, state, tribal, or municipal law; and one that in a course of harassment, intimidation, or surveillance of another person, places that person in reasonable fear of material harm to the health or safety of her- or himself, an immediate family member of that person, a household member of that person, or a spouse or intimate partner of that person; or that causes, attempts to cause, or would reasonably be expected to cause emotional distress to any of those persons. The proposed definition is subject to certain mitigating factors. A person would not be considered to have been convicted of a misdemeanor crime of stalking unless (1) the person was represented by counsel in the case, or (2) they knowingly and intelligently waived the right to counsel in the case. In the case of a prosecution for a misdemeanor crime of stalking for which a person was entitled to a jury trial, a person would not be considered convicted in the jurisdiction in which the case was tried, unless (1) the case was tried by a jury; or (2) the person knowingly and intelligently waived the right to have the case tried by a jury, by guilty plea, or otherwise. H.R. 1585 would also expand the scope of ""protection orders"" or ""court-order restraints"" under 18 U.S.C. §§922(d)(8) and (g)(8). Under current law these provisions prohibit any person from firearms receipt, possession, or transfer, who is subject to a court order that: (A) was issued after a hearing of which such person received actual notice, and at which such person had an opportunity to participate; (B) restrains such person from harassing, stalking, or threatening an intimate partner of such person or child of such intimate partner or person, or engaging in other conduct that would place an intimate partner in reasonable fear of bodily injury to the partner or child; and (C) includes a finding that such person represents a credible threat to the physical safety of such intimate partner or child; or by its terms explicitly prohibits the use, attempted use, or threatened use of physical force against such intimate partner or child that would reasonably be expected to cause bodily injury. H.R. 1585 would substantively amend the domestic violence protection order prohibition (18 U.S.C. §922(g)(8), and §922(d)(8), by reference) to specifically include restraining orders under state, tribal, or territorial law that are issued after an ""ex parte"" hearing, and to expand it to include restraining orders related to ""witness intimidation."" The legal term ""ex parte"" (""for one party"") refers generally to court motions, hearings, or orders granted on the request of and for the benefit of one party only without the respondent/defendant being present. H.R. 1585 would add the following at the end of 18 U.S.C. §922(g)(8)(A): in the case of an ex parte order, relative to which notice and opportunity to be heard are provided—(I) within the time required by State, tribal, or territorial law; and (II) in any event within a reasonable time after the order is issued, sufficient to protect the due process rights of the person. Notwithstanding the reference to ""due process"" in the amending language, this language could potentially generate considerable debate about the balance between due process and public safety. In addition, at the end of clause 18 U.S.C. §922(g)(8)(B), it would add, ""intimidating or dissuading a witness from testifying in court,"" which may appear less controversial, but critics might argue that such language has little to do with domestic violence. As discussed in the body of this report, Congress has passed legislation to encourage states to make DVPO and MCDV records accessible promptly to NICS. Progress has been made, but many state, tribal, and territorial authorities still find such reporting challenging, if not daunting. Gun control advocates, meanwhile, have argued that the definition of ""intimate partner"" ought to be expanded under the DVPO and MCDV definitions of ""intimate partner"" to include current and former dating partners, as well as persons convicted of misdemeanor stalking offenses. Expanding the grounds for firearms transfer or receipt and possession ineligibility is one avenue along which intimate partner gun violence could be addressed, perhaps effectively, but such an expansion could also strain ongoing federal-state efforts to ensure that prohibiting records under current law are accurate and reported to NICS in a timely manner in order to be accessible electronically during background checks. Appendix A. FBI and POC Firearms-Related Background Checks Pursuant to the Brady Act FBI NICS Section Checks and Denials, November 30, 1998, Through 2018 As Table A-1 shows, from November 30, 1998, through 2018, the FBI CJIS Division's NICS Section conducted 128.7 million background checks, resulting in nearly 1.6 million denials, for an overall initial denial rate of 1.2%. About 2.7% of those denials were appealed and eventually overturned. Table A-2 shows FBI NICS Section denials by prohibiting category. Over the 20-year and one month period (November 30, 1998, through 2018) that NICS has been in operation, over half of FBI firearms transfer denials were based on a prior felony conviction. For 2018, by comparison, a smaller percentage (45.1%) were based on a felony conviction. This percentage decrease can be attributed to at least two factors. One, over time, persons with past felony convictions could be less likely to risk a background check through NICS. Two, since the establishment of NICS, state and local government submissions of prohibiting records—particularly those related to mental incompentency—have increased. As shown in Table A-2 , such records accounted for 2.5% of denials over the 20-year period, but accounted for 6.1% of denials for 2018. As discussed below, Congress prioritized such reporting as part of the NICS Improvement Amendments Act of 2007 ( P.L. 110-180 ), in the aftermath of the April 20, 2007, VA Tech mass shooting. Ten years later, Congress passed the Fix NICS Act of 2017 in an effort to strengthen and streamline provisions previously enacted under P.L. 110-180 , and authorize future appropriations for grant and other programs designed to assist state, tribes, and territories with improving the quality of prohibiting records and increasing their accessibility to NICS ( P.L. 115-141 , Div. S, Title VI). State and Local POC Background Checks and Denials, November 30, 1998, Through 2015 As shown in the Table A-3 below, the Bureau of Justice Statistics (BJS) has reported that state and local POC agencies conducted nearly 81.7 million background checks from November 30, 1998, through 2015 for firearms transfers and permits. These checks resulted in nearly 1.46 million denials, for an overall denial rate of 1.8%, according to BJS. Over the same time period, the FBI NICS Section processed 102.4 background checks, resulting in 1.27 million denials of firearms transfers, for an overall denial rate of 1.2%. BJS also reports on the reasons (prohibitors) for some, but not all, state and local POC denials. For example, as shown in Table A-3 , while state and local POCs made 119,368 denials for firearms transfers and permits in 2015, BJS reported the reason for 84,199 (70.5%) of such denials. Similarly, state and local POCs made 102,468 denials in 2014, but BJS reported the reason for 57,001 (55.6%) of them. In addition, over the years, BJS sometimes reported for both state and local POC agencies, and in other years only for state POC agencies. Moreover, BJS's methodology for making estimates about state and local POC background checks and denials over the years has been revised. Notwithstanding these data limitations, Table A-4 shows the BJS-reported reasons for some, but not all denials made by state and local POCs for 2014 and 2015. Looking at the data in Table A-4 , it is notable that there either appears to be no denials based upon dishonorable discharges or renounced U.S. citizenship, or such denials were not estimated by BJS based on data submitted by state and local POC agencies. In addition, the percentages of felony conviction denials for either year, 2014 or 2015, are roughly half of the percentages of federal denials made by the FBI NICS Section. As a percentage of the total, it could be that these percentages are based on incomplete data and, therefore, are not particularly comparable with the percentages for federal denials, which are based on complete data. Appendix B. NICS-Queried Computer Systems and Files As part of a NICS check, the transferee's information is crosschecked against three computerized databases/systems to determine firearms transfer and possession eligibility. Those systems are the Interstate Identification Index (III), the National Crime Information Center (NCIC), and the NICS Indices. If prospective transferees indicate that they are non-U.S. citizens, then their information is also checked against the immigration and naturalization databases maintained by the Department of Homeland Security (DHS), Immigration and Customs Enforcement (ICE). Interstate Identification Index (III) The III, or ""Triple I,"" is a computerized criminal history index pointer system that the FBI maintains so that records on persons arrested and convicted of felonies and serious misdemeanors at either the federal or state level can be shared nationally. This criminal history records exchange system includes arrest and disposition information on individuals charged with felonies and certain misdemeanors. Felony crimes generally include any offense that is punishable by a term of imprisonment exceeding one year. Under state law, there are misdemeanor crimes that are punishable by a term of imprisonment exceeding two years, which are also shared nationally through the III. By virtue of this record sharing, other information accessible through III also includes records on persons under felony indictment, fugitives from justice, persons found not guilty by reason of insanity or adjudicated incompetent to stand trial, persons convicted of misdemeanor crimes of domestic violence, and persons subject to domestic violence protection orders. All records in III are supported by fingerprint records which are exchanged through the Interstate Automated Fingerprint Identification System (IAFIS), though NICS checks do not entail fingerprint-based background checks under current law. National Crime Information Center (NCIC) The NCIC is a database of documented criminal justice information that is made available to law enforcement and authorized agencies, with the goal of assisting law enforcement in apprehending fugitives, finding missing persons, locating stolen property, and further protecting law enforcement personnel and the public. NCIC includes 21 files, 10 of which are queried by NICS. Those 10 NCIC files include Wanted Persons; Protection Orders; Immigration Violators; Protective Interest; Foreign Fugitive; Supervised Release; National Sex Offender Registry; Gang File; Known/Appropriately Suspected Terrorist (KST); and Violent Person. NICS Indices The NICS Indices contain records of persons prohibited from receiving or possessing firearms under federal, state, local, tribal, or territorial law that are not shared nationally in either the III or NCIC. Those records include felony arrest and disposition records (not included in the III); felony indictments; fugitives from justice; addicts and other unlawful users of controlled substances; involuntary commitments to mental institutions and other related adjudications; illegal or unlawful aliens; dishonorable discharges; renunciations of U.S. citizenship; domestic violence protection orders; domestic violence misdemeanor convictions; previous NICS denials under state laws (by POCs); and previous NICS denials made federally (by NICS Section). Appendix C. ATF-Certified Permanent Brady Permits Appendix D. ATF-Certified State Relief from Disabilities Statutes","The Federal Bureau of Investigation (FBI) administers a computer system of systems that is used to query federal, state, local, tribal, and territorial criminal history record information (CHRI) and other records to determine an individual's firearms transfer/receipt and possession eligibility. This FBI-administered system is the National Instant Criminal Background Check System (NICS). NICS, or parallel state systems, must be checked and the pending transfer approved by the FBI or state point of contact before a federally licensed gun dealer may transfer a firearm to any customer who is not also a federally licensed gun dealer. Current federal law does not require background checks for intrastate (same state), private-party firearms transactions between nondealers, though such checks are required under several state laws. In the 116 th Congress, the House of Representatives passed three bills that would expand federal firearms background check requirements and firearms transfer/receipt and possession ineligibility criteria related to domestic violence. The Bipartisan Background Checks Act of 2019 ( H.R. 8 ), a ""universal"" background check bill, would make nearly all intrastate, private-party firearms transactions subject to the recordkeeping and NICS background check requirements of the Gun Control Act of 1968 (GCA). For the past two decades, many gun control advocates have viewed the legal circumstances that allow individuals to transfer firearms intrastate among themselves without being subject to the licensing, recordkeeping, and background check requirements of the GCA as a ""loophole"" in the law, particularly within the context of gun shows. Gun rights supporters often oppose such measures, underscoring that it is already unlawful to knowingly transfer a firearm or ammunition to a prohibited person. In addition, some observers object to these circumstances being characterized as a loophole, in that the effects of the underlying provisions of current law are not unintended or inadvertent. The Enhanced Background Checks Act of 2019 ( H.R. 1112 ) would lengthen the amount of time firearms transactions could be delayed pending a completed NICS background check from three business days under current law to several weeks. The timeliness and accuracy of FBI-administered firearms background checks through NICS—particularly with regard to ""delayed proceeds""—became a matter of controversy following the June 17, 2015, Charleston, SC, mass shooting at the Emanuel African Methodist Episcopal Church. The assailant in this incident had acquired a pistol following a three-business-day-delayed sale under current law and an unresolved background check. While it has never been definitely determined whether the assailant's arrest record would have prohibited the firearms transfer, this incident prompted gun control advocates to label the three-business-day delayed transfer provision of current law as the ""Charleston loophole."" Gun rights supporters counter that firearms background checks should be made more accurate and timely, so that otherwise eligible customers are not wrongly denied a firearms transfer, and ineligible persons are not allowed to acquire a firearm. The Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ) would expand federal firearms ineligibility provisions related to domestic violence to include former dating partners under court-ordered restraints or protective orders and persons convicted of misdemeanor stalking offenses. Gun control advocates see this proposal as closing off the ""boyfriend loophole."" Gun rights supporters are wary about certain provisions of this proposal that would allow a court to issue a restraining order ex parte ; that is, without the respondent/defendant having the opportunity for a hearing before a judge or magistrate. This report provides an overview of federal firearms background check procedures, analysis of recent legislative action, discussion about possible issues for Congress, and related materials."
"As of November 2018, 43 states operated at least part of their Medicaid programs under demonstrations. State demonstrations can vary in size and scope, and many demonstrations are comprehensive in nature, affecting multiple aspects of states’ Medicaid programs. In fiscal year 2017, federal spending on demonstrations accounted for more than one- third of total federal Medicaid spending and in eight states accounted for 75 percent or more of Medicaid expenditures. CMS typically approves demonstrations for an initial 5-year period that can be extended in 3- to 5-year increments with CMS approval. Some states have operated portions of their Medicaid programs under a demonstration for decades. Each demonstration is governed by special terms and conditions, which reflect the agreement reached between CMS and the state, and describe the authorities granted to the state. For example, the special terms and conditions may define what demonstration funds can be spent on—including which populations and services—as well as specify reporting requirements, such as monitoring or evaluation reports states must submit to CMS. In January 2018, CMS announced a new policy to support states interested in using demonstrations to make participation in work or community engagement a requirement to maintain Medicaid eligibility or coverage. CMS’s guidance indicates that states have flexibility in designing demonstrations that test work requirements, but it also describes parameters around the populations that could be subject to work requirements and other expectations. CMS guidance addresses several areas, including the following: Populations. Work requirements should apply to working-age, non- pregnant adult beneficiaries who qualify for Medicaid on a basis other than a disability. Exemptions and qualifying activities. States must create exemptions for individuals who are medically frail or have acute medical conditions. States must also take steps to ensure eligible individuals with opioid addiction and other substance use disorders have access to coverage and treatment services and provide reasonable modifications for them, such as counting time spent in medical treatment toward work requirements. The guidance indicates that states can allow a range of qualifying activities that satisfy work requirements, such as job training, education programs, and community service. The guidance also encourages states to consider aligning Medicaid work requirements with work requirements in other federal assistance programs operating in their states. Beneficiary supports. States are expected to describe their strategies to assist beneficiaries in meeting work requirements and to link them to additional resources for job training, child care assistance, transportation, or other work supports. However, CMS’s guidance specifies that states are not authorized to use Medicaid funds to finance these beneficiary supports. About one-third of states have either received CMS approval or submitted applications to CMS to test work requirements in their demonstrations. Nine states have had work requirements approved as part of new demonstrations or extensions of or amendments to existing demonstrations as of May 2019. Also as of May 2019, seven more states had submitted demonstration applications with work requirements, which were pending CMS approval. (See fig. 1.) States with approved work requirements were in various stages of implementation as of August 2019, and three states faced legal challenges to implementation. The requirements were in effect in Arkansas for 9 months before a federal district court vacated the approval in March 2019. Work requirements became effective in Indiana in January 2019 and will be enforced beginning in January 2020. CMS’s approval of work requirements in Kentucky was vacated in March 2019— several days before the work requirements were set to become effective on April 1, 2019. As of August 2019, CMS was appealing the court decisions vacating demonstration approvals in Arkansas and Kentucky. Other states’ requirements are approved to take effect in fiscal years 2020 and 2021. (See fig. 2.) Implementing work requirements, as with other types of beneficiary requirements, can involve an array of administrative activities by states, including developing or adapting eligibility and enrollment systems, educating beneficiaries, and training staff. In general, CMS provides federal funds for 50 percent (referred to as a 50 percent matching rate) of state Medicaid administrative costs. These funds are for activities considered necessary for the proper and efficient administration of a state’s Medicaid program, including those parts operated under demonstrations. CMS provides higher matching rates for certain administrative costs, including those related to IT systems. For example, expenditures to design, develop, and install Medicaid eligibility and enrollment systems are matched at 90 percent, and maintenance and operations of these systems are matched at 75 percent. States may also receive federal funds for administrative activities delegated to MCOs. The amount of federal Medicaid funds states receive for payments to MCOs that bear financial risk for Medicaid expenditures is determined annually by a statutory formula based on the state’s per capita income, known as the Federal Medical Assistance Percentage (FMAP). The FMAP sets a specific federal matching rate for each state that, for fiscal year 2019, ranges from 50 percent to 76 percent. There are exceptions to this rate for certain populations, providers, and services. For example, states that chose to expand Medicaid under the Patient Protection and Affordable Care Act (PPACA) receive a higher FMAP for newly eligible adults, equal to 93 percent in 2019. (See fig. 3.) CMS has several different related processes under which the agency oversees Medicaid administrative costs, including those for demonstrations. Demonstration approval, monitoring, and evaluation. States seeking demonstration approvals must meet transparency requirements established by CMS. For example, states must include certain information about the expected changes in expenditures under the demonstration in public notices seeking comment at the state level and in the application to CMS, which is posted for public comment at the federal level. In addition, CMS policy requires that demonstrations be budget neutral—that is, that the federal government should spend no more under a demonstration than it would have without the demonstration. Prior to approval, states are required to submit an analysis of their projected costs with and without the demonstration. CMS uses this information to determine budget neutrality and set spending limits for demonstrations. During the demonstration, CMS is responsible for monitoring the state’s compliance with the terms and conditions of the demonstration, including those related to how Medicaid funds can be spent and the demonstration spending limit. States must also evaluate their demonstrations to assess the effects of the policies being tested, which could include impacts on cost. Review and approval of federal matching funds for IT projects. To request higher federal matching rates for changes to Medicaid IT systems, including eligibility and enrollment systems, states must submit planning documents to CMS for review and approval. States’ plans must include sufficient information to evaluate the state’s goals, procurement approach, and cost allocations within a specified budget. States may request funds for system development related to a proposed demonstration before the demonstration is approved. Funding can be approved and expended under the approved plan while the demonstration application is being reviewed. States submit updates to planning documents annually for CMS review, which can include requested changes to the approved budget. Quarterly expenditure reviews. In order to receive federal matching funds, states report their Medicaid expenditures quarterly to CMS, including those made under demonstrations. Expenditures associated with demonstrations, including administrative expenditures, are reported separately from other expenditures. CMS is responsible for ensuring that expenditures reported by states are supported and allowable, meaning that the state actually made and recorded the expenditure and that the expenditure is consistent with Medicaid requirements. With regard to consistency, this includes comparing reported expenditures to various approval documents. For example, CMS is responsible for comparing reported demonstration expenditures against the special terms and conditions that authorize payment for specified services or populations and establish spending limits. CMS is also responsible for reviewing states’ reported expenditures against budgets in states’ planning documents to ensure that states do not exceed approved amounts. A list of GAO reports related to these CMS oversight processes is included at the end of this report. States took different approaches to designing work requirements under their Medicaid demonstrations. These requirements varied in terms of the beneficiary groups subject to the requirements; the required activities, such as frequency of required reporting; and the consequences beneficiaries face if they do not meet requirements. In the nine states with approved work requirements as of May 2019, we found differences in the age and eligibility groups subject to work requirements, and, to a lesser extent, the number of hours of work required and frequency of required reporting to the state. For example: Age and eligibility groups subject to work requirements. Four of these states received approval to apply the requirements to adults under the age of 50, similar to how certain work requirements are applied under the Supplemental Nutrition Assistance Program (SNAP). Among the other five states, approved work requirements apply to adults up to the age of 59 (Indiana and Utah), 62 (Michigan), and 64 (Kentucky and New Hampshire). States generally planned to apply the requirements to adults newly eligible under PPACA or a previous coverage expansion, but some states received approval to apply the requirements to additional eligibility groups, such as parents and caretakers of dependents. Number of hours of work required and frequency of required reporting. Under approved demonstrations in seven states, Medicaid beneficiaries must complete 80 hours of work or other qualifying activities per month to comply with work requirements. Five states’ approved demonstrations require beneficiaries to report each month on their hours of work or other qualifying activities, using methods approved by the state, such as online or over the phone. (See table 1.) We saw similar variation under the seven state applications that were pending as of May 2019. All nine states with approved work requirements as of May 2019 exempted several categories of beneficiaries and counted a variety of activities as meeting the work requirements. For example, all nine states exempted from the work requirements people with disabilities, pregnant women, and those with certain health conditions, such as a serious mental illness. In addition, depending on the state, other groups were also exempted, such as beneficiaries who are homeless, survivors of domestic violence, and those enrolled in substance use treatment programs. States also counted activities other than work as meeting the work requirements, such as job training, volunteering, and caregiving for non-dependents. In addition to work requirements, eight of the nine states received approval under their demonstrations to implement other beneficiary requirements, such as requiring beneficiaries to have expenditure accounts. (See app. I for more information on these other beneficiary requirements.) The consequences Medicaid beneficiaries faced for non-compliance and the timing of the consequences varied across the nine states with approved work requirements. The consequences for non-compliance included coverage suspension and termination. For example, Arizona received approval to suspend beneficiaries’ coverage after 1 month of non-compliance. In contrast, Wisconsin will not take action until a beneficiary has been out of compliance for 4 years, at which time coverage will be terminated. Three states (Arkansas, Michigan, and Wisconsin) imposed or planned to impose a non-eligibility period after terminating a beneficiary’s enrollment. For example, under Arkansas’ demonstration, after 3 months of non-compliance, the beneficiary was not eligible to re-enroll until the next plan year, which began in January of each year. Thus, beneficiaries could be locked out of coverage for up to 9 months. (See table 2.) For states with pending applications, suspension or termination of coverage takes effect after 2 or 3 months of non- compliance. For states that suspend coverage for beneficiaries, there are different conditions for coming into compliance and lifting the suspension. For example: Arizona received approval to automatically reactivate an individual’s eligibility at the end of each 2-month suspension period. In other states, such as Indiana, beneficiaries must notify the state that they have completed 80 hours of work or other qualifying activities in a calendar month, after which the state will reactivate eligibility beginning the following month. (See text box.) Indiana’s Suspension Process for Non-Compliance with Medicaid Work Requirements At the end of each year, the state reviews beneficiaries’ activities related to work requirements. Beneficiaries must meet the required monthly hours 8 out of 12 months of the year to avoid a suspension of Medicaid coverage. If coverage is suspended for not meeting work requirements, the suspension will start January 1 and could last up to 12 months. During a suspension, beneficiaries will not be able to access Medicaid coverage to receive health care. Beneficiaries with suspended Medicaid coverage can reactivate coverage if they become medically frail; or employed, enrolled in school, or engaged in volunteering. Beneficiaries must contact the state to reactivate coverage. To prevent suspension from taking effect, two states (Kentucky and New Hampshire) require beneficiaries to make up required work hours that were not completed in order to maintain compliance with work requirements. For example, in Kentucky, if the beneficiary worked 60 hours in October (20 hours less than the required 80), the beneficiary must work 100 hours in November to avoid suspension of coverage in December. Available estimates of the costs to implement Medicaid work requirements varied considerably among the five selected states, and these estimates did not account for all costs. These states estimated that federal funding would cover the majority of these costs, particularly costs to modify IT systems. Selected states (Arkansas, Indiana, Kentucky, New Hampshire, and Wisconsin) reported estimates of the costs to implement work requirements that ranged from under $10 million in New Hampshire to over $250 million in Kentucky. These estimates—compiled by states and reported to us—did not include all planned costs. The estimates were based on information the states had readily available, such as the costs of contracted activities for IT systems and beneficiary outreach, and primarily reflect up-front costs. Four selected states (Arkansas, Indiana, Kentucky, and New Hampshire) had begun implementing work requirements and making expenditures by the end of 2018. Together, these states reported to us having spent more than $129 million in total for implementation activities from the time the states submitted their demonstration applications through the end of 2018. (See table 3.) Several factors may have contributed to the variation in the selected states’ estimated costs of administering work requirements, including planned IT system changes and the number of Medicaid beneficiaries subject to the work requirements. IT system changes. Selected states planned distinct approaches to modify their IT systems in order to administer work requirements. For example: Indiana, which implemented work requirements by expanding on an existing work referral program, planned to leverage existing IT systems, making modifications expected to result in IT costs of $14.4 million over 4 years. In contrast, Kentucky planned to develop new IT system capabilities to communicate, track, and verify information related to work requirements. Kentucky received approval to spend $220.9 million in fiscal years 2019 and 2020 to do that and make changes needed to implement other beneficiary requirements in its demonstration. Number of beneficiaries subject to requirements. The estimated cost of some activities to administer work requirements depended on the number of Medicaid beneficiaries subject to work requirements, which varied across selected states. For example: Kentucky estimated 620,000 beneficiaries would be subject to work requirements—including those who may qualify for exemptions—and estimated costs of $15 million for fiscal years 2019 and 2020 to conduct beneficiary education, outreach, and customer service. In contrast, Arkansas had fewer beneficiaries subject to work requirements (about 115,000 in February 2019, with about 100,000 of those eligible for exemptions) and estimated fewer outreach costs. The state estimated $2.9 million in costs from July 2018 through June 2019 to conduct education and outreach. As noted earlier, states’ available estimates did not include all expected Medicaid costs. For example, four of the five selected states planned to use MCOs or other health plans to help administer work requirements, but two of these four did not have estimates of the associated costs. Indiana and Kentucky estimated additional payments to MCOs—$20.7 million in Indiana to administer work requirements in 2019 and $50.7 million in Kentucky to administer its demonstration from July 2018 through June 2020. In contrast, officials in New Hampshire told us that no estimates were available. In Arkansas, where beneficiaries receive premium support to purchase coverage from qualified health plans on the state’s health insurance exchange, plans were instructed to include the costs of administering work requirements in the premiums, according to Arkansas officials. State officials and representatives from a qualified health plan we spoke with could not provide the amount that the state’s premium assistance costs increased as a result. States’ estimates also did not include all ongoing costs that they expect to incur after the up-front costs and initial expenditures related to implementation of the work requirements. States had limited information about ongoing costs, but we collected some examples. For instance, New Hampshire provided estimated costs of $1.6 million to design and implement the evaluation of its demonstration, which all states are required to perform. In addition, officials or documents in each selected state acknowledged new staffing costs that may be ongoing, such as Indiana’s costs for five full-time employees to assist beneficiaries with suspended coverage to meet requirements or obtain exemptions. Finally, states reported that administering Medicaid work requirements will increase certain non-Medicaid costs—costs that are not funded by federal Medicaid, but are borne by other federal and state agencies, stakeholders, or individuals. For instance, New Hampshire officials planned to use approximately $200,000 to $300,000 in non-Medicaid funds for six positions performing case management for workforce development. Similarly, in July 2017, Indiana estimated that providing beneficiaries with job skills training, job search assistance, and other services would cost $90 per month per beneficiary, although state officials said these costs were uncertain after learning they were not eligible for federal Medicaid funds. In addition, beneficiaries and entities other than states, such as community organizations, may incur costs related to the administration of work requirements that are not included in states’ estimates. All five selected states expected to receive federal funds for the majority of estimated costs and expenditures (described previously) for implementing work requirements. For example, the four selected states that provided data on expenditures to administer work requirements through 2018 (Arkansas, Indiana, Kentucky, and New Hampshire) expected the portion of those expenditures paid by the federal government to range from 82 percent in Indiana to 90 percent in New Hampshire and Kentucky. These effective matching rates exceed the 50 percent matching rate for general administrative costs, largely due to higher matching rates of 75 and 90 percent of applicable IT costs. For example, Kentucky received approval to spend $192.6 million in federal funds for its $220.9 million in expected IT costs over 2 years to implement work requirements and other beneficiary requirements, an effective match rate of 87 percent. In addition to higher federal matching rates for IT costs, the selected states receive federal funds for the majority of MCO capitation payments, which the states planned to increase to pay MCOs’ costs to administer work requirements. Each of the three states that planned to use MCOs to administer work requirements planned to increase capitation payments in order to do so. For example, Indiana planned to increase capitation payments to MCOs by approximately 1 percent (or $20.7 million in 2019) to pay for a variety of ongoing activities to administer work requirements, including requiring MCOs to help beneficiaries report compliance, reporting beneficiaries who qualify for exemptions, and helping the state verify the accuracy of beneficiary reporting, according to state officials. The federal government pays at least 90 percent of capitation payments to MCOs to provide covered services to beneficiaries who are newly eligible under PPACA, the primary population subject to work requirements among the five selected states. Indiana and Kentucky also received approval to apply work requirements to other populations, and capitation payments for these other populations receive federal matching rates of 66 percent in Indiana and 72 percent in Kentucky in fiscal year 2019. States’ approaches to implementing work requirements can affect the federal matching funds they receive. For example, Arkansas officials told us that the state decided to collect information on beneficiary compliance through an on-line portal—the initial cost of which received an effective federal matching rate of 87 percent, according to Arkansas. Officials told us that the state avoided having beneficiaries report compliance to staff— costs of which receive a 75 percent matching rate. However, after approximately 17,000 beneficiaries lost coverage due to non-compliance with work requirements, Arkansas revised its procedures to allow beneficiaries to report compliance to state staff over the phone. Three of the five selected states sought to leverage other programs funded by the federal government to help implement work requirements or provide beneficiary supports, such as employment services. Kentucky officials reported piloting elements of Medicaid work requirements using its SNAP Employment and Training program. Similarly, Arkansas officials sought a waiver to be able to use TANF funds to provide employment services to individuals without children in order to serve Medicaid beneficiaries subject to work requirements. New Hampshire also used TANF funds to provide employment services to Medicaid beneficiaries who were also enrolled in TANF. CMS does not consider administrative costs when approving any demonstrations—including those with work requirements—though these costs can be significant. The agency has recently taken steps to obtain more information about demonstration administrative costs. However, we identified various weaknesses in CMS’s oversight of administrative costs that could result in states receiving federal funds for costs to administer work requirements that are not allowable. CMS’s demonstration approval process does not take into account the extent to which demonstrations, including those establishing work requirements, will increase a state’s administrative costs. CMS policy does not require states to provide projections of administrative costs in their demonstration applications or include administrative costs in their demonstration cost projections used by CMS to assess budget neutrality. CMS officials explained that in the past demonstrations had generally not led to increases in administrative costs, and as such, the agency had not seen a need to separately consider these costs. However, the officials told us and have acknowledged in approval letters for demonstrations with work requirements, that demonstrations may increase administrative costs. Kentucky provides an example of this, reporting to us estimated administrative costs of approximately $270 million—including about $200 million in federal funds—to implement the demonstration over 2 years. However, neither Kentucky nor the other four selected states provided estimates of their administrative costs in their applications to CMS, and CMS officials confirmed that no additional information on administrative costs was provided by the states while their demonstration applications were being reviewed. By not considering administrative costs in its demonstration approval process, CMS’s actions are counter to two key objectives of the demonstration approval process: transparency and budget neutrality. Transparency. CMS’s transparency requirements are aimed at ensuring that demonstration proposals provide sufficient information to ensure meaningful public input. However, CMS officials told us that they do not require the information states provide on the expected changes in demonstration expenditures in their applications to account for administrative costs. This information would likely have been of interest in our selected states, because public commenters in each state expressed concerns about the potential administrative costs of these demonstrations. In prior work, we reported on weaknesses in CMS’s policies for ensuring transparency in demonstration approvals. Budget neutrality. The aim of CMS’s budget neutrality policy is to limit federal fiscal liability resulting from demonstrations, and CMS is responsible for determining that a demonstration will not increase federal Medicaid expenditures above what they would have been without the demonstration. However, CMS does not consider administrative costs when assessing budget neutrality. For three of our five selected states, the demonstration special terms and conditions specify that administrative costs will not be counted against the budget neutrality limit. Even though demonstrations’ administrative costs can be significant, CMS officials said the agency has no plans to revise its approval process—either to (1) require states to provide information on expected administrative costs to CMS or the public, or to (2) account for these costs when the agency assesses whether a demonstration is budget neutral. CMS officials explained that the agency needs more experience with policies that require administrative changes under a demonstration before making any revisions to its processes. Without requiring states to submit projections of administrative costs in their demonstration applications, and by not considering the implications of these costs for federal spending, CMS puts its goals of transparency and budget neutrality at risk. This is inconsistent with federal internal control standards that call for agencies to identify, analyze, and respond to risks related to achieving program objectives. CMS recently implemented procedures that may provide additional information on demonstrations’ administrative costs. These included implementing new procedures to identify costs specific to demonstrations when approving federal matching funds for states’ planned IT costs and issuing guidance on monitoring and evaluating demonstrations. However, it is unclear whether these efforts will result in data that improve CMS’s oversight. (See table 4.) In addition to these new initiatives, states’ quarterly expenditure reports provide CMS with some information on their demonstration administrative costs, but this information also has limitations. States are required to separately track and report administrative expenditures attributable to their demonstrations in their quarterly expenditure reports. However, CMS officials told us that states typically use the same resources, such as staff, to administer their demonstrations and their regular Medicaid program, which can affect the demonstration costs states report. We found that about a quarter of states with demonstration expenditures in fiscal year 2017 reported no administrative expenditures related to their demonstrations. CMS officials acknowledged that the data states submit in their quarterly expenditure reports may not provide a meaningful measure of states’ demonstration-related administrative costs. CMS’s recently implemented procedures may provide more information on the amounts states are spending on demonstration administrative costs, but they do not address weaknesses we found in CMS’s oversight of administrative costs. In four of the five selected states, we identified examples of states requesting federal matching funds for costs to administer work requirements that do not appear to be allowable, or at higher matching rates than appropriate under CMS guidance. In some cases, states received CMS approval for planned administrative costs while in others it was unclear whether CMS would have identified the issues through their oversight procedures. Areas of risk included funds for planned IT costs, funds for beneficiary supports, and funds provided under managed care contracts. Federal funds for planned IT costs that may not be allowable or eligible for higher matching rates. Three of our five selected states requested and received funding approval for planned IT costs to implement their demonstrations that did not appear to be allowable or at higher matching rates than appropriate under CMS guidance. Kentucky and Indiana requested and received funding approval for planned IT costs that do not appear to be allowable under CMS guidance. Kentucky requested and received CMS approval for funds (at the 90 percent federal matching rate) for a contract that included activities to assist Medicaid beneficiaries obtain employment. (See text box.) However, CMS’s 2018 guidance states that Medicaid funding is not available to finance beneficiary supports, such as job training or other employment services. CMS officials said that the agency did not review the contract and approved the request based on Kentucky’s assertion that these costs were specific to technology. Indiana received approval to receive IT funds to develop a website that provides beneficiaries access to information and tools to seek, acquire, and retain employment, costs that also appear related to beneficiary supports. Kentucky Received Approval of Information Technology Funding for Activities Aimed at Helping Beneficiaries Obtain Employment In 2018, in an update to its information technology budget request, Kentucky included costs for a contract with the state’s Department of Workforce Services to assist Medicaid beneficiaries in developing skills needed to obtain and retain employment. The contracted services included activities such as assessing beneficiaries’ eligibility for non-Medicaid programs, providing services to beneficiaries at career assistance centers, and making referrals to other agencies and programs. Kentucky budgeted $21 million for this contract at a 90 percent federal matching rate ($18.9 million in federal funds) for fiscal year 2019 and another $21 million at a 75 percent matching rate ($15.8 million in federal funds) for fiscal year 2020. CMS approved Kentucky’s budget request without reviewing the contract. Medicaid Services. | GAO-20-149. Indiana and New Hampshire received funding approval for federal IT funds at the 90 percent matching rate for costs that do not appear eligible for that rate. In 2018, CMS approved Indiana’s request for a 90 percent match rate to pay $500,000 in consulting fees to develop work requirement policies, despite CMS guidance indicating that policy research and development activities should be matched at 50 percent. New Hampshire requested and received CMS approval in 2018 for federal funds at a 90 percent matching rate for $180,000 in costs to educate beneficiaries about work requirements, including costs to place outreach calls through an existing contracted call center. CMS guidance indicates that these costs should receive funding at a lower matching rate. Federal funds for beneficiary supports that are not allowable. Wisconsin requested and planned to seek federal funds for beneficiary support costs that are not allowable until our work identified the issue for CMS. Wisconsin officials told us that it was their understanding during the planning phase of the demonstration that administrative costs incurred by state programs providing such services were eligible for federal matching funds. State officials said that CMS officials told them on multiple occasions that the state could receive a 50 percent federal match for these costs. Based on this, the state requested budget authority from its legislature for $51.2 million for employment and training services, of which it anticipated $23.1 million would come from federal Medicaid funds. CMS officials told us that such costs are not eligible for federal matching funds and maintained that the agency’s guidance—which indicates that beneficiary support costs are not eligible for federal matching funds—was clear. In response to our inquiries, the agency contacted the state in April 2019 and clarified this with officials. Federal funds for costs to administer work requirements provided through managed care contracts, which may not be allowable. As noted earlier, three of the five selected states (Indiana, Kentucky, and New Hampshire) required or planned to require MCOs to perform a number of activities to implement work requirements. These activities included, for example, providing information on options to satisfy work requirements, assisting beneficiaries with reporting compliance with work requirements, and providing referrals to state work requirement resources. To fund these activities, officials in these states said that they plan to increase their capitation payments. States will receive at least a 90 percent federal matching rate for most of these payments, because the payments are largely for beneficiaries who are newly eligible under PPACA. It is unclear, however, whether including these activities in capitation payments is allowable. CMS regulations provide that states may only include administrative costs that are related to the provision of covered health care services in their MCO capitation payments. In addition, CMS guidance notes that implementing work requirements will not change the types of expenditures that are allowable. We provided CMS with specific examples of activities states delegated or planned to delegate to MCOs and asked if these types of activities met CMS’s criteria to be included under capitation payments. CMS officials told us that federal review of the related managed care contracts in Indiana and New Hampshire had not been completed as of June 2019 and could not make a definitive statement. While CMS guidance requires states to carry out a range of activities to implement work requirements—some of which are not eligible for federal Medicaid funds—agency officials told us that CMS has not updated any procedures for the various reviewers of these costs. Further, CMS has not completed a risk assessment to determine whether current procedures for overseeing administrative costs are sufficient, and agency officials told us that there were no plans to do so. According to federal internal control standards, agencies should identify, analyze, and respond to risks related to achieving program objectives (in this case, ensuring that administrative expenditures under demonstrations are allowable and matched at the correct rate). Without identifying, assessing, and addressing the risks posed by demonstrations that may increase administrative costs, CMS may be providing federal funds for costs that are not allowed or at inappropriately high matching rates. A third of states have sought approval to implement work requirements in their Medicaid programs. CMS has acknowledged that demonstrations, including those with work requirements, may increase Medicaid administrative costs—and therefore overall Medicaid spending. Yet, CMS is not factoring these costs into its approval decisions, which is counter to the agency’s goals of transparency and budget neutrality. Further, the agency has not taken steps to assess and respond to risks of federal funds being spent for administrative costs that are not allowable or matched at rates higher than what is appropriate, risks we found in four of the five demonstrations we reviewed. While administrative costs are a relatively small portion of states’ Medicaid spending, the weaknesses in CMS’s oversight of these costs could take on increased importance as more states seek and receive approval to implement work requirements. We are making the following three recommendations to CMS: The Administrator of CMS should require states to submit and make public projections of administrative costs when seeking approval of demonstrations, including those with work requirements and all other demonstrations. (Recommendation 1) The Administrator of CMS should account for the administrative costs of demonstrations, including those with work requirements and all other demonstrations, when assessing whether demonstrations are budget neutral. (Recommendation 2) The Administrator of CMS should assess the risks of providing federal funds for costs to administer work requirements that are not allowable and should respond to risks by improving oversight procedures, as warranted. This assessment should consider risks related to costs for information systems, beneficiary supports, and managed care. (Recommendation 3) We provided a draft of this report to HHS for comments and its comments are reproduced in appendix II. HHS also provided us with technical comments, which we incorporated in the report as appropriate. HHS did not concur with our recommendations. In general, HHS commented that it expects administrative costs to represent a relatively small proportion of total Medicaid spending and that its current approach to overseeing administrative costs—including those incurred under Medicaid demonstrations—is appropriate given the level of financial risk. HHS commented that administrative costs were approximately 5 percent of Medicaid expenditures. While these cost may represent a relatively small share of total spending, CMS projected them to be $18 billion in federal funds in fiscal year 2019—and this does not include all administrative spending. In particular, it does not include amounts paid to MCOs for administrative costs, which are likely considerable given that managed care payments now represent about half of all Medicaid spending. Further, demonstrations may represent a heightened financial risk given our finding that they can result in additional administrative costs that would not otherwise occur. Regarding our first recommendation to require states to submit and make public projections of administrative costs, HHS commented that its experience suggests that demonstration administrative costs will be a relatively small portion of total costs and therefore HHS believes making information about these costs available would provide stakeholders little to no value. As noted, Medicaid is a significant component of federal and state budgets. In each of the five states we reviewed, public commenters expressed concerns about the potential administrative costs of Medicaid demonstrations with work requirements, suggesting stakeholders would value information about these costs. We maintain that requiring states to make public information about administrative costs would help to ensure that demonstration proposals provide sufficient information to ensure meaningful public input. Regarding our second recommendation to account for administrative costs when assessing whether demonstrations are budget neutral, HHS again commented that its experience suggests that demonstration administrative costs will be a relatively small portion of total costs and that it believed that its current approach is appropriate for the level of financial risk. However, we found that demonstration administrative costs could be significant and HHS’s current policy of not considering these costs in its assessments of budget neutrality could increase federal fiscal liability. For example, in Kentucky, we found estimated administrative costs for implementing the demonstration exceeded $270 million over about 2 years. We maintain that including administrative costs in its assessments will help HHS ensure that demonstrations are budget neutral. Regarding our third recommendation to assess and respond to risks of providing federal funds for costs to administer work requirements that are not allowable, HHS commented that (1) all states’ requests for federal Medicaid funding are subject to the same federal regulations and requirements; (2) the expenditures reported by states to GAO had not been reviewed against federal requirements or certified by states to be accurate and permissible; and (3) HHS believes its existing approach is appropriate for the low level of risk that administrative expenditures represent. Our findings indicate that CMS’s oversight procedures—which are designed to prevent state spending on costs that do not meet federal requirements—have vulnerabilities, particularly given the types of administrative activities associated with work requirements. Four of the five states we reviewed were planning to seek federal funds for costs (1) that did not appear allowable, or (2) at higher matching rates than appear appropriate, and three states succeeded in gaining CMS approval to do so. We agree with HHS that CMS may also identify inappropriate expenditures during its reviews of state-reported expenditures. However, our past work has identified weaknesses in that review process. In 2018, we reported that CMS officials indicated that resource constraints have limited the agency’s ability to target risk during such reviews, potentially allowing errors to go undetected. Finally, the basis for HHS’s conclusion that its current approach is appropriate for the risks posed by these administrative expenditures is unclear. As we note in our report, CMS officials told us that they had not assessed whether current procedures sufficiently address risks posed by administrative costs for work requirements and had no plans to do so. We maintain that assessing these risks of providing federal funds for costs that are not allowable and improving oversight, as warranted, would help HHS to ensure the integrity of the Medicaid program. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the Secretary of Health and Human Services, the appropriate congressional committees, and other interested parties. In addition, this report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff members have any questions about this report, please contact me at (202) 512-7144 or yocomc@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Major contributors to this report are listed in appendix III. Eight of the nine states that received approval for work requirements, as of May 2019, also received approval under their demonstrations for other beneficiary requirements, such as requiring beneficiaries to have expenditure accounts. Some of these beneficiary requirements preceded work requirements, while others were newly introduced with the work requirements. For example, Kentucky was developing and implementing work requirements at the same time as other beneficiary requirements, such as the requirement for beneficiaries to have two expenditure accounts and make premium payments. (See table 5.) In addition to the contact named above, Susan Barnidge (Assistant Director), Russell Voth (Analyst in Charge), Linda McIver, and Matt Nattinger made key contributions to this report. Also contributing were Giselle Hicks, Drew Long, Ethiene Salgado-Rodriguez, and Emily Wilson Schwark. Medicaid Demonstrations: Approvals of Major Changes Need Increased Transparency. GAO-19-315. Washington, D.C.: April 17, 2019. Medicaid: CMS Needs to Better Target Risks to Improve Oversight of Expenditures. GAO-18-564. Washington, D.C.: August 6, 2018. Medicaid Demonstrations: Evaluations Yielded Limited Results, Underscoring Need for Changes to Federal Policies and Procedures. GAO-18-220. Washington, D.C.: January 19, 2018. Medicaid Demonstrations: Federal Action Needed to Improve Oversight of Spending. GAO-17-312. Washington, D.C.: April 3, 2017. Medicaid: Federal Funds Aid Eligibility IT System Changes, but Implementation Challenges Persist. GAO-15-169. Washington, D.C.: December 12, 2014. Medicaid Demonstration Waivers: Approval Process Raises Cost Concerns and Lacks Transparency. GAO-13-384. Washington, D.C.: June 25, 2013. Medicaid Demonstration Waivers: Recent HHS Approvals Continue to Raise Cost and Oversight Concerns. GAO-08-87. Washington, D.C.: January 31, 2008.","Section 1115 demonstrations are a significant component of Medicaid spending and affect the care of millions of low-income and medically needy individuals. In 2018, CMS announced a new policy allowing states to test work requirements under demonstrations and soon after began approving such demonstrations. Implementing work requirements can involve various administrative activities, not all of which are eligible for federal funds. GAO was asked to examine the administrative costs of demonstrations with work requirements. Among other things, this report examines (1) states' estimates of costs of administering work requirements in selected states, and (2) CMS's oversight of these costs. GAO examined the costs of administering work requirements in the first five states with approved demonstrations. GAO also reviewed documentation for these states' demonstrations, and interviewed state and federal Medicaid officials. Additionally, GAO assessed CMS's policies and procedures against federal internal control standards. Medicaid demonstrations enable states to test new approaches to provide Medicaid coverage and services. Since January 2018, the Centers for Medicare & Medicaid Services (CMS) has approved nine states' demonstrations that require beneficiaries to work or participate in other activities, such as training, in order to maintain Medicaid eligibility. The first five states that received CMS approval for work requirements reported a range of administrative activities to implement these requirements. These five states provided GAO with estimates of their demonstrations' administrative costs, which varied, ranging from under $10 million to over $250 million. Factors such as differences in changes to information technology systems and numbers of beneficiaries subject to the requirements may have contributed to the variation. The estimates do not include all costs, such as ongoing costs states expect to incur throughout the demonstration. GAO found weaknesses in CMS's oversight of the administrative costs of demonstrations with work requirements. No consideration of administrative costs during approval. GAO found that CMS does not require states to provide projections of administrative costs when requesting demonstration approval. Thus, the cost of administering demonstrations, including those with work requirements, is not transparent to the public or included in CMS's assessments of whether a demonstration is budget neutral—that is, that federal spending will be no higher under the demonstration than it would have been without it. Current procedures may be insufficient to ensure that costs are allowable and matched at the correct rate. GAO found that three of the five states received CMS approval for federal funds—in one case, tens of millions of dollars—for administrative costs that did not appear allowable or at higher matching rates than appeared appropriate per CMS guidance. The agency has not assessed the sufficiency of its procedures for overseeing administrative costs since it began approving demonstrations with work requirements. GAO makes three recommendations, including that CMS (1) require states to submit projections of administrative costs with demonstration proposals, and (2) assess risks of providing federal funds that are not allowable to administer work requirements and improve oversight procedures, as warranted. CMS did not concur with the recommendations and stated that its procedures are sufficient given the level of risk. GAO maintains that the recommendations are warranted as discussed in this report."
"U nder long-standing Supreme Court precedent, Congress has ""plenary power"" to regulate immigration. This power, according to the Court, is the most complete that Congress possesses. It allows Congress to make laws concerning non-U.S. nationals (aliens) that would be unconstitutional if applied to citizens. And while the immigration power has proven less than absolute when directed at aliens already physically present within the United States, the Supreme Court has interpreted the power to apply with most force to the admission and exclusion of nonresident aliens. The Court has upheld or shown approval of laws excluding aliens on the basis of ethnicity, gender and legitimacy, and political belief. It has also upheld an executive exclusion policy that was premised on a broad statutory delegation of authority, even though some evidence considered by the Court tended to show that religious hostility may have prompted the policy. Outside of the immigration context, in contrast, laws and policies that discriminate on such bases are almost always struck down as unconstitutional. To date, the only judicially recognized limit on Congress's power to exclude aliens concerns lawful permanent residents (LPRs): they, unlike nonresident aliens, generally cannot be denied entry without a fair hearing as to their admissibility. The plenary power doctrine has roots in the Chinese Exclusion Case of 1889, which upheld a federal statute that provided for the exclusion of Chinese laborers. Some jurists and commentators have criticized the Chinese Exclusion Case for indulging antiquated notions of race. More generally, many legal scholars contend that the plenary power doctrine lacks a coherent rationale and that it is an anachronism that predates modern individual rights jurisprudence. Yet the Supreme Court continues to employ the doctrine. Some commentators have argued that the Court is in the process of narrowing the parameters of the doctrine's applicability, but they find support for this argument mainly in cases outside the exclusion context. In the exclusion context, the Court's 2018 decision in Trump v. Hawaii reaffirms the exceptional scope of the plenary power doctrine. Congress's plenary power to regulate the entry of aliens rests at least in part on implied constitutional authority. The Constitution itself does not mention immigration. It does not expressly confer upon any of the three branches of government the power to control the flow of foreign nationals into the United States or to regulate their presence once here. To be sure, parts of the Constitution address related subjects. The Supreme Court has sometimes relied upon Congress's enumerated powers over naturalization and foreign commerce, and to a lesser extent upon the Executive's implied Article II foreign affairs power, as sources of federal immigration power. Significantly, however, the Court has also consistently attributed the immigration power to the federal government's inherent sovereign authority to control its borders and its relations with foreign nations. It is this inherent sovereign power, according to the Court, that gives Congress essentially unfettered authority to restrict the entry of nonresident aliens. The Court has determined that the executive branch, by extension, possesses unusually broad authority to enforce laws pertaining to alien entry, and to do so under a level of judicial review much more limited than that which would apply outside of the exclusion context. Recent events have generated congressional interest in the constitutional division of responsibilities between Congress and the Executive in establishing and enforcing policies for the exclusion of aliens. Through three iterative executive actions in 2017, commonly known as the ""Travel Ban,"" the President provided for the exclusion of broad categories of nationals of specified countries, most of which were predominantly Muslim. These executive actions relied primarily upon a delegation of authority in the Immigration and Nationality Act (INA) allowing the President, by way of proclamation, to exclude ""any aliens"" or ""any class of aliens"" whose entry he determines would be ""detrimental to the interests of the United States."" In June 2018, the Supreme Court upheld the third iteration of the Travel Ban as likely lawful, rejecting claims that it was motivated by unconstitutional religious discrimination and that it exceeded the President's authority under the INA. Since that decision, some Members of Congress have proposed curtailing executive authority to craft exclusion policy or subjecting executive exclusion decisions and policies to more stringent judicial review. This report provides an overview of the legislative and executive powers to exclude aliens. First, the report discusses a gatekeeping legal principle that frames those powers: nonresident aliens outside the United States cannot challenge their exclusion from the country in federal court because Congress has not expressly authorized such challenges. But aliens at the threshold of entry have more access to judicial review of exclusion decisions, compared to aliens abroad, because of statutory provisions and other considerations. Next, the report analyzes the extent to which the constitutional and statutory rights of U.S. citizens limit the exclusion power. Specifically, the report examines a line of Supreme Court precedent, starting with Kleindienst v. Mandel and ending with Trump v. Hawaii , that makes a highly curtailed form of judicial review available to U.S. citizens who claim that the exclusion of one or more aliens abroad violates the U.S. citizens' constitutional rights. The report concludes by analyzing the implications of these cases for the scope of the congressional power to legislate for the exclusion of aliens and, separately, for the scope of the executive power to take action to exclude aliens. As discussed later, Supreme Court case law on the exclusion of aliens has come to focus upon whether the rights of U.S. citizens limit the government's power to exclude. The case law arrived at this issue, however, only after the Supreme Court developed an underlying principle: nonresident aliens outside the United States do not have constitutional rights with respect to entry. Further, any statutory provisions that govern the admission of nonresident aliens do not permit judicial review unless Congress ""expressly authorize[s]"" such review, something that federal courts generally conclude Congress has not done. Put differently, Congress's plenary power over immigration includes not merely the power to set rules as to which aliens may enter the country and under what conditions, but also the power to have such rules ""enforced exclusively through executive officers, without judicial intervention"" unless Congress provides otherwise. Because Congress has not provided otherwise, judicial review of decisions to exclude aliens abroad is generally unavailable. The Supreme Court developed these general principles against judicial review of exclusion decisions in a series of cases between the late 19th and mid-20th centuries about aliens denied admission after arriving by sea. In one illustrative early case, the 1895 decision Lem Moon Sing v. United States , a Chinese national contended that immigration officers improperly denied him admission under the Chinese exclusion laws. Those laws barred the entry of Chinese laborers, but the Chinese national described himself as a merchant and argued that the laws therefore did not apply to him. As a consequence of his exclusion, he was detained by the steamship company. The Supreme Court recognized that the professed merchant could challenge the legality of his detention through a petition for habeas corpus. This procedural right ultimately proved hollow, however, because the Court held that it could not review the immigration officials' determination that the petitioner fell within the scope of the provision excluding Chinese laborers. The Court explained that Congress had precluded such review by providing in statute that the decisions of immigration officers to deny admission to aliens under the Chinese exclusion acts ""shall be final, unless reversed on appeal to the secretary of the treasury."" In other words, the statute allowed only the Secretary of the Treasury to review exclusion decisions under the acts. Accordingly, the Court limited its consideration of the habeas petition to the narrow question of whether the immigration officers who excluded the professed merchant had authority to make exclusion and admission decisions under the statutes (in other words, whether the officers had jurisdiction). Determining that the immigration officers did have such statutory authority, the Court rejected the habeas petition without reviewing the petitioner's contention that he was in fact a merchant, not a laborer. To review that contention, the Court reasoned, would ""defeat the manifest purpose of congress in committing to subordinate immigration officers . . . exclusive authority to determine whether a particular alien seeking admission into this country belongs to the class entitled by some law or treaty to come into the country."" The Court saw no constitutional problem in Congress's assignment of final authority over exclusion decisions to executive officials. The Court considered it a settled proposition that, because aliens lack constitutional rights with respect to entry, exclusion decisions ""could be constitutionally committed for final determination to subordinate immigration or other executive officers . . . thereby excluding judicial interference so long as such officers acted within the authority conferred upon them by congress."" Two major Supreme Court decisions from the 1950s appeared to transform the principle from Lem Moon Sing and earlier cases—that Congress may bar judicial review of exclusion decisions affirmatively—into a presumption that judicial review of exclusion decisions is barred unless Congress expressly provides otherwise. First, in the 1950 case United States ex rel. Knauff v. Shaughnessy , the Court declared itself powerless to review an executive branch decision to exclude the German bride of a U.S. World War II veteran, even though executive officials failed to explain the exclusion beyond stating that the woman's entry would have been ""prejudicial."" The Court reiterated that aliens do not have constitutional rights with respect to entry and reasoned that, as a consequence, ""[w]hatever the procedure authorized by Congress is, it is due process as far as an alien denied entry is concerned."" In what would become an oft-cited sentence, the Court also announced the presumption against judicial review of exclusion decisions: ""it is not within the province of any court, unless expressly authorized by law , to review the determination of the political branch of the Government to exclude a given alien."" Next, in the 1953 case Shaughnessy v. Mezei , the Court refused to question the Executive's undisclosed reasons for denying entry to an essentially stateless alien returning to the United States after a prior period of residence, even though the exclusion relegated the stateless alien to potentially indefinite detention on Ellis Island. The Mezei Court cited Knauff for the proposition that federal courts may not review exclusion decisions ""unless expressly authorized by law,"" and the Court held that the Attorney General's decision to exclude Mezei and detain him as a consequence of that exclusion was ""final and conclusive."" The issue of detention complicated the Knauff and Mezei cases. Because the aliens in both cases suffered detention as a result of their exclusion, they filed petitions for habeas corpus challenging the legality of their detention. And in both cases, in accord with Lem Moon Sing and other early precedents, and notwithstanding the Court's declaration in Knauff and Mezei that judicial review of the exclusion decisions was unavailable, the Court conducted a limited inquiry into whether the governing statutes empowered the Attorney General to exclude the aliens without a hearing. As explained further below, in the immigration context, the Supreme Court does not construe a general bar on judicial review to preclude habeas corpus review, although the proper scope of habeas review in cases concerning the exclusion of arriving aliens remains unclear. In any event, even though the Knauff and Mezei Courts conducted a limited habeas inquiry into the Attorney General's statutory authority to exclude aliens without a hearing, federal courts often cite the cases (and especially Knauff ) for the proposition that courts may not review exclusion decisions unless Congress expressly provides otherwise. Many scholars criticize Knauff and Mezei as incorrectly decided. The aspect of Mezei that upholds as constitutional the indefinite detention of an arriving alien, in particular, is controversial and has been limited by some lower federal courts to apply only in cases that implicate national security. The Supreme Court, however, has cited Knauff and earlier exclusion cases for the proposition that excluded nonresident aliens do not have grounds to challenge their exclusion in federal court. Under current law, this proposition forms the basis for the doctrine of consular nonreviewability, which bars judicial review in almost all circumstances of the denial of visas to aliens abroad. The general principle against judicial review of exclusion decisions applies with less force to executive decisions to exclude aliens arriving in the United States, even though the rule arose from cases about such aliens. The general principles that govern reviewability of both of these two categories of exclusion decisions—(1) visa denials and other exclusion decisions concerning aliens located abroad; and (2) decisions to deny entry to aliens arriving at U.S. borders or ports of entry—are discussed below. The doctrine of consular nonreviewability precludes judicial review of challenges brought by nonresident aliens located abroad against visa denials and also possibly against other actions by executive branch officials to deny them admission. Under the doctrine, the millions of nonresident aliens denied visas each year at U.S. consulates abroad cannot themselves challenge their visa denials in federal court on statutory or constitutional grounds. The doctrine may also bar U.S. citizens, LPRs, and U.S. entities from challenging the exclusion of a nonresident alien abroad on statutory grounds (as opposed to constitutional grounds), although the Supreme Court has not decided this issue. The general unavailability of judicial review of visa denials under the doctrine means that U.S. consular officers (the officials who adjudicate visas abroad) have considerable power to make final decisions about visa applications. Table 1 provides an overview of the types of claims to which the doctrine of consular nonreviewability applies. Much controversy surrounds the doctrine of consular nonreviewability. Some scholars argue that it lacks a compelling foundation in law. No statute speaks expressly to the issue of whether visa decisions should be subject to judicial review. Even so, lower federal courts recognize the doctrine with apparent uniformity (although some have recognized exceptions to it, as discussed in the next subsection). As authority for the doctrine, courts often cite Knauff and the other Supreme Court cases referenced above concerning the denial of admission to aliens arriving by sea. In particular, the consular nonreviewability cases cite these Supreme Court precedents for the proposition that Congress's plenary immigration power includes the power to have statutes governing the admission of aliens ""enforced exclusively through executive officers, without judicial intervention"" and that ""it is not within the province of any court, unless expressly authorized by law, to review the determination of the political branch of the Government to exclude a given alien."" Thus, the reasoning that supports lower court applications of the doctrine appears to be that Congress has not expressly authorized judicial review of visa denials. Because the doctrine has its basis in Knauff and the presumption against judicial review of exclusion decisions, it does not apply to the decisions of domestic immigration authorities to deny immigration benefits, unless perhaps those decisions underlie eventual visa denials or otherwise work to exclude aliens located abroad. Some federal courts have sought to reconcile the doctrine of consular nonreviewability with the provisions governing judicial review of final agency action set forth in the Administrative Procedure Act (APA). The APA establishes a ""strong presumption"" that the actions of federal agencies—including the Department of State—are subject to judicial review. Yet, according to these courts, Congress enacted the APA against the backdrop of already-existing consular nonreviewability jurisprudence and without expressly overruling that jurisprudence by providing for review of consular decisions. On this basis, these courts have concluded that the doctrine of consular nonreviewability constitutes a preexisting limitation on judicial review that the APA preserves through its stipulation, in 5 U.S.C. § 702(1), that nothing in the statute ""affects other limitations on judicial review."" In other words, the APA preserves consular nonreviewability as an exception to the general rule that judicial review is available for agency action. Although the doctrine of consular nonreviewability is well established, it remains true that no statute expressly bars judicial review of visa denials abroad. For this reason, courts generally hold that the doctrine ""supplies a rule of decision, not a constraint on the subject matter jurisdiction of the federal courts."" The legislative history of the original Immigration and Nationality Act of 1952 indicates that Congress considered and rejected the idea of creating within the Department of State a system of administrative appeals for visa denials, and the current version of the INA bars the Secretary of State from overturning visa decisions. But Congress has not legislated affirmatively to shield visa decisions from judicial review. The doctrine of consular nonreviewability is therefore premised upon the absence of any specific statutory authorization for the review of visa denials, not upon an explicit statutory prohibition on such review. Supreme Court case law qualifies the doctrine of consular nonreviewability in one important respect discussed at length later in this report: if a U.S. citizen challenges the exclusion of a nonresident alien abroad on the ground that the exclusion violates the citizen's constitutional rights, then, under the rule of Kleindienst v. Mandel and later cases, courts ""engage[] in a circumscribed judicial inquiry"" of the constitutional claim. Mandel recognized that U.S. citizens may have constitutional rights that bear upon the entry of nonresident aliens, even though nonresident aliens themselves do not have such rights. As such, the case law of multiple federal circuit courts of appeals establishes that ""a U.S. citizen raising a constitutional challenge to the denial of a visa is entitled to a limited judicial inquiry regarding the reason for the decision."" This is the only exception to consular nonreviewability that federal courts have recognized uniformly. As explained later in the section on the Mandel line of cases, it allows challengers only exceedingly slim prospects of obtaining relief from a visa denial. Lower federal courts have split over whether U.S. citizens may also challenge visa denials on statutory grounds. Some lower federal courts have recognized other exceptions to consular nonreviewability's bar on judicial review of decisions to exclude aliens abroad. For instance, at least one federal circuit court decision extends the Mandel principle to allow a limited level of judicial review of a constitutional challenge brought directly by an excluded nonresident alien (rather than a U.S. citizen) against the denial of a visa. This extension, however, seems at odds with Mandel itself, which concluded that a nonresident alien who was denied the statutory waivers needed to secure a visa ""had no constitutional right of entry,"" and that limited judicial review was therefore available only because of constitutional claims brought by U.S. citizens against the alien's exclusion. Other federal appellate court decisions make clear that review of visa denials under Mandel is available only for claims brought by U.S. citizens. In another non-uniformly recognized exception, a line of decisions by the U.S. Court of Appeals for the Ninth Circuit allows nonresident aliens to challenge a consular officer's failure to act upon a visa application (as opposed to the denial of an application). The supporting rationale is that the Mandamus Act supplies a basis for judicial review where an official fails to take a legally required action, such as the adjudication of a visa application, even if the APA does not. This exception to the rule of consular nonreviewability is not as well established as the exception allowing for limited review of constitutional claims brought against visa denials by U.S. citizens. Federal district courts outside the Ninth Circuit have split over whether to recognize the exception. However, as discussed in the next section, in cases not specifically concerning the adjudication of visas, other courts have recognized that the Mandamus Act creates an exception to the presumption against judicial review of decisions to exclude aliens abroad. Other federal district court opinions may suggest further exceptions to consular nonreviewability that have yet to gain uniform recognition, such as an exception allowing visa applicants to challenge the validity of generally applicable statutes, regulations, or policies that govern their applications. Nonetheless, the review available under Mandel for constitutional challenges brought by U.S. citizens remains the only exception to consular nonreviewability grounded in Supreme Court case law and universally recognized by lower federal courts. Other cases concerning aliens abroad that implicate the presumption against judicial review of exclusion decisions and the doctrine of consular nonreviewability address the following question: may a federal court order the executive branch to grant entry to a nonresident alien located abroad in order to remedy violations of constitutional or statutory rights that the alien suffered while in the United States or while detained by the United States? The Seventh and Ninth Circuits have both answered in the affirmative. The D.C. Circuit, however, has held that Knauff bars courts from ordering the executive branch to grant entry to an alien unless a statutory provision authorizes courts to do so. The Ninth Circuit held that a federal district court has authority to order the executive branch to parole aliens whom it removed in violation of due process back into the country to attend fair removal proceedings. ""Without a provision requiring the government to admit individual [aliens] into the United States so that they may attend the hearings to which they are entitled,"" the court reasoned, the determination that their removal proceedings violated due process ""would be virtually meaningless."" In other words, the only way to remedy the constitutional violation was to order the government to grant the aliens reentry. In a recent district court case that relied on the Ninth Circuit decision, the district court reasoned that ordering the government to grant reentry to aliens who were removed in violation of law did not contravene the political branches' broad authority over exclusion decisions because the remedy formed part of the review that Congress authorized courts to conduct of removal orders under the INA. The Seventh Circuit reached a broader holding in a different context. The case, Samirah v. Holder , concerned an alien who had overstayed his nonimmigrant visa but who had applied for LPR status (through a process called ""adjustment of status""). When his mother fell ill in Jordan, the alien received a grant of advance parole from the Department of Homeland Security (DHS) so that he could visit her without abandoning his application for adjustment and with some assurance that he would be able to return to the United States to pursue the application. But while the alien was abroad, DHS revoked his advance parole and did not allow him to board a connecting flight back to the United States. Reviewing the alien's application for a writ of mandamus ordering executive branch officials to grant him reentry, the Seventh Circuit reasoned that DHS had used the advance parole as ""a trap—a device for luring a nonlawful resident out of the United States so that he can be permanently excluded from this country."" The circuit court held that DHS's parole regulation unambiguously granted the plaintiff a right to reenter the country to continue pursuing his pending application for adjustment of status and that the court could enforce that right through mandamus. Further, the circuit court reasoned that the Supreme Court's holding in Knauff —that ""it is not within the province of any court, unless expressly authorized by law ,  to review the determination of the political branch of the Government to exclude a given alien""—does not apply in instances where a statute or regulation grants an excluded alien a right to physical presence in the United States. Put differently, where a nonresident alien abroad ""has a right, conferred by a regulation the validity of which is conceded all around, to be in this country,"" Knauff and the doctrine of consular nonreviewability do not bar a court from ordering executive branch officials to grant the alien entry. The Court did not clarify, however, whether the alien's right to be in the United States under the parole regulation also constituted an ""express[] authoriz[ation]"" of judicial review , within the meaning of Knauff , of the alien's exclusion. The Supreme Court, for its part, has held at least once that the potential existence of a right to entry does not give rise to judicial review of an alien's exclusion. A D.C. Circuit decision stands in tension with the Seventh and Ninth Circuit cases. In Kiyemba v. Obama , the D.C. Circuit held that it did not possess authority to order executive branch officials to grant entry into the United States to seventeen Chinese nationals detained without sufficient evidence as enemy combatants in Guantanamo Bay. The aliens feared that they would face persecution in China and requested entry and release into the United States, at least until authorities could locate an appropriate third country to accept them, but executive branch officials denied their request and continued to hold the aliens at Guantanamo Bay while pursuing resettlement options through diplomacy. Although the illegality of the aliens' detention was undisputed, the D.C. Circuit held that it could not order the government to release the aliens into the United States. The circuit court cited Knauff , Mezei , and other exclusion cases for the principle that the political branches have ""exclusive power . . . to decide which aliens may, and which aliens may not, enter the United States,"" and reasoned that this principle barred it from granting the requested relief. The ""critical question"" under Knauff , the circuit court reasoned, was whether any law ""expressly authorized"" courts ""to set aside the decision of the Executive Branch and to order the[] aliens brought to the United States."" The Court concluded that the aliens did not have due process rights and that no other ""statute or treaty"" authorized it to override the executive branch's decision not to grant the aliens entry to the United States. As such, the rule that ""in the United States, who can come in and on what terms is the exclusive province of the political branches"" foreclosed the aliens' claims for relief. In conclusion, the Seventh and Ninth Circuit cases suggest that the doctrine of consular nonreviewability does not bar federal courts from ordering executive branch officials to grant entry to nonresident aliens abroad for the purpose of remedying constitutional, statutory, or regulatory violations that the aliens suffered in the United States. However, the cases may not fully explain how such judicial authority to order a nonresident alien's entry comports with Knauff and the principles underlying the doctrine of consular nonreviewability. The D.C. Circuit opinion, in contrast, appears to stand for the proposition that Knauff allows federal courts no authority to order the entry of a nonresident alien located outside the United States, unless a statute expressly authorizes such relief. Under current law, the general rule against challenges to denials of entry appears less relevant in the context of arriving aliens at the threshold of entry, notwithstanding the rule's provenance in Knauff and other cases about such aliens. Unlike in the visa context, it is not rare for federal courts to review and even strike down executive exclusion decisions and policies concerning aliens arriving at the border. At least three interrelated considerations contribute to the diminished relevance of the rule against challenges to exclusion decisions in arriving alien cases. First, decisions to exclude arriving aliens, unlike decisions to exclude aliens abroad, typically result in detention. Although nonresident aliens do not have constitutional rights with respect to entry , they may enjoy some protection from burdensome enforcement measures, such as prolonged detention, that sometimes flow from denial of entry. Recall, for example, the 1953 Mezei case mentioned above, where the Supreme Court denied relief to a stateless alien whose exclusion left him detained on Ellis Island without prospects for release. Unlike cases about aliens denied visas abroad, Mezei raised not only the question of whether the alien had grounds to challenge his exclusion from the United States, but also whether the government could keep him in detention on Ellis Island as a consequence of the exclusion decision. The majority answered this second question in the affirmative, reasoning that Mezei's lack of constitutional rights with respect to entry, and Congress's decision not to provide him with any judicially enforceable statutory rights to entry, foreclosed his challenge to the detention that resulted from his exclusion. In dissent, Justice Jackson made a famous retort: Because the respondent has no right of entry, does it follow that he has no rights at all? Does the power to exclude mean that exclusion may be continued or effectuated by any means which happen to seem appropriate to the authorities? It would effectuate [an alien's] exclusion to eject him bodily into the sea or set him adrift in a rowboat. In more recent cases, the Supreme Court has hesitated to rely on Mezei for the proposition that the federal government has the constitutional power to subject arriving aliens to prolonged detention in order to carry out their exclusion. Some lower courts have gone further and held that arriving aliens have due process rights that offer some protection against unreasonably prolonged detention, reasoning that Mezei applies only in cases that implicate specific national security concerns. The Supreme Court has yet to resolve the issue. As such, the extent to which aliens arriving at the border enjoy constitutional protections against prolonged detention or other enforcement measures connected to the denial of entry is a disputed issue. And while the law remains clear on the point that arriving nonresident aliens do not have constitutional rights with respect to entry itself, the proposition that they may have constitutional rights against detention or other enforcement measures that implicate fundamental rights often leads to judicial review of issues arising from their exclusion. Second, also because of the detention issue, arriving alien cases may trigger some level of habeas corpus review. Knauff and Mezei establish that no judicial review is available for exclusion decisions unless a statute expressly authorizes such review. But at the same time, the cases confirm an arguably countervailing proposition: that arriving aliens who suffer detention as a consequence of exclusion may challenge their exclusion in habeas corpus proceedings. Thus, in Knauff , the Court disavowed judicial review but still considered and rejected the excluded alien's argument that the applicable statutes required the Attorney General to conduct a hearing on her admissibility and that an executive branch regulation providing to the contrary was ""unreasonable."" Similarly, in Mezei , the Court's habeas review included an assessment that the exclusion of the stateless alien in that case without a hearing conformed to the procedural requirements of the immigration statutes. As the Court has noted elsewhere, ""[i]n the immigration context, 'judicial review' and 'habeas corpus' have historically distinct meanings."" The Court has held in the deportation context that the preclusion of judicial review does not bar habeas corpus proceedings. Knauff , Mezei , and earlier exclusion cases suggest that the same principle applies in the exclusion context: the cases declare that judicial review is unavailable for challenges to exclusion decisions, but they nonetheless engage in some review of executive jurisdiction and procedure under the rubric of habeas corpus. The scope of federal court review in habeas corpus proceedings of a decision to exclude an alien appears extremely limited, although its exact contours remain unclear (as does the question whether such proceedings are constitutionally required). The habeas review that the Court conducted in Knauff and Mezei did not reach the merits of the exclusion decisions. In Knauff , the Court declined to review the Attorney General's determination that the German war bride's entry would be ""prejudicial."" Similarly, in Mezei , the Court held that it could not review the Attorney General's undisclosed reasons for excluding the stateless alien. As such, one might read Knauff and Mezei to mean that courts reviewing exclusion decisions in habeas proceedings (1) may review pure questions of law, such as whether immigration officials had jurisdiction to enforce the relevant exclusion statutes and whether the statute authorized them to forgo a hearing, but (2) may not review the basis for the officials' determination that the statutes require the aliens' exclusion. Other cases complicate this picture, however. In at least one early habeas case that the Supreme Court has not overruled, the Court reviewed and reversed the determination of immigration officers that a group of arriving aliens was subject to exclusion under the immigration statutes. One federal circuit court has interpreted Supreme Court case law to suggest that ""the Suspension Clause requires review of legal and mixed questions of law and fact related to removal orders, including expedited removal orders."" The proper reach of a habeas court's review of the exclusion of an arriving alien thus remains unsettled, although the Supreme Court is scheduled to consider this issue in 2020. Regardless, the availability of any level of habeas review in arriving alien cases means that, in practice, the general rule against judicial review of exclusion decisions applies with less force in this context than in the context of visa denials or other decisions to exclude aliens located abroad , where the lack of detention makes habeas unavailable. Third and finally, Congress has established a limited framework in the INA for the review of orders of removal against arriving nonresident aliens. The INA sets forth two primary procedures by which DHS officials may remove aliens arriving in the United States. These procedures are expedited removal, a streamlined process that contemplates removal without a hearing before an immigration judge, and formal removal, a more traditional proceeding in which an immigration judge determines whether to order the alien's removal. The INA specifies the limited circumstances in which an alien ordered removed under these procedures may obtain judicial review. The INA also expressly bars or limits judicial review of a range of executive branch actions and determinations connected to the removal process. This INA scheme of limitations on judicial review purports to bar review of expedited removal orders in most circumstances, but it may not bar review of some executive branch exclusion policies that bear upon the expedited removal process (such as, for example, executive policies that restrict asylum eligibility for some aliens arriving at the border who are subject to expedited removal procedures). These INA provisions concerning the reviewability of removal orders appear to have replaced the Knauff presumption—that judicial review of exclusion decisions is unavailable ""unless expressly authorized by law""—as the touchstone for whether executive decisions or policies for the exclusion of arriving nonresident aliens are subject to judicial review. When the INA expressly authorizes judicial review of orders or policies for the removal of arriving aliens, federal courts engage in such review. More broadly, however, federal courts have also shown a willingness to review statutory challenges to exclusion decisions or policies concerning aliens at the threshold of entry so long as the INA does not expressly bar such review (even if it does not expressly authorize review). This situation typically arises in cases where arriving aliens or their advocates challenge an executive branch exclusion policy under the APA. How judicial review in such exclusion cases—where the INA neither expressly authorizes nor bars review—comports with the Knauff presumption remains largely unexplained in the case law. Yet the Supreme Court has on at least one occasion allowed for judicial review of inadmissibility determinations of arriving aliens on the ground that Congress had not expressly barred such review: in the 1956 case Brownwell v. We Shung , the Court held that arriving aliens could challenge inadmissibility determinations through declaratory judgment actions because the relevant statute—a prior version of the INA that Congress later amended in disapproval of the Supreme Court decision—did not bar such actions. This decision appeared to disregard the presumption against judicial review of exclusion determinations established in Knauff and earlier exclusion cases, although the We Shung Court did not address this point. The underlying implication of We Shung , and of the more recent lower court decisions reviewing statutory challenges to executive branch policies concerning the exclusion of arriving aliens, may be that the INA's judicial review framework for orders of removal occupies the territory that the Knauff presumption against judicial review once occupied and therefore replaces the Knauff presumption as the law governing the availability of judicial review in arriving alien exclusion cases. To recap: the current case law generally provides that statutory challenges to the exclusion of arriving aliens are reviewable unless a statute expressly bars such judicial review. However, the case law does not thoroughly reconcile this approach with the Knauff presumption that there should be no review of an exclusion determination unless the review is expressly authorized in statute. The line of Supreme Court exclusion jurisprudence culminating in Knauff and Mezei establishes that courts may not review challenges to the exclusion of nonresident aliens unless Congress expressly provides for such review. In the context of aliens located abroad, this jurisprudence has developed into the rule of consular nonreviewability, which bars judicial review in most circumstances of visa refusals and other decisions to exclude nonresident aliens abroad. In the context of arriving aliens, however, the Knauff presumption against judicial review of exclusion decisions appears to have been mostly overshadowed by constitutional issues concerning enforcement measures related to the denial of entry, the potential availability of some level of habeas review, and the framework of INA provisions governing judicial review of removal orders. Even as applied to aliens abroad, the rule against nonresident alien challenges to denials of entry has a major limitation: the rule only clearly forecloses challenges brought by nonresident aliens themselves. Thus, if a U.S. citizen claims that the exclusion of an alien violated the U.S. citizen's constitutional rights, the rule against alien challenges does not apply with its full force. Cases that invoke this limitation account for the entirety of the Supreme Court's modern exclusion jurisprudence. The Court has not considered a nonresident alien's own challenge to a denial of entry in decades. The question about the extent to which U.S. citizens can challenge an alien's exclusion, on the other hand, has occupied the Court in four important cases since 1972: Kleindienst v. Mandel , Fiallo v. Bell , the splintered Kerry v. Din , and Trump v. Hawaii . Under the rule that these cases establish, the government need satisfy only a ""highly constrained"" judicial inquiry into whether the exclusion ""had a justification independent of unconstitutional grounds"" in order to prevail against an American citizen's claim that the exclusion violated his or her constitutional rights. This is an extremely limited level of judicial review under which the government has always prevailed before the Supreme Court. In 1972, the Court confronted a case in which a group of American professors claimed that the exclusion of a Belgian intellectual, Ernest Mandel, violated the American professors'—and not Mandel's—First Amendment rights. The professors had invited Mandel to speak at their universities. A provision of the INA rendered him ineligible for a visa because of his communist political beliefs. A separate provision authorized the Attorney General to waive Mandel's ineligibility upon a recommendation from the Department of State, but the Attorney General declined to do so. The case produced a standard of review for claims that the exclusion of an alien violates an American citizen's constitutional rights: [P]lenary congressional power to make policies and rules for exclusion of aliens has long been firmly established . . . . We hold that when the Executive exercises [a delegation of this power] negatively on the basis of a facially legitimate and bona fide reason , the courts will neither look behind the exercise of that discretion, nor test it by balancing its justification against the First Amendment interests of those who seek personal communication with the applicant. Applying this ""facially legitimate and bona fide"" test, the Court upheld Mandel's exclusion on the basis of the government's explanation that it denied the waiver because Mandel had abused visas in the past. The American professors and two dissenting Justices pointed to indications of pretext and argued that Mandel had actually been excluded because of his communist ideas. Nonetheless, the majority refused to ""look behind"" the government's justification to determine whether any evidence supported it. In other words, the Court accepted at face value the government's explanation for why it denied Mandel permission to enter. The ""facially legitimate and bona fide"" standard resolved what the Court saw as the major dilemma that the dispute over Mandel's visa posed for the bedrock principles of its immigration jurisprudence. Unlike Mandel himself and the unadmitted aliens from prior exclusion cases, the American professors stated a compelling First Amendment claim based on their ""right to receive information"" from the Belgian intellectual. But for the Court to grant relief on that claim, or even to grant full consideration of the claim, would have undermined Congress's plenary power to exclude aliens by interjecting the courts into the exclusion process. After all, many other exclusions of aliens for communist ideology could also have implicated the rights of U.S. citizens who sought to ""meet and speak with"" the excluded aliens. The ""facially legitimate"" standard protected the plenary power against dilution by limiting the reach of the American professors' claim. Under the standard, the professors were not entitled to balance their First Amendment rights against the government's exclusion power; they were entitled only to a constitutionally valid statement as to why the government exercised the exclusion power. Significantly, the Court left open the question whether the American professors' rights entitled them to even that much. Although the government proffered a ""facially legitimate and bona fide"" justification for Mandel's exclusion, the Court declined to say whether the government would have prevailed even if it had offered ""no justification whatsoever."" The Court has followed Mandel in three subsequent exclusion cases. The first of these cases, Fiallo v. Bell , concerned the constitutionality of a statute; the second, Kerry v. Din , concerned the Executive's application of a statute in an individual visa case; and the third, Trump v. Hawaii , concerned the Executive's invocation of statutory authority to exclude a broad class of aliens by presidential proclamation. All three cases reinforce the notion of the government's plenary power to exclude aliens even in the face of constitutional challenges brought by U.S. citizens. The second and third cases, however, indicate that a different standard of review than Mandel 's ""facially legitimate and bona fide"" test may apply when challengers present extrinsic evidence of an unconstitutional justification for an executive exclusion decision or policy. The Supreme Court has assumed without definitively holding that, in such cases, reviewing courts may consider the extrinsic evidence to determine whether the exclusion decision or policy ""can reasonably be understood to result from a justification independent of unconstitutional grounds."" In Fiallo v. Bell , the Court upheld a provision of the INA that classified people by gender and legitimacy. The statute granted special immigration preferences to the children and parents of U.S. citizens and LPRs, unless the parent-child relationship at issue was that of a father and his illegitimate child. Two U.S. citizens and two LPRs claimed that the restriction violated their equal protection rights by disqualifying their children or fathers from the preferences. Despite the ""double-barreled discrimination"" on the face of the statute, the Court upheld it as a valid exercise of Congress's ""exceptionally broad power to determine which classes of aliens may lawfully enter the country."" Although it relied on Mandel , the Fiallo Court did not identify a concrete ""facially legitimate or bona fide"" justification for the statute. Instead, the Court surmised that a desire to combat visa fraud or to emphasize close family ties may have motivated Congress to impose the gender and legitimacy restrictions. Similar to the analysis in Mandel , the Fiallo Court justified its limited review of the facially discriminatory statute as a way to prevent the assertion of U.S. citizen rights from undermining the sovereign prerogative to exclude aliens. In Kerry v. Din , the Court considered a U.S. citizen's claim that the Department of State violated her due process rights by denying her husband's visa application without sufficient explanation. The Department indicated that it denied the visa under a terrorism-related ineligibility but did not disclose the factual basis of its decision. The Court rejected the claim by a vote of 5 to 4 and without a majority opinion. Justice Scalia, writing for a plurality of three Justices, did not reach the Mandel analysis because he concluded that Din did not have a protected liberty interest under the Due Process Clause in her husband's ability to immigrate. But Justice Kennedy, in a concurring opinion for himself and Justice Alito, which some lower courts view as the controlling opinion in the case, assumed without deciding that the visa denial implicated due process rights but rejected the claim under the ""facially legitimate and bona fide reason"" test. Justice Kennedy's concurring opinion made two significant statements about how Mandel works in application. First, the government may satisfy the ""facially legitimate and bona fide reason"" standard by citing the statutory provision under which it has excluded the alien. Such a citation fulfills the ""facially legitimate"" prong by grounding the exclusion decision in legislative criteria enacted under Congress's ""plenary power"" to restrict the entry of aliens, and the citation also, by itself, suffices to ""indicate[] [that the government] relied upon a bona fide factual basis"" for the exclusion. Thus, because the government stated that it denied Din's husband's visa application under the terrorism-related ineligibility, it provided an adequate justification under Mandel even though it did not disclose the factual findings that triggered the ineligibility. Pointing to the statute suffices. Second, however, Justice Kennedy indicated that his interpretation of the ""bona fide"" prong might be susceptible to a caveat in some cases: Absent an affirmative showing of bad faith on the part of the consular officer who denied Berashk [Din's husband] a visa—which Din has not plausibly alleged with sufficient particularity— Mandel instructs us not to ""look behind"" the Government's exclusion of Berashk for additional factual details beyond what its express reliance on [the terrorism-related ineligibility] encompassed. In other words, under Justice Kennedy's reading of the Mandel standard, courts will assume that the government has a valid basis for excluding an alien under a given statute— unless an affirmative showing suggests otherwise. In Din , the facts did not suggest bad faith, because Din's own complaint revealed a connection between the statutory ineligibility and her husband's case. Justice Kennedy therefore had no occasion to apply the caveat, and the opinion did not clarify what kind of ""affirmative showing"" would trigger it. Nonetheless, Justice Kennedy's concept of a bad faith exception to Mandel 's rule against judicial scrutiny of the government's underlying factual basis for an exclusion decision became a prominent issue in the Supreme Court's most recent exclusion case, Trump v. Hawaii . Most recently, in Trump v. Hawaii , the Court rejected a challenge brought by U.S. citizens, the state of Hawaii, and other U.S.-based plaintiffs against a presidential proclamation that provided for the indefinite exclusion of broad categories of nonresident aliens from seven countries, subject to some waivers and exemptions. Five of the seven countries covered by the proclamation were Muslim-majority countries. The proclamation, like two earlier executive orders that imposed entry restrictions of a similar nature, became known colloquially as the ""Travel Ban"" or ""Muslim Ban."" As statutory authority for the proclamation, the President relied primarily upon INA § 212(f). That statute grants the President power ""to suspend the entry of all aliens or any class of aliens"" whose entry he ""finds . . . would be detrimental to the interests of the United States."" In the proclamation, the President concluded that the entry of the specified categories of nationals from the seven countries would have been ""detrimental"" to the United States because, based on the results of a multiagency review, the countries did not adequately facilitate the vetting of their nationals for security threats or because conditions in the countries posed particular risks to national security. Thus, the stated purpose of the proclamation was to protect national security by excluding aliens who could not be properly vetted due to the practices of their governments or the conditions in their countries. The challengers contended, however, that the actual purpose of the proclamation was to exclude Muslims from the United States. They based this argument primarily upon extrinsic evidence—that is, evidence outside of the four corners of the proclamation—including statements that the President had made as a candidate calling for a ""total and complete shutdown of Muslims entering the United States."" The challengers argued that the proclamation was illegal on statutory and constitutional grounds. With respect to statute, the challengers contended that INA § 212(f) conferred upon the President only a ""residual power to temporarily halt the entry of a discrete group of aliens engaged in harmful conduct"" and therefore did not authorize the proclamation's indefinite exclusion of nationals of seven countries. The challengers also made other statutory arguments, including that the proclamation did not make sufficient findings that the entry of the excluded aliens would be ""detrimental to the interests of the United States,"" as the language of § 212(f) requires. With respect to the constitutional ground, the challengers argued that the proclamation violated the Establishment Clause because, based on the extrinsic evidence, the President issued the proclamation for the actual purpose of excluding Muslims from the United States. As such, according to plaintiffs, the proclamation ran afoul of the ""clearest command"" of the Establishment Clause: ""that one religious denomination cannot be officially preferred over another."" A five-Justice majority of the Supreme Court rejected all of these challenges in an opinion by Chief Justice Roberts that generally reaffirmed the unique breadth of the political branches' power to admit or exclude aliens. On the statutory claims, the Court declined to decide whether the doctrine of consular nonreviewability barred judicial review of the U.S. plaintiffs' arguments that the proclamation violated § 212(f) and other provisions of the INA. The Court instead held that the proclamation did not violate the INA because § 212(f) ""exudes deference to the President"" and grants him ""'ample power' to impose entry restrictions in addition to those elsewhere enumerated in the INA,"" even restrictions as broad as those in the proclamation. The Court also reasoned that the ""deference traditionally accorded the President"" in national security and immigration matters means that courts must not conduct a ""searching inquiry"" into the basis of the President's determination under § 212(f) that the entry of certain aliens would be ""detrimental to the interests of the United States."" The Court suggested that such a presidential determination might not be subject to judicial review at all—calling the premise for such review ""questionable""—but ultimately held that, ""even assuming some form of review [was] appropriate,"" the findings in the proclamation about the results of the multiagency review of vetting practices satisfied § 212(f)'s requirements. In short, although the Court reviewed the statutory claims against the proclamation, it rejected those claims by holding that Congress has delegated extraordinary power to the President to exclude aliens and that the President's decisions to employ this power warrant deference. On the constitutional issue, the Court reiterated the holdings in Mandel and Fiallo that matters concerning the admission or exclusion of aliens are ""'largely immune from judicial control'"" and are subject only to ""highly constrained"" judicial inquiry when exclusion ""allegedly burdens the constitutional rights of a U.S. citizen."" Interestingly, however, the Court did not decide whether the limitations on the scope of this inquiry barred consideration of extrinsic evidence of the proclamation's purpose. Much of the litigation in the lower courts had turned on this issue. A majority of judges on the U.S. Court of Appeals for the Fourth Circuit, citing Justice Kennedy's concurrence in Din , had relied on the campaign statements and other extrinsic evidence of anti-Muslim animus to hold that the proclamation likely violated the First Amendment. Dissenting Fourth Circuit judges had reasoned that Mandel and the other exclusion cases prohibited consideration of the extrinsic evidence. The Supreme Court, instead of resolving this disagreement, assumed without deciding that consideration of the extrinsic evidence was appropriate in connection with a rational basis inquiry: A conventional application of . . . [the] facially legitimate and bona fide [test] would put an end to our review. But the Government has suggested that it may be appropriate here for the inquiry to extend beyond the facial neutrality of the order. For our purposes today, we assume that we may look behind the face of the Proclamation to the extent of applying rational basis review. That standard of review considers whether the entry policy is plausibly related to the Government's stated objective to protect the country and improve vetting processes. As a result, we may consider plaintiffs' extrinsic evidence, but will uphold the policy so long as it can reasonably be understood to result from a justification independent of unconstitutional grounds. In other words, the Court concluded that, even if plaintiffs' evidence of anti-Muslim animus warranted expansion of the scope of judicial review beyond the four corners of the proclamation itself, the appropriate inquiry remained extremely limited: whether the proclamation was rationally related to the national security concerns it articulated. And that rational basis inquiry, the Court explained, is one that the government ""hardly ever"" loses unless the laws at issue lack any purpose other than a ""'bare . . . desire to harm a politically unpopular group.'"" Applying this forgiving standard, the Court held that the proclamation satisfied it mainly because agency findings about deficient information-sharing by the governments of the seven covered countries established a ""legitimate grounding in national security concerns, quite apart from any religious hostility."" In the principal dissent, Justice Sotomayor argued that the majority failed to provide ""explanation or precedential support"" for limiting its analysis to rational basis review after deciding to go beyond the ""facially legitimate and bona fide reason"" inquiry. In Justice Sotomayor's view, the Court's Establishment Clause jurisprudence required the Court to strike down the proclamation because a ""reasonable observer"" familiar with the evidence would have concluded that the proclamation sought to exclude Muslims. She also reasoned that, even if rational basis review were the correct standard, the proclamation failed to satisfy it because the President's statements were ""overwhelming . . . evidence of anti-Muslim animus"" that made it impossible to conclude that the proclamation had a legitimate basis in national security concerns. Finally, Justice Sotomayor criticized the majority for, in her view, tolerating invidious religious discrimination ""in the name of a superficial claim of national security."" She compared the majority decision to Korematsu v. United States , a case that upheld as constitutional the compulsory internment of all persons of Japanese ancestry in the United States (including U.S. citizens) in concentration camps during World War II. (The majority responded that unlike the exclusion order in Korematsu the proclamation did not engage in express, invidious discrimination against U.S. citizens and that, as such, "" Korematsu has nothing to do with this case."" The majority also took the occasion to overrule Korematsu —which had long been considered bad law but which the Supreme Court had never expressly overruled—calling it ""gravely wrong the day it was decided."" ) In conclusion, Trump v. Hawaii leaves some questions unresolved about how the Mandel test works in practice, but Trump v. Hawaii leaves no uncertainty on one point: Mandel and its progeny permit courts to conduct only a vanishingly limited review of executive decisions to exclude aliens abroad. The Court did not decide whether U.S. citizens may challenge exclusion decisions on statutory grounds or whether, and in what circumstances, courts may consider extrinsic evidence of the government's purpose for an exclusion decision or policy. Yet the majority opinion reaffirms that the standard of review that applies to constitutional claims brought by U.S. citizens against the exclusion of aliens abroad is a ""highly constrained"" one that favors the government heavily, even when extrinsic evidence suggests that the Executive may have acted for an unconstitutional purpose. The Mandel line of cases embraces the broad view of congressional power over the admission and exclusion of aliens that the Supreme Court established in Knauff and earlier precedent, although the cases do leave some uncertainty about the outer edges of the congressional power. Mandel and Din appeared to take the absoluteness of Congress's exclusion power as a given. In Din , Justice Kennedy grounded his conclusion—that a visa denial withstands constitutional attack so long as the government ties the exclusion to a statutory provision—on the premise that Congress can impose whatever limitations it sees fit on alien entry. In other words, because Congress's limitations are valid per se , executive enforcement of those limitations is also valid. Mandel makes the same point, albeit mainly through omission. Recall that the case concerned application of an INA provision that rendered the Belgian academic ineligible for a visa because he held communist political beliefs. The Court acknowledged that the statute triggered First Amendment concerns by limiting, based on political belief, U.S. citizens' audience with foreign nationals. But the Court did not assess whether the statute violated the First Amendment. Rather, the Court accepted without significant analysis that Congress had the power to impose such an idea-based entry limitation. As a result, the Mandel decision considered only the First Amendment implications of the Attorney General's refusal to waive Mandel's communism-based ineligibility, not the statutory premise of the ineligibility. The untested assumption underlying Mandel and Din —that Congress's immigration power encompasses the power to exclude based on any criteria whatsoever, including political belief—raises a fundamental question about the nature of the plenary power. Often, the Supreme Court has described the power as one that triggers judicial deference , meaning that courts may conduct only a limited inquiry when considering the constitutionality of an exercise of the immigration power. But the plenary power doctrine, as some scholars have noted, can be understood another way, one that perhaps makes more sense of Mandel : the ""plenary"" refers to the scope of the power itself, in substance, and not to its immunity from judicial review. The congressional power to admit or exclude aliens is so complete, this theory goes, as to override the constitutional limitations that typically constrain legislative action. For example, the power overrides the First Amendment principles that would invalidate legislation that expressly provides for unfavorable treatment based on political belief in almost any other context. Aspects of Fiallo , however, arguably do not support this concept of a substantively limitless congressional power to regulate alien entry. Unlike Mandel and Din , which examined the Executive's application and implementation of authority delegated by statute, Fiallo squarely considered the constitutionality of a statute itself. And while Fiallo 's outcome (upholding an immigration law that discriminated by gender and legitimacy) aligns with the concept of an unbridled legislative power, the Court's reasoning wavered between statements suggesting that the legislative power might have limits and statements describing the power as absolute. The lack of clarity in the opinion seemed to stem from the awkwardness of applying Mandel —which fashioned a rule for review of executive action (the ""facially legitimate and bona fide"" test)—in a case reviewing legislative action. Ultimately, the Fiallo Court cited the Mandel test as an analogue but did not actually apply the test. Rather, the Court upheld the statute at issue under something that looked like a version of rational basis review, one in which a hypothetical justification suffices to sustain the statute. While extremely deferential, this version of rational basis review implies an underlying constitutional limitation against legislative unreasonableness, at least in theory. In other words, an even-handed reading of Fiallo suggests that statutes regulating the admission of aliens must at least be reasonable. Some scholars have argued that Fiallo was incorrectly decided and that stricter constitutional scrutiny should apply to admission and exclusion laws that classify aliens by factors such as race, religion, and gender. To date, this argument does not find support in Supreme Court precedent, particularly not after the Court relied on Fiallo in Trump v. Hawaii to describe the breadth of the political branches' exclusion power. To be sure, the Supreme Court has made clear that Congress cannot deny certain rights to aliens subject to criminal or deportation proceedings within the United States, and that the federal government cannot deny some procedural protections to LPRs returning from brief trips from abroad. But the Court has never suggested that laws regulating the admission of non-LPR aliens trigger anything more than the deferential rational basis review that it applied to the gender-based immigration preferences statute at issue in Fiallo . In other words, the Court has never called Fiallo into question. In one recent case, Sessions v. Morales-Santana , the Supreme Court applied heightened constitutional scrutiny to strike down a derivative citizenship statute that, much like the statute in Fiallo , used gender classifications. However, the Morales-Santana Court distinguished Fiallo and the plenary power doctrine by noting that the statute before it concerned citizenship, not immigration. Accordingly, Morales-Santana does not appear to portend imminent reconsideration of Fiallo . The term after Morales-Santana , the Court applied rational basis review in Trump v. Hawaii to an executive exclusion policy that was based on a statutory delegation of authority, suggesting that nothing more than rational basis review could apply to an exclusion statute itself. To summarize, dicta in two of the exclusion cases that decided challenges to executive action, Mandel and Din , give the impression of a substantively absolute congressional power to control the entry of aliens. But courts have generally interpreted Fiallo , which concerned a direct challenge to a law regulating alien admission and exclusion, to mean that such laws must at least survive a review for reasonableness. To date, the Supreme Court has not heeded calls by some scholars and litigants for more exacting review of laws regulating alien entry. Mandel , Din , and Trump v. Hawaii trace the contours of the Executive's exclusion power. As described above, Mandel 's ""facially legitimate and bona fide reason"" test governs claims that an exclusion decision or policy violates a U.S. citizen's constitutional rights. The Executive satisfies the test by identifying the statutory basis for the exclusion. Where the U.S. citizen challenger proffers extrinsic evidence that the Executive acted with an unconstitutional purpose, it might be proper for a reviewing court to consider that evidence, but only as part of a rational basis inquiry under which the exclusion decision or policy must be upheld if ""it can reasonably be understood to result from a justification independent of unconstitutional grounds."" However, the cases do not resolve definitively at least three issues about the executive power. These issues, discussed below, are (1) whether the Executive possesses inherent exclusion power, as opposed to solely statutory-based power; (2) the extent to which U.S. persons or entities may challenge an alien's exclusion on statutory grounds; and (3) the extent to which the Constitution limits the Executive's application of broad delegations of congressional power to make exclusion determinations. The Supreme Court's exclusion cases generally indicate that the authority to exclude aliens reaches the Executive through congressional delegation. The cases generally assign the constitutional power to regulate immigration to Congress and imply that an executive exclusion decision or policy must have a basis in statute. Mandel , Din , and Trump v. Hawaii illustrate this implied point: even though all three cases considered the constitutionality of executive action, the Court focused its analysis in each case on a statutory source of authority for the executive action. For instance, in Trump v. Hawaii , the Court analyzed whether the ""Travel Ban"" order fit within the President's authority under INA § 212(f) to ""suspend the entry of all aliens or any class of aliens."" Trump v. Hawaii and the Court's other exclusion cases proceed on the assumption that executive action to exclude aliens requires statutory authorization. An opposing view held by at least one current Supreme Court Justice posits that the Executive has "" inherent authority to exclude aliens from the country."" Under this view, Congress does not have authority to constrain executive exclusion decisions. This view arguably finds some support in Supreme Court immigration jurisprudence. Many of the cases, for example, do not distinguish between Congress and the Executive when discussing the constitutional power to regulate immigration, suggesting that the two branches could share the power. Furthermore, at least one pre- Mandel Supreme Court decision states expressly that the Executive possesses inherent authority to exclude aliens. The case makes this statement, however, only to rebuff a challenge to the constitutionality of congressional delegations of immigration authority to executive agencies. In other words, the case states that the Executive has inherent exclusion authority only to explain why Congress may delegate exclusion authority to the Executive, not to establish that the Executive may exclude aliens absent statutory authority. The case goes on to acknowledge that, notwithstanding any inherent executive authority, in immigration matters the Executive typically acts upon congressional direction. The text of the Constitution itself does not resolve whether the Executive has a constitutional power to exclude aliens that is independent of statutory authorization. Because the federal government's immigration power rests at least in part upon an ""inherent power as a sovereign"" not enumerated in the Constitution, courts cannot determine who owns the power by reading Article I or Article II. Neither does Supreme Court precedent resolve the issue definitively. In one 1915 case, Gegiow v. Uhl , the Court held that an executive exclusion decision violated the governing statute. That holding implies that legislative restrictions on such decisions are constitutionally valid. But that brief decision did not discuss the concept of inherent executive authority over immigration, and more recent exclusion cases have not decided the issue because they have resolved statutory challenges by holding that the executive action at issue complied with the relevant statutes. On balance, the weight of authority favors the view that the power to exclude aliens belongs primarily to Congress, at least in the first instance. The idea that the Executive could exclude aliens in contravention of a statute—or, to a lesser extent, without statutory authorization—would challenge separation of powers principles and does not find support even in the one Supreme Court opinion that expressly endorses the concept of an inherent executive immigration power. The idea of an extra-statutory executive exclusion power would also undermine basic features of the Court's exclusion jurisprudence, such as the long-standing rule that a court reviewing the exclusion of an arriving alien in habeas corpus proceedings must ascertain whether immigration officers had statutory authorization to make the exclusion determination. The point remains, however, that the Court has not established clearly that the Executive may not exclude aliens in contravention of a statute or without statutory authorization. This lack of definitive precedent on the issue may result from Congress's extremely broad delegation of exclusion authority to the Executive, most notably in INA § 212(f), and from the limited judicial review available for executive enforcement of exclusion statutes. Finally, a specific aside about the field of diplomacy: because the Reception Clause of the Constitution grants the President the exclusive power to ""receive Ambassadors and other public Ministers,"" it seems more than plausible that a President could override a statute at least when making decisions about the admission or exclusion of foreign diplomats. Because executive exclusion power appears to derive primarily from statute, executive exclusion decisions or policies are susceptible in theory to attack on the ground that they violate the governing statutes. In Trump v. Hawaii , for instance, the Supreme Court analyzed and rejected arguments that the ""Travel Ban"" exclusion policy violated provisions of the INA. But the Court declined to resolve a threshold question about such challenges: whether they are barred by the doctrine of consular nonreviewability, which, as discussed above, forms part of the general rule against judicial review of exclusion decisions. Specifically, consular nonreviewability prohibits judicial review of a visa denial unless the denial burdens the constitutional rights of a U.S. citizen, in which case the deferential standard of review under the Mandel line of cases applies to the constitutional claim. The Mandel Court, in recognizing for the first time that U.S. citizens could challenge exclusion decisions despite the bar against such suits when brought by aliens, spoke narrowly of constitutional claims by U.S. citizens. Trump v. Hawaii reasoned that the statutory claims at issue there failed on the merits even if they were subject to judicial review, and the Court therefore declined to answer whether the Mandel exception also encompasses statutory claims brought by U.S. citizens against the exclusion of aliens abroad. At least two federal circuit courts have held that the doctrine of consular nonreviewability bars U.S. citizen challenges to visa denials on statutory grounds, at least when the citizen does not also state constitutional claims. These courts reasoned that permitting review of purely statutory claims would ""convert[] consular nonreviewability into consular reviewability"" and ""eclipse the Mandel exception"" by subjecting statutory claims to a more exacting level of review under the APA than constitutional claims receive under the ""highly constrained"" review that applies under the Mandel line of cases. On the other hand, in two other cases involving a combination of statutory and constitutional claims brought by U.S. citizens against visa denials, courts in the First Circuit and D.C. Circuit reviewed the statutory claims and rejected or called into question the visa denials on statutory grounds. One of these decisions concluded that the statutory claims were reviewable because, among other rationales, the canon of constitutional avoidance required the court to construe the relevant statutes before considering whether the Executive's application of the statutes violated the Constitution. In both cases, the courts analyzed the statutory claims without deferring to the government's determination that the INA required the denial of the visa applications at issue. As a result, the cases scrutinized the government's justifications for excluding aliens much more closely than the Supreme Court analyzed the constitutional claims in Trump v. Hawaii , Mandel , and Din . It was the Ninth Circuit's disagreement with this framework endorsed by the First and D.C. Circuits—that statutory challenges to visa denials should draw stricter review than constitutional challenges—that led it, among other reasons, to hold in a pure statutory case that consular nonreviewability bars statutory claims. The Supreme Court has on at least two occasions rejected statutory challenges brought by U.S. citizens or organizations against the exclusion of aliens abroad without deciding whether such challenges are subject to judicial review. As already mentioned, in Trump v. Hawaii , the Court acknowledged but did not decide the reviewability question in a case that involved a combination of statutory and constitutional claims brought by U.S. citizens and other U.S. parties. In the 1993 case Sale v. Haitian Centers Council , the Court considered and ultimately rejected statutory challenges to the U.S. Coast Guard's interdiction and forced return of Haitian migrants trying to reach the United States by sea. Specifically, the Court analyzed and rejected the argument that the interdictions violated an INA provision requiring immigration authorities to determine whether aliens would suffer persecution in a particular country before returning them to that country. The Sale Court did not address the consular nonreviewability issue, even though the government argued it, but instead seemed to assume without discussion that the statutory challenges to the interdictions and forced returns were reviewable. The only clear holding about consular nonreviewability that arises from Hawaii and Sale is that the doctrine does not deprive federal courts of subject matter jurisdiction over statutory challenges brought by U.S. citizens against the exclusion of aliens abroad, even though the doctrine might supply a rule of decision requiring courts to reject such statutory challenges without reviewing their merits. In summary, federal appellate courts have held that the doctrine of consular nonreviewability bars exclusively statutory challenges brought by U.S. citizens against the executive branch decisions to exclude aliens abroad, but not where the citizens also press constitutional challenges. The Supreme Court has not resolved the issue, but the Court reviewed statutory challenges that were combined with constitutional challenges in Trump v. Hawaii and reviewed exclusively statutory challenges in Sale . Justice Kennedy concluded in Din that the plenary nature of Congress's power to exclude aliens means that an executive exclusion decision for a statutory reason is facially legitimate and bona fide. But what about where Congress transfers its exclusion power to the Executive with few limiting criteria? What constitutional restrictions does the Executive face in that scenario? Trump v. Hawaii indicates that the Executive, at least in theory, must comply with constitutional guarantees when exercising power delegated from Congress to create exclusion policies. Even though the Court in that case engaged in only a ""highly constrained"" level of judicial review, it stated that the purpose of the review was to determine whether the challenged exclusion policy could ""reasonably be understood to result from a justification independent of unconstitutional grounds."" Presumably, if the Court had concluded that the ""Travel Ban"" proclamation was ""'inexplicable by anything other than [anti-Muslim] animus,'"" it would have struck down the proclamation for violating the Establishment Clause. Although the proposition that constitutional guarantees restrict executive exercises of exclusion authority may seem unremarkable, the Court actually avoided deciding this issue in Mandel . The relevant statute in that case gave the Attorney General broad discretion to waive the communism-based ground for exclusion. The parties and the Court assumed that Congress had the authority to exclude communists based on their political ideas. The executive branch argued that it, too, could exercise congressionally delegated exclusion authority to deny entry based on political belief or for ""any reason or no reason."" The Mandel Court, in adopting the ""facially legitimate and bona fide"" standard, avoided addressing this contention. The Court reasoned that it did not have to decide whether the government could deny an inadmissibility waiver for ""any reason or no reason"" because the government had in fact supplied a reason for denying Mandel's waiver—his alleged prior visa abuse—""and that reason was facially legitimate and bona fide."" Thus, Mandel left open the possibility that the First Amendment could limit the executive branch's, but not Congress's, power to exclude based on political belief, but the Court did not decide the issue. After Trump v. Hawaii , however, it seems relatively clear that executive exclusion policies must find support in justifications that are ""independent of unconstitutional grounds,"" even though courts will apply only a ""narrow standard of review"" to assess those justifications. In other words, constitutional guarantees might not restrict Congress's exercise of the exclusion power, but they apparently do restrict the Executive's exercise of exclusion power delegated to it by Congress. The Supreme Court has consistently reaffirmed that legislative and executive decisions to exclude aliens abroad are ""'largely immune from judicial control.'"" The doctrine of consular nonreviewability bars judicial review of decisions to exclude aliens abroad in most circumstances. And even where such decisions burden the constitutional rights of U.S. citizens, the Mandel line of cases stands for the proposition that federal courts must grant the decisions a level of deference so substantial that it mostly assures government victory over any challenges. Notably, however, Supreme Court precedent mainly describes the deference due to executive exclusion decisions as an issue within Congress's control. The doctrine of consular nonreviewability and the Mandel line of cases take their cue from legislative inaction: because Congress has not said that courts may review executive decisions to exclude aliens abroad, courts mostly do not conduct such review or (where constitutional claims of U.S. citizens are at stake) conduct only an extremely limited form of review. Ultimately, the cases indicate that Congress has authority to expand review through affirmative legislation. ","Supreme Court precedent establishes that inherent principles of sovereignty give Congress ""plenary power"" to regulate immigration. The core of this power—the part that has proven most impervious to judicial review—is the authority to determine which non-U.S. nationals (aliens) may enter the United States and under what conditions. The Court has also established that the executive branch, when enforcing the laws concerning alien entry, has broad authority to do so mostly free from judicial oversight. Two principles frame the scope of the political branches' power to exclude aliens. First, nonresident aliens abroad generally cannot challenge exclusion decisions because they do not have constitutional rights with respect to entry and cannot obtain judicial review of the statutory basis for their exclusion unless Congress provides otherwise. Second, even when the exclusion of a nonresident alien burdens the constitutional rights of a U.S. citizen, the government need only satisfy a ""highly constrained"" judicial inquiry to prevail against the citizen's constitutional challenge. The Supreme Court developed the first principle—that nonresident aliens generally cannot challenge exclusion decisions—in a line of late 19th to mid-20th century exclusion cases. These cases culminated in the 1950 decision United States ex rel. Knauff v. Shaughnessy , in which the Court declared that ""it is not within the province of any court, unless expressly authorized by law, to review the determination of the political branch of the Government to exclude a given alien."" This rule forms the basis of the doctrine of consular nonreviewability, which in almost all circumstances bars nonresident aliens abroad from challenging visa denials by U.S. consular officers. But the rule set forth in Knauff applies with less force to decisions to exclude aliens arriving at the border. Aliens at the cusp of entry into the United States may be detained by immigration authorities pending their removal. Their cases can trigger habeas corpus proceedings for that reason and may also implicate complex statutory frameworks on judicial review. The second principle, concerning exclusion decisions that burden the rights of U.S. citizens, has been the primary subject of the Supreme Court's modern exclusion jurisprudence. In four cases since 1972— Kleindienst v. Mandel , Fiallo v. Bell , the splintered Kerry v. Din , and Trump v. Hawaii —the Court has recognized that U.S. citizens who claim that the exclusion of aliens violated the citizens' constitutional rights may obtain judicial review of the exclusion decisions. Yet the standard of review that the Court applies to such claims is so deferential to the government as to all but foreclose U.S. citizens' constitutional challenges. In the most recent case, Trump v. Hawaii , the Court applied a ""highly constrained"" level of review to uphold a broad executive exclusion policy notwithstanding some evidence that the purpose of the policy was to exclude Muslims. The Mandel line of cases reaffirms the unique scope of Congress's power to legislate for the exclusion of aliens. Exclusion statutes draw minimal judicial scrutiny even when they classify people by disfavored criteria, such as gender or legitimacy. With respect to the executive power, the cases reaffirm generally that, in the absence of statutory provisions to the contrary, courts play almost no role in overseeing the application of admission and exclusion laws to nonresident aliens abroad. However, the cases leave some questions about executive exclusion power unresolved, including whether the Executive has inherent, constitutional power to exclude aliens and whether U.S. citizens may bring statutory challenges against executive decisions to exclude aliens abroad."
"In 2017, three major hurricanes made landfall in the United States and historic wildfires struck California. According to FEMA, the 2017 hurricanes and wildfires collectively affected 47 million people—nearly 15 percent of the nation’s population. See figure 1 for a timeline of these major disasters. When disasters hit, state and local entities are typically responsible for disaster response efforts. The Stafford Act establishes a process by which the Governor of the affected state or the Chief Executive of an affected Indian tribal government may request a presidential major disaster declaration to obtain federal assistance. According to the DHS National Response Framework—a guide to how the federal government, states and localities, and other public and private sector institutions should respond to disasters and emergencies—the Secretary of Homeland Security is responsible for ensuring that federal preparedness actions are coordinated to prevent gaps in the federal government’s efforts to respond to all major disasters, among other emergencies. The framework also designates FEMA as the lead agency to coordinate the federal disaster response efforts across 30 federal agencies. The National Response Framework identifies 14 emergency support functions that serve as the federal government’s primary coordinating structure for building, sustaining, and delivering disaster response efforts across more than 30 federal agencies. Each function defines specific mission areas—such as communication, transportation, and energy—and designates a federal department or agency as the coordinating agency. For example, provision of assets and services related to public works and engineering, such as temporary roofing or power, are coordinated by USACE within DOD. See Appendix II for more information about emergency support function responsibilities across the federal government. FEMA’s Response Directorate coordinates disaster response efforts through mission assignments—work orders that it issues to other federal agencies to direct them to utilize their authorities and the resources granted to them under federal law in support of direct assistance to state, local, tribal, and territorial governments. Mission assignments are authorized by the Stafford Act, and agencies may fulfill these assignments through federal contracts. FEMA made 1,515 mission assignments for the 2017 hurricanes and California wildfires, and total obligations for these mission assignments were more than $7.8 billion as of January 2018, according to FEMA. See figure 2 for a depiction of the mission assignment process under a notional scenario of removing derelict marine vessels—boats and ships damaged during a hurricane and that are determined to be inoperable. The National Response Framework states that when an Emergency Support Function is activated in response to an incident, the primary agency for that emergency support function is responsible for executing contracts and procuring goods and services as needed, among other things. For example, DOD and USACE are the coordinators for Emergency Support Function 3—public works and engineering—and as part of this role, these agencies are responsible for emergency contracting support for lifesaving and life-sustaining services. As such, during the 2017 disasters, USACE obligated funds on contracts in support of its assigned mission of public works and engineering by restoring the electrical grid in Puerto Rico following Hurricane Maria and removing debris following the California wildfires. In its role as the lead coordinator of federal disaster response efforts across federal agencies, FEMA’s contracting workforce plays a key role in post-disaster contracts. FEMA’s contracting efforts are supported by its contracting workforce within FEMA’s Office of the Chief Procurement Officer (OCPO). In our prior work, we found that FEMA’s contracting workforce had grown significantly since Hurricane Katrina, but the agency struggled with attrition at times. While the majority of FEMA’s contracting workforce is located in headquarters, contracting officers are also located in each of FEMA’s 10 regional offices. See figure 3 for the location of FEMA’s 10 regional offices as well as the states and territories for which each one is responsible in terms of fulfilling National Response Framework duties. In addition, FEMA can deploy members of its Disaster Acquisition Response Team (DART), a group whose primary purpose is to support contract administration for disasters. There are two DART teams under FEMA’s Expeditionary branch, each comprised of contracting officers, contracting specialists, and quality assurance specialists. Figure 4 shows how FEMA’s contracting workforce is organized. In headquarters, FEMA’s contracting officers support a variety of functions, such as contracting for information technology needs, activities to prepare for and mitigate disasters, and disaster response. In the field, the disaster and field operations division manages contracting for disaster response efforts including: Logistics: delivering goods and services to support disaster survivors and communities, including life-sustaining commodities such as meals, blankets, and electricity generators, Response: coordinating capabilities needed immediately following a disaster, such as air and ground evacuation services and emergency sheltering, and Recovery: primarily supporting rebuilding efforts, including technical assistance programs. Regional contracting officers serve as the first response for contracting if a disaster occurs in their region. During a disaster, the regional offices can request additional contracting support from headquarters if needed. Contracting officers are typically located in each regional office’s mission support division, which provide essential administrative, financial, information technology, and acquisition support for the region. Each region is headed by a Regional Administrator who reports directly to the head of FEMA, the FEMA Administrator. In response to a 2009 DHS Inspector General Report, FEMA created a formal agreement to establish a new role for FEMA’s OCPO to oversee regional contracting staff. The Inspector General report found that regional contracting officers only reported to their respective supervisor in the region—who usually are not contracting officers—with no formal link to FEMA’s OCPO. The Inspector General recommended that only contracting officials should manage the technical performance of contracting officers. The report stated that having the contracting officer’s performance and career advancement controlled by someone who is not a contracting professional was an internal control risk and created a potential conflict-of-interest situation for the contracting officer. A subsequent 2011 agreement between the regions and headquarters states that a FEMA OCPO official will be the contracting officers’ performance reviewer and that the regional supervisors will continue to manage regional contracting officials’ day-to-day activities. As a result, regional contracting officers have a dual reporting chain to both FEMA OCPO in headquarters and to their supervisor within the region. In September 2015, we identified challenges with how the agreement was being implemented, particularly in that it heightened the potential for an environment of competing interests for the regional contracting officers. Specifically, we found that being physically located in a regional office where their regional supervisor is not a contracting professional gave contracting officers less standing to resist requests to perform duties outside of a contracting officer’s responsibilities or to resist pressure from program officials to make certain decisions. Further, we found that FEMA had not updated its 2011 agreement, even though the agreement states that FEMA OCPO and the regions will revisit it each year. We recommended that the FEMA Administrator direct FEMA OCPO and the regional administrators to revisit the 2011 agreement to, among other things, add details about the extent of operational control headquarters and regional supervisors should exercise to minimize potential competing interests experienced by regional contracting officers, and further detail headquarters and regional supervisors’ roles and responsibilities for managing regional contracting officers to improve coordination and communication. We also recommended, and FEMA agreed, that it establish a plan to review this agreement on an annual basis. As of January 2019, FEMA had not implemented these recommendations. After a major disaster is declared, FEMA establishes a joint field office, a temporary office through which it coordinates disaster response and recovery efforts with state and local governments and organizations. Once the need for disaster response and recovery ends and a joint field office is closed, the contracts supporting the disaster are returned to the cognizant regional contracting office. Congress enacted the Post-Katrina Emergency Management Reform Act of 2006 (PKEMRA) after shortcomings were identified in preparation for and response to Hurricane Katrina—one of the largest and most destructive natural disasters in U.S. history, which hit the Gulf Coast in 2005. PKEMRA included several provisions related to contracting, including: Contracting preference for local vendors. PKEMRA amended the Stafford Act to provide a contracting preference for local vendors. Specifically, for contracts or agreements with private entities, the provisions of the act state, in part: in general, for major disaster assistance activities, agencies shall provide a preference, to the extent feasible and practicable, to organizations, firms, and individuals residing or doing business primarily in the area affected by the major disaster or emergency; they may be set aside for local vendors, which means that only vendors residing or primarily doing business in the declared disaster area are allowed to compete for an award; those not awarded to local vendors shall be justified in writing in the contract file. After the enactment of PKEMRA, changes were made to the FAR to implement provisions regarding the award of set-aside contracts to local vendors. Figure 5 displays the steps a contracting officer must take to implement the preference for awarding post-disaster contracts to a local vendor based on related laws and regulation. Use of noncompetitive contracts using the urgency exception. Agencies are generally required to use full and open competition— achieved when all responsible sources are permitted to compete— when awarding contracts. The Competition in Contracting Act of 1984 recognizes that full and open competition is not feasible in all circumstances and authorizes contracting without full and open competition under certain conditions, such as in cases with an unusual and compelling urgency and the government would be seriously injured unless the agency is permitted to limit the number of sources from which it solicits offers (“urgency exception”). When DHS awards disaster contracts non-competitively based on the urgency exception, PKEMRA, as implemented in the Homeland Security Acquisition Regulation, restricts the period of performance to 150 days, unless the Head of Contracting Activity determines that exceptional circumstances apply. For other uses of the urgency exception, the FAR’s period of performance limit is generally no more than one year. Generally, exceptions to full and open competition must be supported by written justifications that contain sufficient facts and rationale to justify use of the specific exception. Depending on the proposed value of the contract, the justifications require review and approval at successively higher approval levels within the agency. Use of advance contracts. PKEMRA requires FEMA to establish advance contracts, which are typically needed to quickly provide life- sustaining goods and services, such as tarps and meals, in the immediate aftermath of disasters. While not required under PKEMRA, USACE also establishes advance contracts for supplies and services (e.g., generators for its temporary power mission) using its independent statutory authorities for emergency management, such as Section 5 of the Flood Control Act of 1941. In addition, DLA has an interagency agreement with FEMA to provide disaster commodities and services, including fuel. As such, DLA also has some advance contracts in place. In December 2018, we found that FEMA and USACE were the primary users of advance contracts. As of June 30, 2018, federal agencies obligated at least $5 billion through post-disaster contracts to support disaster response and recovery efforts after hurricanes Harvey, Irma, and Maria and the 2017 California wildfires. USACE and FEMA awarded over three quarters of the reported obligations on post-disaster contracts. However, data on post-disaster contracting are not comprehensive due to changes in the criteria for establishing and closing a NIA code and DHS’s inconsistent implementation of the criteria for closing codes. Specifically, we found DHS closed the codes for Hurricanes Harvey and Irma less than a year after the storms hit, compared to prior hurricanes when the NIA codes remained open for at least 5 years. As of June 30, 2018, federal agencies obligated at least $5 billion through post-disaster contracts in response to the three 2017 hurricanes and the California wildfires. Data on obligations for the California wildfires are limited to those contracts identified by two selected agencies in our review—FEMA and USACE—because no NIA code was established in FPDS-NG to track contracts specifically for the wildfire events at a government-wide level. The obligations on post-disaster contracts accounted for more than half of the $9.5 billion in contract obligations on contracts related to the three hurricanes and the 2017 California wildfires, with the remainder of the dollars obligated on advance contracts. See figure 6 for details on post-disaster and advance contract obligations by event. FEMA and USACE accounted for more than three quarters of the total obligations on post-disaster contracts for the three hurricanes. Because there was no NIA code for the 2017 California wildfires, we cannot identify government-wide obligations in FPDS-NG and, therefore, do not know which agencies had the highest contract obligations for the two wildfire events. Figure 7 provides details on known obligations on post-disaster contracts, by agency. About 63 percent of the obligations on post-disaster contracts, or $3.1 billion, was for services. See figure 8 for a breakdown of services and products by 2017 disaster. Five services across the 2017 disasters comprised nearly 80 percent of total obligations for services on post-disaster contracts. Contracts for repair and maintenance services comprised 38 percent of total obligations on post-disaster contracts for services, largely driven by the $1 billion obligated to support the power restoration effort in Puerto Rico following Hurricane Maria. Following Hurricanes Harvey and Irma, agencies primarily awarded post-disaster contracts for management support functions, such as call center services. See figure 9 for the top post- disaster contract services across the three hurricanes and the California wildfires. Of the $1.8 billion agencies obligated on goods through post-disaster contracts, 28 percent was on contracts for subsistence, such as food and water. Nearly 30 percent, or more than $530 million, of all obligations on post-disaster contracts for goods was on contracts for electric wire and power distribution equipment, almost all of which was for the power mission in Puerto Rico following Hurricane Maria. See Figure 10. Across all three hurricanes and the California wildfires, we found that the competition rate—the percentage of total obligations reported under competitive contracts—was about 75 percent for post-disaster contracts. This is an increase from the past since we previously found that the competition rate in the immediate aftermath of Hurricane Katrina was about 53 percent. Contracting for disaster relief and recovery efforts presents unique circumstances in which to solicit, award, and administer contracts. Under the FAR, agencies are generally required to use full and open competition when soliciting offers, with some exceptions. As discussed earlier, an agency may award a contract without full and open competition, for example when the need for goods and services is of such an unusual and compelling urgency that the federal government faces the risk of serious financial or other type of loss, unless the agency is permitted to limit the number of sources from which it solicits offers (“urgency exception”). When using the urgency exception, the FAR requires agencies to request offers from as many potential sources as practicable. Based on FPDS-NG data, we found that about 47 percent of obligations on post-disaster contracts were on contracts citing the urgency exception, with 63 percent of those obligations on contracts coded in FPDS-NG as using “limited competition.” Among our selected contracts, we also found that contracting officers implemented the urgency exception to seek offers from as many sources as possible in different ways. Of the 11 contracts in our sample that cited the urgency exception, five included abbreviated award time frames in the justification documentation. The full extent of disaster contracting—for both advance and post- disaster contracts—related to the 2017 disasters is unknown due to changes in the criteria for establishing and closing a NIA code in FPDS- NG and DHS’s inconsistent implementation of the updated criteria for closing codes. The NIA code data element in FPDS-NG was established following landfall of several major hurricanes in 2005 to enable consistent tracking of emergency or contingency-related contracting. Contracting officers select the applicable NIA code in FPDS-NG when entering related contract information into the system. Officials at GSA—the agency responsible for operating and maintaining FPDS-NG—stated there is little to no cost or administrative burden associated with establishing or maintaining a NIA code. Based on a memorandum of agreement (the agreement), GSA, DHS, and DOD are jointly responsible for determining when a NIA code should be established and closed. DHS delegated its role, on behalf of civilian agencies for disaster or emergency events, to its Office of the Chief Procurement Officer (DHS OCPO), and DOD, on behalf of military departments and defense agencies for contingency operations, delegated its role to the Defense Contract and Pricing office. The agreement outlines criteria DHS and DOD should consider in making determinations to establish and close a NIA code. We identified changes in the criteria for establishing and closing a NIA code between a June 2012 agreement and a June 2018 update that superseded and replaced it. According to DHS OCPO officials, the agencies updated the agreement to incorporate lessons learned (such as adding that events should have a procurement impact as criteria for establishing a NIA code), and because it had not been revisited in 6 years. See table 2 for criteria from the agreements, changes in 2018, and examples of potential implications of those changes that we identified related to emergency or disaster events. The June 8, 2012 agreement criteria applied to the establishment of NIA codes for the 2017 disasters, while the June 1, 2018 updates applied to determinations to close or extend the NIA codes after this date for the 2017 disasters. DHS OCPO requested that a NIA code be established for each of the 2017 major hurricanes (Harvey, Irma, and Maria). However, the codes for Harvey and Irma closed on June 30, 2018, less than a full year after the hurricanes hit. The code for Maria was scheduled to close on December 15, 2018, and in August 2018 we began raising questions about the planned or actual NIA code closures for the three 2017 hurricanes. Since December 2018, DHS OCPO provided two additional extensions for Maria, with the code now valid through June 15, 2019, about 21 months after that hurricane made landfall. In contrast, the NIA code for Hurricane Sandy, which made landfall in October 2012, remained open until December 2017, more than 5 years after the disaster. The NIA code for Hurricane Katrina, which made landfall in August 2005, remained open until August 2018, 13 years after the disaster. We observed that DHS OCPO requested NIA codes for Hurricanes Florence and Michael in 2018, although we did not review the data associated with those events. After we sent this report to the agencies for comment on February 15, 2019, the agencies allowed the codes for Florence and Michael to expire, on March 15, 2019 and April 12, 2019, respectively. DHS OCPO officials offered several different rationales to support their decision to close the NIA codes for the 2017 hurricanes and cited the changes to the criteria in the 2018 agreement for closing the codes. However, we found that these rationales were inconsistent with the criteria in the agreement, did not consider key user needs, and did not fully explain the decisions to close these codes. For example: DHS OCPO officials told us that NIA codes for disasters should be closed when agencies no longer use the special emergency procurement authority such that the procurement thresholds—such as the simplified acquisition and micro purchase thresholds—return to the general (non-emergency) procurement thresholds in the FAR. Further, when FEMA requested to keep the codes open, DHS OCPO questioned why agencies would need to continue tracking with a NIA code after the thresholds had returned to general procurement thresholds. DHS officials stated that the updated agreement put an emphasis on this criterion; however, our analysis indicated that was not consistent with 2018 agreement, which includes multiple criteria and is not limited to this factor. Further, the agreement does not provide additional emphasis on one criterion over others. DHS OCPO officials stated that the purpose of the NIA code is to track federal procurement related to response, not recovery efforts. However, both the 2012 and 2018 agreements specifically state that the NIA code is intended to track disaster response and recovery efforts. Further, according to the National Response Framework and National Disaster Recovery Framework, we found that there are no clear lines of distinction between the start and end date of these two efforts, and often these stages of the process overlap. Additionally, FEMA officials from the Recovery Support Function Leadership Group’s Program Management Office stated that they use the NIA code to track government-wide contracting related to recovery efforts. The Recovery Support Function Leadership Group, an interagency body chaired by FEMA, tasked the Program Management Office with providing accountability and transparency of projects and outcomes for the 2017 disasters, among other things. DHS OCPO officials pointed to the Digital Accountability and Transparency Act of 2014 as providing alternatives to FPDS-NG. The Digital Accountability and Transparency Act of 2014 required improvements in the quality of data on federal spending, including disaster spending, by making data more accessible and transparent, such as by improving the quality of data submitted by federal agencies to USASpending—an online tool that tracks federal grant, loan, contract, and other awards. However, we found that USASpending provided some information on contract obligations using disaster response and recovery funds but does not separate obligations by disaster event. Further, our prior work on the Digital Accountability and Transparency Act of 2014 has found limitations with the data agencies provide, notably the completeness and accuracy of data. Specifically, we found that agencies routinely provided award descriptions in an abbreviated way and lacked clarity needed to compare data across the federal government. Moreover, we found inconsistencies in agencies’ ability to track contract actions by disaster. While FEMA has the capacity to provide contract information by disaster through a centralized contract tracking tool, USACE officials stated that they use a decentralized tracking process where they reach out to the districts and centers to identify and track disaster contracts without a NIA code. Prior to the June 30, 2018 decision to close the NIA codes for Harvey and Irma, DHS OCPO officials told us they found that the number of actions FEMA was making for these events had decreased. Our analysis of the NIA codes showed that components across ten departments, including within DHS and DOD, were executing contracts related to Harvey and Irma in June 2018. When we requested supporting documentation and analysis, DHS OCPO officials provided some correspondence with FEMA but did not provide government-wide data analysis to identify what other agencies were awarding and executing contracts related to these events. DHS OCPO officials stated they also sought input from DOD through the Defense Pricing and Contracting Office on whether to keep the codes open. According to DHS officials, DOD deferred to DHS on the decision because DHS was responsible for establishing the codes. Further, DOD officials did not provide evidence that would allow us to determine whether they assessed which defense components were executing contracts related to these events or sought the input of the components that were doing so, such as USACE and the Navy. FPDS-NG—a public, government-wide database of federal procurements—offers a resource the federal government can use to create recurring and special reports for key users, such as the President, Congress, executive agencies, and the general public. The NIA code in FPDS-NG provides consistent tracking and government-wide visibility into contracting related to disaster events through a publicly available database. Without clear criteria for establishing and closing NIA codes that consider the needs of data providers and users, such as FEMA, and the high visibility of the event being tracked and a mechanism to ensure consistent implementation of these criteria, insight into disaster contracting may be limited. Additionally, federal internal control standards state that management should use quality information, communicate quality information internally, and communicate quality information externally to achieve objectives. Management should accomplish this by considering appropriate methods for communicating externally, such as to the President, Congress, and the general public. As noted above, the 2018 agreement no longer includes the 2012 criteria that a NIA code can be closed if the NIA no longer has high visibility and there is no other interest in the NIA code. In our discussions with officials, DHS OCPO could not provide a rationale for these changes and the rationale is also not included in the updated agreement. Prior to DHS OCPO’s decision to close the codes for Hurricanes Harvey and Irma, a senior FEMA procurement official requested that they remain open, in part because of the high visibility of these events. As such, this official stated that there will be continued interest in the 2017 hurricanes including inquiries from Congress, which will require agency officials to pull data for interested parties, as that data can no longer be tracked and identified through public databases, such as FPDS-NG and USASpending. DHS OCPO officials denied FEMA’s request, pointing to the criteria in the 2018 agreement, which does not include consideration of the visibility of the event or key user needs. As the federal agency responsible for coordinating disaster response and recovery, FEMA is well positioned to understand the level of national and political interest in tracking procurement information for a disaster or emergency event. Yet, it is unclear why neither the 2012 nor the updated 2018 agreements included a role for or consideration of key users, such as FEMA and Congress. Further, as noted above, FEMA program officials expressed concern over closing the Harvey and Irma codes because they had planned to use the codes to assess recovery efforts for the 2017 disasters. As we have previously reported, it can take years to fully account for federal contract obligations related to response and recovery after a hurricane. Once a NIA code is closed, there is no publicly available, government-wide system to track contract obligations for specific events. Moreover, DHS OCPO officials were unable to provide data analysis conducted using available data from prior events to determine historical patterns in federal contracting obligations for disasters prior to closing the codes for Hurricanes Harvey and Irma. Figure 11 illustrates the lack of insight we have into disaster contracting activities related to the 2017 hurricanes, in comparison to what we know about prior storms with high federal procurement obligations. Further, using the description field in FPDS-NG, we found that between July 1 and September 30, 2018, after the NIA codes were closed, agencies obligated at least $136 million on contracts for Hurricane Harvey and $123 million on contracts for Hurricane Irma. While this provides some important insights regarding the continued contracting activity related to these hurricanes, the description field in FPDS-NG cannot be relied on to provide a full picture. Some agencies may include event- specific information in the description field; however, we found that, for the 2017 hurricanes, about 65 percent of contract obligations linked to a NIA code did not include event-specific information in the description. Without reopening the NIA codes for Hurricanes Harvey and Irma, and, to the extent practicable, retroactively populating the NIA codes for contract actions supporting response and recovery for these hurricanes during the period they were closed, decision makers are missing important information to understand the procurement impact of these disasters. Retroactively entering NIA code information is not unprecedented. For example, based on our analysis, the NIA codes for the 2005 hurricanes were established in October 2005, and contracting officers retroactively entered data for contracts related to these events which occurred as early as August of that year to enable full insight into contracting for these disasters. Based on the contracts we reviewed and officials we spoke with responsible for the planning of these contracts, we found that agencies experienced challenges planning for post-disaster contracts, especially when it came to contracting with local vendors. Additionally, FEMA also experienced challenges with requirements development—in that program officials did not always provide well-defined or sufficiently specific requirements for post-disaster contracts. However, FEMA has taken steps to address its challenges with requirements development, but it is too soon to tell the extent to which these steps will address the challenges we identified. Steps to Implement Local Vendor Preference, as Outlined in the Post-Katrina Emergency Management Reform Act and the Federal Acquisition Regulation (FAR) Step 1: Identify the set-aside area in accordance with FAR § 26.202-1—Local Area Set-Aside and § 6.208—Set-asides for Local Firms During a Major Disaster or Emergency Step 2: Conduct market research to determine whether there are qualified vendors in the set-aside area. Step 3: Issue a solicitation that provides for local vendor preference to the extent feasible and practicable either through the use of a set-aside or an evaluation preference. Step 4: Review offers based on evaluation criteria in the solicitation. If using a local area set-aside, review information from potential vendors to determine if they reside or primarily do business in the set-aside area in accordance with FAR § 52.226-3—Disaster or Emergency Area Representation. Step 5: Award contract to qualified vendor. If the vendor selected is not local or no qualified vendors are in the set-aside area, justify the decision in writing. determine that a vendor resides or primarily does business in the local justify in writing awards that they made to vendors outside the set- aside area. For the contracts we reviewed, contracting officials at FEMA correctly identified the local area for six set-aside contracts across the three hurricanes, and USACE correctly identified the local area for two set- aside contracts in Puerto Rico. However, based on the interviews we conducted during our review, USACE contracting officials were not consistently aware of the specific regulation for doing so and did not correctly identify the local area for two other USACE contracts awarded in support of the California wildfires. When awarding a local area set-aside or using an evaluation preference for local vendors, FAR § 26.202-1 states that a major disaster area can span several counties in several contiguous states, but need not include all the counties in the disaster area, and cannot extend beyond the counties designated in a Presidential disaster declaration. Figure 12 provides an example of a disaster declaration that depicts which counties could be included in the set-aside area. For all six local area set-aside FEMA contracts—awarded in response to Hurricanes Harvey, Irma, and Maria—we reviewed, FEMA officials defined the local area in accordance with regulation. This was an improvement from what we previously found. Specifically, in 2015, we found that FEMA contracting officers were confused about the definition of the set-aside area and recommended that the FEMA Administrator provide new or updated guidance to ensure all contracting officers are aware of requirements concerning contracting with local vendors, among other things. DHS concurred, and FEMA updated its annual disaster contracting webinar training to reiterate the requirement and clarify how to determine the geographic area using the disaster declaration. For the two local area set-aside USACE contracts awarded, officials responsible for those contracts told us that when awarding these contracts, they were not aware of the regulatory requirements for defining the geographic area of the local area set-aside. However, as the presidential disaster declaration for Hurricane Maria included the entire island of Puerto Rico, the local set-aside area covered the entire island. As a result, officials met the set-aside area requirement in accordance with regulation, even though they noted that they were not familiar with the requirement at the time. Officials told us they became aware of the regulation after conducting research pursuant to a protest related to the use of local vendor preference. We also reviewed two other USACE contracts that were used to support the debris removal mission following the California wildfires. Contracting officials stated that they conducted market research on the availability of local contractors, and they ultimately did not find qualified local firms. However, based on a review of contract file documentation, we found that USACE officials did not identify the local area in accordance with regulation for these contracts. Instead they used congressional districts that overlapped with impacted areas to identify the local area. We found that the areas USACE identified included areas outside of the geographic area defined by the presidential disaster declaration for the California wildfires. Contracting officials responsible for these debris removal contracts stated they were not aware of a policy or regulation for how to identify the geographic area for a local area set-aside, but that their office had internally determined the use of congressional districts impacted by a disaster to be the preferred method. A senior USACE official told us that there is no agency supplemental guidance or related training regarding the use of local vendor preference for contracts supporting disaster recovery and response, only that they expect USACE contracting officials to comply with the FAR. Without additional guidance or related training, contracting officers may be unaware of how to define the geographic area for a local area-set aside in accordance with regulation and may miss opportunities to support improving the local economies of disaster impacted areas by giving preference in awarding contracts to local vendors to the extent feasible and practicable, per the Stafford Act. Despite contracting officers having a high degree of discretion to determine that an offeror qualifies as a “local firm,”—that is, a firm that resides or primarily does business in the designated set-aside area— contracting and legal officials at both FEMA and USACE told us they were unsure what or how much information is sufficient to determine that an offeror qualifies as a local firm under the FAR. After contracting officials have identified the geographic boundaries of the local “major disaster or emergency area” and included required clauses in the solicitation and issued it as a local area set-aside, offerors must represent in their offer that they reside or primarily do business in the set-aside area. Specifically, FAR § 52.226-3(c) outlines two criteria a contracting officer should use to determine whether an offeror is to be considered “local.” If an offeror does not meet these first two criteria, FAR § 52.226- 3(d) provides eight additional criteria contracting officers may consider to make this determination (see sidebar). under FAR § 52.226-3(c) An offeror is considered to reside or primarily do business in the set-aside area if, during the last 12 months, 1) the offeror had its main operating office in the area; and 2) that office generated at least half of the offeror’s gross revenues and employed at least half of the offeror’s permanent employees. If the offeror does not meet the criteria under FAR § 52.226-3(c) consider other factors listed in FAR § 52.226-3(d) including: 1) Physical location(s) of the offeror’s permanent office(s) and date any office in the set-aside area(s) was established; 2) Current state licenses; 3) Record of past work in the set-aside area(s); 4) Contractual history the offeror has had with subcontractors and/or suppliers in the set-aside area; 5) Percentage of the offeror’s gross revenues attributable to work performed in the set-aside area; 6) Number of permanent employees the offeror employs in the set-aside area; 7) Membership in local and state organizations in the set-aside area; and 8) Other evidence that establishes the offeror resides or primarily does business in the set-aside area. Of the eight local area set-aside contracts we reviewed, two were impacted by bid protests—which is when an offeror challenges an award or proposed award of a contract or a solicitation—related to the FAR criteria for determining that an offeror qualifies as a local firm. The following protests show examples of the criteria agencies reviewed to determine whether a firm resided or primarily did business in a set-aside area. FEMA contract for food: In a protest of the award of a contract for food on the basis that FEMA improperly determined the protester failed to meet the requirements in FAR§ 52.226-3(d), the protester stated it met the requirements of FAR § 52.226-3(d), because it had (1) done past work in the set-aside area; (2) maintained a warehouse in the set-aside area; (3) maintained a contractual history with subcontractors in the set-aside area; and (4) maintained a current state license and filed a franchise tax return. FEMA denied, the protest stating that the evidence the protester provided was not sufficient to qualify as “residing or primarily doing business” in the local area. USACE Blue Roof contract: To support the Blue Roof mission— which provides temporary blue plastic roofs for disaster-impacted residences to prevent further damage and allow homeowners to arrange for permanent repairs—following Hurricane Maria in Puerto Rico, contracting officials awarded two post-disaster contracts. In a protest of the awards filed with GAO, the protestor argued, among other things, that one of the awardees did not meet local firm criteria in FAR § 52.226-3(c). USACE had assessed information on the awardee, including its local business address in the System of Award Management and other documentation of prior work in Puerto Rico, prior to award and determined that the awardee met Stafford Act criteria for award to a local vendor. USACE officials told us that, after the protest was filed, they further assessed information on the awardee in question and determined that it was a subsidiary of a larger national company. According to USACE officials, in order to quickly continue work on the Blue Roof mission, which had increased in scale, USACE negotiated pricing with the protestor while the protest was ongoing and made a third award under the solicitation. The protestor withdrew the protest. Contracting and legal officials at FEMA and USACE described difficulty in determining whether a vendor resides or primarily does business in the local set-aside area and cited a lack of clarity and different interpretations of the FAR. Based on conversations with the agencies’ legal officials, we found that USACE and FEMA applied the eight criteria in FAR § 52.226- 3(d) differently. FEMA officials told us that in determining whether a firm is local, if the first two criteria are not met, they evaluate an offeror’s information related to the eight criteria in FAR §52.226-3(d) to see if the first two criteria can be met with this additional information. They added that they look to see if the firm’s main operating office is in the set-aside area and if that office generated at least half of the offeror’s gross revenues and employed at least half of its permanent employees, but stated that the eight criteria do not need to be met within the last 12 months. Alternatively, USACE officials told us that in determining if a firm is local, if the first two criteria are not met, they evaluate an offeror’s information against the eight criteria in FAR § 52.226-3(d) independent of the two criteria described under FAR § 52.226-3(c). Legal officials at both USACE and FEMA stated that the FAR criteria should be clarified. Further, agencies’ varying application of the criteria increases the risk that an offeror may be considered local by some agencies, but not others. FEMA legal officials told us that contracting officers have been instructed to ask offerors for information on a local firm status in post-disaster solicitations. USACE legal officials explained that it is not always clear what specific information or documents provide the necessary information to meet the criteria under FAR § 52.226-3. For example, it may not be clear what documentation adequately demonstrates the number of permanent employees the offeror employs in the set-aside area, or the percentage of the offeror’s gross revenue earned in the set-aside area. The Office of Federal Procurement Policy provides overall direction of government-wide procurement policies, regulations, procedures, and forms for executive agencies. However, Office of Federal Procurement Policy staff told us that they have not provided additional guidance or clarification related to this FAR clause. Federal internal control standards state that management should use quality information to achieve objectives. Management should accomplish this by identifying information requirements, collecting relevant data from reliable sources, and processing data into quality information to be communicated internally and externally. Without clarifying guidance, contracting and legal officials will likely continue to have varying interpretations on how to implement the FAR criteria for determining that an offeror qualifies as a local firm. When contracts for major disaster or emergency assistance activities are not awarded to local vendors, the Stafford Act, as implemented in the FAR, requires that the decision be justified in writing in the contract file. Contracting officers at three of the four agencies included in our review— FEMA, USACE, and the Coast Guard—did not consistently justify in writing the award of selected contracts to non-local vendors. Specifically, 12 of the 14 contracts in our review that were not awarded to local vendors did not contain the required written justifications in the files (see table 3). DLA included written justifications for the use of non-local vendors, as required. After the 2017 disasters, FEMA identified the absence of justifications for the use of non-local vendors as an area for improvement. According to FEMA officials, they subsequently released guidance and a pre-solicitation memorandum to assist contracting officers in identifying what documentation related to local vendor preference is required in a contract file. FEMA officials told us they expect these steps will improve compliance with the requirement to document the justification for using non-local vendors going forward. While the Coast Guard provided a memorandum ahead of the 2017 disaster response that addressed the use of local vendors, it did not reference the requirement under the Stafford Act, as implemented in the FAR, to justify in writing the use of non-local vendors. A senior USACE official told us the agency had not issued any guidance to address requirements for contracting with local vendors and was not aware of any guidance issued at the department level. USACE legal officials noted the lack of written justification may be due to abbreviated timeframes under which post-disaster contracts are awarded. However, we found that USACE contracts included consolidated justification documents outlining rationales for the use of limited competition or abbreviated solicitation timeframes, but they did not include justifications for the use of non-local vendors. Without additional guidance or tools, contracting officials may not be aware that they are required to include written justifications for the use of non-local vendors in contract files, and federal agencies are at risk of not complying with the Stafford Act requirement to do so. Contracting officers responsible for the FEMA contracts we selected and senior procurement officials stated that during disaster response they received post-disaster requirements packages that were lacking in technical specificity or were otherwise deficient, but FEMA has begun to address this challenge. Program officials communicate contract requirements to contracting officers through requirements documents that include, among other items, a statement of work describing goods or services to be provided by an offeror, market research, and an independent government cost estimate. Contracting officials explained that when they received deficient documents, they had to conduct additional work to refine the requirements before soliciting for the contract—such as spending time assisting program officials to develop the required documentation. This additional work may add time to already tight award time frames for post-disaster contracts. When compared to large dollar value acquisitions, post-disaster contracts are awarded on significantly abbreviated time frames. For example, among the 12 FEMA contracts we assessed, time frames between the submission of a resource request and award date ranged from 1-26 days. This is faster than suggested; FEMA’s Procurement Administrative Lead Time guidance suggests preparation time frames of 60-300 days for new procurements based on the nature and value of an action. We found instances where FEMA program offices provided inaccurate or untimely estimates of the quantities of goods or services needed for the contracts we reviewed, in some cases leading to additional time and efforts spent to meet the need. For example: After Hurricane Harvey, FEMA awarded contracts to supply a food bank. Officials told us the initial requirement from the food bank through the program office to the contracting officer was expressed in terms of “truck loads” but did not specify, for example, how large the truck should be, or how many pallets should be loaded per truck. FEMA ultimately awarded three contracts to meet the post-disaster need—the first contract had a period of performance of 4 days and, according to FEMA officials, was intended to meet initial needs for food while the program and contracting officials determined the full scope of the requirement. The second contract—a $37 million contract with a period of performance of 52 days—was intended to fulfill the remaining requirement. However, due to miscommunication of the requirement as documented in the contract files and according to a program official responsible for the contracts, FEMA needed to award a third contract for an additional 2.5 months and $23 million to meet the need. Due to the value of the contracts, FEMA deemed that the subsequent contract required a new solicitation and award, rather than a modification to the existing contracts, thereby increasing the time and effort required of procurement personnel to meet the post- disaster need for food. In response to Hurricane Maria, FEMA awarded four post-disaster contracts for self-help tarps—which are used to cover small areas of roof damage. Of these contracts, two were terminated for convenience, both of which were included in our sample. The terminations were due in part to a national supply shortage. FEMA officials told us that under one of the contracts included in our review, at the request of the Commonwealth of Puerto Rico through program officials, FEMA ordered 500,000 40-foot-by-40-foot tarps, which differ from the size of the tarps normally ordered and stocked by the agency. Due to the supply shortage, FEMA received none, but officials noted that the impact of not receiving the tarps was minimal because the agency had initially overestimated the total number of tarps needed. Since the 2017 disasters, FEMA has started to address the issues with requirements development. Specifically, in 2018, FEMA officials told us the agency used portfolio managers in the field to assist with developing requirements for disaster response. Previously, in 2017, portfolio managers told us they supported the National Response Coordination Center but did not deploy to the disasters. Organizationally housed within FEMA’s OCPO, portfolio managers we spoke with told us they provide general templates for and guidance on acquisition documents for program officials to use and are primarily responsible for supporting steady-state acquisitions included in FEMA’s Master Acquisition Planning Schedule. Additionally, portfolio managers told us they provide informal, optional, “brown bag” training sessions for program officials. FEMA OCPO officials told us that they receive more requests for portfolio manager assistance than they can support, as the portfolio management section only maintains up to six staff. FEMA OCPO officials noted, however, that the agency expected to award an acquisition support contract to expand portfolio management capabilities. While the use of portfolio managers is an important step, it is too soon to tell the extent to which the use of portfolio managers in the field will address FEMA’s challenges with requirements development for post-disaster contracts. The agencies we reviewed each have a process for identifying lessons learned following a disaster, and we found they used these processes for the 2017 disasters. While agencies have identified actions they plan to take in response to the lessons they found following the 2017 disasters, additional challenges remain. Specifically, the agencies in our review encountered interagency contracting coordination challenges during the mission assignment process. Further, FEMA identified disaster contracting workforce shortages. FEMA, USACE, Coast Guard, and DLA each have processes for identifying lessons learned within their agencies through after-action reports. These reports identify lessons learned and areas for improvement and may be completed following a training exercise or a real-world event. Through these processes, agencies identified lessons learned during the 2017 disasters. Table 4 lays out each agency’s practice or requirement for identifying lessons learned and key findings— those related to contracting and mission assignments during the 2017 disasters. FEMA has also taken steps to identify interagency lessons learned by leading the Emergency Support Function Leadership Group and developing a mechanism to regularly report to the Secretary of Homeland Security. This group consists of the national emergency support function coordinators from each of the functions (such as transportation and firefighting), along with FEMA headquarters and regional officials. This body of senior officials is tasked with coordinating responsibilities and resolving operational and preparedness issues relating to interagency response activities in support of the National Response Framework. According to its charter, the group is required to carry out post-incident and after-exercise critiques, and perform substantive reviews of after- action reports, with recommendations for federal interagency partners to address shortfalls. Following the 2017 disasters, in May 2018, the Emergency Support Function Leadership Group identified 19 corrective actions, including improvements to mission assignment submission documents. Federal internal control standards state that communicating internally is key to an entity achieving its objectives. Further, as part of this communication, management should receive quality information about the entity’s operational processes that flows up the reporting lines from personnel to help management achieve the entity’s objectives. FEMA officials stated that there are processes, such as data calls, in place to solicit input from agencies. However, we noted, and FEMA officials agreed, that there is no formal reporting mechanism to the leadership group, and that it is up to the representatives from these agencies to raise issues for the group’s consideration. However, this is not consistently happening within the Coast Guard because it does not have a formal reporting process for soliciting input from officials directly involved in responding to these disasters to share with the Emergency Support Function Leadership Group. Coast Guard officials stated that they actively collect input during and immediately after an event or incident response, and that Coast Guard responders are able to provide input and issues through their chain of command at any time, but there is no formal process for reporting to the interagency group. During the course of our review, USACE officials did not provide information that indicated they had a formal reporting process for soliciting input from officials directly involved in responding to these disasters to share with the Emergency Support Function Leadership Group. Some senior level USACE officials responsible for the agency’s public works and engineering mission stated that they were unsure of the process for raising concerns to the Emergency Support Function Leadership Group and that officials were sometimes hesitant to raise issues to the group. However, in response to our draft report, USACE stated it has a formal process called the USACE Remedial Action Program for soliciting input from officials directly involved in the agency’s response and recovery following a disaster. As discussed later, we will follow up with USACE as part of our recommendation follow-up process. While Emergency Support Function Leadership Group member agencies may raise issues to the group, additional opportunities exist within these agencies to enhance the lines of communication from responders to the senior officials that comprise this leadership group. For example, some of the interagency challenges we identified in our review were not identified by this group, such as challenges in managing state and local expectations of federal response, which is discussed in more detail below. Also, USACE officials told us that some of the interagency challenges they cited following the 2017 disasters related to the mission assignment process were still present during the response to Hurricane Florence, which struck the Carolina coast in 2018. Formal processes for Emergency Support Function agencies—such as the Coast Guard and USACE—to solicit and share input from officials directly involved in the response and recovery efforts would help ensure the Emergency Support Function Leadership Group does not miss additional opportunities to improve disaster response. As the federal disaster coordinator, FEMA obtains requirements from states and localities and tasks the appropriate federal agencies, based on their emergency support function, through the mission assignment process. The agency assigned to a specific mission is then responsible for fulfilling those requirements, and may use contracts to do so. For example, the Coast Guard fulfills its pollution mitigation mission by executing contracts, and utilizes its own workforce to execute its search and rescue mission. USACE officials we spoke with raised concerns about the mission assignment process for the debris removal and power restoration missions related to the 2017 disasters. Specifically, USACE officials noted concerns about coordination between state, local, and federal partners for the contracts we reviewed. USACE debris removal mission: In December 2018, we found that USACE and California state officials reported different expectations related to USACE’s debris removal contracts following the wildfires, such as what structures would be removed from private properties and what levels of soil contamination would be acceptable. USACE removed more than 2.2 million tons of debris from more than 4,500 properties following the northern California wildfires. Due to the size and scope of this mission, USACE used both its advance contracts and additional post-disaster contracts for debris removal. According to USACE officials, they relied on FEMA, the lead for coordinating federal disaster response, to manage communication with states and localities and to identify and manage expectations about the scope of work to be performed using their debris removal contracts. USACE officials cited challenges with communicating to state and local officials what the agency was permitted to do under its mission assignment. For example, USACE officials told us that local officials believed that USACE would replace soil removed as part of its debris removal efforts; however, this was not part of the mission assignment from FEMA. Further, officials added that different environmental standards created confusion regarding what types of soil should be removed. For example, Napa County officials said that USACE’s mission required them to ensure that no contaminated soil remained on the properties, without regard for the naturally occurring levels of arsenic and asbestos in Napa area soil. As a result, Napa County officials said that USACE removed more soil than was necessary. However, following discussions with Napa County officials, USACE obtained site-specific samples from some properties to understand pre-existing contamination levels prior to further debris removal. USACE power restoration mission: Hurricane Maria destroyed much of the electricity grid in Puerto Rico, leaving millions without power and resulting in the longest blackout in U.S. history. To restore power to its 3.3 million people, Puerto Rico requested federal assistance with its power grid. To coordinate this effort across all stakeholders, FEMA established a unified command structure—which included the federal agencies, the Puerto Rican government and its contractors, and utility companies providing mutual assistance. According to FEMA officials, this structure allowed stakeholders to target priority work, ensure crews could access the work areas, and identify the needed materials. USACE officials stated that they received direction from FEMA and had limited direct interaction with Puerto Rican officials. However, despite this structure, USACE officials noted that changing direction from FEMA contributed to inefficiencies in contract management. For example, the scope of power restoration work Puerto Rico was requesting changed several times—such as from transmission work to distribution. These changes necessitated adjustments in contractor workforce configurations and contributed to idle time and equipment, according to officials. FEMA’s mission assignment policy designates a Federal Disaster Recovery Coordinator as the person responsible for facilitating disaster recovery coordination and collaboration among federal, state, local, tribal, and territorial governments; the private sector; and voluntary, faith-based, and community organizations. However, neither FEMA’s mission assignment policy nor its guide—which provides guidance on how to open and close mission assignments—provide additional details on how that coordination is to take place. Further, FEMA’s Response Directorate—the office that oversees the mission assignment process— was unable to identify at what level this coordination should occur. USACE and Coast Guard officials also noted that the mission assignment process does not account for other contracting considerations, such as demobilization, which occurs when contractor personnel leave the work site and return to their headquarters. According to USACE and Coast Guard officials, demobilization is required to be completed by the end of the contract’s period of performance; therefore, contracting officers need to know when the mission will end so that they can build adequate time for demobilization into the contract. Coast Guard pollution mitigation mission: Under this mission, the Coast Guard is responsible for responding to threats to public health, welfare, or the environment caused by actual or potential oil and hazardous materials incidents. Coast Guard officials told us that mission timing and the length of requirements were not communicated by FEMA in a timely manner. They told us that they contacted FEMA multiple times to determine if its mission assignment would be continued, but they did not receive an answer until shortly before the end of a contract’s period of performance. As a result, officials told us they were unsure whether they would need to demobilize contractors before completing the work, which created uncertainty about the availability of subcontractors. A FEMA Response Directorate official stated that these issues are coordination and planning concerns that should be worked out in advance between FEMA and the mission assigned agency. Ultimately, FEMA extended the Coast Guard’s mission assignment for pollution mitigation following Hurricane Maria four times. Figure 13 depicts the number of times Coast Guard’s mission was extended by FEMA. USACE power restoration mission: USACE officials cited similar challenges during the power restoration mission in Puerto Rico following Hurricane Maria. For example, USACE officials stated they typically begin planning for demobilization as soon as a mission begins. However, in this instance, officials did not know the eventual end date in order to plan for demobilization activities. Officials added that demobilization may take about 30 days, but USACE cannot extend contracts or obligate funds without a FEMA mission assignment extension. For example, if the mission assignment is scheduled to end on June 30, contracting officials would need to direct the contractor to begin demobilization as early as May 31. Officials stated that a mission assignment extension or option period of 30 days beyond the anticipated mission end date would facilitate demobilization and reduce any undue burden or concern around demobilization efforts. FEMA’s mission assignment guide does not provide a process or mechanism to follow up on the status of a mission once it is assigned. A FEMA official stated that the Response Directorate is responsible for informing their leadership of expiring mission assignments and contacting the mission-assigned agency to make them aware of the impending expiration, but that there is no standard time frame for doing so. Further, the official stated that, in some cases, FEMA may be performing this work a few days before a mission is set to expire. However, officials at USACE and Coast Guard told us they are dependent upon FEMA to reissue, clarify, or extend mission assignments. Further, the FEMA official told us that contracting considerations—such as the time needed for a contractor to mobilize and demobilize—are not necessarily built into the period of performance of a mission assignment. FEMA identified issues related to the mission assignment process, both during the 2017 disasters and following Hurricane Sandy in 2012. For example, in its 2013 Hurricane Sandy After-Action Report, FEMA found that the mission assignment process was not optimally set up to quickly surge resources to the field in a large-scale incident. To address these challenges, FEMA convened an Executive Steering Committee to update the mission assignment process, among other actions, and subsequently updated its mission assignment policy in 2015. Following the 2017 disasters, the Emergency Support Function Leadership Group identified challenges related to the mission assignment process and made recommendations to: (1) ensure response officials are properly trained on their department or agency’s statutory authorities and FEMA’s mission assignment process, and (2) develop specific recommendations to the FEMA Response Directorate on ways to reform mission assignment submission documents. These recommendations have been assigned to working groups within the Emergency Support Function Leadership Group, which plans to track the status until they are implemented. While these actions may improve the mission assignment process, they do not specifically address the issues we identified related to coordination and contracting. While the emergency support functions lay out agencies’ general responsibilities, agencies are dependent upon FEMA’s mission assignment process to further define how to perform their roles. Federal internal control standards state that management should implement control activities through its policies. These control activities include periodically reviewing policies, procedures, and related control activities for continued relevance and effectiveness in achieving the entity’s objectives or addressing related risks. Further, these standards also state that communicating internally and externally are key to achieving an entity’s objectives. As part of its internal controls, entities should evaluate the methods to communicate quality information throughout and outside of the entity on a timely basis. While FEMA revised its mission assignment guide in 2017, it still does not require FEMA to lay out coordination responsibilities in detail when assigning a mission. Without a mission assignment policy and related guidance that better incorporates contracting considerations, such as demobilization, and requires FEMA to clearly define coordination responsibilities with federal, state, and local stakeholders during the mission assignment process, federal agencies may encounter challenges fulfilling their assigned missions and may not fulfill their disaster response and recovery missions efficiently. During the 2017 disasters, FEMA leveraged contracting staff from its regions, headquarters, and the DART teams—FEMA’s deployable contracting workforce. However, FEMA’s after-action report and officials we spoke with cited workforce shortages as a continuing challenge for disaster response and recovery. For example, officials we spoke with in several regional offices stated that there are only one to three contracting officers per region. Further, information provided by FEMA OCPO shows that eight of FEMA’s 10 regional offices have only one permanent full- time contracting official. Some of FEMA’s regional offices have additional contracting staff through FEMA’s Cadre of On-Call Response/Recovery Employees, but this varies from region to region. Regional offices are responsible for managing post-disaster contracts, even if regional procurement staff were not involved in the initial award of those contracts, according to FEMA officials. As noted in table 4 above, FEMA’s after-action report recommended increasing contract support capacities; however, it did not provide a specific plan to do so. According to FEMA officials, the agency’s workforce needs have not been assessed since a FEMA workforce analysis pilot conducted in 2014. We have identified several key principles that strategic workforce planning should address, including: determining the critical skills and competencies that will be needed to achieve current and future programmatic results, and developing strategies that are tailored to address gaps in the number, deployment, and alignment of human capital approaches for enabling and sustaining the contributions of all critical skills and competencies. Further, in our review of FEMA’s 2014 analysis, we found that FEMA evaluated contracting workforce needs, but did not specifically consider contracting workforce needs in the regional offices or address DART employees. The analysis was based on 5 years of workload data and conducted at the task or activity level, such as performing market research prior to making a contract award. However, the analysis did not prioritize skills or mission needs, nor did it identify critical competencies. In September 2018, FEMA procurement officials told us that, based on the 2014 analysis, they planned to hire 57 additional contracting staff. Officials noted that FEMA’s general operation funding does not support these additional hires, thus the agency plans to hire these staff as Stafford Act employees for 2-year appointments using disaster funding. While this is an important step, it is unclear when these staff will be hired or how they will be allocated across FEMA OCPO. For example, as of July 2018, FEMA OCPO had 72 vacant positions, including key leadership positions and contracting specialists. Without assessing its current contracting workforce needs—including staffing levels, mission needs, and skill gaps—and developing a plan to address these gaps that includes time frames, FEMA will not know whether it has the appropriate number of contracting officials with the key skills needed to meet its mission and is not likely to be well-positioned to respond to future disasters. Contracting during a disaster can pose a unique set of challenges as officials face a significant amount of pressure to provide life-sustaining goods and services to survivors as quickly as possible. Given the scale and consecutive nature of the 2017 disasters, disaster contracts— particularly post-disaster contracts—played a key role in the response and recovery efforts. In these situations, it is important that the federal government be accountable for the contracting decisions it makes and the money it obligates, support the local economy and survivors as effectively as possible, and implement lessons learned before the next disaster strikes. Regarding accountability for the contracting decisions it makes and dollars obligated following disasters, without the ability to track disaster contracts using a NIA code in FPDS-NG, agencies, Congress, and the public lack full insight into post-disaster contracts. Providing clear criteria for establishing and closing the NIA code that accounts for the needs of users and consistently implementing these criteria will help ensure insight into high-visibility disaster events. Further, the ability to identify and track contracting dollars for disasters through a publicly available database, such as FPDS-NG, can reduce the burden on agencies to provide these data for interested parties, including Congress and other users, and offer a resource for historical data across major disasters. To help meet the needs of the local economy as effectively as possible, using a contracting preference for vendors in a disaster-affected area is an important component to early recovery efforts. Without guidance or training to ensure contracting officers are aware of the regulatory definition of the local area, agencies may miss opportunities to provide financial support to local vendors. Additionally, without clarifying how contracting officers determine whether offerors reside or primarily do business in a disaster area for the purposes of a local area set-aside, contract officials will remain uncertain on how to implement related FAR criteria. Similarly, guidance and tools to help ensure contracting officials are aware of the requirement to provide preference to the extent feasible and practicable to local vendors, including the need for written documentation on the use of non-local vendors for post-disaster contracts, will help ensure agencies comply with the requirement to do so. Taken together, these actions could enhance compliance with the Stafford Act provisions related to the award of contracts to local businesses in the disaster area, which could help jump-start the local economy. With regards to implementing lessons learned before the next disaster strikes, large scale disasters, like those that occurred in 2017, require effective coordination across emergency support function agencies. Given the Emergency Support Function Leadership Group’s responsibility to identify gaps or seams in the federal government’s efforts to respond to disasters, it is essential that the group have accurate and up-to-date information. Formal processes for soliciting and sharing information to communicate lessons learned to this group would help enhance agencies’ abilities to identify and address weaknesses in disaster response. Further, incorporating contracting considerations, such as demobilization, into the mission assignment policy, could enhance federal agencies’ ability to fulfill their disaster response and recovery missions efficiently. Lastly, without an assessment of FEMA’s contracting workforce needs, FEMA is at risk of not having a sufficient contracting workforce during a disaster. We are making a total of 10 recommendations, including one to DHS, one to the Office of Federal Procurement Policy, two to FEMA, three to the Army, two to the Coast Guard, and one to GSA (in coordination with DOD and DHS). The Administrator of the General Services Administration, in coordination with the Secretaries of Defense and Homeland Security, should jointly revisit and assess the extent to which the criteria in the 2018 NIA code Memorandum of Agreement, including criteria for closing NIA codes, meet long-term visibility needs for high visibility events and account for the needs of users, such as FEMA, other agencies, and the Congress. At a minimum, the agreement should include criteria that take into account the roles of the federal agencies involved in response and recovery and provide a process that ensures consistent consideration and implementation of the criteria. (Recommendation 1) Until the NIA code Memorandum of Agreement between the General Services Administration and the Departments of Defense and Homeland Security is revised, the Secretary of Homeland Security should, in coordination with the Department of Defense and the General Services Administration, keep the existing NIA code for Hurricane Maria open, reopen the other NIA codes established for 2017 and 2018 hurricanes (Hurricanes Harvey, Irma, Florence, and Michael), and request that agencies retroactively enter NIA codes for contract actions for Hurricanes Harvey and Irma made after June 30, 2018, for Hurricane Florence made after March 15, 2019, and for Hurricane Michael made after April 12, 2019 into FPDS-NG to adequately capture contract obligations, to the extent practicable. (Recommendation 2) The Secretary of the Army should direct the Commanding General of the U.S. Army Corps of Engineers to provide guidance or related training to ensure contracting officers are aware of the regulatory definition of “local area”. (Recommendation 3) The Administrator of the Office of Federal Procurement Policy should provide additional clarification on how contracting officers should determine whether offerors reside or primarily do business in a disaster area for the purposes of a local area set-aside contract. (Recommendation 4) The Commandant of the Coast Guard should provide guidance and tools for contracting officials to use to ensure requirements concerning contracting with local vendors, including justification requirements for the use of non-local vendors, are consistently met. (Recommendation 5) The Secretary of the Army should direct the Commanding General of the U.S. Army Corps of Engineers to provide guidance and tools for contracting officials to use to ensure requirements concerning contracting with local vendors, including justification requirements for the use of non- local vendors, are consistently met. (Recommendation 6) The Secretary of the Army should direct the Commanding General of the U.S. Army Corps of Engineers to establish a formal process to solicit input from officials directly involved in the agency’s response and recovery following a disaster and to share that input with the Emergency Support Function Leadership Group. (Recommendation 7) The Commandant of the Coast Guard should establish a formal process to solicit input from officials directly involved in the agency’s response and recovery following a disaster and to share that input with the Emergency Support Function Leadership Group. (Recommendation 8) The FEMA Administrator should take the lead to work together with the Coast Guard and the U.S. Army Corps of Engineers to revise the mission assignment policy and related guidance to better incorporate consideration of contracting needs, such as demobilization, and to ensure clear communication of coordination responsibilities related to contracting. (Recommendation 9) The FEMA Administrator should assess its workforce needs—including staffing levels, mission needs, and skill gaps—for contracting staff, to include regional offices and DART; and develop a plan, including timelines, to address any gaps. (Recommendation 10) We provided a draft of this report to DOD, DHS, GSA, and OMB for review and comment. In written comments provided by DOD, DHS, and GSA (reproduced in appendixes III, IV, and V), as well as an email response from OMB, the agencies concurred with nine of the 10 recommendations. They generally provided steps they plan to take to address these recommendations. As discussed further below, USACE described actions it stated were sufficient to fully address the seventh recommendation, the steps described by FEMA would not fully meet the intent of the tenth recommendation, and DHS did not concur with our second recommendation. In response to the seventh recommendation as written in our draft report—to establish a formal process to solicit input from officials directly involved in the agency’s response and recovery following a disaster and to share that input with the Emergency Support Function Leadership Group—in its comments, USACE concurred and stated it has a formal process and it considered the recommendation completed. USACE noted that its Remedial Action Program solicits input from officials involved in response and recovery efforts and added that USACE shares findings from this program with the Emergency Support Function Leadership Group throughout the year and annually during the senior leaders seminar. During the course of our review, USACE did not provide information that indicated that they had such a formal process. As part of our recommendation follow-up process, we will request documentation regarding the process and how it solicits and shares information to the Emergency Support Function Leadership Group. In response to the tenth recommendation that FEMA assess its workforce needs—including staffing levels, mission needs, and skill gaps—for contracting staff, to include regional offices and DART; and develop a plan, including timelines, to address any gaps, FEMA stated that its Office of the Chief Component Procurement Officer assesses its workforce on an annual basis, with the last assessment conducted in January 2019. FEMA also noted that it entered into a contract for acquisition support services and plans to hire Cadre of On-Call Response and Recovery employees to provide dedicated support during disasters. Following FEMA’s response, we requested and received the FEMA Office of the Chief Component Procurement Officer’s 2019 workforce assessment. As with FEMA’s 2014 workforce analysis, the 2019 assessment calculated the number of employees needed based on the estimated time to complete a task. However, the assessment did not include an analysis of mission needs or skill gaps, and the assessment provided does not specify whether it includes the needs of regional offices and DART. FEMA estimates that it will implement this recommendation in September 2019, and we will continue to monitor FEMA’s planned efforts through our recommendation follow-up process. DHS did not concur with the draft report’s second recommendation regarding NIA codes. In its response, with regards to extending existing NIA codes and reinstating expired NIA codes, DHS stated that it is bound by the memorandum of agreement with GSA and DOD, unless or until all three signatory agencies agree to revise or suspend the agreement. We recognize that all three agencies are bound by the agreement, and also recommended in the first recommendation that GSA, DOD, and DHS jointly revisit the agreement. GSA concurred with this recommendation in its written comments reproduced in Appendix V. In an email sent from an official within DOD’s Defense Pricing and Contracting Office, DOD concurred. DHS did not respond to our first recommendation. As such, we have revised the second recommendation to state that DHS take action in coordination with DOD and GSA. We also note that the memorandum of agreement states that extending expiring or already expired NIA code end date is appropriate, in part, when two or more agencies do not have a reasonable alternative method of identifying and internally tracking those emergency acquisitions. We discuss in our report how once the NIA code is closed, there is no publicly available, government-wide system to track contract obligations for specific events. We also discuss how, using the description field (which does not provide a full picture) in FPDS-NG, agencies obligated more than $250 million on contracts for Hurricanes Harvey and Irma during the three months after the NIA codes for these two hurricanes were closed. Given this, we continue to believe DHS should consider reopening the codes for Hurricanes Harvey and Irma, in coordination with DOD and GSA. Moreover, in its response to the second recommendation DHS further stated that FEMA’s Office of the Chief Component Procurement Officer (who is not currently a party to the memorandum of agreement), believes the recommendation to extend the NIA codes for 2018 Hurricanes Michael and Florence goes beyond the scope of this audit. While the main focus of this report is the 2017 hurricanes and California wildfires, we discuss Hurricanes Florence and Michael in this draft with respect to the NIA codes, as the same issues and concerns we raised apply regardless of the year of the hurricane. However, after we sent the draft to the agencies for comment, the agencies let the codes for Hurricanes Florence and Michael expire on March 15, 2019 and April 12, 2019, respectively. We therefore revised the second recommendation to recommend that the codes for Hurricanes Florence and Michael should be reopened (rather than kept open). In its written comments, DHS also stated that neither DHS nor FEMA can unilaterally direct other agencies to retroactively enter FPDS-NG data for Hurricanes Harvey and Irma. We acknowledge this and have revised the recommendation to recommend that DHS request, rather than direct, other agencies to retroactively enter the information, to the extent practicable. As we state in the report, the NIA codes for the 2005 hurricanes were established in October 2005, and contracting officers retroactively entered data for contracts related to these events to enable full insight into contracting for these disasters. DHS further stated that retroactively entering data into FPDS-NG is not practical and places an unreasonable burden on contracting staff, and that the draft did not support the case that there were any benefits to be gained. We recognize that there is some burden associated with the recommendation, thus we recommended that DHS request agencies take action to the extent practicable. In terms of benefits, the report identifies benefits in terms of providing decision makers with important information to understand the procurement impact of such disasters. DOD and DHS also provided technical comments, which we incorporated as appropriate. We are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, the U.S. Army Corps of Engineers Director of Contracting, the Director of the Defense Logistics Agency, the Secretary of Homeland Security, the Administrator of the Federal Emergency Management Agency, the Federal Emergency Management Agency’s Chief Procurement Officer, the Commandant of the Coast Guard, the Administrator of the General Services Administration, the Director of the Office of Management and Budget, and the Administrator of the Office of Federal Procurement Policy. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-4841 or makm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI. This report specifically addresses the use of post disaster contracts and: (1) assesses the extent to which federal agencies obligated funds on post-disaster contracts in response to the 2017 major disasters; (2) assesses the extent to which selected agencies experienced challenges in the planning process for selected post-disaster contracts; and (3) describes selected agencies’ lessons learned as a result of the 2017 major disasters and assesses the extent to which they have taken action to address them. To identify the extent to which federal agencies obligated funds on post- disaster contracts in response to the 2017 disasters, we reviewed Federal Procurement Data System-Next Generation (FPDS-NG) data through June 30, 2018, the most recent and complete data at the time of our review. We adjusted the obligation data to constant fiscal year 2018 dollars using the Fiscal Year Gross Domestic Product price index. We identified hurricane obligations using the national interest action (NIA) code, as well as the contract description. Data on obligations for the California wildfires is limited to those contracts, if any, identified by the agencies with the highest obligations on post- disaster contracts for the hurricanes—the Federal Emergency Management Agency (FEMA), U.S. Army Corps of Engineers (USACE), Defense Logistics Agency (DLA), and the U.S. Coast Guard (Coast Guard)—because no NIA code was established in FPDS-NG. Coast Guard officials stated that they did not execute any contracts in response to the 2017 California wildfires. DLA officials stated that they maintain contracts, which for the most part provide inventory replenishment for DLA and the U.S. Forest Service within the U.S. Department of Agriculture, but they were unable to provide data on contracts awarded or executed specifically for the two wildfire disasters in the scope of our review. Therefore, our analysis only captures obligations for FEMA and USACE reported contracts related to the 2017 California wildfires. To determine which obligations were made through the use of post- disaster contracts versus advance contracts, we reviewed documentation provided by FEMA and USACE identifying the advance contracts they have in place and that were used in support of the 2017 disasters. We analyzed the FPDS-NG data against these contracts to identify obligations on post-disaster contracts and compared these to obligations on advance contracts by disaster. We analyzed competition procedures used and the types of goods and services procured for post-disaster contracts. In addition to advance contracts for disaster response, agencies can leverage other existing contract vehicles. For example, to respond to its pollution mitigation functions under emergency support function 10, the Coast Guard awards task orders off of its portfolio of basic ordering agreements. For the purposes of this report, post-disaster contracts include all contract awards and orders that were not identified by FEMA or USACE as advance contracts. To assess the extent to which disaster contract obligations can be tracked through FPDS-NG using the NIA code, we identified prior hurricane events with the highest contract obligations from 2005 through September 2018. We analyzed the data to determine when the highest level of federal contract obligations occurs following a hurricane. We also assessed the process for establishing and closing a NIA code. Specifically, we reviewed the criteria in the 2012 and 2018 memorandums of agreement between DHS, DOD, and the General Services Administration, and interviewed officials involved in the process. We assessed the reliability of FPDS-NG data by reviewing existing information about the FPDS-NG system and the data it collects— specifically, the data dictionary and data validation rules—and performing electronic testing. We also compared FPDS-NG data to the contract files in our review. Specifically, to review our selected post-disaster contracts for data reliability, we compared items such as, the extent competed, the use of a local area set-aside, NIA code, and termination status, based on the contract information and the information in FPDS-NG. Based on the steps we took, we determined the FPDS-NG data were sufficiently reliable for the purposes of describing agencies’ post- disaster contract obligations. To assess the extent to which agencies experienced challenges in the planning of selected post-disaster contracts, we reviewed relevant laws and regulations, including the Post-Katrina Emergency Management Reform Act (PKEMRA), the Federal Acquisition Regulation (FAR), the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), as well as agency policy and guidance. We identified a non-generalizable sample of 23 post-disaster contracts from the four agencies with the highest post-disaster obligations based on FPDS-NG data as of March 31, 2018—DHS’s FEMA, DOD’s USACE, DOD’s DLA, and DHS’s Coast Guard. We selected contracts across the four major 2017 disasters included in our scope (Hurricanes Harvey, Irma, and Maria, as well as the California wildfires) based on four selection criteria—(1) contracts using the urgency exception to full and open competition; (2) contracts using a local area set-aside; (3) contracts awarded to small businesses; and (4) contracts terminated for cause or convenience. Our goal in this selection was to ensure we selected a range of contracts within each of these four criteria so as to assess the extent to which these contracts implemented certain laws and regulations. Specifically, we selected contracts based on the use of urgency and local area set-asides in order to assess agencies’ implementation of relevant PKEMRA, Stafford Act and FAR criteria for post-disaster contracts. Because the obligations for local area set-aside contracts was low across all federal agencies, about 5 percent of total post-disaster obligations, we selected contracts that were awarded to small business vendors as a proxy to identify other awards to local vendors. Finally, we selected terminated contracts to assess additional challenges related to post- disaster contracts, such as the availability of contracted services and supplies and the requirement setting process. Based on these criteria, we selected 12 FEMA, 7 USACE, 2 DLA, and 2 Coast Guard contracts. Findings based on information collected from the 23 contracts cannot be generalized to all post-disaster contracts. Additional details on our selected contracts can be found in table 5. To assess how agencies used the urgency exception to full and open competition, we reviewed selected contracts for the inclusion of a justification and approval for other than full and open competition including sole source justifications and exclusion of sources justifications. To assess the extent to which agencies provided preference to local vendors for post-disaster contracts, we reviewed selected contract files for the use of a set-aside or an evaluation preference listed in the contract solicitation, and the inclusion of justifications for contracts not awarded to local vendors. Additionally, we reviewed applicable agency guidance and interviewed contracting and senior procurement officials across all four agencies regarding their use of local area set-asides, including the means by which they define the geographic set-aside area and determine that an offeror primarily resides or does business in the set-aside area. We also met with officials from the Office of Management and Budget’s Office of Federal Procurement Policy to discuss relevant FAR criteria. To assess how FEMA program offices develop and deliver requirements packages for use by contracting officers and the extent to which those packages are sufficiently specific to allow contracting officers to issue a contract solicitation, we interviewed contracting, program, and senior procurement officials responsible for the contracts in our selection sample. We discussed the specificity of initial versus final requirements, the nature of requirements changes, the process of requirements development, and training provided to program officials regarding the requirements development process. We also reviewed new post-disaster awards at FEMA to determine time frames between resource request to award on average for post-disaster contracts. We compared these findings to relevant agency guidance on acquisition planning. To describe lessons learned selected agencies identified related to the use of post-disaster contracts and assess the extent to which agencies have taken action to address them, we reviewed available completed after-action reports from the 2017 and prior disasters, including the Hurricane Sandy FEMA After-Action Report, the 2017 Hurricane Season FEMA After-Action Report, USACE’s Temporary Emergency Power Mission After Action Review for Hurricane Matthew, USACE’s Puerto Rico After Action Review, USACE’s Northern California Wildfires Debris Removal Mission After Action Review, the Coast Guard’s 2017 Hurricane Season Strategic Lessons Learned After Action Report, and the Defense Logistics Agency’s 2017 Hurricane After Action Meeting papers. We also reviewed findings from the Emergency Support Function Leadership Group related to interagency lessons learned. As part of our review, we identified requirements for agencies to document or practices agencies use to document lessons learned following a disaster, agency specific and interagency lessons learned specific to post-disaster contracts and mission assignments, and recommendations or actions planned by the agencies to address them. We reviewed federal internal control standards and the Emergency Support Function Leadership Group charter and the standard operating procedures for its Preparedness Evaluation/Corrective Action Working Group. To describe challenges related to coordination with state and local officials on the use of post-disaster contracts, we interviewed FEMA, USACE, DLA, and Coast Guard officials. To obtain perspectives and examples from state and local government officials involved in disaster response, we interviewed officials in California on the use of federal contracts. We also met with state and local officials in Texas, Florida, Puerto Rico, and the U.S. Virgin Islands to discuss the federal response to the 2017 hurricanes more broadly. The information gathered from these officials is not generalizable to all officials. To describe challenges related to the mission assignment process, we interviewed FEMA, USACE, and Coast Guard officials, including officials from FEMA’s Response Directorate and the contracting officials from USACE and the Coast Guard that awarded the contracts these agencies used to fulfill their missions. We also reviewed the mission assignment documents, where FEMA assigned USACE and Coast Guard missions and laid out their responsibilities. To assess workforce challenges, we reviewed DHS’s 2014 workforce assessment, which identified gaps in FEMA’s contracting workforce. We also obtained information from FEMA on its current contracting workforce in headquarters, regional offices, Disaster Assistance Response Team, and joint field offices. We also interviewed FEMA contracting officials to obtain their perspectives and experiences during the 2017 disaster season. We conducted this performance audit from March 2018 to April 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. The National Response Framework identifies 14 emergency support functions (ESF) and designates a federal department or agency as the coordinating agency for each function. ESFs are the federal government’s primary coordinating structure for response, and under this structure, the Federal Emergency Management Agency (FEMA) acts as the federal coordinating agency. In addition to the contact named above, Janet McKelvey (Assistant Director), Katherine Trimble (Assistant Director), Caryn E. Kuebler (Analyst in Charge), Lindsay Taylor, and Sarah Tempel were principal contributors. In addition, the following people made contributions to this report: Emily Bond, Lorraine Ettaro, Suellen Foth, Julia Kennon, Carol Petersen, Sylvia Schatz, Alyssa Weir, and Robin Wilson.","Federal contracts play a key role in timely response and recovery efforts following disasters. While federal agencies, such as FEMA and USACE, may have advance contracts in place for obtaining goods and services following disasters, agencies may also award post-disaster contracts. GAO was asked to review the federal government's response to three major hurricanes in 2017, as well as the 2017 California wildfires. This report addresses, among other objectives, the extent to which (1) federal agencies obligated funds on post-disaster contracts in response to the these events, and (2) selected agencies experienced challenges in the planning of selected contracts. GAO analyzed data from the Federal Procurement Data System-Next Generation; selected a non-generalizable sample of 23 post-disaster contracts based on factors such as if the contract was set aside for award to a local contractor; reviewed federal regulations and agency guidance; and interviewed agency officials. Following hurricanes Harvey, Irma, and Maria and the 2017 California wildfires, federal agencies obligated at least $5 billion in post-disaster contracts—which are awarded after disasters hit— to support disaster response and recovery efforts. The U.S. Army Corps of Engineers (USACE) and the Federal Emergency Management Agency (FEMA) comprised over three-quarters of reported post-disaster contract obligations as of June 30, 2018 (see figure). However, the full extent of post-disaster contracting related to the 2017 disasters is unknown due to the Department of Homeland Security's (DHS) inconsistent implementation of the criteria for closing a national interest action (NIA) code. This code allows agencies to track data on contract actions related to national emergencies, providing government-wide insight into response and recovery efforts. DHS closed the codes for Harvey and Irma on June 30, 2018, less than a year after those hurricanes hit. In contrast, the codes for prior hurricanes were open for at least five years, with Katrina remaining open for 13 years. Based on a review of 23 contract files from FEMA, USACE, the Defense Logistics Agency, and the Coast Guard, GAO identified challenges in the planning of selected contracts. For example, GAO found USACE officials were not consistently aware of the regulation that defines “local area.” GAO also found that contracting officers at FEMA, USACE, and the Coast Guard did not consistently write justifications for awards to non-local vendors outside the disaster area, as required. FEMA developed guidance to address this, but the Coast Guard and USACE have not issued guidance or tools to address this requirement. Without addressing planning challenges, agencies may miss opportunities to award contracts to local businesses in the disaster area to the extent feasible and practicable, which could help jump-start the local economy. GAO is making 10 recommendations, including that DHS reopen NIA codes for Hurricanes Harvey and Irma; USACE provide guidance on the local area definition; and the Coast Guard and USACE provide guidance to ensure contracting requirements for the use of non-local vendors are met. Agencies concurred with 9 recommendations. DHS did not agree that NIA codes should be reopened. GAO continues to believe DHS should do so, to the extent practicable, as discussed in the report."
"Our past work has identified progress and challenges in a number of areas related to DHS’s management of the CFATS program, including (1) the process for identifying high-risk chemical facilities; (2) how it assesses risk and prioritizes facilities; (3) reviewing and approving facility site security plans; (4) inspecting facilities and ensuring compliance; and (5) efforts to conduct outreach with stakeholders and first responders. In May 2014, we found that more than 1,300 facilities had reported having ammonium nitrate to DHS. However, based on our review of state data and records, there were more facilities with ammonium nitrate holdings than those that had reported to DHS under the CFATS program. Thus, we concluded that some facilities weren’t required to report to DHS and some that were required may have failed to do so. We recommended that DHS work with other agencies, including the Environmental Protection Agency (EPA), to develop and implement methods of improving data sharing among agencies and with states as members of a Chemical Facility Safety and Security Working Group. DHS agreed with our recommendation and has since addressed it. Specifically, DHS compared DHS data with data from other federal agencies, such as EPA, as well as member states from the Chemical Facility Safety and Security Working Group to identify potentially noncompliant facilities. As a result of this effort, in July 2015, DHS officials reported that they had identified about 1,000 additional facilities that should have reported information to comply with CFATS and subsequently contacted these facilities to ensure compliance. DHS officials told us that they continue to engage with states to identify potentially non-compliant facilities. For example, as of June 2018, DHS officials stated that they have received 43 lists of potentially noncompliant facilities from 34 state governments, which are in various stages of review by DHS. DHS officials also told us that they hired an individual to serve as the lead staff member responsible for overseeing this effort. DHS has also taken action to strengthen the accuracy of data it uses to identify high-risk facilities. In July 2015, we found that DHS used self- reported and unverified data to determine the risk categorization for facilities that held toxic chemicals that could threaten surrounding communities if released. At the time, DHS required that facilities self- report the Distance of Concern—an area in which exposure to a toxic chemical cloud could cause serious injury or fatalities from short-term exposure—as part of its Top-Screen. We estimated that more than 2,700 facilities with a toxic release threat had misreported the Distance of Concern and therefore recommended that DHS (1) develop a plan to implement a new Top-Screen to address errors in the Distance of Concern submitted by facilities, and (2) identify potentially miscategorized facilities that could cause the greatest harm and verify that the Distance of Concern of these facilities report is accurate. DHS has fully addressed both of these recommendations. Specifically, in response to the first recommendation, DHS implemented an updated Top-Screen survey in October 2016 and now collects data from facilities and conducts more accurate modeling to determine the actual area of impact (formerly called the Distance of Concern), rather than relying on the facilities’ calculation. In response to the second recommendation, DHS officials reported in November 2016 that they reassessed all facility Top-Screens that reported threshold quantities of chemicals posing a toxic release threat, and identified 158 facilities with the potential to cause the greatest harm. In April 2018, DHS officials reported that all of these facilities have since been reassessed using updated Top-Screen information and, where appropriate, assigned a risk tier. DHS has also taken actions to better assess regulated facilities’ risks in order to place the facilities into the appropriate risk tier. In April 2013, we reported that DHS’s risk assessment approach did not consider all of the elements of threat, vulnerability, and consequence associated with a terrorist attack involving certain chemicals. Our work showed that DHS’s CFATS risk assessment methodology was based primarily on consequences from human casualties, but did not consider economic consequences, as called for by the National Infrastructure Protection Plan (NIPP) and the CFATS regulation. We also found that (1) DHS’s approach was not consistent with the NIPP because it treated every facility as equally vulnerable to a terrorist attack regardless of location or on-site security and (2) DHS was not using threat data for 90 percent of the tiered facilities—those tiered for the risk of theft or diversion—and using 5-year-old threat data for the remaining 10 percent of those facilities that were tiered for the risks of toxic chemical release or sabotage. We recommended that DHS enhance its risk assessment approach to incorporate all elements of risk and conduct an independent peer review after doing so. DHS agreed with our recommendations and has implemented actions to address both of them. Specifically, with regard to our recommendation that DHS enhance its risk assessment approach to incorporate all elements of risk, DHS worked with Sandia National Laboratories to develop a model to estimate the economic consequences of a chemical attack. In addition, DHS worked with Oak Ridge National Laboratory to devise a new tiering methodology, called the Second Generation Risk Engine. In so doing, DHS revised the CFATS threat, vulnerability, and consequence scoring methods to better cover the range of CFATS security issues. Additionally, with regard to our recommendation that DHS conduct a peer review after enhancing its risk assessment approach, DHS conducted peer reviews and technical reviews with government organizations and facility owners and operators, and worked with Sandia National Laboratories to verify and validate the CFATS program’s revised risk assessment methodology. To further enhance its risk assessment approach, in the fall of 2016, DHS also revised its Chemical Security Assessment Tool (CSAT), which supports DHS efforts to gather information from facilities to assess their risk. According to DHS officials, the new tool—called CSAT 2.0—is intended to eliminate duplication and confusion associated with DHS’s original CSAT. DHS officials told us that they have improved the tool by revising some questions in the original CSAT to make them easier to understand; eliminating some questions; and pre-populating data from one part of the tool to another so that users do not have to retype the same information multiple times. DHS officials also told us that the facilities that have used the CSAT 2.0 have provided favorable feedback that the new tool is more efficient and less burdensome than the original CSAT. Finally, DHS officials told us that, as of June 2018, DHS completed all notifications and processed tiering results for all but 226 facilities. DHS officials did not provide an estimated target completion date for these pending risk assessments, noting that completing the assessments is highly dependent on the facilities providing the necessary Top-Screen information. DHS has also made progress reviewing and approving facility site security plans by reducing the time it takes to review these plans and eliminating the backlog of plans awaiting review. In April 2013, we reported that DHS revised its procedures for reviewing facilities’ security plans to address DHS managers’ concerns that the original process was slow, overly complicated, and caused bottlenecks in approving plans. We estimated that it could take DHS another 7 to 9 years to review the approximately 3,120 plans in its queue at that time. We also estimated that, given the additional time needed to do compliance inspections, the CFATS program would likely be implemented in 8 to 10 years. We did not make any recommendations for DHS to improve its procedures for reviewing facilities’ security plans because DHS officials reported that they were exploring ways to expedite the process, such as reprioritizing resources and streamlining inspection requirements. In July 2015, we reported that DHS had made substantial progress in addressing the backlog—estimating that it could take between 9 and 12 months for DHS to review and approve security plans for the approximately 900 remaining facilities. DHS officials attributed the increased approval rate to efficiencies in DHS’s review process, updated guidance, and a new case management system. Subsequently, DHS reported in its December 2016 semi-annual report to Congress that it had eliminated its approval backlog. Finally, we found in our 2017 review that DHS took action to implement an Expedited Approval Program (EAP). The CFATS Act of 2014 required that DHS create the EAP as another option that tier 3 and tier 4 chemical facilities may use to develop and submit security plans to DHS. Under the program, these tier 3 and 4 facilities may develop a security plan based on specific standards published by DHS (as opposed to the more flexible performance standards using the standard, non- expedited process). DHS issued guidance intended to help facilities prepare and submit their EAP security plans to DHS, which includes an example that identifies prescriptive security measures that facilities are to have in place. According to committee report language, the EAP was expected to reduce the regulatory burden on smaller chemical companies, which may lack the compliance infrastructure and the resources of large chemical facilities, and help DHS to process security plans more quickly. If a tier 3 or 4 facility chooses to use the expedited option, DHS is to review the plan to determine if it is facially deficient, pursuant to the reporting requirements of the CFATS Act of 2014. If DHS approves the EAP site security plan, it is to subsequently conduct a compliance inspection. In 2017, we found that DHS had implemented the EAP and had reported to Congress on the program, as required by the CFATS Act of 2014. In addition, as of June 2018, according to DHS officials, only 18 of the 3,152 facilities eligible to use the EAP had opted to use it. DHS officials attributed the low participation to several possible factors including: DHS had implemented the expedited program after most eligible facilities already submitted standard (non-expedited) security plans to DHS; facilities may consider the expedited program’s security measures to be too strict and prescriptive, not providing facilities the flexibility of the standard process; and the lack of an authorization inspection may discourage some facilities from using the expedited program because this inspection provides useful information about a facility’s security. We also found in 2017 that recent changes made to the CFATS program could affect the future use of the expedited program. As discussed previously, DHS has revised its methodology for determining the level of each facility’s security risk, which could affect a facility’s eligibility to participate in the EAP. In our July 2015 report, we found that DHS began conducting compliance inspections in September 2013, and by April 2015, had conducted inspections of 83 of the inspected 1,727 facilities that had approved security plans. Our analysis showed that nearly half of the facilities were not fully compliant with their approved site security plans and that DHS had not used its authority to issue penalties because DHS officials found it more productive to work with facilities to bring them into compliance. We also found that DHS did not have documented processes and procedures for managing the compliance of facilities that had not implemented planned measures by the deadlines outlined in their plans. We recommended that DHS document processes and procedures for managing compliance to provide more reasonable assurance that facilities implement planned measures and address security gaps. DHS agreed and has since taken steps toward implementing this recommendation. Specifically, DHS revised CFATS Standard Operating Procedures that, as of February 2019, we are reviewing to determine if they sufficiently document the processes and procedures currently being used to track noncompliant facilities and ensure facilities implement planned measures as outlined in their approved site security plans. In August 2018, we reported that our analysis of DHS data since our 2015 report showed that DHS has made substantial progress in conducting and completing compliance inspections. Specifically, our analysis showed that DHS increased the number of compliance inspections completed per year since DHS began conducting compliance inspections in 2013 and that, for the 2,466 high-risk facilities with an approved site security plan as of May 2018, DHS had conducted 3,553 compliance inspections. Of these, DHS issued corrective actions to two facilities that were not in compliance with their approved site security plan. In our August 2018 report, we also found that DHS developed a new methodology and performance measure for the CFATS program in order to evaluate security changes made by high-risk chemical facilities, but that the methodology does not measure the program’s impact on reducing a facility’s vulnerability to an attack. We found that DHS could take steps to evaluate vulnerability reduction resulting from the CFATS compliance inspection process. We recommended that DHS incorporate vulnerability into the new methodology to help measure the reduction in the vulnerability of high-risk facilities to a terrorist attack, and use that data in assessing the CFATS program’s performance in lowering risk and enhancing national security. DHS agreed and is taking steps to implement this recommendation. Specifically, in September 2018, DHS reported making progress towards the implementation of two new performance metrics by the end of the first quarter of fiscal year 2019. DHS officials stated that these metrics should, among other things, evaluate the progress of individual facilities in enhancing their security while part of the CFATS program and be used to demonstrate an increase in the security posture across the population of CFATS facilities. In April 2013, we reported that DHS took various actions to work with facility owners and operators, including increasing the number of visits to facilities to discuss enhancing security plans, but that some trade associations had mixed views on the effectiveness of DHS’s outreach. We found that DHS solicited informal feedback from facility owners and operators in its efforts to communicate and work with them, but did not have an approach for obtaining systematic feedback on its outreach activities. We recommended that DHS take action to solicit and document feedback on facility outreach consistent with DHS efforts to develop a strategic communication plan. DHS agreed and has implemented this recommendation by developing a questionnaire to solicit feedback on outreach with industry stakeholders and began using the questionnaire in October 2016. In August 2018, we reported that DHS shares some CFATS information with first responders and emergency planners, but these stakeholders may not have all of the information they need to minimize the risk of injury or death when responding to incidents at high-risk facilities. While certain facilities are required under the Emergency Planning and Community Right-to-Know Act of 1986 to report some chemical inventory information, which local officials told us they rely on to prepare for and respond to incidents at chemical facilities, we found over 200 chemicals covered by CFATS that may not be covered by these reporting requirements. We also reported that DHS developed a secure interface called the Infrastructure Protection (IP) Gateway that provides access to CFATS facility-specific information that may be missing from required reporting. However, we found that the IP Gateway is not widely used at the local level and officials from 13 of 15 selected Local Emergency Planning Committees we contacted—consisting of first responders and covering 373 CFATS high-risk facilities—said they did not have access to CFATS data in the IP Gateway. We recommended that DHS should take actions to encourage access to and wider use of the IP Gateway and explore other opportunities to improve information-sharing with first responders and emergency planners. DHS concurred with this recommendation and reported in September 2018 that they are taking actions to implement it. Specifically, DHS has revised three fact sheets and an outreach presentation to include information on the IP Gateway and how to request access to it. In addition, DHS plans to ensure contact is made with first responders representing the top 25 percent of CFATS high-risk chemical facilities by no later than March 2019 so that they are properly prepared to respond to incidents at these facilities. Chairman Thompson, Ranking Member Rogers, 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. If you or your staff members have any questions about this testimony, please contact me at (202) 512-3841 or andersonn@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Other individuals making key contributions to this work include Ben Atwater, Assistant Director; Hugh Paquette, Analyst-in-Charge; Chuck Bausell, Michele Fejfar, Tracey King, and Tom Lombardi. 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.","Thousands of facilities across the United States contain hazardous chemicals that could be used by terrorists to inflict mass casualties or harm surrounding populations. In accordance with the DHS Appropriations Act, 2007, DHS established the CFATS program to, among other things, identify and assess the security risk posed by chemical facilities. DHS inspects high-risk facilities after it approves facility security plans to ensure that the facilities are implementing required security measures and procedures. This statement summarizes progress and challenges related to DHS's CFATS program management. This statement is based on prior products GAO issued from July 2012 through August 2018, along with updates as of September 2018 on actions DHS has taken to address GAO's prior recommendations. To conduct the prior work, GAO reviewed relevant laws, regulations, and DHS policies for administering the CFATS program; how DHS assesses risk; and data on high-risk chemical facilities. GAO also interviewed DHS officials and relevant stakeholders. The Department of Homeland Security (DHS) has made progress addressing challenges that GAO's past work identified to managing the Chemical Facility Anti-Terrorism Standards (CFATS) program. The following summarizes progress made and challenges remaining in key aspects of the program. Identifying high-risk chemical facilities. In July 2015, GAO reported that DHS used self-reported and unverified data to determine the risk of facilities holding toxic chemicals that could threaten surrounding communities if released. GAO recommended that DHS should better verify the accuracy of facility-reported data. DHS implemented this recommendation by revising its methodology so it now calculates the risk of toxic release, rather than relying on facilities to do so. Assessing risk and prioritizing facilities. In April 2013, GAO reported weaknesses in multiple aspects of DHS's risk assessment and prioritization approach. To improve this process, GAO recommended that DHS enhance its risk assessment approach to incorporate all elements of risk and conduct a peer review after doing so. DHS implemented both recommendations by revising the CFATS risk assessment methodology to include threat, vulnerability, and consequence to better cover the range of security issues, and conducting peer reviews and technical reviews to verify and validate the CFATS program's new risk assessment approach. Reviewing and approving facility site security plans . DHS is to review facility security plans to ensure their security measures meet DHS standards. In April 2013, GAO reported a 7- to 9-year backlog for these reviews. In July 2015, GAO reported that DHS had made substantial progress in addressing the backlog—estimating that it could take between 9 and 12 months for DHS to review and approve security plans for the approximately 900 remaining facilities. DHS has since taken additional action to expedite these activities and has eliminated this backlog. Inspecting facilities and ensuring compliance. In July 2015, GAO found that nearly half of the facilities DHS had inspected were not fully compliant with their approved security plans and that DHS did not have documented procedures for managing facilities' compliance. GAO recommended that DHS document procedures for managing compliance. DHS revised CFATS procedures that, as of February 2019, GAO is reviewing to determine if they sufficiently address the recommendation. Conducting stakeholder and first responder outreach. In August 2018, GAO reported that DHS shares some CFATS information with first responders and emergency planners but these stakeholders may not have all of the information they need to minimize the risk of injury or death when responding to incidents at high-risk facilities. GAO recommended that DHS should, among other things, take actions to explore opportunities to improve information-sharing with first responders and emergency planners. DHS concurred with this recommendation and reported in September 2018 that it is conducting additional outreach and taking other actions to implement it. GAO has made various recommendations to strengthen DHS's management of the CFATS program, with which DHS has generally agreed. DHS has implemented or described planned actions to address these recommendations."
"Coal mining and production in the United States during in the 20 th century contributed to the nation meeting its energy requirements and left a legacy of unreclaimed lands. Prior to the enactment of the Surface Mining Control and Reclamation Act in 1977 (SMCRA; P.L. 95-87 ), no federal law had authorized reclamation requirements for coal mining operators to restore lands and waters affected by mining practices. Title IV of SMCRA established the Abandoned Mine Lands (AML) program to address the public health, safety, and environmental hazards at these legacy abandoned coal mining sites. The objective of reclamation under Title IV of SMCRA is to restore lands or waters adversely affected by past coal mining to a condition that would mitigate potential hazards to public health, safety, and the environment. The actions necessary to attain these objectives may vary from site to site depending on the nature of the hazards and the technical or engineering feasibility of reclamation alternatives to mitigate the hazards. The severity of the hazard would also determine the prioritization of funding for reclamation. Examples of reclamation activities include removing or stabilizing coal mining waste piles, re-contouring and re-vegetating affected lands, mitigating the potential for subsidence, filling voids or sealing tunnels, and treating acid mine drainage. The costs to complete reclamation at a particular site would depend on the scope and nature of actions necessary to mitigate the potential hazards and any technical or engineering challenges to implement the selected actions. The Abandoned Mine Reclamation Fund, established under Section 401 of SMCRA, provides funding to eligible states and tribes for the reclamation of surface mining impacts associated with historical mining of coal. Title IV of SMCRA applies only to sites that were abandoned or left unreclaimed prior to the enactment of SMCRA on August 3, 1977, and for which there is no continuing reclamation responsibility under other federal or state law. SMCRA also established the Office of Surface Mining Reclamation and Enforcement (OSMRE) in the Department of the Interior. OSMRE is the federal office responsible for administering SMCRA in coordination with eligible states and tribes. The balance of the Abandoned Mine Reclamation Fund is provided by fees collected on coal mining operators in coal producing states. The fee rates in current law are based on a per-ton fee for the volume of coal produced at a mine annually or the percentage value of the coal produced at a mine, whichever is less each year as determined by the Secretary of the Interior. SMCRA authorizes annual grants to eligible states and tribes for the reclamation of abandoned coal mining sites. SMCRA also authorizes two sources of federal financial assistance to three United Mine Workers of America (UMWA) coal mineworker health benefits plans and the UMWA pension plan. These federal payments augment employer contributions to these plans. Interest transfers from the Abandoned Mine Reclamation Fund have supported the UMWA health benefit plans since FY1996, supplemented by payments from the General Fund of the U.S. Treasury since FY2008. As amended in the 116 th Congress, SMCRA authorizes additional General Fund payments to support the UMWA pension plan. The coal reclamation fee collection authorization is set to expire at the end of FY2021 absent the enactment of legislation extending the sunset date. If the authority to collect reclamation fees is not reauthorized, SMCRA directs the remaining balance of the fund to be distributed among states and tribes receiving grants from the Abandoned Mine Reclamation Fund based on the FY2022 grant amounts. The FY2022 grant amounts would depend on the fees collected in FY2021, and payments from the fund would begin in FY2023, continuing annually until the balance has been expended. Given that scenario, reclamation grants to eligible states would continue for some years. This report discusses funding for eligible states and tribes, reclamation priorities, annual receipts and appropriations, reauthorization issues, and other related bills that would authorize the use of the existing balance of the fund. This report does not discuss issues associated with Title V of SMCRA, which authorized the regulation of coal mining sites operating after the law's enactment. SMCRA requires coal mining operators regulated under Title V to be responsible for providing financial assurance for completing site reclamation. Coal mining sites regulated under SMCRA after August 3, 1977, are ineligible for grants from the Abandoned Mine Reclamation Fund. If financial assurances are inadequate to meet reclamation needs, the availability of federal funding to pay reclamation costs would be subject to the enactment of legislation. Section 401 of SMCRA established the Abandoned Mine Reclamation Fund as a trust fund within the U.S. Treasury. As enacted in 1977, SMCRA originally did not authorize the Abandoned Mine Reclamation Fund as an interest-bearing trust fund. The Abandoned Mine Reclamation Act of 1990 amended SMCRA for various purposes and authorized the investment of the unexpended balance of the Abandoned Mine Reclamation Fund in U.S. Treasury securities. The portion of the balance available for investment in U.S. Treasury securities is the amount that the Secretary of the Interior determines is not needed to meet current withdrawals. Interest began accruing on the invested balance in FY1992. Receipts credited to the Abandoned Mine Reclamation Fund are sourced from fees collected from coal mining operators based on coal production. The coal reclamation fee rates are authorized in Section 402 of SMCRA. The fees are specified in current law and based on a per-ton fee for the amount of coal produced at a mine annually or the percentage value of the coal produced annually at a mine, whichever is less each year as determined by the Secretary of the Interior. The fees are 28 cents per ton of coal produced by surface mining, 12 cents per ton of coal produced by underground mining, or 10% of the value of the coal, whichever is less. The fee for lignite coal is different from non-lignite coal and is 8 cents per ton or 2% of the value of the coal, whichever is less. Congress decreased the fee rates authorized in the original enactment of SMCRA to these fee rates in the 2006 amendments to SMCRA. Annual receipts credited to the Abandoned Mine Reclamation Fund from these fees therefore depend on the fee rates applied to the amount or value of coal production each year. SMCRA does not set or guarantee any particular amount of receipts on an annual basis. Regardless of the fee rates, this framework may result in receipts fluctuating annually with changes in the amount or value of coal production in the United States. Coal reclamation fees generally increased until FY2007, after which the trend in fee revenue decreased from FY2008 to FY2019. During these years, coal reclamation fees collected by OSMRE decreased by approximately 49% in nominal dollars (i.e., without adjusting for inflation) ( Figure 1 ). U.S. coal production declined during that same time period by approximately 34%. While the nominal coal reclamation fees collected peaked in FY2007, the inflation-adjusted value of the coal reclamation fees have generally decreased since FY1979. The extent to which the reduced fee rates in 2006 contributed to the decline in fee receipts during this time period would depend on whether the fee receipts were based on the tonnage or value of coal produced. Section 404 of SMCRA limits eligible lands and waters affected by coal mining to those left abandoned or unreclaimed prior to August 3, 1977, and for which there is no continuing reclamation responsibility under other federal or state laws. U.S. territories, states, and tribes without such lands and waters are excluded from eligibility for grants from the Abandoned Mine Reclamation Fund. The reclamation and regulatory programs authorized in SMCRA apply only to coal production states and tribal lands, and coal has not been mined in all states, U.S. territories, and tribal lands. States and tribes with lands on which coal was mined prior to the enactment of SMCRA on August 3, 1977, with an OSMRE-approved reclamation program are eligible for grants from the Abandoned Mine Reclamation Fund pursuant to Section 401 of SMCRA. SMCRA describes differing types and priorities of AML reclamation projects eligible for reclamation funding from the Abandoned Mine Reclamation Fund. Examples of eligible AML projects include the reclamation of land subsidence, vertical openings, hazardous equipment and facilities, dangerous highways, and acid mine drainage (AMD) that originated from historical coal mining operations. Section 403 of SMCRA directs the prioritization of AML reclamation projects under a tier of three categories: 1. Priority 1 projects involve the reclamation of lands and waters to protect public health, safety, and property from extreme danger. 2. Priority 2 projects involve the reclamation of lands and waters to protect public health and safety from adverse effects of coal mining practices. 3. Priority 3 projects involve the reclamation of lands and waters previously degraded by adverse effects of coal mining practices for the conservation and development of soil, water (excluding channelization), woodland, fish and wildlife, recreation resources, and agricultural productivity. The reclamation of Priority 2 projects may be similar in scope and nature as Priority 1 projects but generally present a lesser degree of danger. In some instances, the proximity of hazards and risks of AML lands to communities may elevate the risks to public health and safety in a way that similar circumstances would merit a lower priority if they occurred at a more isolated and remote location. However, proximity alone is not necessarily an indicator of risk if contamination may migrate from the mining site to an affected community. The geographic scope of the site may be larger than where the coal was mined, because it includes all the affected lands and waters. AMD causes persistent water quality impairment when minerals within coal are exposed to atmospheric oxygen and water, which causes a reaction generating sulfuric acid. The production of acid creates low-pH conditions in the water, enhancing the solubility of iron, sulfate, and other trace metals from the exposed ore. Those dissolved constituents may discharge to downgradient streams and water bodies and may generate secondary minerals within the stream and on the stream beds. Streams and other ecosystems impacted by AMD can become functionally impaired. States may consider reclamation projects to abate AMD water quality issues as a higher priority if that impaired water could pose a risk to public health. Section 402 allows states receiving grants from the Abandoned Mine Reclamation Fund to deposit up to 30% of their annual grants into an acid mine drainage abatement fund. The state may establish an acid mine drainage abatement fund in accordance with that state's law, and the monies in the fund are not subject to SMCRA's three-year limitation on expenditure and may accrue interest. SMCRA allows states to expend monies in their abatement fund without a time limit because water quality issues associated with AMD may persist for decades or longer. States and tribes with lands on which coal is mined may be eligible for annual grants from the Abandoned Mine Reclamation Fund to support the reclamation of abandoned coal mining sites within their respective jurisdictions. To be eligible for these federal funds, pursuant to Section 405 of SMCRA, states and tribes first must obtain OSMRE approval of their reclamation programs. OSMRE approval of a reclamation program depends upon the state or tribe demonstrating that it has developed its own requirements that do not conflict with the federal requirements but may be more stringent and that it has the ability to carry out these requirements in lieu of the federal government. OMSRE has approved mine reclamation programs for 25 states and three tribes. Pursuant to Section 411 of SMCRA, OSMRE may certify a state or tribe with an OSMRE-approved state reclamation program once it demonstrates that it has reclaimed all of its priority abandoned coal mining sites identified pursuant to Section 403. States and tribes may apply to OSMRE for certification, and the final determination is subject to notice in the Federal Register and public comment. Certified states and tribes may use annual grants for the reclamation of abandoned non-coal sites and other uses. Section 411 includes certain limitations. SMCRA prohibits certified states and tribes from spending annual payments on sites remediated under the Uranium Mill Tailings Radiation Control Act of 1978, as amended, and sites designated for remedial action pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act, as amended (CERCLA). To date, OSMRE has certified five states and three tribes as having reclaimed all of their priority coal mining sites that were abandoned or unreclaimed prior to the enactment of SMCRA on August 3, 1977. A state with an OSMRE-approved state reclamation program that has not reclaimed all of its priority abandoned coal mining sites is an uncertified state . OSMRE provides annual grants to uncertified states from the Abandoned Mine Reclamation Fund for the reclamation of the priorities described under Section 403. For uncertified states, OSMRE administers grants from the Abandoned Mine Reclamation Fund. For certified states and tribes, OSMRE administers annual payments from the General Fund in lieu of the Abandoned Mine Reclamation Fund. OSMRE administers grants among eligible states and tribes based on a statutory formula to calculate their respective shares of annual coal reclamation fee receipts. OSMRE publishes grant distribution summaries on an annual basis. OSMRE administered grants to states and tribes for FY2019 are presented in Table 1 and Table 2 . The following sections describe the grants administered to eligible states and tribes. The Surface Mining Control and Reclamation Act Amendments of 2006 ( P.L. 109-432 , Division C, Title II, of the Tax Relief and Health Care Act of 2006) authorized General Fund payments to certified states and tribes beginning in FY2008 to focus the expenditure of coal reclamation fees on the reclamation of abandoned coal mining sites. The 2006 amendments also authorized permanent appropriations of coal reclamation fees for mine reclamation grants in FY2008 and subsequent fiscal years. Just over 80% of annual coal reclamation fee collections since FY2008 are authorized as permanent (mandatory) appropriations that are distributed to eligible uncertified states during the fiscal year following their collection. Section 402 of SMCRA authorizes the distribution of the fee collections credited to the Abandoned Mine Reclamation Fund based on a statutory formula that allocates to uncertified states: Uncertified State Share: shares of 50% of the coal reclamation fees collected within that state. Historic Coal Funds: shares of 30% of the fee collections based on historic coal production prior to the enactment of SMCRA on August 3, 1977. The historic coal payments are based on the total coal tonnage produced by each respective state prior to enactment. Coal reclamation fees collected in certified states and on tribal lands therefore affect the amount available in the Abandoned Mine Reclamation Fund for annual reclamation grants to uncertified states. Fees collected in certified states and on tribal lands are distributed to uncertified states as part of their historic coal payment. Minimum Program Make Up Funds: additional shares of the fee collections if necessary to guarantee that each uncertified state receives an annual grant of at least $3 million if its 50% state share payment and historic coal payment combined would not equal this threshold. The formula leaves 20% of the annual fee collections available for the minimum program make up funds and discretionary spending through annual appropriations to fund the activities of OSMRE to oversee and assist state mine reclamation programs and to administer the Abandoned Mine Reclamation Fund. Under Section 402, any amount of the 50% state share grant to an uncertified state not expended within three years of the date when the grant was awarded would become redistributed as historic coal payments, with the exception of the AMD abatement funds discussed earlier. The formula does not allocate any of the fee collections to support the UMWA health or pension benefit plans. The interest that accrues on the invested balance of the Abandoned Mine Reclamation Fund via an intergovernmental transfer from the General Fund is available to support UMWA health benefit plans. Direct payments from the General Fund supplement the interest for the UMWA health benefit plans. Additionally, the UMWA pension plan is eligible for General Fund payments, but it is not eligible to receive payments from the Abandoned Mine Reclamation Fund. See the discussion in ""Federal Financial Assistance for UMWA Health and Pension Benefit Plans"" later in this report. Section 401(f)(5)(B) of SMCRA authorized a four year ""phase-in"" period during FY2008-FY2011 for the newly established mandatory payments to uncertified states for their state share, historic coal, and minimum make up grants. During this period, grants to uncertified states were reduced by 50% for FY2008 and FY2009 and 25% for FY2010 and FY2011. Section 411(h)(2) of SMCRA authorized certified states and tribes to receive annual payments from the General Fund equivalent to 50% of annual coal reclamation fees collected within their jurisdictions. The fees collected from coal mining operations in certified states, and on lands of certified tribes, are credited to the Abandoned Mine Reclamation Fund. However, as authorized in Section 411 of SMCRA, certified states and tribes receive their payments from the General Fund of the U.S. Treasury in lieu of the Abandoned Mine Reclamation Fund and may use these funds for addressing the impacts of non-coal mineral development. Unlike uncertified states, certified states and tribes are not eligible to receive historic coal payments or minimum program make up funds. Section 411(h)(3)(B) of SMCRA authorized a three-year ""phase-in"" period between FY2009 and FY2011 for annual payments to certified states and tribes. During those fiscal years, annual state and tribal share payments were reduced to 25% in FY2009, 50% in FY2010, and 75% in FY2011. OSMRE paid the total amount reduced during the three-year phase-in period to certified states and tribes in two equal payments from the General Fund in FY2018 and FY2019. Certified states and tribes would no longer receive these payments in FY2020 and subsequent fiscal years because they have been fully paid out. In 2012, Congress amended Section 411(h) of SMCRA to place an annual $15 million cap on payments to each certified state or tribe. The cap applied to both in lieu payments and prior balance payments (described below) to certified states and tribes. Congress increased the cap to $28 million for FY2014 and $75 million for FY2015 by amending Section 411(h) of SMCRA again in 2013. Wyoming was the only state whose payments were reduced in FY2013 and FY2014 because of the caps. The higher cap in FY2015 did not affect Wyoming's payment. No other certified state or tribe exceeded caps for any of these fiscal years. In 2015, Congress removed these caps on payments to certified states and tribes by amending Section 411(h) of SMCRA. This amendment also authorized a retroactive payment for amounts that were reduced under the caps. Wyoming received a one-time retroactive payment of approximately $242 million in FY2016. This retroactive payment was included in the total payment to Wyoming in FY2016 as reported in the FY2018 Office of Management and Budget (OMB) budget in addition to the annual in lieu payments to certified states and tribes for FY2016. The majority of the unappropriated balance of the Abandoned Mine Reclamation Fund accumulated prior to the 2006 amendments. Prior to the enactment of the 2006 amendments to SMCRA, OSMRE distributed payments to both certified and uncertified states and tribes from the Abandoned Mine Reclamation Fund subject to annual appropriations. Annual appropriations were generally lower than annual coal reclamation fees collected by OSMRE prior to the 2006 amendments, resulting in an accumulation in the unappropriated balance of the Abandoned Mine Reclamation Fund. Section 411(h)(1) of SMCRA authorized ""Prior Balance"" payments equivalent to state and tribal share of the unappropriated balance of past coal reclamation fee receipts through annual federal payments to both uncertified and certified states and tribes from FY2008 through FY2014 from the General Fund of the U.S. Treasury. The Prior Balance payments were fully paid out by the end of FY2014, with the exception of the state of Wyoming (discussed above), which received a retroactive payment in FY2016 for amounts owed to the state because of statutory caps that were lifted. States and tribes no longer receive these prior balance payments. The accumulated balance of past coal reclamation fees collected prior to the 2006 amendments has remained credited to the Abandoned Mine Reclamation Fund and continues to accrue interest annually from investments in U.S. Treasury securities. States and tribes report site specific information to OSMRE about the reclamation of eligible AML projects. OSMRE hosts the Abandoned Mine Land Inventory System (AMLIS) database that presents information on total eligible mine reclamation costs by state and tribe, which may be categorized by unfunded, funded, and completed costs. The costs to complete reclamation at a particular site would depend on the scope and nature of actions necessary to mitigate the potential hazards and any technical or engineering challenges to implement the selected actions. OSMRE tracks AML reclamation project costs under three separate categories to identify the costs of completed projects and to estimate funding needs for future projects: 1. ""Unfunded Costs"" are based on estimates by states and tribes to implement projects for which funding is not available or has not been approved by OSMRE. 2. ""Funded Costs"" are based on estimates by states and tribes to implement projects for which funding is available and for which OSMRE has approved the funds. 3. ""Completed Costs"" are the actual costs of projects upon completion that states or tribes report to OSMRE. According to AMLIS, the total unfunded costs for uncertified and certified states and tribes was approximately $12.4 billion as of January 21, 2020. Of that total amount, the total unfunded cost estimates for uncertified states were approximately $12 billion, representing roughly 97% of the remaining unfunded reclamation needs. Unfunded reclamation cost estimates depend on the number of unreclaimed sites and on the severity of the reclamation problems as defined by the ""Priority"" level, per Section 403, for each unclaimed site in the state ( Table 1 ). Uncertified states reported Priority 2 costs as approximately $7.5 billion, or approximately 62% of the total uncertified unfunded reclamation costs. The remaining 38% of the unfunded costs for uncertified states are associated with Priority 1 and Priority 3 issues. Uncertified states reported Priority 1 issues as the smallest portion of unfunded cost estimates, but these sites generally represent the most severe hazards and most urgent priorities. Uncertified states reported the total unfunded reclamation cost for Priority 1 sites as roughly $1.8 billion. Two states, Pennsylvania and West Virginia, reported combined unfunded reclamation costs as $8.4 billion, representing approximately 66% of the total unfunded reclamation costs reported for all uncertified states. Pennsylvania reported the highest unfunded reclamation costs of any state, as reclamation cost estimates exceed $5 billion. OSMRE periodically updates funding estimates for sites in the AMLIS inventory. Thus, the number of priority sites in each funding category may change periodically. Future funding requirements may change as unforeseen contamination and remediation may be discovered or arise. Recent congressional hearing testimony by a Pennsylvania state official describes the challenges state programs face when attempting to catalog AML issues: Identifying and categorizing AML sites was among the first objectives for the AML program at its outset, and many of the cost estimates contained in the federal eAMLIS inventory were developed when the sites were initially inventoried in the early to mid-1980s. With time, the scale and depth of the AML problem has become better understood. However, it is in the nature of AML's that previously unknown sites will continue to manifest (particularly those associated with abandoned underground mines) and that known sites will continue to degrade, both of which increase the number of sites and the total cost to complete remaining AML reclamation work. With advancements in technology, the collection of more complete maps and mining records, and increased awareness and identification of these sites by local residents, many additional AML hazards have been and will continue to be identified and added to the AML inventory. Annual reclamation grants to states and tribes are based on the statutory formula described previously, and these grants are not based on reclamation needs. For example, several uncertified states reported similar unfunded reclamation costs: Indiana, Illinois, Oklahoma, and Missouri. The FY2020 grants received by those states, however, varied between $2.82 million and $11.7 million. Comparing FY2020 grants to the total unfunded reclamation costs suggests that some states or tribes may require annual grants for additional years or decades to completely fund reclamation needs. For example, Kansas reported $810 million in unfunded reclamation costs while receiving the minimum program make up fund amount of $2.82 million in FY2020. States and tribes may identify additional reclamation needs post-certification ( Table 2 ). A Wyoming state official described the ongoing reclamation challenges that the state continues to manage under their AML program. According to his written testimony, he described the state's awareness of AML issues as improved since the state achieved certification in 1984: Wyoming became a certified state under Title IV on May 25, 1984. Wyoming became certified on the basis of the best available information at the time. Early work to develop the inventory was essentially done through ""boots on the ground."" As our understanding of historic mining in the state has improved our AML inventory has continued to grow. Eligible UMWA members (including family members) receive post-retirement health and pension benefits from one of three multiemployer health benefit plans and one multiemployer pension plan. These plans include the Combined Benefit Fund, the 1992 Benefit Plan, the 1993 Benefit Plan, and the 1974 UMWA pension plan. These plans are funded by premiums paid by employer contributions and two sources of federal financial assistance authorized under SMCRA. Section 402(h) authorizes transfers of interest from the Abandoned Mine Reclamation Fund to the UMWA health plans on an annual basis if the annual contributions from employers are not sufficient to cover liabilities for benefit coverage each year. Section 402(i) also authorizes supplemental payments from the General Fund of the U.S. Treasury on an annual basis if the interest that accrues on the balance of the Abandoned Mine Reclamation Fund is not sufficient to ensure benefit coverage each year. General Fund payments to the UMWA plans and to certified states and tribes combined are subject to a statutory cap of $750 million per year. Each of these sources is authorized in SMCRA as permanent appropriations that result in direct federal spending (i.e., mandatory spending not subject to discretionary spending controlled through annual appropriations acts). Figure 2 shows the transfers of monies from the Abandoned Mine Reclamation Fund and the General Fund to eligible states and tribes for AML reclamation projects and other uses and to the UMWA plans. In response to rising concern in the early 1990s about the potential insolvency of UMWA health benefit plans, the Coal Industry Retiree Health Benefit Act of 1992 ( P.L. 102-486 , Title XIX, Subtitle C of the Energy Policy Act of 1992) authorized the annual transfer of interest from the Abandoned Mine Reclamation Fund to three UMWA health benefit plans beginning in FY1996. Like other federal trust funds invested in U.S. Treasury securities, the interest that accrues on the invested balance of the Abandoned Mine Reclamation Fund is derived from the General Fund of the U.S. Treasury through an intergovernmental transfer. Receipts from coal reclamation fees invested in U.S. Treasury securities serve as the basis for calculating the interest that accrues to the Abandoned Mine Reclamation Fund. However, the fees do not function as ""principal"" in the same manner as private investments. Because the interest is sourced from existing receipts in the General Fund, the interest does not increase total receipts in the U.S. Treasury. The interest payments to the UMWA health plans are supplemented by payments from the General Fund if the interest is insufficient. The General Fund is therefore the source of receipts within the federal budget for both the interest and the supplemental payments to support the UMWA health and pension benefit plans. The General Fund consists of receipts from individual and corporate income taxes and other miscellaneous receipts not dedicated to other accounts of the U.S. Treasury. None of the coal reclamation fees credited to the Abandoned Mine Reclamation Fund are available to fund the UMWA benefit plans in current law. If employer contributions and the interest accrued to the Abandoned Mine Reclamation Fund are not sufficient to ensure UMWA health benefit coverage each year, the 2006 amendments to SMCRA authorized permanent appropriations for supplemental payments from the General Fund to pay the balance of benefits that would otherwise not be covered. The amendments authorized permanent appropriations for these General Fund supplemental payments beginning in FY2008 and ""each fiscal year thereafter"" without a termination date. The supplemental payments from the General Fund have become the larger source of federal funding to help ensure health benefit coverage under the UMWA plans (see Figure 3 and Figure 4 ), as the benefit obligations of the plans have exceeded the availability of interest that annually accrues on the invested balance of the Abandoned Mine Reclamation Fund. In the 116 th Congress, the Bipartisan American Miners Act of 2019 ( P.L. 116-94 ; Further Consolidated Appropriations Act, 2020, Division M) increased the availability of federal financial assistance to address the solvency of the UMWA health and pension benefit plans, subject to a new statutory funding cap to control federal direct spending for this purpose. The act amended Section 402(h) of SMCRA to expand the eligibility of the UMWA health benefit plans for interest transfers from the Abandoned Mine Reclamation Fund and General Fund supplemental payments. The act also amended Section 402(i) of SMCRA to authorize General Fund payments for the 1974 UMWA pension plan and increased the total spending cap on Title IV General Fund payments from $490 million to $750 million annually to help fund the UMWA pension plan. The 2006 amendments to SMCRA authorized General Fund supplemental payments for the UMWA health benefit plans beginning in FY2008 but no federal funding for the 1974 UMWA pension plan. The 2006 amendments limited the eligibility of the UMWA health benefit plans for federal funding based on beneficiaries enrolled to receive health benefits as December 31, 2006. Funding needs for the 1993 UMWA health benefit plan continued to increase after this cut-off date as additional beneficiaries enrolled in that plan in later years. Certain coal mining company bankruptcies after 2006 also affected health benefit coverage for other retirees. Subsequent amendments to SMCRA in the 114 th and 115 th Congresses expanded the populations of beneficiaries who could be eligible for federal payments to the UMWA health benefit plans. Prior to the Bipartisan American Miners Act, Section 402(h)(2)(C) of SMCRA limited General Fund supplemental payments for the 1993 UMWA health benefit plan based on funding needs to cover beneficiaries enrolled in that plan as of May 5, 2017 (with coverage retroactive to January 1, 2017) and retirees whose benefits were denied or reduced as a result of coal mining company bankruptcies commenced in 2012 and 2015. Since that time, funding needs to cover health benefits for additional populations of retirees have increased. The Bipartisan American Miners Act amended Section 402(h)(2)(C) of SMCRA again to expand the eligibility of the 1993 UMWA health benefit plan for General Fund supplemental payments to cover beneficiaries eligible as of January 1, 2019, and retirees whose benefits were denied or reduced as a result of coal mining company bankruptcies commenced in 2018 and 2019. This expansion of eligibility for federal funding to ensure health benefit coverage for these additional populations of beneficiaries may lead to increases in General Fund supplemental payments to the UMWA health benefit plans. The Bipartisan American Miners Act of 2019 also authorized annual General Fund payments to the 1974 UMWA pension plan to address the solvency of that plan. The act established a new cap of $750 million annually on the aggregate amount of General Fund payments to certified states and tribes, UMWA health benefit plans, and the UMWA pension plan combined. The cap serves as a mechanism to control federal direct spending from the U.S. Treasury. After in lieu payments to certified states and tribes and supplemental payments to the UMWA health benefit plans each fiscal year, the act authorizes any remaining amount within the $750 million annual cap to be transferred to the UMWA pension plan. If the aggregate annual certified state and tribal payments and the supplemental payment for the UMWA health plans would exceed $750 million in a fiscal year, the UMWA health plans would be reduced to the cap, and the UMWA pension plan would not receive a federal payment that fiscal year. SMCRA gives funding priority to certified state and tribal payments that would not be reduced by the $750 million annual cap unless the amount for this purpose alone otherwise would exceed the cap. Given that certified state and tribal payments are based on shares of coal reclamation fees, these payments would not reach the cap unless coal production in certified state and tribal lands were to rise several fold compared to recent fiscal years. Supplemental payments to UMWA health plans may vary depending on the availability of interest accrued on the unappropriated balance of the Abandoned Mine Reclamation Fund, the annual funding needs of the plans, and the amount available within the $750 million annual cap for supplemental payments. General Fund payments to the 1974 UMWA pension plan would also depend on how much funding is remaining each year within the $750 million annual cap after certified state and tribal payments and the supplemental payment to the UMWA health benefit plans. Appropriations from the Abandoned Mine Reclamation Fund include uncertified state shares, historic coal funds, minimum program make up funds, interest transfers to UMWA health benefit plans, and OSMRE administrative program funding ( Figure 3 and Figure A-1 ). Annual grants to uncertified states from the Abandoned Mine Reclamation Fund are permanent appropriations except for the OSMRE program funding, which Congress provides to OSMRE through annual appropriations. Total appropriations from the Abandoned Mine Reclamation Fund from FY2008 to FY2020 have totaled approximately $3.1 billion ( Table 3 ). Permanent appropriations from the General Fund of the U.S. Treasury include in lieu state share payments to certified states and tribes and UMWA supplemental payments. The General Fund also provided prior balance payments to certified states and tribes and uncertified states in several installments from FY2008 through FY2014, with a retroactive payment to the state of Wyoming in FY2016 (See the discussion of ""Prior Balance Payments"" earlier in this report). From FY2008 to FY2020, General Fund payments authorized in Title IV of SMCRA totaled approximately $6.0 billion ( Table 3 ). Appropriations vary from year to year based on statutory requirements (such as the phase-in reductions and payments), the amount of coal fees collected in a given year (which determine the amount available for state and tribal payments), and the amount of supplement payments required for UMWA health benefit plans ( Figure 4 ). The Bipartisan American Miners Act of 2019 authorized annual payments from the General Fund to the UMWA pension plan retroactively back to FY2017 and subsequent fiscal years, among other provisions. The FY2020 payment of $1.6 billion to the UMWA pension plan included cumulative payments from FY2017 through FY2020. The amount available for each of these fiscal years was subject to the $750 million annual cap and was based on the remainder within the cap after the certified state and tribal payments and the supplemental payments for the UMWA health benefit plans. The $1.6 billion payment to the UMWA pension plan in FY2020 was the largest annual General Fund payment authorized under Title IV of SMCRA ( Figure 4 ). For FY2021 and subsequent fiscal years, General Fund payments to certified states and tribes and the UMWA health and pension benefit plans will remain subject to the $750 million annual cap. Certified state and tribal payments would cease after FY2022 in current law absent the reauthorization of coal reclamation fees upon which these payments are based. Since FY2008, supplemental payments to UMWA health benefit plans from the General Fund have contributed a greater amount than have interest transfers from the Abandoned Mine Reclamation Fund ( Table 3 ). Absent reauthorization of the coal reclamation fees, as the balance from the Abandoned Mine Reclamation Fund is paid down after FY2023, the interest payments would continue to have a relatively smaller contribution to UMWA health plans. Thus, the supplemental payments from the General Fund for the UMWA health plans would continue to contribute a larger share of contributions to the plans as the amount of interest payments decrease. From FY2008 to FY2020, UMWA health and pension plans received approximately $3.91 billion of the total $6.04 billion in General Fund payments authorized in Title IV of SMCRA ( Table 3 ). That amount was nearly twice the total amount of grants paid to uncertified states from the Abandoned Mine Reclamation Fund (approximately $2.03 billion from the aggregate of the uncertified state shares, historic coal funds, and minimum program make up funds for FY2008 to FY2020) for the reclamation of abandoned coal mining sites during that same time period. Whereas funding for reclamation grants is dependent on coal reclamation fee collections, most of the UMWA plan funding is tied to the $750 million annual cap on General Fund payments, which are not financed with these fees. OMB estimates that coal reclamation fee receipts would continue to decline through FY2021, after which time the fee collection authority expires in current law. The Budget Control Act of 2011 provides a measure to control federal spending by placing a percent reduction on permanent appropriations to remain within prescribed caps. The percent reduction may vary each year depending on how much of a reduction is needed to remain within the cap. Sequestration reductions apply to permanent appropriations from General Fund and Abandoned Mine Reclamation Fund permanent appropriations as of FY2013. Congress has also appropriated monies from the General Fund for the Abandoned Mine Land Reclamation Economic Development Pilot Program. These appropriations have been authorized in annual appropriations and are not authorized in Title IV of SMCRA. Congress previously reauthorized the fee under the Surface Mining Control and Reclamation Act Amendments of 2006, and that authorization is set to expire at the end of FY2021. Some Members of Congress have introduced legislation in the 116 th Congress that would reauthorize the coal reclamation fee and authorize funds from the existing balance of the Abandoned Mine Reclamation Fund for economic and community development. Various issues are discussed in the following sections. Given that the balance of the Abandoned Mine Reclamation Fund is less than 20% of the estimated unfunded reclamation needs, Congress may consider whether and how to fund the remaining coal reclamation needs. Abandoned coal mining sites that remain unreclaimed are expected to continue to pose hazards to public health, safety, and the environment. If the coal reclamation fees are not reauthorized beyond FY2021, Section 401 of SMCRA directs the unappropriated balance of the Abandoned Mine Reclamation Fund to be distributed among eligible states over a series of fiscal years beginning in FY2023 based on what the state received in FY2022 as its share of fee collections from the prior year. Those payments would continue in that same amount each fiscal year thereafter until the balance of the fund is expended. In FY2020, OSMRE reported that the unappropriated balance of the Abandoned Mine Reclamation Fund was approximately $2.2 billion. Reclamation grants to eligible states therefore would likely continue for some years, even if coal reclamation fees were not reauthorized after FY2021. If the fee collection is not reauthorized, the fees collected in FY2022 will dictate the annual rate of grants to eligible states starting in FY2023 until the unappropriated balance is expended. Those amounts are based on coal production or the value of the coal produced in FY2022, whichever is less. If the coal reclamation fees are not reauthorized, one potential option for Congress would be to appropriate from the General Fund to meet remaining needs after the balance of the Abandoned Mine Reclamation Fund is expended. Congress was faced with a similar issue in the debate over the reauthorization of Superfund excise taxes for the Superfund Trust Fund under CERCLA ( P.L. 96-510 ). From the enactment of CERCLA in 1980 through FY1995, the balance of the Superfund Trust Fund was provided by revenues from the collection of a Superfund excise tax on petroleum, chemical feedstocks, corporate income, transfers from the General Fund, and other receipts. The authority to collect those Superfund excise taxes expired in FY1995, leaving revenues from the General Fund as the primary source of money to the Superfund Trust Fund. The Abandoned Mine Land Reclamation Fee Extension Act ( S. 1193 ), introduced in the 116 th Congress, would amend Section 402(b) of SMCRA, extending the fee collection authorization date until September 30, 2036. As introduced, S. 1193 would authorize OSMRE to collect coal reclamation fees under Section 402, and OSMRE would begin fixed payments from the unappropriated balance on the Abandoned Mine Reclamation Fund to uncertified states beginning in FY2023 based upon their FY2022 grants, according to Section 401(f)(2)(B). The Surface Mining Control and Reclamation Act Amendments of 2019 ( H.R. 4248 ) would amend Section 402(b) of SMCRA and Section 401(f) of SMCRA. This bill would extend the fee collection authorization date until September 30, 2036, and grants to eligible states and tribes would continue to be paid out annually according to the statutory formula until after FY2037. The bill would also increase the minimum payments to uncertified states from $3 million to $5 million and authorize compensation to uncertified states from the Abandoned Mine Reclamation Fund for the total amount reduced by sequestration between FY2013 and FY2018. In FY2020, 11 uncertified states together received approximately $21.9 million in minimum program make up funds, and 3 other uncertified states received less than $5 million. Raising the cap would increase payments to uncertified states receiving less than the current $3 million cap and may change the number of uncertified states eligible for minimum program make up funds. The extent to which more uncertified states become eligible would depend on future coal production in that state, coal production in certified states contributing to historic payments, and the value of coal generated. In the event the Congress enacts legislation reauthorizing the coal reclamation fee, the adequacy of those receipts to pay for the remaining unfunded reclamation costs would depend on domestic coal production, the duration of fee extension, and the emergence of additional reclamation needs. Given that the unfunded reclamation costs may be updated or subject to change based on the discovery or the occurrence of new health and safety or environmental issues, predicting the duration to reauthorize the fees to fund the remaining unfunded reclamation costs is challenging. Additionally, eligible states and tribes continuously update unfunded costs estimates as new problems are discovered or arise. Other legislation introduced in the 116 th Congress would use a portion of the unappropriated balance of the Abandoned Mine Reclamation Fund to provide funding for AML reclamation projects that promote economic and community development, as well as the purposes and priorities of reclamation described in Section 403 of SMCRA. However, some have argued expending funding for AML projects to prioritize economic and community development deviates from the original congressional intent of prioritizing the reclamation of lands and waters impacted by historic coal mining sites to address health and safety issues. Congress authorized the Abandoned Mine Land Reclamation Economic Development Pilot Program (AML Pilot Program) in the Consolidated Appropriations Act, 2016 to determine the feasibility of reclaiming abandoned coal mining sites to facilitate economic and community development. Congress provides funding for the AML pilot program through annual appropriations from the General Fund of the U.S. Treasury, not from the Abandoned Mine Reclamation Fund financed with coal reclamation fees. From FY2016 to FY2020, Congress has appropriated a total $540 million from the General Fund to the AML pilot program. For states and tribes that receive discretionary appropriations for the AML pilot program, those funds are in addition to the permanent appropriations as reclamation grants to eligible states and tribes from the Abandoned Mine Reclamation Fund. Annual appropriations have limited the use of AML pilot program grants to fund reclamation projects only in Appalachian counties of eligible states in areas where the project would have the potential to facilitate economic or community development. SMCRA authorizes the broader use of grants from the Abandoned Mine Reclamation Fund to fund reclamation projects in any counties within an eligible state. In the 116 th Congress, House and Senate versions of the Revitalizing the Economy of Coal Communities by Leveraging Local Activities and Investing More Act of 2019 (RECLAIM Act) have been introduced ( H.R. 2156 and S. 1232 ). Those bills would authorize $1 billion over five years from the existing unappropriated balance of the Abandoned Mine Reclamation Fund for the reclamation of abandoned coal mining sites as a means to facilitate economic and community development in states and tribes with eligible reclamation programs under Title IV of SMCRA. The RECLAIM Act would distribute $195 million annually to uncertified states based on historic payments and averaged state share grants. House and Senate versions of the RECLAIM Act differ by the allocation of these funds to uncertified states. For uncertified states to obligate RECLAIM monies on AML projects, the state would be required to demonstrate that those projects satisfy the reclamation priorities described in Section 403 and would contribute to future economic or community development. Both introduced versions of the RECLAIM Act would provide $5 million annually to certified states and tribes. Certified states and tribes would submit an application for funds, and OSMRE would determine the distribution of those funds based on the demonstration of needs. Neither introduced version of the RECLAIM Act would reauthorize the collection of the coal reclamation fees. RECLAIM grants to eligible states and tribes would be in addition to the annual grants paid to states and tribes. If the RECLAIM Act were enacted and the fee collection authority were not reauthorized, the unappropriated balance of the Abandoned Mine Reclamation Fund would be paid out sooner compared to a scenario where neither RECLAIM nor fee reauthorization legislation were enacted. Both House and Senate versions of the RECLAIM Act would increase the minimum program make up funds to uncertified states from the Abandoned Mine Reclamation Fund from $3 million to $5 million annually.","Coal mining and production in the United States during the 20 th century contributed to the nation meeting its energy requirements and left a legacy of unreclaimed lands. Title IV of the Surface Mining Control and Reclamation Act of 1977 (SMCRA, P.L. 95-87 ) established the Abandoned Mine Reclamation Fund. The Office of Surface Mining Reclamation and Enforcement (OSMRE) administers grants from the Abandoned Mine Reclamation Fund to eligible states and tribes to reclaim affected lands and waters resulting from coal mining sites abandoned or otherwise left unreclaimed prior to the enactment of SMCRA. Title IV of SMCRA authorized the collection of fees on the production of coal, which are credited to the Abandoned Mine Reclamation Fund. The use of this funding is limited to the reclamation of coal mining sites abandoned or unreclaimed as of August 3, 1977 (the date of SMCRA enactment). Title V of SMCRA authorized the regulation of coal mining sites operating after the law's enactment. Coal mining sites regulated under Title V are ineligible for grants from the Abandoned Mine Reclamation Fund. The balance of the Abandoned Mine Reclamation Fund is provided by fees collected from coal mining operators based on the volume or value of coal produced, whichever is less. The coal reclamation fee collection authorization in Title IV expires at the end of FY2021. If Congress does not reauthorize the collection of reclamation fees, SMCRA directs the remaining balance of the Abandoned Mine Reclamation Fund to be distributed among states and tribes receiving grants from the fund based on the FY2022 grant amounts. The FY2022 grant amounts would depend on the fees collected in FY2021, and payments from the fund would begin in FY2023, continuing annually until the balance has been expended. As of November 11, 2018, OSMRE reported that the unappropriated balance of the Abandoned Mine Reclamation Fund was approximately $2.3 billion. Reclamation grants to eligible states and tribes receiving grants from the Abandoned Mine Reclamation Fund would continue for some years until the balance is expended if coal reclamation fees are not reauthorized. The balance of the Abandoned Mine Reclamation Fund is several times less than the estimated unfunded reclamation costs. OSMRE recently reported estimates of the unfunded reclamation costs as $12.4 billion. Congress may consider whether and how to fund the remaining unfunded coal reclamation needs. If the fees are reauthorized, the adequacy of those receipts to pay the remaining unfunded reclamation needs would depend in part on decisions made by Congress (e.g., source of funds, duration of the fee extension, and fee rate). Additional factors include the status of domestic coal production, upon which the fees are based, and the potential emergence of additional reclamation needs. As introduced, H.R. 4248 and S. 1193 would amend SMCRA to extend the fee collection authorization at the current fee rates until September 30, 2036. SMCRA also authorizes federal financial assistance to United Mine Workers of America (UMWA) health and pension benefit plans for retired coal miners and family members who are eligible to be covered under those plans. Two sources of federal financial assistance to UMWA plans include interest transfers from the Abandoned Mine Reclamation Fund and supplemental payments from the General Fund of the U.S. Treasury. Should Congress not reauthorize the coal reclamation fees, as the balance from the Abandoned Mine Reclamation Fund is paid down, the interest transfers from the Abandoned Mine Reclamation Fund would make a relatively smaller contribution to the UMWA plans, increasing the reliance on General Fund payments for these plans. In the 116 th Congress, House and Senate versions of the RECLAIM Act ( H.R. 2156 and S. 1232 ) would authorize $1 billion over five years from the unappropriated balance of the Abandoned Mine Reclamation Fund for the reclamation of abandoned coal mining sites as a means of facilitating economic and community development in coal production states. Either of these bills would accelerate the expenditure of the remaining balance of the fund but would not reauthorize the reclamation fee."
"The U.S. Coast Guard is the agency charged by law with overseeing the safety of vessels and maritime operations. For at least four decades, Congress has been concerned about the Coast Guard's ability to maintain an adequate staff of experienced marine safety personnel with technical knowledge of vessel construction and accident investigation. Recent incidents, particularly the 2015 sinking of the U.S.-flag cargo ship El Faro with the loss of 33 lives during a hurricane near the Bahamas, have revived questions about the Coast Guard's persistent difficulty with hiring and training a marine safety workforce. The safety inspections of the vessel were found to have been inadequate. In the Hamm Alert Maritime Safety Act of 2018 ( P.L. 115-265 , §210), Congress directed the Coast Guard to brief congressional committees of jurisdiction on its efforts to enhance its marine inspections staff, the staff responsible for ensuring that vessels are meeting safety standards. In the Frank LoBiondo Coast Guard Authorization Act of 2018 ( P.L. 115-282 , §501) Congress requested a report from the Coast Guard detailing the courses and other training a marine inspector must complete to be considered qualified, including any courses that have been dropped from the training curriculum in recent years. This report examines the staffing challenges the Coast Guard faces in assuring marine safety at a time when its responsibilities in this area are increasing significantly. It also considers proposals to realign marine safety functions within the federal government. The Coast Guard engages in two distinct activities with respect to marine safety: Vessel inspection . The Coast Guard has a staff of 671 marine inspectors—533 military and 138 civilian—who are responsible for inspecting U.S.-registered passenger and cargo vessels, foreign-flag vessels calling at U.S. ports, mobile offshore drilling units, and towing vessels and barges carrying hazardous cargoes. Foreign-flag vessels are those registered in jurisdictions other than the United States. Accident investigation. The Coast Guard employs 158 accident investigators—120 military and 38 civilian—who conduct casualty investigations of U.S.- and foreign-flag vessels to detect and correct safety hazards, prepare investigation reports, analyze trends, and recommend enforcement action. These two assignments fall under the Coast Guard's prevention policy workforce headed by the Assistant Commandant for Prevention Policy, a rear admiral. Reporting to the Assistant Commandant is the Director of Inspections and Compliance, a captain, who oversees the Office of Commercial Vessel Compliance and the Office of Investigations and Casualty Analysis, among other safety-related offices. The prevention policy workforce is especially critical for the commercial U.S.-flag fleet because a majority of this fleet is much older than the 15 to 20 years of age at which ships in the worldwide oceangoing fleet are typically scrapped. About 60% of the 217 ships in the dry-cargo U.S.-flag commercial fleet and 53% of U.S.-flag offshore supply vessels (which service oil rigs) are older than 20 years; the El Faro had been in service for 40 years. Some 72% of the 1,497 vessels in the U.S.-flag passenger and ferry fleet are over 20 years old. In general, older vessels require more frequent inspection; the National Transportation Safety Board (NTSB) raised questions about the quality of the Coast Guard's inspections in its investigation of the El Faro sinking, after which the Coast Guard revoked the safety certificate for another vessel of the same design and similar age, forcing its removal from service. Generally, inspections of vessels carrying passengers or hazardous cargo, and inspections of older vessels, are more frequent than inspections of general-cargo vessels and newer vessels. Vessels transporting cargo or passengers domestically (from one U.S. point to another U.S. point) must be U.S.-built, as required by the Jones Act. The cost of U.S.-built vessels, particularly deep-draft ships, can be multiples of world prices, which may retard vessel replacement. U.S.-flag vessels on international voyages need not be U.S.-built, and this fleet is younger than the Jones Act fleet. Congress's request for information about the Coast Guard's inspection staff comes at a time when the number of vessels requiring inspection is increasing by about 50% because towing vessels have been added to the list. Congress has been increasing the agency's role in fishing vessel safety as well, putting additional demands on the safety workforce. Adding to the Coast Guard's safety responsibilities is the construction of several liquefied natural gas (LNG) export terminals, whose siting, operations, and security are partly or entirely under Coast Guard jurisdiction, as well as the increasing use of LNG as ship fuel. According to the Coast Guard, the marine inspector workforce consists of commissioned officers, chief warrant officers (CWOs), and civilians. Officer marine inspectors enter the workforce through a variety of accession sources, including Officer Candidate School, the Direct Commission Officer program for U.S. Maritime Academy graduates, and the Coast Guard Academy. CWOs are divided into two specialties: Marine Safety Specialty Deck and Marine Safety Specialty Engineer. Those who meet the eligibility requirements to compete for CWO are selected through an accession panel. An emphasis is placed on past maritime and inspection experience when hiring civilian marine inspectors. Additionally, the Coast Guard hires and trains civilians who are inexperienced in inspections to become marine inspectors through its civilian marine inspector apprenticeship program. The normal entry is a marine inspector apprenticeship tour at a larger port (referred to as a feeder port). A feeder port is located near a unit that is better prepared and equipped to train inspectors. The civilian inspectors generally remain at a single location for their entire careers to provide continuity. Most officers complete one to three tours as a field-level marine inspector or marine investigator and do not rotate between tours ashore and afloat. Officers rotate approximately every three years and may be promoted to leadership positions in the marine safety organization. CWOs remain marine inspectors or marine investigators until retirement. On average, a CWO serving as a marine inspector works in this capacity for approximately 8.7 years. Inspector pay scales range from CWO2 to CWO4 (approximately $90,000 to $124,000); officers (O-1 to O-5, approximately $64,000 to $152,000). Civilian marine inspectors are typically classified at GS-12 ($64,000 to $84,000). The investigator workforce also comprises commissioned officers, CWOs, and civilians. It has the same path for entry as marine inspection. Many marine investigators have prior experience as inspectors, giving them familiarity with commercial shipping operations and regulations. However, this is not true in all cases, and some marine investigators become familiar with marine inspections through on-the-job training. The typical pay scale for investigators is CWO3 to CWO4 (approximately $106,000 to $124,000) and O-2 to O-4 (approximately $83,000 to $130,000). The Coast Guard has recognized the training of the inspection staff as an important concern. As Rear Admiral John Nadeau, then the Coast Guard's Assistant Commandant for Prevention Policy, testified at a January 2018 hearing about the El Faro casualty: [T]his is not strictly a capacity problem. There are elements to training. If you just gave me another 1,000 marine inspectors, it wouldn't solve this problem. This problem involves training. This problem involves getting the right information. This problem involves getting the right policy and procedures in place.... Entry-level marine inspections is not what I am talking about. I need to have a small corps—it is not a lot—a small corps of people that can get out and are highly trained and proficient and stay focused on this area until we get it right. In a March 2019 hearing, Rear Admiral Nadeau testified that the agency was improving the quality of its safety inspection workforce: [T]he Coast Guard has prioritized marine inspector training, established new staff dedicated to performing third party oversight, increased opportunities for maritime graduates to join the Coast Guard, and prioritized the hiring of civilian marine inspectors.... The Coast Guard is actively developing a comprehensive training architecture for our marine inspectors. This architecture will provide cohesive strategy, policy, and performance support to ensure that Coast Guard marine inspectors are trained consistently from the basic to the advanced level in a manner that keeps pace with industry, technology, and related regulatory changes. The Coast Guard repeatedly has made statements in recent decades laying out its plans to improve the quality of its inspection workforce. Often, these pronouncements have been in response to heightened congressional scrutiny of the agency's marine inspection program in the aftermath of a major marine casualty in which investigators found that subpar vessel inspections played a contributing role. This cycle was described by a retired Coast Guard senior official in 2015: [T]he Marine Safety program is a low profile mission within the Coast Guard's multi-mission portfolio. That is true until a confluence of factors markedly raises its visibility and causes great introspection. The program's purpose is to keep bad things from happening. Non-events are virtually impossible to measure. Marine Safety is normally not a major budget item of interest to the Service. The Coast Guard, especially in what has generally been a declining resource environment, will always have many pressing and competing budget needs. And if a major incident occurs, Congress is willing to throw the Service a lifesaver in the form of significant dollars. As employees of a military organization, Coast Guard personnel typically change mission assignments and/or locations every two or three years, so they do not develop the knowledge and experience required of a proficient marine inspector or investigator. As noted, the scope of the vessel types the Coast Guard inspects ranges from small passenger boats to oceangoing ships to mobile offshore drilling rigs. Geographic reassignments can change the category of vessels an individual inspector must evaluate. Vessel technology can be complex and is constantly changing, and the safety regulations are voluminous and technical. An internal Coast Guard study in 2012 revealed that ""41% of marine inspectors were not confident interacting with maritime industry personnel concerning marine inspection issues."" Even if personnel rotate back into marine inspection after a different assignment, they need time to regain proficiency. The Coast Guard recognizes the difficulty of building marine inspection and investigation proficiency among uniformed officers who rotate assignments frequently. Consequently, each Commandant's initiative or plan to revamp marine inspections has stated a goal of boosting the civilian inspector and investigator workforce and creating more attractive long-term career paths by extending promotion potential. However, a perception inside the agency that marine safety is an area that retards promotion could be thwarting efforts to boost the inspection workforce. This is asserted in a study by a career Coast Guard official who spent his last several years working in human resources for the agency: [T]he Coast Guard's internal manpower management processes are considered to be at odds with the need to build and maintain a competent marine safety officer corps … The perception for decades is that it is difficult for marine safety officers to succeed in the Coast Guard's military officer promotion system. The Service endeavors to manage individual officer specialties, such as marine safety, while at the same time operate an ""up or out"" promotion system that is mandated by law.... officers who follow a marine safety career path consider themselves disadvantaged as they become more senior and face stiffer competition for promotion.... Currently, the perception of disadvantage continues. The Coast Guard's challenges with marine inspection and investigation date to a government reorganization in preparation for World War II. A 1942 executive order transferred the civilian Bureau of Marine Inspection and Navigation (BMIN) from the Department of Commerce to the Coast Guard for the duration of the war and for six months after hostilities ended. After the war ended, President Truman proposed keeping the marine inspection function under the Coast Guard rather than transferring it back to the Department of Commerce. Proponents of this approach contended that the Coast Guard had performed the mission adequately during the U.S. involvement in the war and that synergies existed with other Coast Guard missions such as maritime search and rescue. Furthermore, they asserted, there was no need to create additional overhead and administrative expenses by establishing a separate bureau. The maritime industry argued against keeping marine inspections under the Coast Guard. A witness representing the American Petroleum Institute testified in 1947 that under the BMIN, almost all of the inspectors had been former merchant marine officers with 10 to 20 years of experience aboard ships who had practical knowledge of vessel safety vulnerabilities. The permanent assignment of marine inspections to the Coast Guard was part of a much larger government reorganization plan advanced by the Truman Administration that was to go into effect unless both houses passed a concurrent resolution of disapproval within a specified period. The House adopted such a resolution, but the Senate did not. Consequently, President Truman's plan became effective in 1946. In subsequent years, the Coast Guard's role remained a point of contention. In 1947, a representative of a ship captains' union testified that under the old regime, the men in the Bureau of Marine Inspection were the wearers of the purple cloth. Before men could become assistant local inspector and go up to the grade of local inspector and supervising inspector, and so forth, they had to be either a master mariner [ship captain], or a chief engineer … with the result that the most mature, and most sensible and most experienced and most intelligent of our profession got into the service. It was very seldom that you found a local inspector under 35 years of age.... They were of mature judgement and they were one of the most respected organizations in the entire marine industry. The concern that the Coast Guard would be unable to replace the experience of the ex-BMIN inspectors as they retired persisted over the decades. In 1979, the General Accounting Office (GAO, known since 2004 as the Government Accountability Office) conducted an audit of the Coast Guard's marine inspection program after a series of tanker accidents in or near U.S. waters during the winter of 1976-1977 resulted in losses of life and property and environmental damage. Under the heading ""Trained and Experienced Personnel Needed,"" the GAO report raised questions about the training of marine inspectors: Most of the inspectors in the three districts included in our review have had at least one tour of sea duty on Coast Guard cutters. Considering this sea experience, along with the on-the-job and formal training, it would seem that most inspectors would be highly qualified. However, we found that relatively few field unit inspectors could be considered as qualified hull or boiler inspectors. This has occurred because the Coast Guard has not established uniform criteria or procedures to determine whether inspectors are actually qualified and has not scheduled needed vessel inspection training in a timely manner. In addition, the rotation policy caused by the lack of a specialized job classification or career ladder contributes to the difficulty in achieving and maintaining expertise in marine inspection. The report note d that the Coast Guard Merchant Marine Safety Manual in effect at the time stated as a customarily accepted fact that it takes three years of experience to become a qualified marine inspector , adding that ""every 2 to 3 years the Coast Guard rotates its staff among various duty stations such as search and rescue, buoy tenders, and high- and medium-endurance cutters , "" and that "" about the time personnel become proficient in one area, such as vessel inspection, they are transferred and assigned to another job."" The GAO found that ""few field inspectors had previous inspection duty or consecutive assignments at marine inspection offices"" and the Coast Guard had been ""unable to keep experienced and trained staff in the vessel inspection area."" Some of the Coast Guard field officers interviewed by the GAO commented that inspectors needed to have additional expertise to gain the respect of the maritime industry, and that most inspectors were not knowledgeable enough to provide industry with a precise interpretation of marine rules and regulations. In response to the 1979 GAO report, the Coast Guard stated that while it would consider establishing an inspection specialty career classification for both officers and enlisted personnel and extend its inspection assignment tour, its existing job classification system was better suited to the multimission nature of the agency. In October 1980, the U.S.-flag ship Poet , carrying a load of corn to Egypt, disappeared with no trace somewhere in the Atlantic. Its disappearance was believed to have coincided with a period of heavy weather; the structural integrity of the 36-year-old ship was suspected as a possible cause. The Coast Guard's Marine Board of Investigation found that the Coast Guard inspector conducting most of the ship's inspections during the year prior to the voyage had no previous experience inspecting commercial vessels, which heightened the Marine Board's concern that structural defects may have gone undetected. In February 1983, the Marine Electric , a 40-year-old Jones Act ship carrying coal from Norfolk, VA, to Massachusetts, sank in heavy weather, killing 31 crew members. Investigators concluded that the probable cause of the sinking was the poor condition of the cargo hatches and deck plating, which allowed waves to flood the hull. The Coast Guard's Marine Board of Investigation stated that the ship's Coast Guard inspectors lacked the experience to conduct safety examinations of a vessel the size, service, and configuration of the Marine Electric . The incompleteness of these inspections as to the dictates of regulations and policy was attributed to the lack of training and experience on the part of the Coast Guard inspectors.... the inexperience of the inspectors who went aboard the Marine Electric , and their failure to recognize the safety hazard imposed by the deteriorated, weakened and non-tight hatch covers, raises doubts about the capabilities of the Coast Guard inspectors to enforce the laws and regulations in a satisfactory manner. At a 1983 congressional hearing examining the marine casualty, a representative of a ship engineers' union noted that ""Coast Guard officers with 12 weeks experience behind a desk are dealing with officers of the merchant marine who have spent 20 years at sea,"" and that ""an inspector can't condemn a dangerous ship if he doesn't know what a dangerous ship is."" This representative further stated that ""while multi-mission flexibility and frequent rotation may be an optimal way to fulfill the Coast Guard's military readiness mission, it is a serious and even fatal distraction from the regulation of commercial industry."" The witness urged Congress to transfer ship inspection responsibilities to an agency of civilian career professionals, similar to the Bureau of Marine Inspection and Navigation that existed before World War II. Some committee Members appeared receptive to this idea. The witness also raised the issue of whether the more fundamental problem was the age of the U.S. fleet: The problem of course is old ships. This means dangerous ships … The Poet and the Marine Electric are trying to tell us something: If a ship isn't retired when it gets old, it will retire itself ... Although 40% of the U.S. fleet is at least 20 years old, 75% of the dozen worst U.S. marine tragedies in the past two decades struck these ships aged 20 or older. Twenty is the rounded number when industry experts say a ship should be junked. In conclusion, any analysis of the plight of maritime safety is misleading if it does not identify old ships as the core of the problem. The only way to uproot this evil is to mandate an aggressive attack by a dedicated and seasoned staff of professional inspectors—a team that the Coast Guard could never field unless it ended its fundamental multi-missioned military structure. In 1985, following up on its 1979 audit, the GAO reported that the Coast Guard had recently completed a two-year project to develop a new marine safety training and qualification program. One change was establishment of uniform standardized on-the-job training and on-the-job qualification requirements. Another change was selection of three ""training ports"" where new inspectors would go for 18 months of intensive training before their initial assignment. The GAO stated that it was too early to assess whether these changes had addressed the qualification problems identified in its 1979 report. On March 24, 1989, the U.S.-flag tanker Exxon Valdez grounded on Bligh Reef after departing Valdez, AK, spilling about 11 million gallons of oil. The actions of the ship captain, who was found to be impaired by alcohol, and who had turned over operation of the vessel to a third mate before reaching open waters, was the focus of the marine casualty investigation. In response to the Exxon Valdez incident, among other things, Congress increased funding for Coast Guard safety personnel. According to one Coast Guard senior official, the ""War on Drugs"" in the mid-1980s had shifted resources from the agency's safety mission to its drug interdiction mission. In the 1990s, the quality of Coast Guard inspections came under scrutiny again as the result of two fatal passenger vessel incidents. On December 5, 1993, the wooden vessel El Toro II , a fishing charter party vessel built in 1961 and carrying 23 people, began sinking in the Chesapeake Bay when water seeped through the hull's planks. There were three fatalities. The Coast Guard's Marine Board of Investigation found that the Coast Guard inspector's knowledge of wooden boat structure was lacking, and that inspection staff were not cognizant of previous inspection reports that would have prompted concern about the vessel's seaworthiness, given the owner's poor track record in making needed repairs to the 32-year-old vessel. The second incident occurred on a lake near Hot Springs, AR, in May 1999. The Miss Majestic , an amphibious ""duckboat"" built during World War II to transport troops and supplies, which had since been converted into a tour boat, began taking on water and sank in less than 30 seconds, drowning 13 of its 20 passengers. The Coast Guard's Marine Board of Investigation found that the Coast Guard inspector had not noticed that a critical part was missing from the rear shaft that was the main source of the leak. It determined that the inspector lacked awareness of the importance of this vessel's design components. The board also found that the local Coast Guard office was not keeping adequate inspection records, which would have shown that the vessel's owner had not installed safety equipment that previous inspectors had called for. The NTSB concluded that the Coast Guard's inspections of the vessel were ""inadequate and cursory"" and that the ""lack of Coast Guard guidance and training for the inspection of [this vessel design] contributed to the inadequate inspections of the Miss Majestic ."" Moreover, the NTSB found that Coast Guard inspectors over the preceding five years had missed deficiencies with the vessel that might have been obvious even to an untrained observer, such as pinholes in the hull of the vessel caused by corrosion and an improper repair using a rubber patch to conceal a large, wasted area of the hull. These marine casualties in the 1990s prompted the Coast Guard and Congress to examine the marine safety mission of the agency once again. In December 1995, the Coast Guard conducted an internal study of its accident investigation activity. One of the recommendations of the internal report was ""To improve the overall quality of the information derived from investigations, an investigations career path should be developed. This would enable the Coast Guard to raise the overall level of expertise in investigations."" In 1996, the GAO reviewed whether the Coast Guard had fully utilized additional funding Congress provided the agency in the early 1990s to add 875 positions to its Marine Safety Program. At a 1997 congressional hearing, a representative of the passenger vessel industry noted that vessel inspection ""responsibilities fill hundreds of pages of regulations and thousands of pages of referenced consensus standards and rules."" The industry representative was ""concerned that the problems in the commercial vessel safety program will grow because of a resulting lack of training and experience on the part of many Coast Guard inspectors."" Following the terrorist attacks of September 11, 2001, Congress greatly increased the Coast Guard's resources directed toward maritime security matters. The maritime industry's reaction to the Coast Guard's new security responsibilities came to light at a 2007 congressional hearing. Some industry witnesses at the hearing contended that since the Coast Guard had been transferred from the Department of Transportation to the newly created Department of Homeland Security (DHS) in 2002, the agency was more focused on security matters than on safety. One industry witness asserted that the industry's relationship with Coast Guard inspectors had changed from being partners with a mutual interest in safety to being viewed as a security risk. The purpose of the 2007 hearing was to examine a proposal by the chairman of the House Transportation and Infrastructure Committee to transfer the Coast Guard's marine safety inspection function to a civilian agency—in other words, to undo the World War II-era reorganization. The chairman argued that ""What we need is what we have in the [Federal Aviation Administration], skilled personnel who have years of seasoning, who aren't shifted year after year from one post to another with only three years on staff."" At the hearing, a witness representing ship captains described how marine inspection was performed in other countries: In foreign countries outside the United States, you go to the Netherlands or Germany or Norway, that is a civilian force that comes on. They are all retired masters or chief engineers, and they become the inspection service for that country. When they go aboard a ship, they are interfacing with chief engineers and masters that have a shared experience. There is a great deal of respect for the inspectors, and the inspectors have a great deal of respect for the officers on the ship. It is an effective system. You have expertise. You have competence, and you have motivation. They obviously love the maritime industry because that is their choice. It is not something they have been assigned to as part of their tour of duty and attaining a generalized background in the Coast Guard. I think that is the way to go. When a fellow retires after a career at sea and he is 45, 50 years old, he might not be looking for a future career advancement as Coast Guard officer. You make him a civilian inspector, and he would fill the same role that they fill in Germany and most maritime countries. Most maritime countries do not have a uniform Coast Guard acting as the maritime inspection service. They use maritime professionals from the industry to fill that role. When they send a petty officer down to represent the United States' interest in enforcing international conventions on foreign flag ships as a port state control officer, the foreign masters, the Germans and the British, take offense that the Coast Guard hasn't sent an officer down or a civilian personnel with a maritime background. At the hearing, the Commandant of the Coast Guard explained the dilemma facing the agency regarding its inspection staff: Here is the quandary we are faced with. Sooner or later, as you get promoted in the Coast Guard, you become a commanding officer. If you get selected for flag, you become a district commander and maybe even a Commandant. When you get to there, you become a general. You are representing the entire organization. We have an issue of needing specialists, subject matter experts, but at some point we need to generalize these folks and give them other experiences if they are going to be promotable and move up to become executives in the organization. In corporate America, for example, if you are a vice president, everybody needs to understand corporate finance. What we have developed inside the Coast Guard is the notion of what we call a broadened specialist. What we need to look at is maintaining the subject matter expertise that is critical to mission execution and then how we can broaden these people at a later date and still make them promotable. They want to be able to move up in the organization as well. At the 2007 hearing, the Commandant urged the ex-chairman of the Transportation and Infrastructure Committee to defer his proposal until the Coast Guard had a chance to rectify the problem, which the chairman agreed to do. The Commandant outlined the actions he was taking to improve the inspection workforce: In the last year, I have directed significant changes and improvements in the training and qualifications of our inspectors to keep pace with the technological advancements and growth in maritime industry. We have made changes to our warrant officer selection system to bring more talented and experienced enlisted personnel into the maritime safety specialty. We have learned valuable lessons from joint military and civilian staffing of our sector command centers and our vessel traffic services. These are areas where we used to have Coast Guard personnel only staffing. We now have brought civilian personnel in to provide continuity, corporate memory and way to bridge during the transfer season, so we get the best of training for our people in uniform by maintaining continuity of services. I am committed to the establishment of more civilian positions in the marine inspection field. We need people with critical job skills. We need to maintain continuity while providing our military members access to this type of experience. We must leverage and expand this dual staffing model. Getting the inspection program right in terms of training, qualifications and staffing is my highest maritime safety priority. The Commandant also argued that marine safety and security were two sides of the same coin; they were not mutually exclusive missions but synergistic to the Coast Guard's other maritime missions. The Commandant's first step was an internal study of the issue by a retired Commandant. This internal study acknowledged that the agency's practice of regularly rotating staff geographically or by activity, as military organizations typically do, hindered its ability to develop a cadre of staff with sufficient technical expertise in marine safety. The report noted the following: ""If the inspector is constantly referring to the regulations when conducting an inspection, the customer doesn't have much confidence in the quality of the Coast Guard inspection. I understand that the Coast Guard has sent unqualified personnel or marginally qualified personnel to conduct inspections and investigations."" The report also stated that ""the DHS has no responsibility for transportation safety so getting them to embrace the Marine Safety program could be a heavy lift."" In response to this problem, the agency revamped its safety program and Congress appropriated additional funds specifically for safety personnel. The FY2009 Coast Guard budget request noted that ""the Coast Guard is encountering serious stakeholder concern about our capacity to conduct marine inspections, investigations, and rulemaking."" Under the revamped safety program, the Coast Guard created additional civilian safety positions, converted military positions into civilian ones, and developed a long-term career path for civilian safety inspectors and investigators. A 2008 audit by the DHS Inspector General (IG) confirmed that Coast Guard stated that the problems identified with respect to its safety program workforce also existed among vessel accident investigators. The IG found that accident investigations were hindered by unqualified personnel and recommended hiring more civilians for this activity. The IG also found that the Coast Guard had lowered the qualification standard for accident investigators in August 2007 by removing the requirement that an investigator have experience as a hull or machinery and small passenger vessel inspector. Since vessel casualties commonly involve structural deficiencies in the hull or loss of propulsion, this experience is considered important for an accident investigator. The IG noted that in the United Kingdom, Australia, and Canada, accident investigators are required to be former ship captains or chief engineers with several years of experience. The IG report noted issues with rotating assignments and promotion potential in the marine safety area: A tour in the Prevention Directorate could mean yearly rotations across specialty areas, such as waterways management and drug and alcohol testing. Given the lack of a career path and the unpredictable nature of investigation assignments, potential Coast Guard candidates also may not want to become investigators. Hull and Machinery Inspectors told us that promotion to the position of marine casualty investigator would not advance their careers. Additionally, according to Coast Guard personnel, tour of duty rotations hinder investigators in acquiring the experience needed for career development. The agency's uniformed investigators generally are not in their positions for more than a single, three-year tour of duty in the same location. The forced rotations preclude the investigators from acquiring the extensive knowledge of local waterways and industries that experienced casualty investigators have told us is needed to be an effective investigator. In contrast, civilian marine casualty investigators are not subject to the three year tour of duty rotation standard. Over time, they can gain a greater knowledge of specialties such as local waterways and industries or experience in enforcing maritime regulations to enhance their qualifications. Of the 22 marine casualty investigators that we reviewed, one was a civilian. A 2009 study by the Homeland Security Institute, a federally funded research center established by Congress in the Homeland Security Act of 2002 (§312) to assist DHS in addressing policy issues, reiterated the same theme regarding frequent rotations of uniformed staff hindering proficiency in marine inspection and investigation. The study's recommendations were to increase tour lengths as well as require back-to-back tours in these areas and to rely more on civilians for these functions. The study found that the Coast Guard's workforce database was not able to indicate years of service or level of expertise for marine safety personnel. The study found that the Coast Guard had no central office responsible for overall management of the marine safety workforce and therefore there were no agency-wide specific standards for determining qualifications in this area. Lacking documentation, the study's authors relied heavily on interviews with hundreds of Coast Guard personnel and private industry to gather data on the marine safety workforce. On April 20, 2010, the mobile offshore drilling unit Deepwater Horizon , 45 miles off the coast of Louisiana, experienced a catastrophic blowout, causing a major explosion and fire, and resulting in its sinking. There were 11 deaths and an oil spill estimated at approximately 206 million gallons, the largest in U.S. history. The Department of the Interior's Minerals Management Service had responsibility for inspection of the drilling apparatus that was the cause of the explosion, but the Coast Guard was responsible for the safety inspection of the rig above water that has commonality with vessels in general (firefighting and lifesaving equipment, evacuation procedures, electrical systems). The ensuing investigation revealed that Coast Guard regulations of offshore structures dated to 1978 and had not been updated as rigs moved farther and farther offshore. For instance, in places where they are not attached to the seabed because of the tremendous depth, these rigs use dynamic positioning systems (propeller systems) to remain in place, but at the time of the accident the Coast Guard had not developed regulations for checking the safety aspects of these critical systems. In response to the Deepwater Horizon marine casualty, Congress required the Coast Guard to take several initiatives to improve the quality of its marine inspection workforce in the Coast Guard Authorization Act of 2010 ( P.L. 111-281 ). Under the subtitle ""Workforce Expertise"" (§§521-526), these initiatives included improving career path management, adding apprenticeships to the program, measuring workforce quality and quantity, adding a marine industry training program and a marine safety curriculum at the Coast Guard Academy, and preparing a report on recruiting and retaining civilian marine inspectors and investigators. A June 2011 audit by the DHS IG of vessel inspections in the offshore oil and gas industry (involving rigs and vessels that support operation of the rigs) found a positive result for the marine inspection program in this sector. The IG found that 99% of those inspections had been performed by Coast Guard inspectors who had been fully qualified. However, the IG found that the Coast Guard's guidance on how to inspect these vessels and how to record the results of these inspections was deficient. A May 2013 audit by the DHS Inspector General found that the agency's efforts had not improved its marine accident reporting system, due to familiar issues surrounding the qualifications and rotation of the personnel: The USCG [United States Coast Guard] does not have adequate processes to investigate, take corrective actions, and enforce Federal regulations related to the reporting of marine accidents. These conditions exist because the USCG has not developed and retained sufficient personnel, established a complete process with dedicated resources to address corrective actions, and provided adequate training to personnel on enforcement of marine accident reporting. As a result, the USCG may be delayed in identifying the causes of accidents; initiating corrective actions; and providing the findings and lessons learned to mariners, the public, and other government entities. These conditions may also delay the development of new standards, which could prevent future accidents. [T]he Director of Prevention Policy [the marine safety program] provides personnel with career management guidance that suggests they should leave this specialty to improve their promotion potential, because of the USCG's emphasis on personnel attaining a wide variety of experience. Personnel indicated that both investigations and inspections suffer from investing time and money into training people only to have them leave the specialty. The IG found that at the 11 sites it visited, two-thirds of accident inspectors and investigators did not meet the Coast Guard's own qualification standards. The IG stated that the shortage of qualified personnel would be further compounded by the new towing vessel safety regime, which would expand the inspection workload by about 50% (or an additional 5,700 vessels to inspect). In January 2015, the new Commandant, Paul Zukunft, indicated that human resource competencies would be one of his key focus areas. He referred to the need to grow ""subject matter experts"" for the marine safety workforce and overhaul the generalist-driven military personnel system in favor of a specialist workforce. Commandant Zukunft called for increasing proficiency through more specialization in both the officer and enlisted corps and to extend the time between job rotations. He noted the complexity of systems aboard vessels and new developments in using LNG as fuel, stating that the Coast Guard needed to know these technologies in order to lead the industry on safety rather than having to learn them from industry. In February 2015, Commandant Zukunft stated his priorities regarding the marine safety mission: I have directed the Vice Commandant to undertake a service-wide effort to revitalize our marine safety enterprise with particular focus on marine inspection and our regulatory framework.... We will increase the proficiency of our marine safety workforce, and we will continue to train new marine inspectors—adding to the more than 500 that have entered our workforce since 2008.... We will review our civilian career management process to eliminate barriers and improve upward mobility. As noted above, the October 2015 sinking of the El Faro has renewed focus on the Coast Guard's marine inspection workforce, but, as in the past, the age of ships in the U.S.-flag fleet has been raised as a corollary safety issue. Regarding the El Faro , the Coast Guard testified in 2018: We looked a little further beyond this particular incident, caused us to look at other vessels in the fleet and did cause us concern about their condition.… And the findings indicate that it is not unique to the El Faro . We have other ships out there that are in substandard condition.… You know, some of our fleet—our fleet is almost three times older than the average fleet sailing around the world today. Just like your old car, those are the ones likely to breakdown. Those are the (inaudible) one—the ones that are more difficult to maintain and may not start when I go out, turn the key. As the above history indicates, the measure most often proposed to increase the competence of marine safety personnel is to shift this mission to a civilian workforce in a civilian subagency, either under the Coast Guard or somewhere else in the executive branch with complementary maritime functions. While such a shift could have the advantages stated, one cannot necessarily expect it, in and of itself, to solve the issue completely. Civilian agencies with inspection workforces covering technically demanding industries also have had difficulty retaining experienced staff. For instance, the Federal Aviation Administration has been criticized for increasing its reliance on private-sector inspectors paid by industry rather than enhancing its in-house inspection workforce. The rationale for this reliance on private-industry inspectors is that the pace of technological development in aviation has overwhelmed the capability of government inspectors. Similarly, the Department of Transportation's Pipeline and Hazardous Materials Safety Administration, which regulates pipeline safety, has found that experienced inspectors are often hired away as safety compliance officers by pipeline companies. The Department of the Interior has voiced much the same concern with respect to the offshore oil rig inspection workforce of the Bureau of Safety and Environmental Enforcement. Even under a civilian agency, vessel inspectors would be subject to recruitment by private industry, as experienced inspectors are sought by ship owners, banks that finance ships, and insurers, all of which want to ensure ships are built to, and are being maintained to, safety standards. Inspectors are employed by private ship classification societies for this purpose. Another consideration with respect to realigning the government's marine safety function is the benefit of housing maritime-related missions in a single agency. As commandants have argued, there are synergies among these missions. For example, the knowledge of and familiarity with vessels and crews that safety inspectors gain via their interactions with them provide risk intelligence relevant to the agency's security mission. Personnel involved in the often perilous mission of search and rescue directly benefit from a competent and effective safety inspection workforce that can reduce the number of such missions. The vessel safety inspection function has synergies with vessel environmental inspections related to oil pollution, ballast water, and emissions. The marine safety function is also complimentary to the Coast Guard's responsibility for deploying and maintaining channel marker buoys and lights and breaking ice in winter. Fisheries enforcement has synergies with fishing safety and security missions. All of these missions require special knowledge for operating on the water, and most require a fleet to do so. Thus, there are both human resource and capital equipment synergies among these missions. Notwithstanding these factors, one can also rationalize dismantling parts of the Coast Guard and reorganizing them under other agencies. The Coast Guard has a close relationship with the Navy, even in peacetime. In 1982, Members of Congress sponsored bills to transfer the agency to the Navy or the Department of Defense ( H.R. 4996 , H.R. 5567 ). These proposals were partly in response to the Reagan Administration's proposal to drastically reduce the size of the Coast Guard, replace the commandant with a civilian administrator, and transfer the Coast Guard's aids to navigation mission to the Army Corps of Engineers. During the partial government shutdown in January 2019, when Coast Guard personnel were the only military personnel not paid, calls for shifting the Coast Guard to the Navy or Department of Defense were renewed. While some supporters hope that transferring the Coast Guard to the military might boost the agency's budget, others have argued that the Coast Guard's nondefense-related missions would suffer, as these missions are not a priority for the military. It would appear that such a transfer might not assist the Coast Guard in addressing the issue of rotating staff in the marine safety program. In addition to realigning marine safety functions, Congress has discussed rearranging navigation-related functions in the federal government more broadly. Some Members of Congress, dissatisfied with the Army Corps of Engineers' performance in the provision of navigation channel infrastructure, have proposed transferring that function to the Department of Transportation. The Trump Administration also has proposed this transfer as part of a larger reorganization plan involving multiple agencies. Congress has requested a National Academy of Sciences study related to this idea. If such a transfer were to occur, navigation infrastructure functions could be combined with a marine safety inspection and accident investigation within the Department of Transportation. This combination of safety and infrastructure provision parallels the primary missions of the department with respect to other transportation modes. However, Congress has shown reluctance to eliminate any of the Coast Guard's missions. Both in 1967, when the Department of Transportation was created and the Coast Guard was transferred there from the Department of the Treasury, and in 2003 after the Department of Homeland Security was created, and the agency was transferred there from the Department of Transportation, the Coast Guard was transferred as a distinct entity.","For at least four decades, Congress has been concerned about the Coast Guard's ability to maintain an adequate staff of experienced marine safety personnel to ensure that vessels meet federal safety standards. The 2015 sinking of the U.S.-flag cargo ship El Faro during a hurricane near the Bahamas with the loss of 33 lives renewed attention to the Coast Guard's persistent difficulty with hiring and training a marine safety workforce with technical knowledge of vessel construction and accident investigation, as the safety inspections of the vessel were found to have been inadequate. In the Hamm Alert Maritime Safety Act of 2018 ( P.L. 115-265 ), Congress directed the Coast Guard to brief congressional committees of jurisdiction on its efforts to enhance its marine inspections staff. In the Frank LoBiondo Coast Guard Authorization Act of 2018 ( P.L. 115-282 ), Congress requested a report from the Coast Guard detailing the courses and other training a marine inspector must complete to be considered qualified, including any courses that have been dropped from the training curriculum in recent years. Congress's concern about the Coast Guard's inspection staff comes at a time when the agency's vessel inspection workload is increasing by about 50% because towing vessels have been added to its responsibilities. Additionally, Congress has been increasing the agency's role in fishing vessel safety. Adding to the Coast Guard's safety responsibilities is the construction of several liquefied natural gas (LNG) export terminals as well as the increasing use of LNG as ship fuel. Vessel safety inspections are especially critical for the U.S.-flag fleet, like the El Faro , because a majority of it is much older than the 15 to 20 years of age at which ships in the foreign-flag worldwide oceangoing fleet are typically scrapped. Over half of the U.S.-flag commercial fleet is over 20 years old; the El Faro had been in service for 40 years. Vessels that transport cargo or passengers domestically (from one U.S. point to another U.S. point) must be built in the United States, as required by the Jones Act. The comparatively high cost of domestic ship construction encourages ship owners to keep Jones Act vessels in service well beyond their normal retirement age. In general, older vessels are believed to have a higher risk of structural defects and to require more intensive inspection. Currently, the Coast Guard's marine inspection staff consists of 533 military and 138 civilian personnel, while its accident investigation staff consists of 120 military staff and 38 civilians. As a military organization, the Coast Guard frequently rotates its staff among various duty stations, so personnel may not develop the knowledge and experience required of a proficient marine inspector or investigator. A common perception inside the agency that marine safety is an area that retards promotion also may be thwarting efforts to boost this mission's workforce. The Coast Guard recently has stated its intention to improve the quality of its inspection workforce and to make marine safety an attractive long-term career path by extending promotion potential. However, its recent statements are similar to statements made 10 years ago, when some Members of Congress advocated transferring the marine safety function to a civilian agency. It is unclear what the agency has accomplished over the last decade regarding its inspection workforce. Government audits dating to 1979 have been consistently critical of the proficiency level of Coast Guard inspectors and accident investigators. Reorganizing the marine safety function under a civilian agency, perhaps as an element of a larger reorganization of navigation functions in the federal government, might improve the quality of safety inspections and investigations, but other federal agencies with transportation-related safety inspection workforces have had similar issues with retaining experienced personnel."
"Medicaid expenditures are financed jointly by the federal government and the states. In order to receive federal matching funds for Medicaid expenditures, states must adhere to a broad set of federal requirements and administer their programs consistent with individual state plans approved by CMS. These plans are agreements between a state and the federal government that describe how states will administer their Medicaid programs, including how the state will administer Medicaid third- party liability procedures. When states make changes to their Medicaid programs or policies, including when necessary to comply with a change in federal law, they must submit a state plan amendment to CMS. CMS reviews and approves state Medicaid plans and state plan amendments. The federal government matches each state’s Medicaid expenditures for services according to a statutory formula called the Federal Medical Assistance Percentage. This formula provides for a match that is no lower than 50 percent of a state’s Medicaid expenditures and no higher than 83 percent. States can receive a 90 percent federal match for the costs associated with the development of each state’s Medicaid Management Information System (MMIS), a claims processing and retrieval system supporting the administration of the state’s Medicaid program. States also receive a 75 percent match for the costs associated with ongoing MMIS maintenance and operations. States use their MMIS systems to process provider claims, including claims for prenatal care services, pediatric preventive services, and services provided to CSE beneficiaries. The Medicaid program is administered at the state level and overseen at the federal level by CMS, which, among other things, ensures that funds are used appropriately and beneficiaries have access to covered services. Medicaid allows significant flexibility for states to design and implement their programs. Within broad federal parameters, states have discretion in, among other things, setting Medicaid eligibility standards and provider payment rates; determining the amount, scope, and duration of covered benefits; and developing their own administrative structures. States may also decide how Medicaid-covered services provided to beneficiaries will be delivered. For example, states may pay health care providers for each service they provide—fee-for-service—or contract with MCOs to provide a specific set of Medicaid-covered services to beneficiaries and pay them a set amount per beneficiary, typically per month. While most states use both delivery systems, the percentage of beneficiaries served through MCOs has grown in recent years, and represented nearly 70 percent of all Medicaid beneficiaries in 2016. Medicaid beneficiaries across various eligibility categories may have access to private health insurance or other sources of third-party coverage. For example, some adult beneficiaries may be covered by employer-sponsored private health insurance even though they also qualify for Medicaid. Children, similarly, may be eligible for Medicaid, while also being covered as a dependent on a parent’s private health plan. As such, federal law requires states to perform various activities to ensure that Medicaid is the payer of last resort, including taking all reasonable measures to identify Medicaid beneficiaries’ other potential sources of health coverage and their legal liability. Specifically, states must ensure that the following steps, among others, are taken. 1. Coverage identification. To identify beneficiaries with third-party health coverage, states are required to request coverage information from potential Medicaid beneficiaries at the time the agency makes any determination or redetermination of eligibility. States are also required to obtain and use information pertaining to third-party liability, for example, by conducting data matches with state wage information agencies, Social Security Administration wage and earning files, state motor vehicle accident report files, or state workers’ compensation files. 2. Coverage verification. When other health coverage is identified, states often verify the information, including the services covered through the other insurance and the dates of eligibility. 3. Cost avoidance payment procedures. As a general rule, federal law requires states to apply cost avoidance payment procedures to claims for most Medicaid items and services. Under cost avoidance procedures, the state must reject claims for which a third party is or is probably liable, and the agency instructs the provider to collect from the third party. Once the provider determines the amount of the third party’s liability, the provider submits a claim to the state Medicaid agency for any remaining balance, up to the maximum amount allowed under the state’s payment schedule. States are then required to make timely payment to the provider, generally within 30 days from the date the claim for the balance is filed. 4. Pay-and-chase payment procedures. The Consolidated Omnibus Budget Reconciliation Act of 1985 made an exception to cost avoidance procedures for three types of services: prenatal care services, pediatric preventive services, and services provided to CSE beneficiaries. It required states to pay such claims without regard to the liability of the third party, a procedure CMS calls “pay and chase.” Under the pay-and-chase payment procedure, the state Medicaid agency is generally required to make a timely payment to the provider within 30 days, and then the state, instead of the provider, will seek to recover payment from any potentially liable third parties within 60 days. According to CMS, cost avoidance does not apply to these claims because there is a risk some providers might not participate in Medicaid to avoid dealing with the administrative burden of cost avoidance. (See fig. 1.) The Bipartisan Budget Act of 2018 amended various sections of the Medicaid third-party liability statute, including the required processes states must follow when paying claims with probable third-party liability for the following three types of services: Prenatal care services. The Bipartisan Budget Act of 2018 eliminated, effective February 2018, the statutory exception for prenatal care services that had required states to apply pay-and- chase procedures to such claims. Thus, under the amended statute, states must apply cost avoidance procedures to claims for prenatal care services when it is apparent that a third party is or may be liable at the time the claim is filed. Additionally, to the extent states had opted under CMS regulations to apply pay-and-chase procedures to claims for labor, delivery, or postpartum care services—which CMS calls “pregnancy-related services”—states must now apply cost avoidance procedures to those as well. Pediatric preventive services. Beginning in October 2019, under federal law as amended by the Bipartisan Budget Act of 2018, states are no longer required to pay claims for pediatric preventive services immediately. While states will still have the option to apply pay-and- chase procedures to these claims, a state may instead choose—if it determines doing so is cost-effective and will not adversely affect access to care—to require the provider to first submit the claim to the third party and wait 90 days for payment by the third party before seeking Medicaid payment. For purposes of this report, we refer to such a 90-day period as a “wait-and-see period.” Services provided to CSE beneficiaries. Beginning in October 2019, states must make payment for a CSE beneficiary’s claim if the third party has not paid the provider’s claim within a 100-day wait-and- see period. However, the state may instead choose—if the state determines doing so is cost-effective and necessary to ensure access to care—to make payment within 30 days. (See table 1.) Once the third-party liability changes in the Bipartisan Budget Act of 2018 are fully implemented, states will have authority to require providers to wait longer to receive Medicaid payments in certain circumstances. For example, Prenatal care services claims, which were previously paid within 30 days under pay-and-chase procedures, are now subject to cost avoidance. This could potentially result in providers waiting indefinitely to receive payment, depending on whether the provider is able to resolve the third-party liability (i.e., submit a claim for payment to the third party and determine the amount of the third-party liability), which must occur before the state may make payment under cost avoidance. Pediatric preventive services claims, which are generally paid within 30 days under pay-and-chase procedures, could be subject to a 90-day wait-and-see period beginning in October 2019 if a state decides to implement one. This could result in providers waiting 120 days to receive payment (90 days to wait and see if the liable third party pays, and then another 30 days for the state to make timely payment on any remaining balance). Claims for services for CSE beneficiaries, which are currently subject to pay-and-chase procedures or a 30-day wait-and-see period at state option, may be subject to either a 30-day or 100-day wait-and- see period beginning in October 2019, depending on which option the state chooses. This could result in providers waiting 130 days to receive payment (up to 100 days to wait and see if the liable third party pays, and then another 30 days for the state to make timely payment on any remaining balance). Officials from four of the nine selected states we reviewed reported having implemented the required third-party liability changes for prenatal care services. The changes were required to be implemented in February 2018. For the third-party liability changes affecting pediatric preventive services and services provided to CSE beneficiaries, which are due to take effect October 2019, Medicaid officials from six of the nine selected states noted that they were in the very early stages of planning how they might implement the changes. Officials from four of the nine selected states we reviewed stated that their state Medicaid agency had implemented the mandated third-party liability changes for prenatal care services, which required states to implement cost avoidance payment procedures for claims for these services beginning in February 2018. Officials from three of the four states that have implemented the third-party liability changes for prenatal care services told us that changing from pay-and-chase to cost avoidance procedures involved identifying all the applicable service codes for prenatal care and making the necessary changes in their systems to ensure that any new claims were subject to cost avoidance procedures. They said it also involved communicating the need for such changes to the MCOs in their state. State Medicaid officials from the remaining five states generally noted that they were discussing the changes internally, researching how to implement the changes in their MMIS, assessing the likely impact of these changes on MMIS, or waiting for additional guidance from CMS. For example: Officials from several states noted that they were undertaking activities, such as identifying the prenatal care codes in their data systems that would need to be switched to cost avoidance payment procedures, or researching the best way to implement these changes. Officials from one state said they were in the process of assessing what the likely impact of these changes on beneficiaries and providers would be, and would only subject claims for prenatal care services to cost avoidance if they determined that doing so was the best course of action. Officials from one state indicated that they were waiting to determine whether it was more cost effective to implement these changes in their legacy MMIS, or wait and implement the changes in the new MMIS they are planning to roll out in the future. State Medicaid officials also described other efforts that they would need to undertake as they implemented these changes to third-party liability. These included staff retraining and communicating the changes to providers in their states. Beyond state Medicaid programs, officials from the five Medicaid MCOs we interviewed all stated that their organizations had not yet implemented the prenatal care third-party liability changes. The MCO officials stated that they were waiting for additional instructions on how to implement the third-party liability changes or for revised contract language from their state Medicaid agencies. Officials from one of the MCOs noted they were not aware of the third-party liability changes until we reached out to them for an interview. Officials from two MCOs we interviewed generally agreed that the third-party liability changes for prenatal care services would require changes to claims processing systems and internal processes, but would not be significant. Several MCO officials noted that these changes would likely result in some cost-savings to MCOs in the future. Medicaid officials from six of the nine selected states noted that they were in the very early stages of planning whether—or how—they would implement the wait-and-see periods for pediatric preventive services and services to CSE beneficiaries. For example, some Medicaid officials from these six states described how they were assessing what changes would need to be made to their MMIS, deciding whether to implement the wait-and-see periods, or exploring how to assess the potential impact of these changes. Some Medicaid officials also expressed uncertainty regarding how such changes would affect Medicaid beneficiaries or the amount of effort required by their agency to implement the third-party liability changes. Officials from one state noted that they had begun discussions about implementing the third-party liability changes for both pediatric preventive services and services for CSE beneficiaries in June 2018, and were in the process of identifying the necessary system changes needed to implement third-party liability changes by the October 2019 effective date. Officials from two of these states stated that they do not believe their state will implement the wait-and-see periods for pediatric preventive services or CSE beneficiaries when the changes go into effect. Officials from the remaining three states noted at the time of our interviews they had not yet developed plans for assessing implementation of these changes. Table 2 summarizes the status of selected states’ implementation of the third-party liability changes. For pediatric preventive services, state Medicaid officials generally noted that the third-party liability changes would involve identifying the relevant codes and making changes to their MMIS to ensure those claims were subject to a wait-and-see period, if implemented. Several state Medicaid officials characterized this effort as “significant” or “difficult.” For services delivered to CSE beneficiaries, officials from several state Medicaid agencies speculated that making the third-party liability changes to their MMIS would necessitate having some sort of indicator in their system to identify which claims were for the CSE beneficiaries and, therefore, should be subject to a wait-and-see period, if implemented. Some state Medicaid agency officials said that this would require obtaining the information from another state agency responsible for administering CSE agreements. Several of the state Medicaid officials we interviewed expressed concerns regarding how to implement the wait-and-see periods for pediatric preventive services and services for CSE beneficiaries. Specifically, these officials noted that—within their MMIS—it is not possible to capture on a Medicaid claim when a provider has billed a third party, waited a specified amount of time, and not received payment. As a result, officials from one state noted that additional guidance from CMS on how to implement and track provider billing of third parties—including wait-and-see periods and providers’ collection of payment—would be necessary before moving forward with implementing the third-party liability changes. Officials from two states said that the administrative burden associated with these changes would possibly make them not cost-effective to implement. However, MCO officials we interviewed generally acknowledged that while these changes would require changes to their claims processing systems and internal processes, they were not significant and could potentially result in some cost-savings to their MCO in the future. The third-party liability change affecting all Medicaid services provided to CSE beneficiaries was a particular concern for officials from three state Medicaid agencies and three MCOs. Specifically, these officials said there is currently no way to identify CSE beneficiaries in their MMIS or claims processing systems, which could potentially make this change difficult, if not impossible, to implement. Officials from one state described how setting up a system to receive this information would involve a significant effort, potentially necessitating new hardware and system modifications, as well as a data sharing agreement with the state entity maintaining the CSE information. Officials from one MCO noted that the third-party liability changes affecting CSE beneficiaries was a particular concern, because those changes would potentially require additional administrative work and changes to their processes in order for providers in their network to track down insurance information from a non-custodial parent. After enactment of the Bipartisan Budget Act of 2018 in February 2018, CMS issued guidance in the form of an informational bulletin to states on June 1, 2018, to facilitate states’ implementation of the key provisions of the Bipartisan Budget Act of 2018 related to third-party liability in Medicaid. However, CMS’s June informational bulletin is missing some key information and contains information that is inconsistent with the federal law. This is inconsistent with CMS’s responsibility for ensuring states’ compliance with federal requirements. In particular, Pregnancy-related claims. Under federal law, states must apply standard cost avoidance procedures to all non-pediatric claims, including claims for prenatal services beginning in February 2018. However, CMS guidance indicates that a state need not apply cost avoidance procedures to claims for labor and delivery services if those claims can be differentiated from prenatal services. The guidance also provides that, effective October 1, 2019, states will have 90 days to pay claims related to labor, delivery, and postpartum care claims. As a result, CMS’s guidance is inconsistent with federal law, which requires states to reject any such claim under cost avoidance procedures until the third-party liability is resolved, regardless of how many days that might take. Pediatric preventive claims. Under federal law, states must generally apply pay-and-chase procedures to pediatric preventive services. However, beginning in October 2019, states are permitted to implement a 90-day wait-and-see period before making payment for these services if the state determines that it would be cost-effective and would not adversely affect access to care to do so. However, CMS guidance simply provides that states will have 90 days to pay such claims, suggesting that states need not make the cost- effectiveness or access determinations required by statute. CSE beneficiary claims. Under federal law, beginning in October 2019, for claims for services to CSE beneficiaries, states may choose to make payment within 30 days (as opposed to implementing a 100- day wait-and-see period), if the state determines doing so is cost- effective and necessary to ensure access to care. If the state does not make such a determination, the statute would require the state to avoid making payment for such services for up to 100 days to allow third parties to make payment first. However, CMS guidance does not identify this as an option for states. Instead, CMS guidance simply provides states with the option of implementing the wait-and-see period, omitting the option for states to make payment within 30 days. CMS officials told us that the Bipartisan Budget Act of 2018 did not change state responsibilities related to cost-effectiveness and access to care, and CMS does not intend to issue additional guidance on this issue. However, prior to enactment of the Bipartisan Budget Act of 2018 in February 2018, federal third-party liability law did not authorize states to apply cost avoidance procedures to preventive pediatric claims or pediatric services provided to CSE beneficiaries. Furthermore, other CMS guidance documents, such as the third-party liability handbook and CMS regulations on third-party liability, are out of date and not a reliable source of information for states to use in implementing the new federal third-party liability requirements. In particular, the third-party liability handbook was last revised in 2016 and does not reflect the Bipartisan Budget Act of 2018 changes. Additionally, CMS regulations implementing federal requirements for state payment of claims for prenatal care, labor and delivery services, postpartum care, preventive pediatric services, and services to CSE beneficiaries were last amended in 1997 and, accordingly, do not reflect current statutory requirements, including the Bipartisan Budget Act of 2018 requirement to cost avoid prenatal and other non-pediatric claims beginning February 2018. CMS officials told us the agency is in the process of updating its third- party liability handbook and anticipates issuing the updated document in September 2019. Agency officials also told us they plan to revise the agency’s regulations regarding pay-and-chase and release the revised regulations in early 2020. However, federal law requires state Medicaid plans to provide for proper third-party liability procedures, which states often carry out through references to federal regulation, according to CMS officials. Without updated third-party liability guidance that is timely, complete, and consistent with federal law, states may lack the necessary information to update their state Medicaid plans so that they comply with these requirements. CMS has not taken steps to determine the extent to which state Medicaid agencies are meeting the third-party liability requirements, and therefore CMS officials were unaware of whether states were meeting the new requirements. In particular, CMS officials did not know the extent to which the selected states in our review had implemented the required third-party liability changes. In our interviews with nine selected state Medicaid agencies conducted between November 2018 and March 2019, we learned that five states continued to apply pay-and-chase procedures to prenatal care claims, despite the federal requirement to implement cost avoidance since February 2018. During our interviews, we also learned that CMS had not monitored state Medicaid agencies’ third-party liability approaches prior to the Bipartisan Budget Act of 2018. For example, officials from one of the selected states told us that they had been using cost avoidance for most claims for pediatric preventive care, rather than applying pay-and-chase procedures, as required by law. We also learned from an official from another selected state that the state had been applying cost avoidance procedures to claims for prenatal care services well in advance of the enactment of the Bipartisan Budget Act of 2018, despite the federal requirement to apply pay-and-chase procedures to such claims from 1986 to 2018. CMS’s failure to monitor the implementation of the third-party liability changes in the Bipartisan Budget Act of 2018 is inconsistent with the agency’s responsibilities for oversight of the Medicaid program, including ensuring that federal funds are appropriately spent. We have previously recommended that, given the significant federal Medicaid outlays, the federal government has a vested financial interest in further increasing states’ third-party liability cost savings, and that CMS should play a more active leadership role in monitoring, understanding, supporting, and promoting state third-party liability efforts. However, CMS officials stated that they expect states to comply with current law for Medicaid third-party liability, and that they do not verify whether states have implemented the required third-party liability changes unless the agency is made aware of non-compliance. When asked how CMS ensures that states apply pay-and-chase procedures required under federal law, such as for pediatric preventive claims, CMS officials stated that it is the agency’s expectation that states comply with current law. According to agency officials, if a state has difficulty complying and reaches out to CMS for technical assistance, the agency will work with that state to come into compliance. CMS officials told us that CMS plans to review all state Medicaid plans and provide technical assistance for any necessary action only after the agency has updated its regulations related to third-party liability. As of May 2019, CMS anticipated that it would release updated regulations in early 2020. Because CMS has not monitored states’ compliance with federal third- party liability requirements, the agency does not know whether states have applied the federally required third-party liability procedures to certain Medicaid claims as required by federal law. In the case of prenatal care services claims, the failure to implement cost avoidance payment procedures could result in unnecessary Medicaid expenditures, to the extent that Medicaid pays providers for services for which a third party is liable. To the extent that states are not properly applying pay-and-chase procedures to pediatric preventive service claims, children’s access to such services could be impacted. According to most of the stakeholders we interviewed, Medicaid providers—especially prenatal care and rural providers—could face increased administrative requirements or delays in payments for services as a result of the third-party liability payment changes to the three service categories in the Bipartisan Budget Act of 2018. Several stakeholders agreed that the tasks associated with identifying sources of third-party liability and attempting to collect from third parties would shift from state Medicaid agencies to providers as a result of the payment changes, although opinions differed on the extent to which this shift would affect providers. Several stakeholders said that the third-party liability changes could increase administrative requirements for providers, because obtaining accurate information on third-party liability sources for Medicaid beneficiaries and resubmitting claims that result from incorrect or outdated third-party liability information can be resource intensive and time consuming. One provider and officials from one state Medicaid agency noted that providers may lack the administrative resources or claims-processing expertise to deal with these changes. Officials from one state Medicaid agency, two state provider associations, and an organization advocating for Medicaid beneficiaries also noted that providers may encounter Medicaid beneficiaries who may be unaware or may not disclose that they have other insurance policies; for example, children who are covered under multiple insurance policies by custodial and non-custodial parents or experience insurance transitions following birth. These issues may increase the amount of time and resources providers spend on processing and resubmitting claims. Other stakeholders were less certain that the added requirements would cause difficulties for providers. Officials from one state Medicaid agency and one MCO said that the payment changes would not be difficult to implement, because providers were familiar with billing third parties for medical services for other beneficiaries. Officials from four state Medicaid agencies and two MCOs noted that providers may prefer to submit claims to commercial insurers, because these insurers pay at a higher rate compared with state Medicaid programs. Several stakeholders we interviewed agreed that providers could wait longer periods of time for payment as they track down third-party insurers or wait up to 100 days for potential payment from these insurers before seeking payment from the state Medicaid agency. According to one provider and officials from two provider associations and one MCO, these delays could put providers at risk of not receiving payments for services or not having enough cash on hand to sustain operations. Additionally, officials from three provider associations noted that payment delays would affect pediatric providers in particular, because the majority of the services that pediatricians provide are preventive care—which would be affected by the third-party liability changes. According to several stakeholders we interviewed, smaller or independent providers and those located in rural areas could be more affected by the third-party liability changes compared with providers affiliated with managed care systems or those located in urban areas. Officials from one state Medicaid agency, two provider associations, and one MCO noted that smaller or rural-based providers generally have fewer staff and resources to deal with the larger volume of administrative paperwork and delays in payment for services that could result from the payment changes. Most of the stakeholders we interviewed said that providers might be less willing to serve Medicaid beneficiaries due to the administrative and payment issues, potentially reducing access to care or delaying services for children and pregnant women. However, some other stakeholders said that the third-party liability changes would have little to no effect on Medicaid beneficiaries. Officials from one state Medicaid agency and one MCO noted that third-party liability payment practices for other Medicaid populations and services have been in place for many years, and providers would already be familiar with processing claims with third-party liability. Several stakeholders said that providers may opt to reduce or eliminate the number of Medicaid beneficiaries they serve, because of actual or perceived increase in administrative requirements or payment delays. Officials from three state provider associations speculated that the potential for additional delays in payment for services could be the “final straw” in providers’ decision to stop serving Medicaid beneficiaries. Other stakeholders, including a Medicaid expert, one provider, and officials from one state provider association noted that providers may decide to see fewer Medicaid beneficiaries, but are unlikely to stop seeing them entirely, because some providers are reluctant to deny care to these beneficiaries. Payment delays could also lead to delays in beneficiaries receiving time- sensitive services, such as immunizations, as well as reduced access to specialists, such as midwives or mental health professionals, according to several stakeholders. Officials from one national provider association and an organization advocating for Medicaid beneficiaries noted that providers may seek to identify sources of third-party liability before providing services to beneficiaries. In addition, officials from one state Medicaid agency, a state provider association, and an organization advocating for Medicaid beneficiaries expressed concern that the third-party liability changes had the potential to reduce access to care for populations, such as children and pregnant women, that already faced challenges in accessing adequate, timely, or quality health care. Medicaid officials we interviewed from seven of the nine selected states said that their agencies will—or could—use existing methods to assess the effects of the third-party liability changes on provider availability and beneficiary access to prenatal care services, pediatric preventive services, and services for CSE beneficiaries. Officials from the remaining two states did not discuss or provide information on how they could assess the effects of the changes. Medicaid officials provided examples of existing methods that could be used to assess the effects of payment changes: Tracking beneficiary access by comparing a set of access-to-care measures for a state’s Medicaid population with its non-Medicaid, commercially insured population, as well as carrying out customer satisfaction surveys with Medicaid beneficiaries, Using a third-party liability hotline to track patient issues and conducting secret shopper calls to monitor if providers are accepting new patients, Contracting with a state university to evaluate Medicaid beneficiary access for prenatal and pediatric services. In addition, one state has an independent health advocacy agency that monitors and seeks to resolve provider availability and beneficiary access issues on behalf of the state’s Medicaid population. However, one state Medicaid official and a Medicaid expert agreed that measuring any possible effects of the third-party liability changes—such as a decline in provider availability or beneficiary access—would be difficult without baseline data. According to officials from two state Medicaid agencies and a Medicaid expert, many other factors could potentially affect provider availability and beneficiary access, making it difficult or impossible to pinpoint if a decline in provider availability or beneficiary utilization of services was the result of the third-party liability changes or something else—such as changes in the managed care market or levels of private coverage among beneficiaries. We found other evidence suggesting that it might be challenging for some states to assess the effects of the third-party liability changes. Specifically, Medicaid officials from eight of the nine selected states did not readily identify the number of beneficiaries in their state that had third- party liability and would be affected by the changes. Moreover, officials from two states noted that obtaining this data would require a “significant” effort. Officials from five states shared information on the number of children, pregnant women, or births covered by Medicaid in their state, but did not specify how many of these beneficiaries had other insurance coverage. Seven of the nine selected states had no data readily available on CSE beneficiaries who were also covered by Medicaid. In several cases, officials noted that their MMIS or other data systems had no way to track whether a child was a CSE beneficiary. Omissions and inaccuracies in CMS’s guidance to states on third-party liability changes from the Bipartisan Budget Act of 2018 have the potential to adversely affect the extent to which Medicaid expenditures are being used to pay for services for which a third party is liable, as well as states’ compliance with federal requirements. Furthermore, CMS has not assessed whether state Medicaid agencies are complying with federal third-party liability requirements, under which states must change how they pay claims for certain services as a result of the Bipartisan Budget Act of 2018 and subsequently enacted legislation. In the absence of CMS overseeing states’ compliance, the agency cannot ensure that federal funds are being spent properly and that states are complying with current federal statute. We are making the following two recommendations to CMS: The Administrator of CMS should ensure the agency’s Medicaid third- party liability guidance is consistent with federal law related to the requirement for states to apply cost avoidance procedures to claims for labor, delivery, and postpartum care services, the requirement for states to make payments without regard to potential third-party liability for pediatric preventive services unless the state has made a determination related to cost-effectiveness and access to care that warrants cost avoidance for 90 days, and state flexibility to make payments without regard to potential third- party liability for pediatric services provided to child support enforcement beneficiaries. (Recommendation 1) The Administrator of CMS should determine the extent to which state Medicaid programs are meeting federal third-party liability requirements and take actions to ensure compliance as appropriate. Such actions can include ensuring that state plans reflect the law. (Recommendation 2) We provided a draft of this report to the Department of Health and Human Services for comment. In its written comments, which are reprinted in appendix I, HHS concurred with our recommendations and indicated a commitment to providing states with accurate guidance on the third-party liability changes in the Bipartisan Budget Act of 2018. The agency noted that it is in the process of updating its guidance and third-party liability handbook to reflect the changes and ensure that such guidance is consistent with federal law. The agency also noted that it will determine the extent to which state Medicaid programs are meeting federal third- party liability requirements and will take actions to ensure compliance. We are sending copies of this report to the appropriate congressional committees, the Secretary of Health and Human Services, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-7114 or yocomc@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs can be found on the last page of this report. Major contributors to this report are listed in appendix II. In addition to the contact named above, Tom Conahan (Assistant Director), Andrea E. Richardson (Analyst-in-Charge), Marybeth Acac, Drew Long, Corinne Quinones, Jennifer Rudisill, and Ethiene Salgado- Rodriguez made key contributions to this report.","The Medicaid program is typically the payer of last resort. The Bipartisan Budget Act of 2018 changed the Medicaid third-party liability payment requirements for prenatal care services, pediatric preventive services, and services provided to CSE beneficiaries. Before the act, in the case of these three services, states were generally required to pay providers for services delivered to Medicaid beneficiaries and then obtain any payments from liable third parties. The Bipartisan Budget Act of 2018 also included a provision for GAO to study the potential effects of these changes. In this report, GAO (1) describes the status of selected states' implementation of Medicaid third-party liability changes; (2) evaluates CMS's implementation and oversight of the Medicaid third-party liability changes; and (3) describes stakeholders' views of the possible effects of these changes on providers and beneficiaries. GAO conducted interviews with state Medicaid agencies and provider associations in nine selected states, which were selected by taking into consideration Medicaid spending and stakeholder recommendations, among other factors. GAO also conducted interviews with national experts in Medicaid, national organizations representing beneficiaries and providers, and officials from CMS. Medicaid officials in the nine selected states GAO reviewed described being in various stages of implementing third-party liability changes as required by law. These changes affect whether health care providers must seek payment from a liable third party, such as private insurance, before the state Medicaid agency pays for services. The changes apply to prenatal care services, pediatric preventive services, and services for children subject to child support enforcement (CSE beneficiaries). At the time of GAO's review, Officials from four of the nine selected states reported having fully implemented the changes for prenatal care services, which were required to be implemented starting in February 2018. Officials from the remaining five states were discussing the changes internally, researching how to implement the changes in their Medicaid payment systems, or waiting for additional guidance from the Centers for Medicare & Medicaid Services (CMS), the federal agency responsible for overseeing states' Medicaid programs. None of the nine states had implemented the changes to pediatric preventive services and services for CSE beneficiaries, which must be implemented starting in October 2019. Officials from six states told GAO that they were in the early stages of exploring how they would make the changes, while the remaining three states had not developed such plans. GAO found that guidance issued by CMS in June 2018 to assist states in implementing the third-party liability changes contains information inconsistent with the law. For example, CMS's guidance incorrectly informs states that providers do not need to seek third-party payments before the state pays for some prenatal services. In addition, CMS has not determined the extent to which states are meeting third-party liability requirements. CMS officials stated that they expect states to comply with current law for Medicaid third-party liability and that they do not verify whether states have implemented the required third-party liability changes unless the agency is made aware of non-compliance. However, this approach is inconsistent with CMS's Medicaid oversight responsibilities, including its responsibility to ensure federal funds are appropriately spent. Medicaid experts and other stakeholders told GAO that the third-party liability changes could affect some health care providers in ways that could result in decreased beneficiary access to care, because some providers might be less willing to see Medicaid patients. According to stakeholders, this could occur for two primary reasons. 1. The changes may increase administrative requirements for providers by requiring them to identify sources of coverage, obtain insurance information, and submit claims to third-party insurers before submitting them to Medicaid. 2. The changes may result in providers waiting longer to receive Medicaid payment for certain services to the extent that states require providers to seek third-party payments before paying the providers' claims. GAO is recommending that CMS (1) ensure that its guidance to states on third-party liability requirements reflects current law, and (2) determine the extent to which state Medicaid programs are meeting federal third-party liability requirements. The Department of Health and Human Services concurred with these recommendations."
"Private student loans are not guaranteed by the federal government. Generally, private lenders underwrite the loans based on the borrower’s credit history and ability to repay, and they often require a cosigner. Private student loans generally carry a market interest rate, which can be a variable rate that is higher than that of federal student loans. As of September 30, 2018, five banks held almost half of all private student loan balances. Other private student loan lenders include credit unions and nonbanks: Credit unions originate private student loans either directly or indirectly through a third party. Nonbanks include both for-profit nonbank lenders and nonbank state lenders. For-profit nonbank lenders can originate, service, refinance, and purchase loans. Nonbank state lenders promote affordable access to education by generally offering low, fixed-rate interest rates and low or no origination fees on student loans. As of September 2018, outstanding private student loan balances made up about 8 percent of the $1.56 trillion in total outstanding student loans (see fig. 1). The volume of new private student loans originated has fluctuated, representing about 25 percent of all student loans originated in academic year 2007–2008, 7 percent in 2010–2011 (after the financial crisis), and 11 percent in 2017–2018. FCRA, the primary federal statute that governs consumer reporting, is designed to promote the accuracy, fairness, and privacy of information in the files of CRAs. FCRA, and its implementing regulation, Regulation V, govern the compilation, maintenance, furnishing, use, and disclosure of consumer report information for credit, insurance, employment, and other eligibility decisions made about consumers. The consumer reporting market includes the following entities: CRAs assemble or evaluate consumer credit information or other consumer information for the purpose of producing consumer reports (commonly known as credit reports). Equifax, Experian, and TransUnion are the three nationwide CRAs. Data furnishers report information about consumers’ financial behavior, such as repayment histories, to CRAs. Data furnishers include credit providers (such as private student loan lenders), utilities, and debt collection agencies. Credit report users include banks, employers, and others that use credit reports to make decisions on an individual’s eligibility for products and services such as credit, employment, housing, and insurance. FCRA imposes duties on data furnishers with respect to the accuracy of the data they furnish. Data furnishers are required to, among other things, refrain from providing CRAs with information they know or have reasonable cause to believe is inaccurate and develop reasonable written policies and procedures regarding the accuracy of the information they furnish. The Act entitles financial institutions that choose to offer a private student loan rehabilitation program that meets the Act’s requirements a safe harbor from potential inaccurate information claims under FCRA related to the removal of the private student loan default from a credit report. To assist data furnishers in complying with their responsibilities under FCRA, the credit reporting industry has adopted a standard electronic data-reporting format called the Metro 2® Format. This format includes standards on how and what information furnishers should report to CRAs on private student loans. The information that private student loan lenders furnish to CRAs on their borrowers includes consumer identification; account number; date of last payment; account status, such as in deferment, current, or delinquent (including how many days past due); and, if appropriate, information indicating defaults. An account becomes delinquent on the day after the due date of a payment when the borrower fails to make a full payment. Private student loan lenders’ policies and terms of loan contracts generally determine when a private student loan is in default. While private student loan lenders may differ in their definitions of what constitutes a default, federal banking regulator policy states that closed- end retail loans (which include private student loans) that become past due 120 cumulative days from the contractual due date should be classified as a loss and “charged off.” Private student loan lenders can indicate that a loan is in default and they do not anticipate being able to recover losses on it by reporting to CRAs one of a number of Metro 2® Format status codes. Participation in a private student loan rehabilitation program entitles borrowers who successfully complete the program to request that the indicator of a student loan default be removed from their credit report, but the delinquencies leading up to the default would remain on the credit report. Figure 2 shows an example of credit reporting for a borrower who defaults on a private student loan and completes a rehabilitation program. A credit score is a measure that credit providers use to predict financial behaviors and is typically computed using information from consumer credit reports. Credit scores can help predict the likelihood that a borrower may default on a loan, file an insurance claim, overdraw a bank account, or not pay a utility bill. FICO and VantageScore are the two firms that develop credit score models with nationwide coverage. FICO develops credit score models for distribution by each of the three nationwide CRAs, whereas VantageScore’s models are developed across the three CRAs resulting in a single consistent algorithm to assess risk. FICO and VantageScore each have their own proprietary statistical credit score models that choose which consumer information to include in calculations and how to weigh that information. The three nationwide CRAs also develop credit score models derived from their own data. There are different types of credit scores, including generic, industry- specific, and custom. Generic scores are based on a representative sample of all individuals in a CRA’s records, and the information used to predict repayment is limited to the information in consumer credit records. Generic scores are designed to predict the likelihood of a borrower not paying as agreed in the future on any type of credit obligation. Both FICO and VantageScore develop generic credit scores. FICO and VantageScore generic scores generally use a range from 300 to 850, with higher numbers representing lower credit risk. For example, VantageScore classifies borrowers in the following categories: subprime (those with a VantageScore of 300–600), near prime (601–660), prime (661–780), and super prime (781–850). A prime borrower is someone who is considered a low-risk borrower and likely to make loan payments on time and repay the loan in full, whereas a subprime borrower has a tarnished or limited credit history. FICO and VantageScore generic scores generally use similar elements in determining a borrower’s credit score, including a borrower’s payment history, the amounts owed on credit accounts, the length of credit history and types of credit, and the number of recently opened credit accounts and credit inquiries. FICO has developed industry-specific scores for the mortgage, automobile finance, and credit card industries. These scores are designed to predict the likelihood of not paying as agreed in the future on these specific types of credit. In addition, credit providers sometimes use custom credit scores instead of, or in addition to, generic credit scores. Credit providers derive custom scores from credit reports and other information, such as account history, from the lender’s own portfolio. The scores can be developed internally by credit providers or with the assistance of external parties such as FICO or the three nationwide CRAs. CFPB has supervisory authority over certain private student loan lenders, including banks and credit unions with over $10 billion in assets and all nonbanks, for compliance with Federal consumer financial laws. CFPB also has supervisory authority over the largest CRAs and many of the entities that furnish information about consumers’ financial behavior to CRAs. To assess compliance with Federal consumer financial laws, CFPB conducts compliance examinations. According to CFPB, because of its mission and statutory requirement regarding nonbank supervision, it prioritizes its examinations by focusing on risks to consumers rather than risks to institutions. Given the large number, size, and complexity of the entities under its authority, CFPB prioritizes its examinations by focusing on individual product lines rather than all of an institution’s products and services. CFPB also has enforcement authority under FCRA regarding certain banks, credit unions, and nonbanks and broad authority to promulgate rules to carry out the purposes of FCRA. The prudential regulators—FDIC, Federal Reserve, NCUA, and OCC— oversee all banks and most credit unions that offer private student loans. Their oversight includes routine safety and soundness examinations for all regulated entities. These examinations may include a review of operations, including policies, procedures, and practices, to ensure that private student loans are not posing a risk to the entities’ safety and soundness. Prudential regulators also have supervisory authority for FCRA compliance for banks and certain credit unions with $10 billion or less in assets. As of January 2019, none of the five banks with the largest private student loan portfolios that we contacted offered rehabilitation programs for defaulted private student loans. In addition, officials from the federal banking regulators told us that as of March 2019, no banks had submitted applications to have rehabilitation programs approved. Representatives from three of the five banks we contacted told us they had decided not to offer a rehabilitation program, and the other two had not yet made a final determination. Representatives from these five banks provided several reasons they were not offering rehabilitation programs for private student loans. Low delinquency and default rates. All five banks’ representatives stated that they had low default rates for private student loans, so the demand for these programs would be low for each bank. Availability of predefault payment programs. Representatives of all five banks said they already offer alternative payment programs, such as forbearance, to help prevent defaults, and two of them explicitly noted this as a reason that a rehabilitation program was unnecessary. Operational uncertainties. Most of the banks’ representatives were not sure how they would operationalize rehabilitation programs. One bank’s representatives said that they sell defaulted loans to debt purchasers and that it would be difficult to offer rehabilitation programs for loans that had been sold. Representatives of two other banks said that the banks’ systems are not able to change the status of a loan once it has defaulted, so they were not certain how their systems would track rehabilitated loans. Another bank’s representatives said that they did not know how rehabilitated loans would be included for accounting purposes in developing their financial statements. Reduced borrower incentives to avoid default. Representatives from two banks said they believed the option to rehabilitate a defaulted loan might reduce borrowers’ incentives to avoid default or to enter a repayment program before default. Risk of compliance violations. One bank representative said a rehabilitation program could put the bank at risk for violations of unfair and deceptive acts and practices if borrowers misunderstood or misinterpreted how much the program would improve their credit scores. Representatives from this bank and another explained that they did not know how much the program would improve credit scores, limiting their ability to describe the program’s benefit to borrowers. Representatives from three of these banks and other organizations, however, noted that there could be advantages for banks to offer private student loan rehabilitation programs. Representatives from the banks said these programs could help banks recover some nonperforming debt, and one of these representatives stated the program could be marketed to borrowers as a benefit offered by the bank. A representative of a consumer advocacy group said a rehabilitation program could improve a bank’s reputation by distinguishing the bank from peer institutions that do not offer rehabilitation for private student loans. Because NCUA is not one of the federal banking regulators by statutory definition, officials said the Act does not require credit unions to seek approval from the agency before offering a rehabilitation program. NCUA officials told us examiners would likely review private student loan rehabilitation programs for the credit unions that choose to offer them as part of normal safety and soundness examinations. The two credit unions we spoke with—which are among the largest credit union providers of private student loans—told us they do not plan to offer rehabilitation programs. One of these credit unions cited reasons similar to those offered by banks, including a low private student loan default rate that suggested there would be a lack of demand for a rehabilitation program. The other credit union explained that it was worried about the effect of removing defaults from credit reports on its ability to make sound lending decisions. NCUA officials also noted that as of January 2019, they had not received any inquiries from credit unions about these programs. OCC, FDIC, and the Federal Reserve have issued information regarding the availability of private student loan rehabilitation programs to their regulated entities, including how they would review applications. In doing so, the agencies informally coordinated to ensure that the statements issued would contain similar information on rehabilitation programs. The three agencies’ statements explained that their regulated entities must receive written approval to begin a program and that the relevant agency would provide feedback or notify them of its decision within 120 days of receiving a written application. The agencies will review the proposed program to ensure that it requires borrowers to make a minimum number of consecutive, on-time, monthly payments that demonstrate renewed ability and willingness to repay the loan. Uncertainty exists regarding two issues with private student loan rehabilitation programs. First, some nonbank private student loan lenders are not certain that they have the authority to implement these programs. Second, the Act does not explain what constitutes a “default” for the purposes of removing information from credit reports. With regard to nonbank state lenders, uncertainty exists about their authority under FCRA to offer private student loan rehabilitation programs that include removing information from credit reports. As discussed previously, for financial institutions such as banks and credit unions, the Act provides an explicit safe harbor to request removal of a private student loan default from a borrower’s credit report and remain in compliance with FCRA. However, the Act does not specify that for-profit nonbank lenders and nonbank state lenders have this same authority. Representatives of the five nonbank state lenders we spoke with had different interpretations of their authority to offer rehabilitation programs. At least two nonbank state lenders currently offer rehabilitation programs, and their representatives told us they believed they have the authority to do so. Another nonbank state lender told us its state has legislation pending to implement such a program. In contrast, representatives of two other nonbank state lenders told us they were interested in offering a rehabilitation program but did not think that they had the authority to do so. In addition, representatives from a trade association that represents nonbank state lenders noted that confusion exists among some of their members and they are seeking a way to obtain explicit authority for nonbank lenders to offer rehabilitation programs for their private student loans. Two trade associations that represent nonbank state lenders also told us that some of their members would be interested in offering these programs if it was made explicit that they were allowed to do so. CFPB officials told us the agency has not made any determination on whether it plans to clarify for nonbanks—including for-profit nonbank lenders and nonbank state lenders—if they have the authority under FCRA to have private student loan defaults removed from credit reports for borrowers who have completed a rehabilitation program. CFPB officials said that the agency does not approve or prevent its regulated entities from offering any type of program or product. Unlike for the federal banking regulators, the Act did not require CFPB to approve rehabilitation programs offered by the entities it regulates. However, CFPB does have general FCRA rulemaking authority. It generally also has FCRA enforcement and supervisory responsibilities over its regulated entities, which includes certain entities that originate private student loans. This authority allows the agency to provide written clarification of provisions or define terms as needed. As a result, CFPB could play a role in clarifying for nonbanks whether they are authorized under FCRA to offer private student loan rehabilitation programs. Federal internal control standards state that management should externally communicate the necessary quality information to achieve the entity’s objectives. Without clarification from CFPB on nonbanks’ authority to offer private student loan rehabilitation programs that allow them to delete information from the borrower’s credit report, there will continue to be a lack of clarity on this issue among these entities. Providing such clarity could—depending on CFPB’s interpretation—result in additional lenders offering rehabilitation programs that would allow more borrowers the opportunity to participate, or it could help ensure that only those entities CFPB has interpreted as being eligible to offer programs are doing so. Statutory changes made to FCRA by the Act do not explain what information on a consumer’s credit report constitutes a private student loan “default” that may be removed when a borrower successfully completes a rehabilitation program. According to the three nationwide CRAs and a credit reporting trade association, the term “default” is not used in credit reporting for private student loans. As discussed previously, private student loan lenders use one of a number of Metro 2® Format status codes to indicate that a loan is in default (i.e., they do not anticipate being able to recover losses on the loan). Representatives of the CRAs and a credit reporting trade association said that private student loan lenders will need to make their own interpretation of what information constitutes a default for the purposes of removing information from a credit report following successful completion of a private student loan rehabilitation program. The statements issued by FDIC, the Federal Reserve, and OCC on rehabilitation programs do not explain what information constitutes a private student loan “default” that may be removed from borrowers’ credit reports upon successful completion of a rehabilitation program. Officials from FDIC, the Federal Reserve, and OCC explained that they do not have the authority to interpret what constitutes a private student loan default on credit reports because the responsibilities for interpreting FCRA fall under CFPB. CFPB officials told us they are monitoring the issue but have not yet determined if there is a need to address it. Given CFPB’s rulemaking authority for FCRA, it could clarify the term “default” for private student loan lenders. In doing so, CFPB could obtain insight from the prudential regulators and relevant industry groups on how private student loan lenders currently report private student loan defaults on credit reports and on how to develop a consistent standard for what information may be removed. According to federal internal control standards, management should externally communicate the necessary quality information to achieve objectives. This can include obtaining quality information from external parties, such as other regulators and relevant industry groups. Without clarification from CFPB, there may be differences among private student loan lenders in what information they determine constitutes a “default” and may be removed from a credit report. Variations in lenders’ interpretations could have different effects on borrowers’ credit scores and credit records, resulting in different treatment of borrowers by credit providers. This could affect borrowers’ access to credit or the terms of credit offered, such as interest rates or the size of down payments required on a variety of consumer loans. In addition, as mentioned previously, the credit reporting industry follows a standard reporting format to help ensure the most accurate credit reporting information possible. Without clarification on what information may be removed from credit reports following successful completion of rehabilitation programs, differences in lenders’ interpretation could introduce inconsistencies in credit reporting data that may affect their accuracy. Rehabilitation programs for private student loans are expected to pose minimal additional risk to banks’ and credit unions’ safety and soundness. Prudential regulators require that banks and credit unions underwrite student loans to mitigate risks and ensure sound lending practices, and OCC guidance specifies that underwriting practices should minimize the occurrence of defaults and the need for repayment assistance. Lenders generally use underwriting criteria based on borrowers’ credit information to recognize and account for risks associated with private student loans. According to officials from OCC, FDIC, and the Federal Reserve and representatives from the major bank and credit union private student loan lenders we spoke with, lenders participating in private student loan rehabilitation programs would face minimal additional risks for several reasons: Loans are already classified as a loss. Loans entering a rehabilitation program are likely to be 120 days past due and to have been charged off, and thus they would have already been classified as a loss by banks and credit unions. OCC officials told us a program to rehabilitate these loans would, therefore, pose no additional risks to the safety and soundness of institutions that offer them. Default rates are low, and loans typically use cosigners. Representatives from the five major banks and two credit unions told us that private student loans generally perform well and have low rates of delinquencies and defaults. Aggregate data on the majority of outstanding loan balances show that the default rate for private student loans was below 3 percent from the second quarter of 2014 through the third quarter of 2018. Lenders also generally require borrowers of private student loans to have cosigners—someone who is liable to make payments on the loan should the student borrower default—which helps reduce the risk of the loan not being repaid. Since the academic year 2010–2011, the rate of undergraduate private student loan borrowers with cosigners has exceeded 90 percent. Private student loan portfolios are generally small. Private student loans make up a small portion of the overall loan portfolios for most of the banks and credit unions we spoke with. For four of the five major banks with the largest portfolios of private student loans, these constituted between about 2 percent to 11 percent of their total loan portfolio in 2017. The fifth bank’s entire portfolio was education financing, with private student loans accounting for about 93 percent of its 2017 portfolio. For the two credit unions we contacted, private student loans constituted about 2 percent and 6 percent of their total assets in 2018. Private student loan rehabilitation programs may create certain operational costs for banks or credit unions that offer them. However, no representatives of the five banks and two credit unions with whom we spoke were able to provide a cost estimate since none had yet designed or implemented such a program. Representatives from four banks and one credit union we spoke with said that potential costs to implement a rehabilitation program would be associated with information technology systems, designing and developing new systems to manage the program, increased human resource needs, additional communications with borrowers, credit reporting, compliance, monitoring, risk management, and any related legal fees. In addition, like any other type of consumer loan, banks and credit unions could face potential risks with private student loan rehabilitation programs, including operational, compliance, or reputational risks. For example, a representative of one bank cited operational risks such as those that could stem from errors in credit reporting or inadequate collection practices for rehabilitated private student loans. One concern about removing information from credit reports—as authorized in connection with the Act’s loan rehabilitation programs—is that it could degrade the quality of the credit information that credit providers use to assess the creditworthiness of potential borrowers. However, the removal of defaults from credit reports resulting from loan rehabilitation programs is unlikely to affect financial institutions’ ability to make sound lending decisions, according to prudential regulator officials and representatives from three private student lenders and three other credit providers with whom we spoke. OCC and FDIC officials and representatives from two of these private student lenders noted that because rehabilitation programs leave the delinquencies leading up to the default on borrowers’ credit reports, lenders would still be able to adequately assess borrower risk. In addition, representatives from one automobile lender and one mortgage lender said that over time, the methods they use to assess creditworthiness would be able to detect whether rehabilitated private student loans were affecting their ability to identify risk patterns in credit information and they could adjust the methods accordingly. Representatives from the Federal Reserve provided three additional reasons why they expected that rehabilitation programs would have little effect on banks’ and credit unions’ lending decisions. First, under the statutory requirement for private student loan rehabilitation, removal of a default from a borrower’s credit report can only occur once per loan. A single default removal would be unlikely to distort the accuracy of credit reporting in general. Second, they said that borrowers who have successfully completed a rehabilitation program by making consecutive on-time payments have demonstrated a proven repayment record, and therefore they likely represent a better credit risk. Finally, because participation in the private student loan rehabilitation program is expected to be low, its effect on the soundness of financial institutions’ lending decisions is expected to be minimal. The effects of private student loan rehabilitation programs on most borrowers’ access to credit would likely be minimal. A simulation conducted by VantageScore found that removing a student loan default increased a borrower’s credit score by 8 points, on average. An 8 point rise in a borrower’s credit score within VantageScore’s range of 300 to 850 represents only a very small improvement to that borrower’s creditworthiness. Therefore, most borrowers who successfully completed a private student loan rehabilitation program would likely see minimal improvement in their access to credit, particularly for credit where the decision-making is based solely on generic credit scores. Factors Credit Providers Consider Prior to Lending Credit providers assess a borrower’s creditworthiness based on several factors, including the following: Generic credit scores: Credit providers can rely solely on generic credit scores, such as those developed by Fair Isaac Corporation and VantageScore Solutions, LLC, to make lending decisions. Credit providers generally do not provide credit to borrowers whose scores do not meet a minimum threshold. Industry-specific credit scores: Certain types of credit providers, such as mortgage lenders, automobile loan lenders, and credit card issuers, may use industry-specific credit scores rather than generic credit scores to make lending decisions. This is because these scores may help them better predict lending risks specific to their industry. Internal credit reviews: Credit providers can customize methods unique to their institution that review different aspects of borrowers’ credit information, such as debt-to-income ratios, employment history, and borrowers’ existing relationships with the institution. Credit providers may also develop custom credit scores that are tailored to their specific needs and include factors they have deemed important in predicting risks of nonpayment. Credit providers incorporate their own internal data in these scores as well as information contained in borrowers’ credit reports. The effect of a rehabilitation program on credit scores will likely be somewhat greater for borrowers with lower credit scores, and smaller for borrowers with higher credit scores. For example, the VantageScore simulation suggests that borrowers in the subprime range (with scores of 300–600) could see score increases of 11 points, on average, while borrowers in the prime (661–780) and super prime (781–850) ranges could see increases of less than 1 point, on average (see fig. 3). The effect of removing a default from a credit report varies among borrowers because a credit score is influenced by other information in a borrower’s credit report, such as other outstanding derogatory credit markers, the length of time since the default, and other types of outstanding loans. Reasons that removing a student loan default may improve a borrower’s credit score and access to credit only minimally include the following: Delinquencies remain in the credit report. A key reason that removing a student loan default has a small effect on a credit score, according to VantageScore officials, is that the delinquencies leading to that default remain in the credit report for borrowers who successfully complete rehabilitation programs. Adding a delinquency in the simulation decreased a credit score by 61 points, on average. Thus, the simulation suggests that the increase in a credit score from removing a student loan default is not as substantial as the decrease from adding the initial delinquency. Credit scoring treats student loans differently. Some credit score models place less emphasis on student loans than on other types of consumer loans in predicting the risk of nonpayment. One credit scoring firm and two CRAs we spoke with said that student loans have a lower weight than other types of consumer loans in their generic credit scoring algorithms. They explained that there are fewer student loans than other types of consumer loans in the sample they use to develop the score, and student debt has proved to be less important statistically at predicting credit risk in their models. Student loans also may have less weight in predicting defaults in industry- specific or custom models of scores. A representative of one credit scoring firm said the algorithm for an industry-specific credit score that predicts the risk of nonpayment on a credit card may place less emphasis on a student loan than the algorithm for a generic credit score that is meant to predict risk more broadly. Further, CRA officials we spoke with said that because their custom credit scoring models are specific to clients’ needs, the models may not include student loans as a predictor of default at all, or they may place greater emphasis on student loans, depending on the clients’ needs. Borrowers in default typically already have poor credit. Borrowers who complete a rehabilitation program have a high likelihood of having other derogatory credit items in their credit report, in addition to the student loan delinquencies that led to the default, according to a study conducted by a research organization, several CRAs, and one credit provider with whom we spoke. The VantageScore simulation also showed that borrowers who had at least one student loan delinquency or default in their credit profile had an average of five derogatory credit items in their profile. Because student loan defaults and student loan delinquencies are both negative credit events that affect credit providers’ credit assessment methods, the removal of one student loan default from a borrower’s credit report likely will not make a large difference in how credit providers evaluate the borrower. Consumer advocates and academic studies cited potential benefits of rehabilitation programs apart from their effect on credit scores and access to credit: Borrowers defaulting on private student loans issued by nonbank state lenders could have wage garnishments stopped after successfully completing a rehabilitation program. Rehabilitation would stop debt collection efforts against a private student loan borrower. Participating in a loan modification program for one loan may help borrowers better meet their other loan obligations, according to studies we reviewed. For example, one study found that participation in mortgage modification programs was associated with lower delinquency rates on nonmortgage loans. However, programs may also have some disadvantages or pose challenges to borrowers, according to representatives from consumer advocacy groups and academic sources: A rehabilitation program may restart the statute of limitations on loan collections, according to representatives of consumer advocacy groups. Borrowers who redefault following entry into a rehabilitation program near the end of the statute of limitations on their debt could have collection efforts extended on these loans. Programs may extend adverse credit reporting. Generally, negative credit information stays on consumer reports for 7 or 10 years; therefore, depending on when a borrower enters into a rehabilitation program, a payment on the loan might prolong the adverse credit reporting for that account. The lack of income-driven repayment programs offered to borrowers in the private student loan market means that borrowers who complete rehabilitation programs may have a high likelihood of redefaulting on their loans. Because removing adverse information from credit reports does not change a borrower’s underlying creditworthiness, improved credit scores and access to credit may cause borrowers to borrow too much relative to their ability and willingness to pay. For example, one study found that for consumers who had filed for bankruptcy, their FICO scores and credit lines increased within the first year after the bankruptcy was removed from their credit report. However, the study found the initial credit score increase had disappeared by about 18 months after the bankruptcy was removed and that debt and delinquency were higher than expected, increasing the probability of a future default. Private student loan rehabilitation programs can provide an opportunity for private student loan borrowers to help repair their credit reports. However, some nonbank state lenders have different interpretations of whether FCRA authorizes them to offer such programs. During our review, CFPB had not determined if it would clarify these uncertainties for nonbank state lenders and other nonbank private student loan lenders. Providing such clarity could—depending on CFPB’s interpretation—result in additional lenders offering rehabilitation (allowing more borrowers the opportunity to participate), or help to ensure that only entities deemed eligible by CFPB to offer programs are doing so. In addition, the Act does not explain what information on a consumer’s credit report constitutes a private student loan “default” that may be removed following the successful completion of a private student loan rehabilitation program. Without clarification from CFPB—after consulting with the prudential regulators and relevant industry groups—on what information in a credit report constitutes a private student loan default that may be removed, lenders may be inconsistent in the credit report information they remove. As a result, variations in lenders’ interpretations could have different effects on borrowers’ credit scores and credit records, which could affect how they are treated by credit providers and could also result in inconsistencies that affect the accuracy of credit reporting data. We are making the following two recommendations to CFPB: The Director of CFPB should provide written clarification to nonbank private student loan lenders on their authorities under FCRA to offer private student loan rehabilitation programs that include removing information from credit reports. (Recommendation 1) The Director of CFPB, after consulting with the prudential regulators and relevant industry groups, should provide written clarification on what information in a consumer’s credit report constitutes a private student loan reported “default” that may be removed after successful completion of a private student loan rehabilitation program. (Recommendation 2) We provided a draft copy of this report to CFPB, the Department of Education, FDIC, the Federal Reserve, the Federal Trade Commission, NCUA, OCC, and the Department of the Treasury for review and comment. We also provided FICO and VantageScore excerpts of the draft report for review and comment. CFPB and NCUA provided written comments, which have been reproduced in appendixes II and III, respectively. FDIC, the Federal Trade Commission, OCC, and the Department of the Treasury provided technical comments on the draft report, which we have incorporated, as appropriate. The Department of Education and the Federal Reserve did not provide any comments on the draft of this report. FICO and VantageScore provided technical comments, which we have incorporated, as appropriate. In its written response, CFPB stated that it does not plan to act on our first recommendation to provide written clarification to nonbank private student loan lenders on their authorities under FCRA to offer private student loan rehabilitation programs. CFPB stated—and we agree—that the Act does not regulate the authority of private student loan lenders that are not included in FCRA’s definition of a “financial institution,” nor direct financial institutions that are not supervised by a federal banking agency to seek CFPB’s approval concerning the terms and conditions of rehabilitation programs. However, CFPB’s written response does not discuss the authority of private student loan lenders that potentially fall outside FCRA’s definition of a financial institution to offer rehabilitation programs that include removing information from credit reports. As we discuss in the report, uncertainty exists among nonbank private student loan lenders regarding their authority to implement such programs. We maintain that although the Act does not require CFPB to act on this issue, CFPB could play a role in clarifying whether FCRA authorizes nonbanks to offer rehabilitation programs that enable the lender to obtain legal protection for removal of default information from a credit report. CFPB intervention is warranted given the lack of clarity in the private student lending industry and is consistent with CFPB’s supervisory authority over nonbank financial institutions and its FCRA enforcement and rulemaking authorities. We do not suggest that CFPB play a role in approving rehabilitation programs. As we note in the report, clarification of nonbanks’ authorities could result in additional lenders offering rehabilitation programs and providing more consistent opportunities for private student loan borrowers, or it could help ensure that only those entities authorized to offer programs are doing so. With respect to our second recommendation on providing written clarification on what information in a consumer’s credit report constitutes a private student loan reported default that may be removed after successful completion of a private student loan rehabilitation program, CFPB’s letter states that such clarification is premature because of ongoing work by the Consumer Data Industry Association. The letter states that after that work is completed, CFPB will consult with the relevant regulators and other interested parties to determine if additional guidance or clarification is needed. As we stated in the report, we are aware of the work of the Consumer Data Industry Association to update the credit reporting guidelines for private student loans. We maintain that this work presents a good opportunity for CFPB to participate in these discussions and to work in conjunction with the industry and other relevant regulators to help alleviate any contradiction between what CFPB would determine in isolation from any determination made by industry. Further, such participation would allow CFPB to weigh in on legal and policy issues from the start, potentially avoiding any need for future rulemaking. In addition, CFPB’s involvement in this determination and issuance of clarification would help ensure more consistent treatment among borrowers participating in private student loan rehabilitation programs, as well as consistency in credit reporting information. NCUA’s written response stated that federal credit unions were authorized to offer rehabilitation programs for private student loan borrowers prior to the Act and that federal credit unions are not required to obtain review and approval from NCUA to offer such programs. The letter notes, however, that the Act requires federal credit unions that offer such programs to remove private student loan defaults from consumer credit reports if borrowers successfully complete a rehabilitation program. NCUA noted that even though removal of the default may result in a relatively small credit score increase, this can benefit credit union members. NCUA stated that it stands ready to assist CFPB in implementing the report’s two recommendations. We are sending copies of this report to CFPB, the Department of Education, FDIC, the Federal Reserve, the Federal Trade Commission, NCUA, OCC, the Department of the Treasury, the appropriate congressional committees and members, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-8678 or cackleya@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV. Our objectives were to examine (1) the factors affecting financial institutions’ participation in private student loan rehabilitation programs, (2) the risks that these programs may pose to financial institutions, and (3) the effects that these programs may have on student loan borrowers’ access to future credit. To examine the factors that affect financial institutions’ participation in private student loan rehabilitation programs and how the federal banking regulators are implementing the Economic Growth, Regulatory Relief, and Consumer Protection Act’s (the Act) provisions on private student loan rehabilitation programs, we reviewed the statements issued by the three regulators tasked with approving the loan rehabilitation programs of their regulated entities—the Board of Governors of the Federal Reserve System (Federal Reserve), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC)—as well as OCC’s examiner guidance. We also interviewed officials from these regulators about their time frames for issuing statements, what topics the statements cover, and how they coordinated in issuing the statements. We reviewed the legal authorities of the Consumer Financial Protection Bureau (CFPB) and National Credit Union Administration (NCUA)—which oversee nonbank private student loan lenders and most credit unions that issue private student loans, respectively—concerning private student loan rehabilitation programs and the legislative history of the Act’s provisions on the programs. Finally, we interviewed officials from NCUA and CFPB about their authorities related to implementing the Act’s provisions on private student loan rehabilitation programs and whether they planned to take any actions related to the provisions. In addition, we interviewed representatives from a nongeneralizable sample of 15 private student loan lenders: the five largest bank lenders, two of the largest credit union lenders, and eight nonbank financial institutions (nonbank). The eight nonbank lenders included three for-profit nonbank lenders and five nonprofit state-affiliated lenders (nonbank state lenders). We asked these lenders about their decisions to offer private student loan rehabilitation programs, risks and costs associated with the programs, and the effects that such programs could have on their lending decisions. We identified the five largest bank lenders by reviewing data from MeasureOne—a private data analytics company that studies the private student loan market—and discussions with officials from the Federal Reserve, FDIC, OCC, and CFPB. We assessed the reliability of data from MeasureOne through discussions with representatives from the company on the methodology used to develop its estimates and its internal controls. We determined that this data source was sufficiently reliable for selecting a sample of private student lenders to interview about participation in rehabilitation programs. We reviewed these five banks’ 2017 10-K reports (annual financial filings with the Securities and Exchange Commission) to verify the size of their student loan portfolios. We selected the two credit unions to interview by reviewing 2018 NCUA data on credit unions’ portfolios to identify two credit unions that were among the largest credit union private student loan lenders. To select the for-profit nonbank lenders, we used suggestions from officials at CFPB, OCC, and the Department of Education, as well as reports from private sources that contained information on nonbank private student loan lenders. We selected nonbank state lenders based on information that indicated they were operating or interested in offering rehabilitation programs. Sources of this information included the Education Finance Council’s 2018–2019 NonProfit & State-Based Education Loan Handbook, an interview with the Education Finance Council, and information received from a 2013 CFPB Request for Information Regarding an Initiative to Promote Student Loan Affordability. Because this sample is nongeneralizable, our results cannot be generalized to all private student loan lenders. To examine the risks, if any, that private student loan rehabilitation programs pose to financial institutions, we reviewed bank and credit union regulator policies and guidance on private student lending. We also analyzed data on delinquency and default rates of private student loans. To do this, we reviewed industry data from MeasureOne and the 2017 10- K filings for the five banks whose representatives we interviewed. We assessed the reliability of MeasureOne’s performance data through discussions with representatives from the company on the methodology it uses to develop these metrics and its internal controls. We determined that this data source was sufficiently reliable for assessing the performance of banks’ portfolios of private student loans. For these five banks, we also used the 10-K filings to estimate the volume of the portion of their portfolios that was composed of private student loans. We also compared private student loan default rates to default rates of other types of consumer loans, including mortgages, credit cards, and automobile loans. To do this, we used data from FDIC’s Statistics on Depository Institutions database to analyze indicators of asset quality for mortgages, credit cards, and automobile loans from 2013 through 2017. We assessed the reliability of FDIC’s Statistics on Depository Institutions database by reviewing related documentation and conducting testing for missing data, outliers, or any obvious errors. We determined that this data source was sufficiently reliable for assessing the performance and risk of banks’ portfolios of private student loans and other types of consumer loans. We also interviewed officials from the Federal Reserve, FDIC, NCUA, and OCC about the types of costs and risks that could be associated with private student loan rehabilitation programs. In addition, we interviewed representatives of our nongeneralizable sample of 15 private student loan lenders about the potential risks and costs of offering rehabilitation programs. To assess potential risks of private student loan rehabilitation programs for other types of financial institutions, we interviewed a nongeneralizable sample of seven credit providers about how these programs could affect their ability to make sound lending decisions. We focused on financial institutions that offer mortgage loans, automobile loans, and credit cards. According to data from the 2016 Survey of Consumer Finances, these are the most common types of debt consumers hold. We selected a nongeneralizable sample of banks and nonbank financial institutions that provide these types of credit. We selected the bank credit providers using data from FDIC’s Statistics on Depository Institutions by identifying the mortgage and automobile loan lenders and credit card issuers that were among the largest holders of assets in these lending categories as of the fourth quarter 2017. To identify nonbank financial institution lenders, we reviewed an industry report to identify some of the larger nonbank mortgage lenders, and we reviewed a list prepared by CFPB of larger industry participants in the automobile finance market industry. We judgmentally selected the final sample of these credit providers based on their size and, to the extent applicable, their federal regulator to obtain a diversity of opinions. We determined that industry reports, CFPB’s list of larger industry participants, and 10-K filings were sufficiently reliable for selecting a sample of nonbank financial institutions to interview about risks posed by rehabilitation programs. Because this sample is nongeneralizable, our results cannot be generalized to all credit providers. We also interviewed representatives of four industry groups and two trade associations that work with these credit providers and student loan borrowers on the types of risks and costs that rehabilitation programs could create for lenders. To examine the effects that private student loan rehabilitation programs may have on student loan borrowers’ access to future credit, we conducted a literature search for studies that empirically analyzed the effects on credit scores and access to credit of adverse credit events, such as foreclosures or bankruptcies; loan modifications, broadly defined; and removal of accurate but adverse information from credit reports, such as a bankruptcy. We identified these studies through our initial background search, targeted searches of the EconLit database, and a search of the Federal Reserve Bank of New York Center for Microeconomic Data publications, and through bibliographies of studies we reviewed. We also asked VantageScore Solutions, LLC (VantageScore)—a credit scoring firm—to conduct a quantitative analysis simulating the effect of adding a student loan delinquency to and removing a student loan default from a borrower’s credit profile on its VantageScore 3.0 credit score. The analysis was conducted using a sample of VantageScore’s data that it obtained from the three nationwide CRAs and that represents actual credit profiles of borrowers. VantageScore analyzed data for borrowers with at least one outstanding student loan with a balance greater than $0. Table 1 contains the results of the simulation and information on the number and characteristics of borrowers whose credit profiles were analyzed. The results of the simulation are specific to changes in the VantageScore 3.0 credit score. The simulated results represent averages for borrowers whose credit profiles were analyzed and are meant to be illustrative. Additionally, because this was a simulation, it is unlikely that any one borrower’s credit profile exactly matches the average profiles used in the simulations. The results of the VantageScore analysis only apply to VantageScore 3.0 credit scores in the 2014–2016, 2015–2017, and 2016–2018 cohorts of borrowers and may not be generalized to other VantageScore credit scores, to Fair Isaac Corporation (FICO) credit scores, or for different cohorts in different years. While we present only the results of the most recent cohort (2016–2018) in our report, VantageScore simulated the analysis across three cohorts to determine whether the results varied substantially over time. The results for all three cohorts were similar. Through reviewing documentation and conducting interviews, we determined that the data used by VantageScore to conduct this analysis were sufficiently reliable for simulating the effects of derogatory credit marks on borrowers’ credit scores. FICO declined our request to develop a similar analysis. To examine how a rehabilitation program may affect borrowers’ future access to credit, we interviewed officials from CFPB, the Department of Education, FDIC, the Federal Reserve, Federal Trade Commission, NCUA, OCC, and the Department of the Treasury. We also interviewed representatives of the four consumer reporting agencies that collect and report information on student loans (Equifax, Experian, Innovis, and TransUnion) and the two credit scoring firms that develop credit score models with nationwide coverage (FICO and VantageScore). We also interviewed representatives from the 15 private student loan lenders and seven credit providers described above, as well as banking, credit reporting, and student loan lending and servicing industry groups and consumer advocacy organizations. We conducted this performance audit from July 2018 to May 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. In addition to the contact named above, Jill Naamane (Assistant Director), Christine McGinty (Analyst-in-Charge), Jill Lacey, Courtney LaFountain, Jon D. Menaster, Tovah Rom, Jessica Sandler, Eric Schwab, and Aisha Shafi made key contributions to this report. Also contributing to this report were Melissa Emrey-Arras, Debra Prescott, and Jena Sinkfield.","The Economic Growth, Regulatory Relief, and Consumer Protection Act enabled lenders to offer a rehabilitation program to private student loan borrowers who have a reported default on their credit report. The lender may remove the reported default from credit reports if the borrower meets certain conditions. Congress included a provision in statute for GAO to review the implementation and effects of these programs. This report examines (1) the factors affecting financial institutions' participation in private student loan rehabilitation programs, (2) the risks the programs may pose to financial institutions, and (3) the effects the programs may have on student loan borrowers' access to credit. GAO reviewed applicable statutes and agency guidance. GAO also asked a credit scoring firm to simulate the effect on borrowers' credit scores of removing student loan defaults. GAO also interviewed representatives of regulators, some of the largest private student loan lenders, other credit providers, credit bureaus, credit scoring firms, and industry and consumer advocacy organizations. The five largest banks that provide private student loans—student loans that are not guaranteed by the federal government—told GAO that they do not offer private student loan rehabilitation programs because few private student loan borrowers are in default, and because they already offer existing repayment programs to assist distressed borrowers. (Loan rehabilitation programs described in the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act) enable financial institutions to remove reported defaults from credit reports after borrowers make a number of consecutive, on-time payments.) Some nonbank private student loan lenders offer rehabilitation programs, but others do not, because they believe the Act does not authorize them to do so. Clarification of this matter by the Consumer Financial Protection Bureau (CFPB)—which oversees credit reporting and nonbank lenders—could enable more borrowers to participate in these programs or ensure that only eligible entities offer them. Private student loan rehabilitation programs are expected to pose minimal additional risks to financial institutions. Private student loans compose a small portion of most banks' portfolios and have consistently low default rates. Banks mitigate credit risks by requiring cosigners for almost all private student loans. Rehabilitation programs are also unlikely to affect financial institutions' ability to make sound lending decisions, in part because the programs leave some derogatory credit information—such as delinquencies leading to the default—in the credit reports. Borrowers completing private student loan rehabilitation programs would likely experience minimal improvement in their access to credit. Removing a student loan default from a credit profile would increase the borrower's credit score by only about 8 points, on average, according to a simulation that a credit scoring firm conducted for GAO. The effect of removing the default was greater for borrowers with lower credit scores and smaller for borrowers with higher credit scores (see figure). Reasons that removing a student loan default could have little effect on a credit score include that the delinquencies leading to that default—which also negatively affect credit scores—remain in the credit report and borrowers in default may already have poor credit. GAO is making two recommendations, including that CFPB provide written clarification to nonbank private student loan lenders on their authority to offer private student loan rehabilitation programs. CFPB does not plan to take action on this recommendation and stated that it was premature to take action on the second recommendation. GAO maintains that both recommendations are valid, as discussed in this report."
"We have previously reported on how federal agencies were planning to protect their federal workers during a pandemic, as well as lessons learned from the H1N1 pandemic, the most recent pandemic experienced by our nation prior to COVID-19. Based on these lessons, and further informed by more recent events, we have identified key issues for federal agencies to consider as their employees reenter the workplace. Agencies should maintain continuous communication with employees, and their representatives, during a pandemic. In particular, agencies should identify employee concerns and communicate human capital guidance such as pay, leave, staffing, and other human capital flexibilities to employees to help to ensure the continuity of agencies’ operations and mission essential functions. It is important that employees understand the policies and requirements of their agencies, and the alternatives, such as telework, that may be available to them. Continuous communication will also help agencies to provide real-time information to employees as conditions evolve. Employees who must work onsite during a pandemic will face varying levels of exposure risk. The level of risk depends, in part, on whether or not they will be in close proximity to people potentially infected with the virus. As a first step, it is important that agencies identify mission essential functions that cannot be performed remotely, as well as the related number of employees who will perform those functions and their risk of exposure. Agencies should consider how they will continue to update their determinations and monitor the associated risks, as these factors could affect decisions on reentry as conditions evolve. It is important for federal agencies to factor-in local conditions of the pandemic at the component and facility level in their determinations regarding workforce reentry rather than applying across-the-board decisions based on agencies’ headquarters locations. Agencies should consider making decisions about reentry, including precautions and safeguards agencies take, based on the local prevalence of the pandemic at each site. As agencies consider local conditions for reentry, they should share information and cooperate with other agencies located in the same area. These reentry decisions could change over time as the pandemic progresses, such as if there is a second or third wave of outbreaks. It is important that agencies’ plans to protect their workforce for a pandemic are operational at all levels of the organization; particularly for those workers who have to perform mission-essential functions onsite. To protect employees as they reenter their workplaces, agencies should have appropriate protection measures in place, by exposure risk level. For example, an agency could make changes to the work environment to reduce workplace hazards, such as by installing sneeze guards as a barrier between employees who must have frequent contact with other employees or the public. Additionally, an agency could provide personal protective equipment (PPE), such as surgical masks, gloves, and N-95 respirators, to employees which, if used correctly, can help prevent some exposures. Agencies will want to ensure that they have an adequate supply of hygiene supplies, such as hand sanitizers, and a plan for distributing those supplies within the agency. Some basic hygiene precautions, such as encouraging employees to wash their hands or use a hand sanitizer after they cough, sneeze, or blow their noses, can be implemented in every workplace. Agencies will also want to provide supplemental cleaning programs for common areas. Avoiding crowded settings through social distancing strategies is one of the best ways to prevent infection during an influenza pandemic. Agencies can implement various social distancing strategies to avoid situations that increase workers’ risk of exposure to a pandemic virus. For those functions that can be performed remotely, agencies may consider maximizing the use of telework, which is discussed in greater detail later in this statement. Other strategies agencies should consider include avoiding unnecessary travel, restricting in-person meetings and gatherings, and allowing flexible schedules to reduce the number of employees in the building at the same time. Agencies should also consider workplace reconfiguration (such as building walls or partitions between workstations), office-specific protocols (such as limiting personal contacts among staff), and making decisions about reopening office fitness and childcare centers as part of separate risk-based decision processes. When medical countermeasures—such as antivirals and vaccines—are developed, it will be important for agencies to decide the extent to which these countermeasures will be provided to employees. In cases where countermeasures are going to be provided to employees, agencies should consider actions necessary to procure them, and establish clearly- defined, well-documented, and consistently-applied protocols to prioritize and allocate their distribution. The Bureau presents an illustrative example on continuity of operations and decision making for resumption of operations. The Bureau has both permanent staff in headquarters and a large local field infrastructure of 248 Area Census Offices (ACO) with short-term staff to implement the decennial census. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, just a day before invitations to respond to the 2020 Census were scheduled to arrive in mailboxes across the country, and as peak census operations were set to begin. In March and April 2020, the Bureau suspended operations until June 1 and extended key operations. Since that time, the Bureau announced it would resume operations at additional ACOs each week, and as of June 11 all ACOs had resumed operations. Key aspects of reopening Bureau ACOs included (1) a phased approach to resuming operations, (2) operational changes in response to challenges related to COVID-19, (3) addressing worker safety concerns, (4) communicating pandemic plans to ensure continued operations, and (5) contingency planning for risks. The Bureau took a phased approach to resuming operations at its ACOs. To make these decisions, the Bureau considered multiple factors including whether the state in which each ACO was located had begun phased reopening, whether data on federally established health criteria supported the decision to restart, and whether the Bureau could meet the safety needs of ACO employees and the public. In our late May survey of ACO managers, responses on the Bureau’s efforts to reopen offices varied. For example, 66 percent of ACO managers responding to our late May survey reported satisfaction with the process of recalling office staff, 68 percent with readiness to conduct field operations, and 75 percent with readiness to conduct office operations. Operations resumed in a phased manner not only by office, but also by function. As the Bureau resumed operations, it was able to resume operations that required less physical interaction, such as Update Leave, in which field staff deliver questionnaires to homes that might not receive mail delivered to their doors. Operations that require interviewing residents, such as Non-Response Follow Up, were delayed until August. The Bureau has also made a number of changes to its 2020 Census operations to minimize face-to-face interactions. The Bureau modified its Update Leave operation, directing field staff to update the addresses by observation when delivering a questionnaire, instead of knocking on doors to speak with residents. To reduce in-person contact for the Group Quarters operation, which enumerates facilities such as prisons, nursing facilities, and college dormitories, Bureau officials told us they were contacting facilities to encourage them to shift from in-person enumeration to electronic responses. In late April, the Bureau also authorized its ACOs to call those facilities that had previously opted to respond by providing a paper listing of residents. Census staff asked the facilities to mail the listing back to the ACO rather than having the ACO send staff to pick up the paper listing. The Bureau stated that it will coordinate with federal, state, and local health officials to put appropriate protocols and procedures in place and ensure adequate PPE and cleaning supplies. In early May, the Bureau announced that it had ordered this equipment for all field staff and that these materials would be secured and provided before resumption of operations. Bureau officials told us they are distributing PPE and cleaning supplies to its 248 ACOs on a rolling basis, prioritizing delivery to those ACOs that were resuming major field operations, such as Update Leave. In our late May survey, ACO manager satisfaction was relatively high regarding PPE for staff conducting Update Leave (66 percent), the largest field operation being conducted at the time. In contrast, managers at that time reported some of their lowest satisfaction rates when asked about PPE adequacy for their office and field workers more generally (34 and 43 percent, respectively). ACO managers reported higher satisfaction in late May than in early April with their ACO’s ability to safely manage employees and operations during the pandemic (increasing from 55 to 65 percent on average across three questions on this topic). Despite this increase in confidence, managers expressed concerns regarding worker safety in open-ended comments. For example, in late May managers expressed concerns regarding how fingerprinting of large numbers of staff—necessary to fulfill the census mission—could be conducted safely under conditions of social distancing. In addition, more than 15 comments in early April and 11 in late May expressed concerns about the ability of the ACO management teams to telework. These included concerns about the inadequate number of laptops and who was expected to report to their local office. The Bureau created a COVID-19 Internal Task Force to create a communications plan and appropriate workforce flexibilities. The Bureau sent emails to regional staff with updated information on delaying field operations and prepared documents to answer questions about the delays, office operating status, payroll, hiring, and training. Responses to our surveys of ACO managers highlighted the need for the Bureau to ensure open lines of communications. Between early April and late May, respondent satisfaction increased regarding the timeliness and clarity of Bureau communication about its pandemic plan; however, satisfaction in these areas remained relatively low. Specifically, reported satisfaction increased for communication timeliness (from 35 to 45 percent) and clarity (from 42 to 51 percent). More than 50 ACO managers commented about communication challenges such as conflicting direction from different sources and guidance received shortly before the implementation date. In May 2019, we reported that the Bureau did not have contingency plans for many identified risks including for major disasters—such as an epidemic—and recommended that it develop contingency plans for all risks that did not have one. The Bureau updated its risk register for major disasters to include a contingency plan. According to the Bureau’s March 2020 risk register, the contingency plan for any major disaster—including an epidemic—is rapid response, meaning the Bureau would develop a plan to address the risk once it was realized. Bureau officials told us that, depending on the type of major disaster, response would vary widely and even if they had a more detailed contingency plan for a pandemic it would have never addressed the magnitude of the current national emergency that is taking place across the country. We have identified key practices in telework-related literature and guidelines that federal agencies should implement in developing telework programs. Also, in 2011, we reported that the Office of Personnel Management, the General Services Administration, and the Federal Emergency Management Agency had suggested several practices to federal agencies, in various telework or emergency-related guidance documents, for how to ensure telework is part of continuity of operations planning. These practices generally align with those we previously identified. Based on this prior work, we have identified several practices that may be especially useful for agencies to help ensure telework programs contribute to continuity of operations during COVID-19 and other major emergencies. These practices may be especially important if substantial numbers of employees remain out of their workplaces for an extended period or if agencies need to reverse their reentry decisions based on changing public health circumstances. In addition, agencies’ experiences with telework during the current pandemic may suggest opportunities to increase the availability of telework in the future. These practices can be grouped into four general categories: (1) policies and guidance related to telework; (2) technology; (3) performance management; and (4) program evaluation. Major emergencies, such as a pandemic, underscore the importance of establishing and updating clear policies and guidance related to telework as agencies’ continuity of operations may depend on employees working remotely for extended periods. Agencies should assess whether their policies and guidance were sufficient to ensure that their workforces were telework ready and understood the agency’s expectation of employees regarding teleworking during this emergency. The current crisis presents an opportunity for agencies to assess their established policies or requirements to ensure that they (1) balance employees’ personal circumstances and work responsibilities, and (2) effectively facilitated communication and engagement among teleworkers, managers, and coworkers. Agencies should institute processes for communicating human-capital guidance for emergencies (e.g., pay, leave, benefits) to ensure they worked effectively. For example, agencies should consider whether emergency employees (including COOP employees) knew in advance about their mission critical status. If not, agencies should ensure that, in case of future emergencies including a potential resurgence of COVID-19, employees are notified about requirements to report for work, remain at work, work at home, or report to an alternative work site when government operations are disrupted. Similarly, agencies should consider whether their guidance on workplace health and safety issues was adequate to ensure that teleworkers had safe and adequate places to work off-site, and whether information- security training was provided to all individuals, or managers of individuals, who teleworked during the current pandemic. It is important for agencies to correct any identified deficiencies in the guidance and training to improve the use of telework going forward, including for future emergency situations that may again require telework. We have reported that technology concerns are frequently cited barriers to telework. To effectively use telework as a tool to continue operations during major emergencies, agencies must have an appropriate information technology infrastructure in place that allows large numbers of employees to telework simultaneously. As such, it is important for agencies to assess the extent to which their telework infrastructure was adequate to support increased telework, especially during peak periods, including whether technical support was sufficient, and address any access and security issues they identify. Ensuring established organizational performance standards are met is important to maintaining agency operations whether employees are physically present in the office or working remotely. During extended periods of remote work, this could include setting expectations and preferences for how employees communicate with supervisors before telework arrangements begin. Agencies should consider whether their existing procedures and standards meet the needs of employees who teleworked and whether they ensured that telework did not diminish employee and organizational performance. Evaluation of telework may help agencies better understand the impact their increased use of telework had on their ability to achieve goals and accomplish missions, and could allow them to make adjustments to telework moving forward as employees are expected to return to their duty stations. As part of such an evaluation, agencies should assess whether their processes, procedures, and tracking systems to collect data provided the information needed to evaluate telework. In conclusion, federal agencies have a responsibility to provide safe workplaces for employees to perform their jobs. The evolving and growing challenges from the COVID-19 pandemic present critical workforce safety issues for federal agencies to assess and address as they seek to continue their operations. As I have discussed today, agencies should consider a number of factors when making decisions about employees reentering workplaces. Lessons learned from previous pandemic emergencies, as well as from telework use to ensure continuity of operations, can be helpful as agencies navigate ongoing workforce safety and productivity challenges. Consideration of these factors and lessons learned from agencies’ current experiences may better prepare agencies to address and respond to challenges from ongoing and future emergencies. Chairman Connolly, Ranking Member Hice, and Members of the Subcommittee, this concludes my prepared statement. I would be happy to respond to any questions you may have. If you or your staff have any questions about this testimony, please contact J. Christopher Mihm at (202) 512-6806 or MihmJ@gao.gov, or Michelle B. Rosenberg at (202) 512-6806 or RosenbergM@gao.gov. Individuals making key contributions to this testimony include Clifton G. Douglas, Jr., Alexandra Edwards, Sarah E. Veale (Assistant Directors), Keith O’Brien (Analyst-in-Charge), Ulyana Panchishin, Maya Chakko, Karin Fangman, Steven Putansu, and Jacqueline Chapin. Key contributors for the earlier work that supports this testimony are listed in each 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.","Federal employees perform critical functions across multiple mission areas, from those vital to the long-term well-being of the country to those directly charged with aspects of public safety. Major emergencies, such as the COVID-19 pandemic, can pose threats to employees' safety and conditions may ebb and flow over an extended period. During these situations, federal agencies have a responsibility to provide an environment for employees to perform their jobs safely and effectively. This statement provides (1) key considerations based on GAO's prior work for federal agencies as federal workers reenter the workplace; (2) an illustrative example of how the Census Bureau was forced to suspend major Decennial Census field operations and the process it used to resume operations; and (3) key practices for ensuring telework contributes to continuity of operations. This statement is based on a large body of GAO work on pandemic preparedness, reviews of the Decennial Census, and federal human capital management issued from July 2003 through June 2020. The rapidly escalating challenges from the Coronavirus Disease 2019 (COVID-19) global outbreak present critical workforce issues for federal agencies to assess and address. GAO's prior work on pandemics and human capital issues has shown that agencies should consider a range of factors to carry out their missions while protecting their workforce and the members of the public with whom they interact. Key considerations for federal workers' reentry to workplaces . As federal agencies manage operations during the COVID-19 pandemic and plan for their employees to safely return to workplaces, GAO's prior work has shown that it is important for agencies to identify mission essential functions that cannot be performed remotely when deciding who needs to return to the office. Agencies should also consider the exposure risk level and local conditions when deciding whether to reopen offices across the country. To protect employees as they reenter the workforce, it will be important for agencies to have appropriate protection measures in place. For example, agencies should consider how they can ensure adequate distribution of hygiene supplies. They should also consider changes to the work environment to reduce workplace hazards, and implement social distancing strategies. How the Census Bureau decided to resume Decennial Census operations. The U.S. Census Bureau offers an example of how an agency suspended and resumed operations under the current pandemic. In March 2020, the U.S. Census Bureau suspended field operations of the Decennial Census and took a phased approach to resuming operations at its area census offices. As of June 11, all area census offices had resumed operations. Key aspects of resuming operations at area census offices included: (1) taking a phased approach to restarting operations, such as resuming operations that required less physical interaction first; (2) making operational changes to minimize face-to-face interactions; (3) addressing worker safety concerns; and (4) communicating pandemic plans to ensure continued operations. Key practices for ensuring telework contributes to continuity of operations. Several key practices GAO previously identified are useful for agencies to help ensure telework contributes to continuity of operations during the current pandemic and in the future. Specifically, agencies should consider based on their current experiences whether: (1) their policies and guidance related to telework are sufficient to ensure that their workforces are telework ready and balances are struck between employees' personal circumstances and work responsibilities; (2) the extent to which their telework infrastructure, including technical support and security, is adequate to support increased telework; (3) procedures and standards are in place that ensure telework does not diminish organizational and employee performance; and (4) the processes, procedures, and tracking systems to collect data provide the information needed to evaluate the use of telework. These assessments will assist agencies in considering broader changes to their policies and procedures related to telework as employees are called back to their duty stations."
"Federal law and regulations require that contractors receiving a contract with a value greater than the simplified acquisition threshold must ensure that small businesses have the “maximum practical opportunity” to receive subcontracting work. In addition, a prospective contractor generally must submit a subcontracting plan for each solicitation or contract modification with a value of more than $700,000—or $1.5 million for construction contracts—whenever subcontracting opportunities exist. Contractors with federal contracts typically use one of three types of subcontracting plans: Individual subcontracting plan, which applies to a specific contract, covers the entire contract period including option periods, and contains subcontracting goals; Commercial subcontracting plan, which covers the company’s fiscal year and the entire production of commercial items sold by either the entire company or a portion of it (such as a division, plant, or product line) and contains subcontracting goals; and Comprehensive subcontracting plan, which is similar to a commercial subcontracting plan and applies only to DOD contracts. Each company reports on subcontracting goals and achievements for a specific fiscal year on a plant, division, or corporate-wide basis. A comprehensive plan may cover a large number of individual contracts. Federal contractors use these plans to document subcontracting goals as a specific dollar amount planned for small business awards and as a percentage of total subcontracting dollars available to small businesses and socioeconomic categories of small businesses. Contractors also may establish, for specific facilities, a master subcontracting plan that contains all the required elements of an individual plan, except the subcontracting goals. Because a master plan does not include specific subcontracting goals, an individual subcontracting plan or an addendum typically provides the goals for specific contracts associated with the master subcontracting plan. After a contract is awarded, the contractor must periodically submit to the government a subcontracting report that describes progress towards meeting these goals. Individual subcontracting plans require reporting on a single contract and commercial and comprehensive subcontracting plans allow for consolidated reporting of multiple contracts on a division- or company-wide basis. Contractors must report their subcontracting achievements through eSRS, a web-based government-wide system that both contractors and agency contracting officers can access. The FAR requires contractors to submit individual subcontracting reports (ISR) and summary subcontract reports (SSR) (see table 1). These reports show contractors’ progress toward meeting their small business subcontracting goals. Several regulations, processes, and procedures dictate contracting officers’ responsibilities for oversight of subcontracting plans during the pre-award and post-award phases of the acquisitions process. Before making an award, the FAR requires that contracting officers review the subcontracting plan to help ensure that the required information, goals, and assurances—such as a contractor committing to submit periodic reports to the government to determine the extent of compliance with the subcontracting plan—are included. Additionally, the FAR requires contracting officers to provide the SBA Procurement Center Representative (PCR)—SBA staff whose responsibility includes supporting agency contracting opportunities for small businesses—with an opportunity to review the proposed contract, including the subcontracting plan and supporting documentation. After a contract or contract modification containing a subcontracting plan is awarded or an existing subcontracting plan is amended, the FAR requires that contracting officers monitor the prime contractor’s compliance with its subcontracting plan. In carrying out their post-award oversight responsibilities, the FAR requires contracting officers to (1) ensure contractors file their subcontracting reports in eSRS within 30 days of the close of each reporting period (a report is also required for each contract within 30 days of contract completion); (2) review ISRs, and where applicable SSRs, in eSRS within 60 days of the reporting end date; and (3) acknowledge receipt of, accept, or reject the reports in eSRS (see fig.1). The FAR requires agencies to perform annual evaluations of and report on a contractor’s performance when work under the contract has been completed. Small business subcontracting is one evaluation area for which agencies rate a contractor’s performance. Agencies use the Contractor Performance Assessment Reporting System to collect and manage the library of Contractor Performance Assessment Reports. Agency contracting officers are to consider information on a contractor’s past performance from these reports when making future contract award decisions, including a contractor’s actions for previously awarded contracts that had a small business subcontracting plan. The FAR also requires contractors to comply in good faith with the agreed-upon subcontracting plan goals and requirements. When a contractor fails to meet the small business goals in the subcontracting plan, the contractor must provide a rationale for not being able to meet the goals. In determining whether a contractor failed to make a good-faith effort, a contracting officer must look at the totality of the contractor’s actions, consistent with the information and assurances provided in its subcontracting plan, and consider the rationale the contractor provided. The contractor’s failure to meet its subcontracting goals does not, in and of itself, constitute failure to make a good-faith effort. Failure to submit required subcontracting reports as required by the FAR also may factor into contracting officers’ determinations. If a contracting officer determined that a contractor failed to make a good-faith effort, the FAR requires the contracting officer to assess liquidated damages (monetary assessments for breaching the contract) against the contractor. SBA’s Office of Government Contracting administers SBA’s subcontracting assistance program. In this office, headquarters and field staff have responsibilities to assist small businesses in meeting requirements to receive government contracts as subcontractors. SBA staff have related responsibilities in both the pre- and post-award acquisition phases. For example, SBA’s PCRs and Commercial Market Representatives (CMR) play a role in helping to ensure that small businesses gain access to subcontracting opportunities. In particular, a PCR’s key responsibilities include reviewing proposed agency contracts and making recommendations to agency contracting officers. PCRs also review proposed subcontracting plans and provide advice and recommendations on them to contracting officers. Key responsibilities of CMRs include counseling small businesses on obtaining subcontracts and conducting reviews, including compliance reviews, of large prime contractors with subcontracting plans. SBA’s standard operating procedure (SOP) for the subcontracting assistance program provides guidance for how CMRs conduct reviews. Although SBA conducts monitoring activities, the awarding federal agency remains responsible for overseeing and enforcing compliance with a subcontracting plan throughout the life of the contract. In the case of DOD, in addition to the components within the agency that award and monitor contracts, the Defense Contract Management Agency (DCMA) also provides contract administration services for certain DOD contracts. SBA and DCMA may conduct compliance reviews jointly to evaluate prime contractor subcontracting programs supporting specific DOD contracts administered by DCMA. SBA is also authorized to enter into agreements with other federal agencies to conduct compliance reviews and further the objectives of the subcontracting program. We discuss SBA oversight in more detail later in the report. Annually, SBA negotiates with agencies to establish individual small business subcontracting goals based on recent subcontracting achievement levels by each agency. Agencies awarding contracts with small business subcontracting plans aim to provide opportunities to promote the use of small businesses, veteran-owned small businesses, service-disabled veteran-owned small businesses, Historically Underutilized Business Zone small businesses, small disadvantaged small businesses, and women-owned small businesses. These efforts can help agencies achieve their individual small business subcontracting goals. The four agencies we reviewed—DLA, GSA, Navy, and NASA— demonstrated that contracting officers reviewed and approved subcontracting plans in most of the contracts in our sample. However, they could not demonstrate they followed procedures for making a determination of subcontracting possibilities for all of the contracts we reviewed without a subcontracting plan. Agencies also could not demonstrate they followed procedures related to PCR reviews in about half of the contracts reviewed. The four agencies provided documentation to show that contracting officers reviewed and approved subcontracting plans in most of the 26 contracts that had subcontracting plans. FAR §§ 19.705-4 and 19.705-5 contain contracting officer responsibilities related to reviewing a proposed subcontracting plan and determining its acceptability. For 25 of the 26 contracts we reviewed with a subcontracting plan, the agencies provided documentation showing the contracting officer reviewed the subcontracting plan. In some instances, we also found specific agency guidance for, and checklists or memorandums documenting the reviews of, subcontracting plans. For example: GSA has guidance for its contracting officers when reviewing subcontracting plans. Specifically, GSA’s Acquisition Manual includes a checklist for reviewing subcontracting plans and ensuring the plans meet FAR requirements. Contracting officers used the checklist in their reviews for five of the six GSA contracts we reviewed with a subcontracting plan. The checklist also documents whether the total planned subcontracting dollars and percentages, the method for developing these goals, and information about supplies or services that will be subcontracted are acceptable to the contracting officer. DOD’s guidance on subcontracting program business rules and processes contains a specific DOD checklist for subcontracting plan reviews. Contracting officers used the DOD checklist for three of 14 DLA and Navy contracts with a subcontracting plan that we reviewed. In addition to documenting the extent to which a subcontracting plan meets FAR and Defense Federal Acquisition Regulation Supplement requirements, the checklist also reflects certain requirements related to master and commercial subcontracting plans. The checklist is optional for contracting officers to use when reviewing subcontracting plans. NASA also has guidance that includes steps contracting officers should take when conducting subcontracting plan reviews. For two of the six NASA contracts with a subcontracting plan that we reviewed, we found a checklist that the contracting officer used or a memorandum the contracting officer prepared that detailed the subcontracting plan review, including proposed subcontracting goals. For almost all the contracts we reviewed that did not have a specific checklist or memorandum to document the contracting officer’s review, we found other evidence, such as a contracting officer’s signature on the subcontracting plan, acknowledging review of the plan. Additionally, for one Navy contract with a contract award value of more than $13 million and with an individual subcontracting plan, we found evidence that, after reviewing the subcontracting plan, the contracting officer requested that the contractor make corrections to it. For one DLA contract we reviewed, based on the limited documentation provided, we were unable to determine the extent to which the subcontracting plan was reviewed. DLA officials stated at the time of our review that they were unable to determine if the subcontracting plan was reviewed. We also obtained documentation that demonstrated the subcontracting plan was approved for most of the contracts—21 of 26—we reviewed with a subcontracting plan. For example, we obtained documentation with the contracting officer’s signature on the subcontracting plan (approving the plan), the contracting officer’s signature approving the contract (which included the subcontracting plan), or a signed memorandum that documented approval of the plan. However, we identified five contracts across DLA, Navy, and GSA that had limited documentation (three contracts) for approval of the subcontracting plan, or for which we could not determine whether the subcontracting plan was approved (two contracts). For one DLA contract with an award amount of $15 million and with an individual subcontracting plan, we were unable to determine if the subcontracting plan was approved. Documentation we reviewed, including DLA emails, did not indicate whether the subcontracting plan was approved. In our review of the subcontracting plan, the section of the plan documenting its approval was not completed. Additionally, according to DLA officials, the contract file does not contain any record of the contracting officer’s signature on the subcontracting plan. For two Navy contracts with award amounts of about $17 million and about $32 million and both with individual subcontracting plans, we found limited documentation demonstrating approval of the subcontracting plan for the first contract and, based on the lack of documentation, were unable to determine if the second contract was approved. For the first contract, we found a checklist with signatures demonstrating review of the subcontracting plan by the contracting officer and other officials. However, the subcontracting plan was not signed by the contracting officer as the approval/signature field in the subcontracting plan was empty. For the other contract, Navy officials could not provide any documentation showing approval of the subcontracting plan. The subcontracting plan was not signed by a Navy contracting officer or other Navy staff, and according to Navy officials, they were unable to find a signed subcontracting plan in the pre-award contract file. For two GSA contracts with individual subcontracting plans, we also found limited documentation approving the subcontracting plan. Similar to one of the Navy contracts discussed above, we found checklists with signatures demonstrating reviews of the subcontracting plan by the contracting officer and other officials. However, in both of these instances, the contracting officer did not sign the approval section of the subcontracting plan. Additionally, for one DLA contract we reviewed with an individual subcontracting plan and contract award amount of about $18 million, while we found documentation indicating that the contract had been approved, DLA could not provide documentation for a DOD requirement related to a socioeconomic subcontracting goal. Specifically, the subcontracting plan for this contract listed the small disadvantaged business goal at less than 1 percent. According to Defense Federal Acquisition Regulations Supplement § 219.705-4, a small disadvantaged business goal of less than 5 percent must be approved one level above the contracting officer. In our review of this contract, DLA could not provide documentation specifically showing a higher-level approval for the goal of less than 1 percent. DLA provided an interoffice record and a signed price negotiation memorandum approval document, but these documents did not reference the small disadvantaged business subcontracting goal of less than 1 percent. As a result, we were unable to determine that this subcontracting goal was approved at the appropriate level. In addition to the 26 contracts with subcontracting plans, we also reviewed another six contracts that initially appeared to require a subcontracting plan (based on data in FPDS-NG) but did not have one. For three of the six contracts, the contracting officer or relevant official did not document why a subcontracting plan had no subcontracting possibilities, or prepared the required documentation years after the contract award. For contracts over $700,000, the FAR generally requires contracting officers to award the contract with a subcontracting plan or to make a determination that no subcontracting possibilities exist. If the contracting officer determines that there are no subcontracting possibilities, the determination should include a detailed rationale, be approved at one level above the contracting officer, and be in the contract file. GSA accounted for one of the three contracts and NASA for the remaining two. A subcontracting plan was not included in a GSA construction contract with an award amount of about $7 million (which met requirements for a small business subcontracting plan based on the award amount and type of contract). GSA did not have any documentation and could not tell us why the contract did not require a subcontracting plan or had no subcontracting possibilities, or why a subcontracting plan was not included in the contract. Specifically, GSA provided a response explaining the agency did not have documentation to support why the contracting officer (who is no longer with the specific contracting center that awarded the contract) determined there were no subcontracting possibilities. For two NASA contracts, NASA officials provided documentation signed by one level above the contracting officer, but the documentation was prepared years after the contract award. For the first contract, with an award value of almost $8 million and awarded in March 2016, the determination providing the rationale for no subcontracting possibilities was created and signed in March 2019, about 3 years after the contract was awarded instead of when the award was made. For the second NASA contract, awarded in September 2017 with a contract award amount of about $2 million, NASA officials explained that in 2017, the initial procurement was estimated at a dollar amount below the threshold for a subcontracting plan and therefore no subcontracting plan was required in the solicitation. The contract value was later changed to add two option periods, which put the estimate over the subcontracting plan threshold. NASA officials said the contracting officer’s documentation to determine the need for a subcontracting plan was inadvertently omitted from the file. As a result of our document request, the reviewing contracting officer noted that the file did not properly address the issue of the increased estimate relative to subcontracting plan requirements. NASA then conducted a review to determine if the award met the requirements for a subcontracting plan or if it would have been waived in 2017. Based on the recent review, NASA officials determined that a requirement for a subcontracting plan would have been waived in 2017 based on, among other factors, the specific product purchased through the contract and the structure of the contract, and they prepared a memorandum (in July 2019) documenting this review and conclusion. A 2018 DOD OIG report on small business subcontracting at two Army contracting command locations found similar issues. Specifically, the report found that of 50 contracts the DOD OIG reviewed, the two contracting command locations awarded six contracts, valued at $330.7 million, without a subcontracting plan or a contracting officer’s determination that no subcontracting possibilities existed. The three other contracts we reviewed—two at DLA and one at GSA— had appropriate documentation directly explaining or a rationale supporting why no subcontracting plan was in place. For example, for one contract, DLA officials provided a memorandum signed at one level above the contracting officer that documented the specific nature of the contract for a particular type of metal, the work required, and ability of the contractor to perform the work in-house. For the second contract, DLA officials provided information that the contract was awarded through the AbilityOne Program—which does not require a subcontracting plan. The GSA contract was an automotive contract in which the vendor initially represented itself as a large business and had submitted a subcontracting plan. However, after the contract award, GSA documented a modification to the contract that reclassified the vendor as a small business, based on size standards for the North American Industry Classification System codes for the specific acquisition. Therefore, the subcontracting plan was no longer required. For half of the contracts we reviewed with a small business subcontracting plan (individual or commercial), the agencies could not demonstrate that procedures related to PCR reviews were followed for one or more contracts. According to FAR § 19.705-5(a)(3), when an agency is making a contract award that includes a subcontracting plan, contracting officers should notify the appropriate PCR of the opportunity to review the proposed contract, including the associated subcontracting plan and supporting documentation. More specifically, for 12 of 24 contracts we reviewed with an individual or commercial subcontracting plan, the agencies could not provide documentation or we were unable to determine from the documentation provided whether the contracting officer gave the SBA PCR a review opportunity and whether the PCR may have conducted a review. Of these 12 contracts, DLA and Navy accounted for 10, while GSA and NASA accounted for one each. Five of the six DLA contracts we reviewed did not have any documentation or lacked sufficient documentation to determine if the contracting officer or other official provided the PCR with an opportunity to review the contract, and whether a PCR review occurred. More specifically, DLA was unable to provide any documentation related to the PCR review process for three contracts with a subcontracting plan and told us they could not locate such documentation in the contract file. For one of these three contracts, DLA referred us to DCMA for additional documentation, but the documentation DCMA provided did not confirm whether the PCR had an opportunity to review the contract. For the remaining two of five contracts, DLA provided documentation, including a review by DCMA’s Small Business Office for one of the contracts, but this documentation did not demonstrate the contract was provided to an SBA PCR for review. Five of six Navy contracts we reviewed that had individual subcontracting plans also lacked this documentation. Specifically, Navy was unable to provide documentation specific to the PCR review process for three contracts. For two other contracts, Navy provided documentation of various internal reviews. For example, Navy provided a checklist for one contract showing that the contract was reviewed and signed by the contracting officer and a small business specialist. However, the section of the checklist where the PCR would sign indicating review of the contract and subcontracting plan was left blank. For the other contract, Navy provided documentation that an Assistant Deputy Director for the procuring contracting command center had reviewed and signed the subcontracting plan, but the PCR signature field was blank. In both cases, no other documentation indicated whether the contract was sent to the PCR for review. Therefore, we were unable to determine if a PCR reviewed the plan or was provided the opportunity to review the plan. GSA and NASA each had one contract (of the six we reviewed for each) for which they could not provide any documentation related to the PCR review process. Both of these contracts had an individual subcontracting plan. For the remaining 12 contracts across the four agencies, the agencies provided documentation demonstrating that the PCR was given the opportunity to and had reviewed the contract and associated subcontracting plan. For these contracts, we obtained documentation such as a memorandum, checklist, or email showing the PCR had reviewed and provided concurrence with the subcontracting plan, or commented on the proposed goals in the plan. According to officials from three of the four agencies we reviewed, contracting officers have a large workload with responsibility for a large number of processes and reviews, which may result in a specific process or task—such as coordinating the PCR review—being missed. Additionally, according to NASA officials, the PCR review process may occur but not be documented for some NASA contracts. The selected agencies provide some training to contracting officers on monitoring subcontracting plans. But, for most of the 26 contracts we reviewed with a subcontracting plan, contracting officers did not ensure contractors met their subcontracting reporting requirements. Contracting officers also accepted subcontracting report submissions with erroneous subcontracting goal information for several contracts. For more than half of the 26 contracts, contractors reported that they met or were meeting their small business subcontracting goal. Officials from all four agencies told us that they provide periodic training to contracting officers related to monitoring subcontracting plans, as illustrated in the following examples: NASA: According to a NASA official, NASA conducted training at the Kennedy Space Center in October 2018 and October 2019 that focused on whether contracting officers should accept or reject an ISR, and how to assign a Compliance Performance Assessment Report rating. The agency also conducted training at the Goddard Space Flight Center in October 2018. GSA: GSA’s Office of Small Business Utilization provided a refresher on eSRS reporting, including how to review the report in eSRS, for contracting officers in May 2018. They also provided training to contracting officers in October 2019 on reviewing ISRs and SSRs, including understanding how to review an ISR and ensuring timely submissions of SSRs. DLA: According to DLA staff with the DLA Contracting Services Office, when a contract requires a subcontracting plan, the office’s eSRS coordinator recommends that contracting personnel responsible for administering subcontracting plans take the Defense Acquisition University online course about eSRS. Navy: According to a Navy official, DOD has conducted extensive training to address eSRS known issues and data collection and guidance on the proper review of ISRs. Additionally, Navy contracting officers can enroll in a 5-day course on subcontracting offered by the Defense Acquisition University. According to Defense Acquisition University staff, in addition to the 5-day classroom course, the university also offers other training online related to subcontracting. For more than half of the 26 contracts we reviewed with a subcontracting plan, agency contracting officers did not ensure contractors met their reporting requirements. Specifically, 14 of 26 contracts with subcontracting plans did not have all required ISR or SSR submissions. Three of the four agencies—DLA, NASA, and Navy—accounted for the 14 contracts without all the required submissions. For the remaining 12 contracts we reviewed, the agencies provided documentation showing that contractors submitted all required ISR or SSR submissions for these contracts. FAR § 19.705-6(f) requires contracting officers to monitor the prime contractor’s compliance with subcontracting plans to ensure that subcontracting reports (ISRs and, where applicable, SSRs) are submitted in eSRS in the required time frames. The contracting officer is also to review the reports in the required time frames, acknowledge receipt of, and accept or reject the reports. Our review of 26 contracts with subcontracting plans found limited monitoring of contractor report submissions. Specifically, we found the following for each agency (see table 2): DLA. Five of the six DLA contracts we reviewed did not have all of the required ISR or SSR contractor submissions. For example, for a $6.6 million contract, with a commercial subcontracting plan that was awarded in fiscal year 2016, we could not locate any SSRs in eSRS. Based on limited documentation DLA provided, the contractor submitted only one SSR for the duration of the contract and did so by email to the contracting officer in November 2018. This document was not an official SSR and it did not include required information such as the vendor’s number, information on who submitted the report from the contractor, a self-certification statement attesting to the accuracy of the report, or acceptance or sign off by a DLA official. Four other DLA contracts with individual subcontracting plans had multiple missing submissions. For two of these contracts, the agency could not explain why the reports were missing, and for the other two contracts, the contractors were not aware of the SSR reporting requirement, according to a DLA official. NASA. Similar to DLA, five of the six NASA contracts we reviewed did not have all of the required ISR or SSR submissions. For example, for a $4.6 million contract with an individual subcontracting plan awarded in fiscal year 2016, the contractor submitted ISRs for 2016 and 2017 and the SSR for 2016. However, according to information we reviewed in eSRS and a NASA official, the contractor did not submit any ISRs for 2018 and 2019, and did not submit any SSRs for 2017 or 2018. The official stated that there was contracting officer turnover during this contract, and the contracting officer monitoring the contract at the time of our review could not find any documented explanation for the reports not being submitted. The same agency official explained that for another contract, the contractor experienced issues submitting documents in the electronic system initially and that there were personnel changes around the time the missing report was due. Additionally, for another contract awarded in 2017 for $3.8 million, the contractor did not submit any SSRs. We discuss the two remaining NASA contracts in our discussion of contracts with subcontracting report submissions that were submitted well past their due dates. Navy. Four of the eight Navy contracts we reviewed did not have all the required report submissions. For example, for one contract awarded for $16.6 million, the contractor submitted the first two required ISRs and an SSR for fiscal year 2016, the year in which the contract was awarded. However, we did not locate any other required submissions in eSRS for subcontracting activity in fiscal year 2017, the year in which the contract ended. A Navy official told us it is not unusual for information related to monitoring and compliance of subcontracting plans to be missing from the contract files. Three remaining contracts with individual subcontracting plans also had missing SSRs. However, the agency did not explain why these submissions were missing. GSA. The six GSA contracts all had the required report submissions. Additionally, contractors submitted ISRs or SSRs well past their required due dates for at least four contracts. For example, for one Navy contract and one DLA contract, we found that the contractors submitted an ISR more than 125 days late, and almost 50 days late, respectively. For two NASA contracts, contractors submitted reports after they were due. For one of these NASA contracts, we found that the March 2016 and September 2016 ISRs were submitted well past their due dates—more than 400 days and more than 150 days, respectively. For the second NASA contract, the contractor did not submit any of the required reports during the life of the contract and only submitted one final ISR when the contract ended. This contract was awarded in fiscal year 2016 and ended in August 2018. According to a NASA official, failure to submit the required subcontract report was an error by the contractor and insufficient contracting officer oversight. Additionally, the contractor did not submit any SSRs for this contract as required by the FAR. In another four instances, contractors began submitting the required reports (ISRs and SSRs) after we inquired about the specific contracts with the respective agencies. For example, the contractor for one NASA contract, which also had some missing subcontracting reports, submitted its 2017 SSR more than 600 days after it was due, and after we inquired with NASA about the SSR. We also found that while contractors for two DLA contracts submitted the required ISRs, they did not submit the required SSRs. In one of these two instances, an agency official told us that the contracting officer was unaware of the need for the contractor to submit both an ISR and SSR, and did not inform the contractor of this requirement. For this contract, which was awarded in fiscal year 2017, the contractor submitted its first SSR in October 2019, after we inquired with DLA officials about the lack of SSR submissions. For the second of these two contracts, which also was awarded in fiscal year 2017, the contractor informed the agency that they had not submitted SSR reports in the past because they were unaware of this requirement, and did not submit an SSR until October 2019. Finally, for one other DLA contract, the only ISR we found in eSRS was submitted by the contractor in October 2019, after we inquired about the ISR and more than 2 years after the contract was awarded. This contractor submitted reports outside of eSRS for two of the four prior reporting periods. These reports did not have acceptance or sign off by the accepting DLA official. In addition, while a DCMA staff member told us that the contractor did not submit its September 2017 and March 2018 ISR reports, the staff member did not provide an explanation why these reports were not submitted. Additionally, officials from all four agencies told us they conduct some type of periodic review related to oversight of subcontracting plans, which can include determining compliance with the subcontracting plan and related reporting requirements. In some of these reviews, the agencies had similar findings to ours. For example, NASA: According to an agency official, NASA’s Office of Small Business Programs conducts procurement management reviews of subcontracting plans every 2–3 years. The official told us that these reviews serve to monitor whether (1) prime contractors submitted the required ISRs and (2) contracting officers assessed the subcontracting plans and reviewed the ISRs, among other things. The results of a review conducted in May 2017 identified missing ISRs and reports that were accepted with incomplete information. Navy: According to a Navy official, the Navy Office of Small Business Programs conducts Procurement Performance Management Assessment Program reviews. The official stated that these reviews are conducted every 3 years at each of Navy’s command centers that conduct buying activities. If a command center receives an unsatisfactory or marginal rating, then the Deputy Assistant Secretary of the Navy for Acquisition and Procurement will perform follow-up reviews every 6–12 months until the issues are addressed. As part of the review process, Navy reviews subcontracting plans and data in eSRS to determine how subcontracting plans are monitored and evaluated. A review conducted in June 2018 concluded that monitoring of prime contractor’s subcontract reporting and compliance was inadequate. GSA: According to agency officials, GSA’s Office of Small Business Utilization, in conjunction with GSA’s Procurement Management Review team, conducts Small Business Compliance Reviews. Annually, the agency selects 4–6 regions from which to select a sample of contracts to review for both pre-award and post-award compliance. According to agency officials, these reviews are designed to help determine if subcontracting goals were met, among other subcontracting-related requirements. A review GSA conducted in March 2019 for one contract noted that the subcontracting plan could not be located in the contract file and that there was a lack of post- award subcontracting plan oversight, including contractor reports on subcontracting activities. DLA: According to a DLA official, various DLA offices, including the DOD Office of Small Business Programs, monitor eSRS regularly to ensure contracting officers are reviewing and processing contractor submissions through the system. The official stated that these reviews happen at various times throughout the year. For example, the Small Business Director at DLA Distribution—an organization within DLA— checks eSRS on a biweekly basis and DLA Aviation—another organization within DLA—conducts semi-annual reviews of eSRS. The DOD OIG had similar findings regarding oversight of contractor compliance with subcontracting plan requirements, including contractor reporting requirements. For example, in 2018 the DOD OIG reported that contracting officers at two Army contracting commands did not monitor prime contractors’ compliance with subcontracting plans. The DOD OIG made three recommendations to address the findings, which have been implemented according to the DOD OIG. As previously mentioned, contracting officers are responsible for a large number of processes and reviews, which may result in a specific process or task being missed. According to officials from Navy and NASA, other factors also contributed to the existence of limited documentation for certain post-award requirements for the contracts we reviewed. For example, the agency officials stated that contracting officers focus more on the award process than on contract administration and fail to properly consider the requirement that subcontracting plans become a material part of the contract on award, resulting in a lack of due diligence after the award. Officials from NASA and Navy also cited eSRS not providing notifications to contracting officers and contractors when reports are not submitted, among other things, as a contributing factor in missing ISR reports. Additionally, according to NASA officials, eSRS does not generate a list of prime contractors who are delinquent in submitting their SSRs. For the 26 contracts we reviewed with a subcontracting plan, contracting officers accepted several report submissions containing incorrect information about subcontracting goals. According to FAR § 19.705-6(j), after a contract containing a subcontracting plan is awarded, the contracting officer must reject a contractor’s subcontracting report submission if it is not properly completed—for example, if it has errors, omissions, or incomplete data. In fulfilling their responsibilities related to FAR § 19.705-6(j), contracting officers can identify omissions that a contractor may need to address. For example, in reviews of ISRs for a $31.8 million Navy contract awarded in fiscal year 2017, the contracting officer noted concerns about the contractor not meeting its socioeconomic goals and asked the contractor to provide an explanation for why the goal was not being met. The contracting officer rejected the September 2018 ISR and later rejected the September 2019 ISR twice because the contractor either did not provide an explanation for not meeting certain socioeconomic goals or failed to describe good-faith efforts to do so. The contractor submitted a revised ISR in December 2019, which included a description of its good-faith efforts to meet the socioeconomic goals. Upon review, the contracting officer accepted the submission stating that it seemed clear from the information provided that the contractor put forth a good-faith effort to meet the goals. However, for the 21 contracts we reviewed in total that required contractor ISR submissions (which provide information on approved subcontracting goals and achievements towards them), we found that for nine contracts, the contracting officers accepted one or more submissions with errors or unexplained conflicting information related to subcontracting plan goals (see table 3). Specifically, all nine contracts lacked explanations of the discrepancies in the ISR or other documentation we reviewed. We discuss the nine contracts in more detail below: NASA: Contracting officers accepted multiple ISRs with errors or unexplained conflicting information for three NASA contracts. In one of the three contracts, awarded in fiscal year 2017 for $3.8 million, the contractor combined small business subcontracting goals (listed as whole dollars and percent of total subcontracting dollars) from two different subcontracting plans associated with the contract into one ISR. However, the dollar amount reported in the ISR as the subcontracting goal—about $177,000—reflected the small business goal from only one of the subcontracting plans, rather than the two subcontracting plans, which would have been a total of about $309,000. As a result, the actual percentage of subcontracting to small businesses of total subcontracting and of the total amount of the contract value was incorrect. In the second contract, awarded in 2016 for $4.6 million with a planned small business subcontracting total of about $2 million, the contractor listed an overall small business subcontracting goal different from the approved subcontracting goal in three ISRs, and there was no documentation explaining the difference. For the third contract, awarded in fiscal year 2016 for $45.2 million with a planned small business subcontracting goal of 10 percent of total subcontracting dollars, the contractor listed this goal incorrectly in two ISRs. According to a NASA official, at the time of our review, the contracting officer was working with the contractor to correct the error. DLA: For one contract awarded in 2017 for $34.1 million with a planned subcontracting total of about $11 million, a DLA contracting officer accepted a September 2019 ISR that listed the small business goal at 90 percent of the total subcontracting dollars for the contract instead of the 87.4 percent (base) or 87.6 percent (option years) in the contract addendum. The actual cumulative subcontracting percentage reported in the ISR was 88.1 percent, which met the goal in the addendum, but not the 90 percent goal in the accepted September 2019 ISR. We could not identify any information in the ISR explaining the conflicting information. Additionally, when calculating the amount of cumulative dollars awarded to small business concerns, the contractor appeared to have excluded about $54,000 in subcontracting, which was included in a separate line item in the ISR for women-owned small business concerns. As a result, we were unable to determine whether this contractor had been meeting its small business goal. For a second contract also awarded in 2017 for $74.9 million with a planned subcontracting total of about $23 million, the contractor reported the approved small business goal of 96 percent of total subcontracting dollars in the March 2018 and September 2018 reports. However, in March 2019 and September 2019 ISR submissions for this contract, the contractor reported a small business goal of 98.5 percent and 74.8 percent, respectively. We found no documentation explaining why the contractor reported goals in the 2019 ISRs that were different from the approved 96 percent goal. Navy: For one Navy contract, which was awarded for $13.5 million in fiscal year 2018 with a planned subcontracting total of $2.7 million, the contracting officer notified the contractor in the September 2018 and March 2019 ISRs that the small disadvantaged business goal of 0 percent of total subcontracting dollars in these submissions did not match the 25 percent goal in the approved subcontracting plan. The contractor corrected the error and the contracting officer accepted the revised reports. In the September 2019 submission, the contractor once again reported that particular goal as 0 percent, but the contracting officer did not note the recurring error in this submission. For another contract, awarded for $16.6 million in fiscal year 2016 with a planned subcontracting total of about $5.9 million, the March 2016 ISR listed a small business goal of 693 percent (the goal in the approved subcontracting plan was 69.3 percent) of total subcontracting dollars. The contracting officer did not address the incorrect percentage. Moreover, in the September 2016 submission, the goal was reduced to 61.8 percent, which was less than the goal in the approved subcontracting plan. There was no explanation for the discrepancies in either submission. GSA: For one GSA Public Building Service contract, which was awarded in fiscal year 2018 for $7.5 million, we found discrepancies between the goals listed in multiple accepted ISRs and the approved subcontracting plan. This contract involved janitorial services performed at two locations. Each location had a different approved small business goal—96 percent and 87 percent of total subcontracting dollars. However, the contractor reported only one small business goal in the three ISRs submitted for September 2018, March 2019, and September 2019, and this reported goal varied from 89 to 97 percent in the three ISRs. According to a GSA official, the contractor submitted one ISR in each reporting period to convey the combined progress toward meeting its subcontracting goals for both locations, but the small business goal the contractor reported in each ISR did not accurately reflect the combined goals for both locations. The GSA official told us the combined goal the contractor should have reported for this contract was about 91 percent. According to the GSA official, these submissions contained data entry errors by the contractor, perhaps due to the contractor not knowing how to properly report its subcontracting data. For one GSA Federal Acquisition Service contract awarded in fiscal year 2017 for $3.6 million, we found a discrepancy between the small business goal reported in multiple ISR submissions—5 percent of total subcontracting dollars—and the 25 percent goal of total subcontracting dollars in the approved subcontracting plan, and we notified the agency of the discrepancy. However, none of these submissions included an explanation for the discrepancy and the agency’s reviewing official accepted the submissions without addressing the conflicting information. We also found one instance involving unclear oversight responsibilities among the 26 contracts we reviewed. We were unable to determine which agency actively monitored one DLA contract, which was awarded in fiscal year 2017 for $23.3 million. According to DLA staff, DCMA is responsible for monitoring, evaluating, and documenting performance of the contractor for the associated small business subcontracting plan. However, DCMA officials provided responses that DLA is the entity that should be conducting oversight of the subcontracting plan. If oversight responsibility of contracts involving two agencies is not apparent, it is unlikely that the contractor’s compliance with their subcontracting plans is being properly monitored. According to agency officials, several factors contributed to contracting officers accepting subcontracting reports with erroneous information. For example, as previously stated, agency officials told us that contracting officers’ large workload and focus on the award process (rather than on contract administration) can contribute to not always considering subcontracting plans as material parts of contracts and, thus, not conducting related due diligence after the contract award. GSA officials also noted that contracting officers may not have read or understood FAR requirements for oversight of contracts. For 16 of the 26 contracts we reviewed with a subcontracting plan, contractors reported that they met their small business subcontracting goal or were meeting the goal in situations where the contract had not yet ended. For the remaining 10 contracts, three ended without the contractor meeting the small business goal, five were not meeting the small business goal but the contract had not yet ended, and two had limited documentation available and we were unable to determine whether the goal was met. For the three contracts that ended without the contractor meeting the small business goal, two contracts had documentation that included a rationale for why the goal was not met. For one NASA contract, the contracting officer documented in a memorandum that a decision was made that there was no longer any subcontracting possibilities. The other instance involved a GSA Federal Acquisition Service contract, in which the assessing official documented in the final Compliance Performance Assessment Report that the low goal achievement was due to the nature of the automotive manufacturing industry. We could not identify a rationale for one Navy contract for why the small business subcontracting goal was not met and the agency could not provide documentation explaining why the goal was not met. The FAR requires contracting officers to assess liquidated damages against a contractor if a contracting officer determined the contractor failed to make a good-faith effort to comply with the subcontracting plan. However, a contractor’s failure to meet its subcontracting plan goals does not, in and of itself, constitute a failure to make a good-faith effort. Of the three contracts we reviewed that did not meet their small business subcontracting goal, we found no instances in which a contracting officer pursued liquidated damages or other actions against a contractor. As previously mentioned, two of these three contracts had a documented rationale for not meeting the small business subcontracting goal. Agency officials told us that contracting officers rely on Compliance Performance Assessment Reports or other performance assessment measures to rate a contractor’s performance relative to their subcontracting goals. Officials from three of the four agencies also told us a contractor’s past performance could affect their future ability to obtain government contracts, which can incentivize contractors to take steps to meet their subcontracting goals. SBA provides training to federal agencies’ contracting officers and contractors to assist in complying with small business subcontracting plan requirements. As part of its Small Business Subcontracting Program, SBA conducts certain reviews to assess overall effectiveness of small business subcontracting, including compliance reviews that are designed to assess contractor compliance with small business subcontracting plans. However, SBA could only provide limited documentation on compliance reviews it conducted from fiscal years 2016 through 2018, and limited information on compliance reviews conducted in fiscal year 2019. SBA provides training for contracting officers yearly to assist them in their reviews of subcontracting plans, including training related to pre-and post- award subcontracting activities for contracting officers. Beginning in 2017, SBA made available annual training for contracting officers to assist them in reviewing subcontracting plans. SBA also provides training to contractors, which provides them with information on meeting subcontracting plan requirements. If a prime contractor receives a less than satisfactory rating on a compliance review, the prime contractor must attend a mandatory training to address the issues found in the initial rating. According to SBA officials, the agency also has been developing new electronic-based training to coincide with new compliance review processes. According to the officials, the training is intended to educate prime business contractors with a subcontracting plan and federal agencies awarding contracts with a subcontracting plan on how to comply with post-award subcontract program requirements. SBA plans to make this training available in July 2020 in an electronic format that will provide information and require the participant to answer a series of questions to ensure they comprehend and retain the information. In addition to providing training, SBA’s CMRs conduct reviews related to SBA’s Small Business Subcontracting Program. In particular, SBA’s Standard Operating Procedure (SOP) 60 03 6, which was effective from December 4, 2006 through July 17, 2018, identified CMR responsibilities and included guidance for conducting reviews related to the Small Business Subcontracting Program. According to this SOP, CMRs were to conduct different types of reviews: In Performance Reviews (also referred to as desk reviews), CMRs were to review ISRs and SSRs that contractors submitted to determine which large business contractors in their portfolios they should visit, and what type of compliance review would be most effective. In Small Business Program Compliance Reviews (compliance reviews), CMRs were to evaluate a contractor’s compliance with subcontracting program procedures and goals in a contractor’s small business subcontracting plan. CMRs also were to conduct follow-up compliance reviews on areas found deficient during a compliance review or previous follow-up review. SOP 60 03 6 also described some orientation or outreach activities as reviews. In Subcontracting Orientation and Assistance Reviews, CMRs were to visit a large business contractor’s facility or telephone the contractor to introduce them to the Small Business Subcontracting Program and provide an overview of the roles and responsibilities of a prime contractor. According to SBA, the agency conducted 417 of these reviews from fiscal years 2016–2018. According to SBA, the agency’s CMRs conducted hundreds of various reviews in fiscal years 2016 through 2018, and a total of 118 compliance reviews specifically during that period (see table 4). SBA staff said SBA also conducts surveillance reviews to evaluate the overall effectiveness of an agency procurement center’s small business program by reviewing contract files and procedures. According to SBA documentation, these reviews allow SBA to recommend changes to improve small business participation at procurement centers. A surveillance review also examines the procurement center’s subcontracting program. SBA staff examine subcontracting files to determine if procurement center staff routinely perform subcontracting plan reviews, route the subcontracting plans to the PCR for review during the contract award process, incorporate approved subcontracting plans into contracts, and ensure that prime contractors submit the subcontracting plan ISRs into eSRS. For example, in a 2019 surveillance review (for which we obtained a copy) SBA found the center that conducted the procurements did not have a subcontracting plan in the file for two contracts and the subcontracting plan was not sent to the appropriate SBA Area Director for four contracts. In July 2018, SBA issued a new SOP entitled Subcontracting Assistance Program Post Award, which revised SBA’s compliance review process. According to SBA officials and a high-level outline SBA provided, SBA intends to have the following three phases for the new review processes that will implement the new SOP: 1. Subcontract Reporting Compliance – In this phase, CMRs are to review and rate a prime contractor’s compliance with subcontracting reporting requirements (that is, the contractor’s ISR and SSR reporting requirements). According to SBA officials, SBA also intends to inform contract awarding and administering agencies of their findings. 2. Subcontracting Plan Goal Attainment Compliance – In this phase, CMRs are to review whether a prime contractor has met or is on track to meet the goals listed in the subcontracting plan. 3. Subcontract Regulation Compliance – In this phase, CMRs are to review the prime contractor’s actions in adhering to all the elements in the subcontracting plan and meeting subcontracting plan goals, among other related actions. According to SBA officials, the new compliance review process is intended to standardize compliance reviews based on the new SOP. SBA developed a broad outline of the three-phase compliance review process, and to implement this process, developed a CMR portfolio tracking document, in the form of a spreadsheet, and a draft compliance review guidance document, both of which SBA is currently using for the first phase of the process. However, SBA officials told us they could not provide detailed procedures for implementing the second and third phases and they continue to refine the compliance review spreadsheet in conjunction with the compliance review guidance. As of mid-March 2020, they stated that they intend to complete phase 2 guidance by July 30, 2020, and phase 3 guidance by October 30, 2020. SBA could not provide us with requested information and almost no documentation on the compliance reviews its CMRs conducted in fiscal years 2016–2018. SBA could not provide basic information such as the list of contractors reviewed, the specific type of compliance reviews (such as reviews conducted individually or conducted jointly with another agency), which agencies may have assisted in the reviews (in the case of any joint reviews), and contractor ratings resulting from the reviews. SBA could only provide one CMR compliance review and two follow-up compliance reviews for this time frame, and all three were conducted in fiscal year 2017. The one CMR compliance review SBA provided included general observations from the review, specific findings, follow-up actions required, best practices for the contractor, and the rating provided to the contractor. The follow-up compliance reviews from fiscal year 2017 identified steps that contractors took to address deficiencies found in the initial compliance review and steps to enhance their subcontracting program. According to SBA officials, the agency’s CMRs conducted 680 compliance reviews in fiscal year 2019 and SBA was able to provide some documentation related to these reviews. To conduct these reviews, SBA officials explained that they selected about 4,000 prime contracts from FPDS-NG with individual subcontracting plans that ended in fiscal year 2019 or later. From these approximately 4,000 contracts, SBA officials told us that CMRs randomly selected 680 for review during fiscal year 2019. The CMRs assessed the selected sample of contracts against the first phase of the new compliance review process—the extent to which contractors complied with their reporting requirements. In our review of the documentation SBA provided, we could not clearly identify how many reviews they conducted. For example, the summary information from the reviews was not documented or maintained in a single document, but was in multiple spreadsheets with some inconsistencies, making it difficult to determine how reviews were counted. Additionally, one spreadsheet contained a summary tab for many contracts, but a count of the unique contracts did not add up to 680. Other spreadsheets did not have a summary tab, and contained information on the reviewed contracts in tabs organized by contractor. According to its latest SOP, SBA conducts compliance reviews to determine whether prime contractors that are not small businesses complied with their post-award subcontracting responsibilities outlined in the subcontracting plan to ensure small business subcontracts are being properly awarded and reported. However, based on our review of the limited documentation provided, SBA lacks specific guidance in its SOP on how CMRs should maintain information for compliance reviews they conduct. SBA has draft guidance on the new compliance review process, including some specific information regarding what CMRs are to record as part of the compliance review. However, SBA does not have clearly documented and maintained records on the first phase of these compliance reviews. Requirements for small business subcontracting plans in certain contracts enhance opportunities for small businesses to participate in federal contracting. However, weaknesses in selected agencies’ oversight of subcontracting plans—such as not following all procedures and not reviewing contractor submissions for errors or omissions—can reduce those opportunities and limit agencies’ knowledge about the extent to which contractors fulfill obligations to small businesses. The frequency with which issues arose in our sample suggests agencies can do more to improve oversight. For contracts we reviewed which used checklists or memorandums to document the PCR review process, we found that those contracts generally demonstrated compliance with the requirement for the opportunity for a PCR review. Taking steps to ensure that contracting officers provide PCRs the opportunity to review contracts with subcontracting plans would help agencies identify subcontracting opportunities and benefit from suggestions for increasing small business participation. In turn, such efforts could help agencies achieve their small business subcontracting goals. Similarly, improved monitoring of submitted contractor reports on subcontracting activities would identify errors in the submissions and increase agencies’ ability to assess contractor performance. Without complete and accurate information on a contractor’s subcontracting goals, agencies cannot adequately assess a contractor’s performance in meeting its subcontracting plan responsibilities. Given the many responsibilities of contracting officers, steps to ensure that contractor report submissions on meeting subcontracting goals are accurate would assist agencies’ oversight efforts. SBA also has opportunities to significantly enhance oversight related to its subcontracting program. It lacks documentation for almost all compliance reviews conducted in three of the four fiscal years from 2016 through 2019, has not fully implemented revisions to the compliance review process, and has not yet developed procedures for ensuring clear and consistent records of all compliance reviews are documented and maintained. By having clear and consistent documentation for compliance reviews and maintaining those records, SBA would better position itself to track contractor compliance for contracts it reviews and would be able to use this information to inform subsequent reviews. Additionally, contracting agencies would be able to leverage the information from SBA for their own reviews of contractor performance and subcontracting plans. We are making a total of 10 recommendations to five agencies (three to DLA, one to GSA, two to NASA, three to Navy, and one to SBA): The Director of DLA should include a step for the opportunity for PCR review of the proposed contract and subcontracting plan in agency procedures and memorandums, and develop a mechanism for documenting whether the opportunity for PCR review was provided. (Recommendation 1) The Secretary of the Navy should include a step for the opportunity for PCR review of the proposed contract and subcontracting plan in agency procedures and memorandums, and develop a mechanism for documenting whether the opportunity for PCR review was provided. (Recommendation 2) The Director of DLA should take steps to fulfill the requirement that contracting officers ensure that subcontracting reports are submitted by contractors in a timely manner. For example, the agency could require contracting officers to verify that prior reports were submitted when reviewing current submissions. (Recommendation 3) The NASA Administrator should take steps to fulfill the requirement that contracting officers ensure that subcontracting reports are submitted by contractors in a timely manner. For example, the agency could require contracting officers to verify that prior reports were submitted when reviewing current submissions. (Recommendation 4) The Secretary of the Navy should take steps to fulfill the requirement that contracting officers ensure that subcontracting reports are submitted by contractors in a timely manner. For example, the agency could require contracting officers to verify that prior reports were submitted when reviewing current submissions. (Recommendation 5) The Director of DLA should take steps to ensure contracting officers compare subcontracting goals in contractor report submissions to goals in the approved subcontracting plan and address any discrepancies. (Recommendation 6) The Administrator of the GSA should take steps to ensure contracting officers compare subcontracting goals in contractor report submissions to goals in the approved subcontracting plan and address any discrepancies. (Recommendation 7) The NASA Administrator should take steps to ensure contracting officers compare subcontracting goals in contractor report submissions to goals in the approved subcontracting plan and address any discrepancies. (Recommendation 8) The Secretary of the Navy should take steps to ensure contracting officers compare subcontracting goals in contractor report submissions to goals in the approved subcontracting plan and address any discrepancies. (Recommendation 9) The SBA Administrator should ensure Commercial Market Representatives clearly and consistently document compliance reviews and maintain these records. (Recommendation 10) We provided a draft of this report to DOD, GSA, NASA, and SBA for review and comment. DOD provided a written response, reproduced in appendix II, in which it concurred with our recommendations. DOD described steps that DLA and Navy intend to take to address the recommendations, including actions to remind contracting officers or to provide additional guidance related to giving the PCR an opportunity to review the proposed contract and subcontracting plan. DOD also described actions that DLA and Navy intend to take to remind contracting officers of the requirement to ensure that subcontracting reports are submitted in a timely manner and to remind contracting officers to compare subcontracting goals in contractor report submissions to goals in the approved subcontracting plan and address any discrepancies. GSA provided a written response, reproduced in appendix III, in which it concurred with our recommendation. NASA provided a written response, reproduced in appendix IV, in which it concurred with our recommendations. NASA described steps it intends to take, such as requiring procurement offices to monitor contracting officer reviews of contractor report submissions and comparisons of subcontracting goals for consistency with the subcontracting plan. NASA also provided technical comments on the draft report that we incorporated where appropriate. SBA provided a written response, reproduced in appendix V, in which the agency partially concurred with our recommendation. SBA also asked us to consider rewording a few statements that it considered to have appeared for the first time in the draft report. In the draft report we sent to SBA, we provided additional information about how we could not clearly identify how many reviews the CMRs conducted. SBA stated in its written response that it has comprehensive documents and records for fiscal year 2019 compliance reviews and while its CMRs maintain a separate workbook of spreadsheets for reviews they conduct, the agency maintains a summary document that combines the compliance reviews performed collectively by its CMRs. During our audit and as part of its written response to our draft report, SBA did not provide a summary document that showed all reviews conducted by its CMRs for fiscal year 2019. SBA also acknowledged in its written response that it could not provide requested documentation for compliance reviews conducted during fiscal years 2016 through 2018. SBA stated it has developed detailed procedures for maintaining consistent records for compliance reviews and that while CMRs are using these procedures currently, the agency intends to finalize the procedures on May 29, 2020 to ensure that SBA continues to fully document its compliance reviews. Based on the documentation we reviewed and analyzed during our audit, we maintain that SBA does not have clearly documented and maintained records of compliance reviews and should clearly and consistently document its compliance reviews and maintain these records. We will review any additional documentation of records of compliance reviews when SBA provides it in response to this recommendation. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to appropriate congressional committees and members, the Secretary of DOD, the Administrator of GSA, the Administrator of NASA, the Administrator of SBA, and other interested parties. This report will also be available at no charge on our website at http://www.gao.gov. If you or your staff have any questions concerning this report, please contact me at (202) 512-8678 or shearw@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 VI. Our objectives in this report were to examine (1) the extent to which select agencies conduct oversight related to small business subcontracting plans in the pre-award phase of the federal contracting process; (2) the extent to which select agencies conduct oversight of such subcontracting plans in the post-award phase; and (3) steps the Small Business Administration (SBA) has taken to encourage agencies to conduct oversight activities related to small business subcontracting plans. To address the first two objectives, we reviewed the Federal Acquisition Regulation (FAR) and agency-specific procedures. We also reviewed requirements for contractor submissions on subcontracting activity related to subcontracting plans, and corresponding agency oversight requirements for the submissions. We reviewed documentation on agency training for contracting officers related to subcontracting plans and requirements. We judgmentally selected two military agencies—the Defense Logistics Agency (DLA) and the Department of the Navy (Navy)—and two civilian agencies—the General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA)— to review based on our analysis of Federal Procurement Data System- Next Generation (FPDS-NG) data and other factors. More specifically, we selected the agencies because they (1) included a mix of military and civilian agencies, (2) had relatively high dollar amounts of federal contracts awarded in fiscal years 2016–2018, and (3) included a range of performance related to subcontracting based on SBA’s annual procurement scorecard. We also reviewed documentation for a nongeneralizable sample of 32 contracts—eight per agency—awarded in fiscal years 2016–2018 across the four agencies. We randomly selected these 32 contracts from a set of contracts that met several criteria. Specifically, the criteria were contracts with dollar amounts above $1.5 million, that had a mix of subcontracting plans (individual, commercial, and comprehensive) or reasons for not including subcontracting plans in a contract (such as no subcontracting possibilities for the contract or the contract not requiring a subcontracting plan), and a mix of their current status at the time of our selection (completed or active). We selected contracts as follows: We first randomly selected six contracts per agency (total of 24) that had a small business subcontracting plan at the time of award. To do this, we used a random number generator for the universe of contracts meeting the above criteria and selected contracts in the order of the random number generator, but skipped a contract if it was too similar to already-selected contracts (for example, same type of subcontracting plan or similar dollar amount). We then selected another set of contracts—two per agency (total of eight)—that seemed to meet criteria for requiring small business subcontracting plans, such as exceeding the dollar threshold, but were coded in FPDS-NG as not having a plan in place. We also obtained reports on contractor submissions on small business subcontracting activity, where applicable, and agency reviews of the submissions from the Electronic Subcontracting Reporting System (eSRS). Specifically, we searched eSRS for any contractor-submitted individual subcontracting reports (ISR) or summary subcontract reports (SSR), where applicable, for each contract with a subcontracting plan and reviewed the reports along with agency contracting officer comments, approvals, or rejections related to the reports. If we were unable to locate any ISRs or SSRs in eSRS, we asked the procuring agency to provide copies of the reports. We also requested agency documentation for any actions contracting officers took, if applicable, for each contract where the contractor had not met the small business subcontracting goal. We also interviewed officials from each agency about their efforts related to oversight of small business subcontracting plans and these contractor submissions. We assessed the reliability of FPDS-NG data by reviewing available documentation and prior GAO data reliability assessments and by electronically testing for missing data, outliers, and inconsistent coding. We found the data to be reliable for the purposes of selecting agencies and contracts to review. We assessed the reliability of eSRS by reviewing available documentation and verifying information with agencies. We found the information in eSRS to be reliable for purposes of assessing the extent to which agencies conduct oversight related to contractor submission reports in the system. To address the third objective, we reviewed documentation on several types of SBA reviews, including compliance reviews, related to contractor compliance with and agencies’ oversight of subcontracting plans. Specifically, we reviewed documentation on reviews SBA conducted related to its subcontracting program during fiscal years 2016–2019. We also reviewed SBA’s standard operating procedures for the subcontracting program, documentation on processes implementing the new procedures, and documentation on SBA training programs for the small business subcontracting program. We interviewed SBA officials regarding steps the agency takes to encourage agency oversight of subcontracting plans. For all the objectives, we reviewed relevant federal laws and regulations and reviewed previous GAO reports and reports from the Department of Defense Office of Inspector General (DOD OIG). We also interviewed officials from the DOD OIG to obtain an understanding of their work on DOD’s oversight of subcontracting plans at selected DOD components and command centers. We conducted this performance audit from January 2019 to May 2020 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. In addition to the contact named above, Andrew Pauline (Assistant Director), Tarek Mahmassani (Analyst in Charge), Suellen Foth, Jonathan Harmatz, Julia Kennon, Jill Lacey, Yola Lewis, John McGrail, Marc Molino, and Barbara Roesmann made key contributions to this report.","Certain federal contracts must have a small business subcontracting plan if subcontracting opportunities exist. But recent Department of Defense Inspector General reports raised concerns about agency oversight of subcontracting requirements. GAO was asked to review oversight of subcontracting plans. Among its objectives, this report discusses (1) the extent to which selected agencies (DLA, GSA, NASA, and Navy) oversee small business subcontracting plans, and (2) how SBA encourages agency compliance with subcontracting plan requirements. GAO reviewed data and documentation for a non-generalizable sample of 32 federal contracts (including 26 contracts with a subcontracting plan) at four agencies, selected to include contracts over $1.5 million at both civilian and military agencies awarded in fiscal years 2016–2018. GAO also reviewed the Federal Acquisition Regulation, SBA and selected agency documentation, and interviewed agency officials. GAO found selected agencies did not consistently follow all required procedures for oversight of small business subcontracting plans, both before and after contracts were awarded. GAO reviewed 26 contracts with a subcontracting plan at four agencies—Defense Logistics Agency (DLA), General Services Administration (GSA), National Aeronautics and Space Administration (NASA), and the Department of the Navy (Navy). For about half of the 26 contracts, agencies could not demonstrate that procedures for Procurement Center Representative (PCR) reviews were followed. These representatives may review small business subcontracting plans and provide recommendations for improving small business participation. When an agency is awarding a contract that includes a subcontracting plan, contracting officers are required to notify these representatives of the opportunity to review the proposed contract. Without taking steps to ensure these opportunities are provided, agencies may not receive and benefit from suggestions for increasing small business participation. For 14 of the 26 contracts, contracting officers did not ensure contractors submitted required subcontracting reports. After a contract is awarded, contracting officers must review reports contractors submit that describe their progress towards meeting approved small business subcontracting goals. In some cases, contracting officers accepted reports with subcontracting goals different from those in the approved subcontracting plans, with no documentation explaining the difference. Without complete and accurate information about a contractor's subcontracting goals, an agency cannot adequately assess a contractor's performance in meeting its subcontracting plan responsibilities. The Small Business Administration (SBA) encourages agency compliance with small business subcontracting plan requirements by providing training to contracting officers and contractors, and by conducting reviews. For instance, SBA Commercial Market Representatives conduct compliance reviews to evaluate a large prime contractor's compliance with subcontracting program procedures and goal achievement. However, SBA could not provide documentation or information on almost all compliance reviews conducted in fiscal years 2016–2018. SBA has developed new procedures for conducting compliance reviews, but as of mid-March 2020, had yet to fully implement them. SBA has conducted fiscal year 2019 compliance reviews that reflect a first phase of their new procedures. SBA has draft guidance on the new compliance review process, including some specific information regarding what Commercial Market Representatives are to record as part of the compliance review. SBA has begun to conduct compliance reviews in accordance with the guidance, but does not have clearly documented and maintained records for the first phase of these reviews. Without consistent, clear documentation and records that will be maintained going forward, SBA's ability to track contractor compliance and agency oversight efforts will be limited. GAO is making 10 recommendations for ensuring procedures for PCR reviews are followed, contractor subcontracting reports are monitored and reviewed for accuracy, and SBA compliance reviews are clearly documented and maintained. DLA, GSA, NASA, and Navy concurred with our recommendations. SBA partially concurred with our recommendation. GAO maintains that its recommendation is warranted."
"Since 2008, both the number of pedestrian fatalities and the share of pedestrian fatalities as a percentage of overall highway fatalities have increased (see fig. 1). In 2008, pedestrian fatalities represented about 12 percent of overall highway fatalities, while in 2018 they represented about 17 percent. In addition to fatalities, the estimated number of pedestrians injured in crashes has increased from about 71,000 in 2008 to about 79,800 in 2018. A range of factors can influence pedestrian fatalities including exposure of pedestrians to crashes, roadway characteristics, and driver and pedestrian behavior. According to DOT officials, there is little nationwide information about pedestrian exposure to potential crashes and that data may be more available on the state or local level. Some national data, however, shows that there may have been some change in people walking. For example, the U.S. Census Bureau’s American Community Survey estimated that in 2018, 4 million people reported walking to work compared with an estimated 3.8 million people in 2010. Regarding roadways, in 2018 the National Transportation Safety Board (NTSB) reported that most pedestrian fatalities occur in urban areas on principal arterial roads that carry high volumes of traffic, traveling at the highest speeds. In 2015, we noted that behavior such as distracted driving, walking, and cycling may contribute to pedestrian and cyclist fatalities. When drivers and pedestrians use cell phones or are otherwise distracted, they may be less aware of their surroundings and more likely to be involved in a crash. Finally, NHTSA data shows that most pedestrian fatalities occurred after dark and at places other than intersections. Specifically, in 2018, of the 6,300 reported fatalities, over 4,700 pedestrians (about 75 percent) were killed after dark and about 4,600 pedestrians (about 73 percent) were killed at non-intersection locations. See appendix II for additional information on pedestrian fatalities from 2008 through 2018. Automakers have developed vehicle features intended to avoid pedestrian crashes and mitigate the extent of injury to pedestrians. Crash avoidance features (also known as “active” safety features) rely on cameras, radar, and other devices to detect a pedestrian and then act to alert a driver to take action, or automatically apply a vehicle’s brakes to slow or stop the vehicle to avoid striking a pedestrian (see fig. 2). One pedestrian crash avoidance system is referred to as pedestrian automatic emergency braking, which uses a camera, radar, or a combination, to automatically apply brakes to avoid a collision. Crash mitigation features (also known as “passive” safety features) generally involve the use of pedestrian-friendly vehicle components that are designed to reduce the severity of injuries should a pedestrian be hit. Passive safety features can include energy absorbing bumper material, hoods that provide space between the hood and the hard components in the engine compartment, and contoured vehicle front-ends intended to reduce harm to pedestrians (see fig. 3). In executing its mission, NHTSA administers NCAP and issues federal motor vehicle safety standards (FMVSS) and the federal bumper standard, among other things. In general, NCAP tests supplement safety standards established in law or regulation. NCAP. Created in 1978, this program tests new vehicles to determine how well they protect drivers and passengers during a crash (front and side) and how well vehicles resist rollovers. NHTSA tests and rates vehicles using a five-star safety rating system with five stars being the highest safety rating and one star the lowest. NHTSA communicates the results of its vehicle tests through window labels on new vehicles and on its website. In 2010, NHTSA also began recommending various safety technologies for consumers to consider when purchasing vehicles. Recommended technologies include such things as forward collision warning (an alert that warns drivers to brake or steer to avoid a crash if they are too close to a car in front of them); lane departure warning (an alert that warns drivers of unintentional lane shifts); and automatic emergency braking, which can automatically activate a vehicle’s brakes if a driver takes no action to avoid an imminent crash with a preceding vehicle. NHTSA has not yet included pedestrian automatic emergency braking systems as recommended technologies. Recommended technologies are not included in star ratings, but rather are features NHTSA believes consumers may wish to look for in new vehicles. Pedestrian safety tests are not currently part of NCAP. FMVSS. These are minimum performance standards established in regulation for new motor vehicles and items of motor vehicle equipment. According to NHTSA officials, FMVSS have test procedures and performance criteria with minimum thresholds for motor vehicles and motor vehicle equipment, such as minimum light intensity requirements for headlamps. Bumper standard. In addition, while not in the FMVSS, NHTSA’s bumper standard prescribes performance requirements in regulation for passenger cars in low-speed front-end and rear collisions. According to NHTSA officials, the bumper standard is intended to prevent damage to the car body and safety related equipment at speeds equivalent to a 5 miles-per-hour (mph) crash into a parked vehicle of the same weight. The standard applies to front and rear bumpers on passenger cars, but not to other multipurpose passenger vehicles, such as SUVs, minivans, or pickup trucks. The United States is also involved with pedestrian safety internationally. In June 1998, the United States signed an international agreement administered by the United Nations concerning the establishment of global technical regulations for motor and other wheeled vehicles. The purpose of the agreement was to establish a global process for jointly developing technical regulations regarding such things as safety, environmental protection, and energy efficiency of vehicles. As part of this agreement, in 2008, Global Technical Regulation No. 9 was established to improve pedestrian safety by requiring vehicle hoods and bumpers to absorb energy more efficiently when impacted in a vehicle-to-pedestrian collision. This international standard has two sets of performance criteria: head impact requirements that ensure vehicle hoods provide protection to a pedestrian’s head when impacted; and leg protection requirements for the front bumper that would require bumpers to subject pedestrians to lower impact forces. According to NHTSA, as a signatory to the 1998 agreement, the United States is obligated to consider adopting global technical regulations, but is not obligated to adopt them. NHTSA officials told us the agency has not yet initiated the rulemaking process for Global Technical Regulation No. 9. Although pedestrian safety testing is not currently a part of the U.S. NCAP, it is a part of similarly established new car assessment programs in other countries. For example, since 2016 both the European New Car Assessment Programme (Euro NCAP) and a program in Japan (known as the Japan New Car Assessment Program (JNCAP)) have tested vehicle pedestrian crash avoidance systems using a variety of scenarios and vehicle speeds. Euro NCAP tests include an adult dummy walking or running perpendicular to a test vehicle and walking parallel to a vehicle. Tests are also conducted with a child dummy running out from parked cars (see fig. 4). Euro NCAP tests are also conducted in daylight and at night. In the United States, two nongovernmental organizations have also conducted pedestrian safety testing. IIHS began a program to test pedestrian crash avoidance systems on 2018 and 2019 vehicles, and in 2020 began using the results to help determine its Top Safety Pick awards. The American Automobile Association (AAA) also recently conducted tests of crash avoidance systems. Moreover, crash mitigation tests that measure the potential for head and leg injuries resulting from pedestrian-motor vehicle crashes have been in place for many years in Europe and Japan. Euro NCAP began head and leg testing in 1997 and Japan began pedestrian head protection testing in 2003 and pedestrian leg protection testing in 2011. In general, these tests launch projectiles designed to simulate a person’s legs or head into various locations on a vehicle’s hood and bumper to assess the effectiveness in limiting pedestrian injury (see fig. 5). We found that several vehicle characteristics including the age and body type of the vehicle and the speed at which the vehicle was being driven at the time of the crash are associated with the increase in pedestrian fatalities from 2008 through 2018. However, NHTSA lacks complete data on the relationship between vehicle characteristics and pedestrian injuries, including detailed information on injury type and severity. Although NHTSA initiated a pilot program to improve its data collection protocol for pedestrian injuries, NHTSA lacks a plan for this program to evaluate its results and determine whether and how it should be expanded. Through FARS, NHTSA annually collects and analyzes data on all crashes involving pedestrian fatalities, including vehicle-related characteristics. Based on these data and relevant research, we analyzed the relationship between pedestrian fatalities and the age, body type, and speed of vehicles. Our analysis of FARS data shows that from 2008 through 2018, the number of pedestrian fatalities increased more for crashes involving vehicles that were: 11 years old or older (123 percent increase) compared with newer vehicles (9 percent increase); SUVs (68 percent increase) compared with other light trucks (25 percent increase), and passenger cars (47 percent increase); and traveling at reported speeds 31 mph and above (45 percent increase), compared to vehicles traveling at lower speeds (28 percent increase). The number of pedestrians struck and killed by vehicles 11 years old or older (older vehicles) increased more relative to the number of pedestrians struck and killed by vehicles 10 years old or newer (newer vehicles). In 2008, 1,139 pedestrian fatalities involved older vehicles, which represented about a quarter (26 percent) of reported pedestrian fatalities (see fig. 6). By 2018, that number more than doubled to 2,537 pedestrian fatalities, or 40 percent of reported pedestrian fatalities. Over that same time period, the number of pedestrian fatalities involving newer vehicles also increased from 2,800 in 2008 to 3,044 in 2018. However, this increase was less than fatalities involving older vehicles, and the overall share of pedestrian fatalities involving newer vehicles decreased from 63 to 48 percent over that period. The rise in the number of older vehicles involved in pedestrian fatalities may reflect the rise in the average age of vehicles in operation. According to data from DOT’s Bureau of Transportation Statistics, the average age of all vehicles in operation in the United States increased by about 1.5 years from 10.1 years old in 2008 to 11.7 years old in 2018. In comparison, the average age of passenger vehicles that struck and killed pedestrians increased by roughly 2 years from 8.1 years in 2008 to 10 years in 2018. Another possible contributing factor to the increased share of pedestrian fatalities resulting from crashes with older vehicles may be the prevalence of safety features in newer vehicles compared with older vehicles. As discussed below, vehicle manufacturers are offering new vehicles with pedestrian safety features such as pedestrian crash avoidance and crash mitigation systems, which may reduce pedestrian injuries and fatalities. The number of pedestrian fatalities where passenger cars, SUVs, or other light trucks were reported as striking vehicles all increased from 2008 to 2018 (see table 1). However, the number of SUVs involved in fatal pedestrian crashes increased by a higher percentage than passenger cars and other light trucks. As table 1 shows, pedestrian fatalities involving SUVs increased by about 68 percent, while pedestrian fatalities involving passenger cars increased by 47 percent and light trucks and vans increased by 25 percent. Additionally, although the number of SUVs involved in pedestrian fatalities increased the most in this timeframe, passenger cars still accounted for the largest share of fatalities. Data on the growth of SUVs within the U.S. vehicle fleet and academic research identify potential contributing factors as to why the number of SUVs involved in pedestrian fatalities increased between 2008 and 2018: Increasing SUV market share. SUVs represent a growing share of the total U.S. vehicle fleet. According to the Highway Loss Data Institute, the share of new vehicles in the United States that were SUVs grew from 30 percent in model year 2008 to 48 percent in model year 2018. In addition, 11 of the 13 auto manufacturers we interviewed stated that SUV sales, either market-wide or at their company, increased relative to passenger car sales in the United States since 2008. Increased risk of injuries based on vehicle size and weight. Research suggests that if a pedestrian is struck by a vehicle with greater mass the crash is more likely to result in serious injuries or a fatality than if the pedestrian is struck by a lower-mass vehicle. For example, one study we reviewed that cited work from five other studies found that the chief determinants for the severity of injuries in motor vehicle collisions are vehicle size and weight. According to one NHTSA-funded study, which used information from NHTSA’s Pedestrian Crash Data Study, researchers found that the probability of death for pedestrians struck by light trucks (including SUVs) was 3.4 times higher than for pedestrians struck by passenger cars. Between 2008 and 2018, the number of pedestrian fatalities involving higher speeds (31 mph and above) at the time of the crash increased more sharply than the number involving lower speeds (30 mph and below). Although vehicle speed was missing or not reported for 62 percent of pedestrian fatalities (as discussed below), our analysis of FARS data showed that when speed data are recorded, the number of pedestrian fatalities involving vehicles reportedly travelling at higher speeds increased from 1,315 to 1,912 (45 percent) between 2008 and 2018 (see fig. 7). The number of pedestrian fatalities involving vehicles reportedly traveling at lower speeds also increased, but at a smaller percentage (28 percent) than vehicles at higher-speed. During this time period, about 79 percent of pedestrian fatalities involved vehicles travelling 31 mph and above, and about 21 percent involved vehicles traveling at lower speeds. Multiple studies have found that when vehicles travel at higher speeds and strike pedestrians, they are more likely to kill or severely injure the pedestrian. For example, the NTSB reported in 2018 that the relationship between speed and the severity of injuries is consistent and direct— higher crash speeds result in injuries that are more severe. The NTSB added that the effect of speed is especially critical for pedestrians because they lack protection. In addition, according to a 2019 report from the National Cooperative Highway Research Program, a pedestrian’s risk of fatality is 90 percent when struck by vehicles travelling between 54 and 63 mph compared with a 10 percent risk of fatality between 24 and 33 mph. We also found that between 2008 and 2018, the speed of the striking vehicle was not reported for about 62 percent of pedestrian fatalities. This omission is likely because it is difficult for police officers to determine a vehicle’s speed after a crash occurs. Further, some organizations we spoke with told us that low speed collisions were typically underreported. According to NHTSA officials, the speed recorded is generally up to the discretion of the responding police officer. NHTSA officials and other stakeholders we interviewed identified limitations in NHTSA’s data on the relationship between vehicle characteristics and pedestrian injuries. These include (1) incomplete and inconsistent injury designations, (2) crash and vehicle information not linked to medical data, and (3) outdated pedestrian crash investigation data. Incomplete and inconsistent injury information. Within CRSS, NHTSA relies on information provided in police reports to determine national estimates of injured pedestrians. According to NHTSA officials, data from the police reports are typically after-the-fact descriptions of events and NHTSA conducts little, or no, follow up investigations of these reports. As a result, CRSS data may not include the cause of crashes or pedestrian injuries, and for some crashes it may be missing detailed information on specific characteristics of the striking vehicle. In addition, there may be inconsistencies in pedestrian injury information. NHTSA’s injury severity data rely on reporting from states and localities, which may define injury severity differently, year-to-year. As we have reported, NHTSA standardized the injury severity definitions nationally in April 2019; however, it will take time for states to adopt this standard. Crash and vehicle data are not linked to medical records. According to NTSB and some researchers we spoke with, the five point injury severity scale used on police crash reports does not effectively capture injury severity or actual injury outcomes because NHTSA does not link crash data with medical and hospital records. Without crash and vehicle information linked to medical records, researchers cannot crosscheck injury severity designations with actual injury outcomes or identify specific injury types. NHTSA previously sponsored a program to help link crash data with injury data contained in medical records, but federal funding for the program was discontinued in 2013. Outdated pedestrian crash investigation data. NHTSA last collected detailed data on pedestrian crash and injury characteristics from 1994 to 1998. The Pedestrian Crash Data Study collected information from over 500 pedestrian crashes, including data on pedestrian injury types, severity, and potential causation. The study also reported the vehicle’s type and the part of the vehicle that caused the injury, such as the front bumper. In its 2018 report, NTSB stated that while this study was the most complete set of pedestrian crash data available in the United States, the data are over 20 years old. NTSB recommended that NHTSA develop a detailed and current pedestrian crash data set for local and state analysis and to model and simulate pedestrian collision avoidance systems. As of February 2020, however, NHTSA had not fully implemented the recommendation. Some automakers and equipment suppliers we spoke with noted that improved real world injury data would help them better develop pedestrian safety features. NHTSA has recognized that it needs to collect more detailed and complete data on pedestrian injuries. For example, in a 2011 report to Congress on the agency’s data gaps, NHTSA noted that internal stakeholders (those within NHTSA) requested an updated Pedestrian Crash Data Study with crashes involving late-model-year vehicles and detailed injury data on the body region impacted rather than the vehicle’s point of contact. Further, in its 2016 to 2020 strategic plan, NHTSA stated that it would work to improve the quality, timeliness and relevance of safety data collected. In 2018, NHTSA initiated a pilot program to evaluate existing and new protocols for collecting pedestrian crash and injury data as part of its Crash Injury Research and Engineering Network (CIREN). The purpose of this pilot program is to develop a data collection protocol and collect preliminary data for pedestrian-motor vehicle crashes, including analysis on injury causation. Further, NHTSA stated that it intends to use this protocol and data as the foundation for subsequent pedestrian crash studies such as research related to injury trends and testing tools. NHTSA officials also told us that the pilot will help update and build upon the data collection and analysis protocols for pedestrian-motor vehicle crashes used in the 1990s in the Pedestrian Crash Data Study. According to NHTSA officials, the pilot will collect data on nine cases from two hospitals. A third hospital will provide engineering support. NHTSA officials stated that they limited the pilot study to nine cases so they would be able to act quickly on the pilot to determine if a full project was worth pursuing and to avoid delays. According to NHTSA officials, they expect initial results to be available by fall 2020. We have reported that a well-developed and documented pilot program can help ensure that agency assessments produce information needed to make effective program and policy decisions. Well-designed pilot programs use five leading practices including: 1. establishing clear, appropriate, and measurable objectives; 2. articulating an assessment methodology and data gathering strategy; 3. developing a data analysis and evaluation plan to track pilot 4. identifying criteria for determining whether and how to scale the pilot and integrate it into overall efforts; and 5. ensuring two-way stakeholder communication through the pilot program. Through our review of the CIREN pedestrian pilot program documentation, we determined that NHTSA met most of the criteria for a well-developed pilot program, but not all. Specifically, NHTSA documented clear, appropriate, and measureable project objectives; identified an assessment methodology and data gathering strategy; developed a data analysis plan; and communicated with stakeholders. NHTSA, however, did not establish an evaluation plan that includes criteria to determine if the pilot program’s data collection and analysis protocol should or could be continued or expanded, once the data have been collected from the nine cases. Although NHTSA officials reported that they had a plan to review and evaluate individual cases, NHTSA does not have an evaluation plan for the pilot program that includes criteria or standards for identifying lessons learned or determining whether the new data collection and analysis procedures would satisfy data needs related to pedestrian’s injuries. NHTSA officials told us that they did not develop an evaluation plan or criteria for determining the success or scalability of the pedestrian pilot program because they were not required to create one. They also said they did not have enough information to tell if the pilot program should be integrated into overall efforts, although they expect the tools developed by the pilot to be incorporated into later efforts to increase the number of pedestrian crashes reviewed under the CIREN program. Pedestrian crash avoidance and crash mitigation safety features are commonly available on many 2019 model year vehicles offered in the United States, according to the 13 automakers we interviewed. As previously discussed, crash avoidance features rely on cameras or radar or both to detect a pedestrian and take action to avoid a crash. Crash mitigation generally involves use of pedestrian-friendly vehicle components (such as energy absorbing bumper components or hoods) that are designed to reduce the severity of injuries should a pedestrian be hit. The 13 automakers we interviewed responded that they, collectively, offered 262 model year 2019 vehicles for sale in the United States. Of those vehicle models, almost 60 percent included pedestrian automatic emergency braking as either a standard or an optional feature (see fig. 8). About 62 percent of their model year 2019 vehicles had some type of standard pedestrian crash mitigation feature. In total, 12 of 13 automakers that we interviewed responded that they offered one or more 2019 model year vehicles with pedestrian automatic emergency braking as either a standard or optional feature; similarly, 12 of 13 automakers told us they offered crash mitigation features in at least one of their 2019 model year vehicles. Some stakeholders we interviewed told us that a combination of crash avoidance and crash mitigation features can be effective in minimizing pedestrian injury. For example, NHTSA officials told us that crash avoidance features, such as pedestrian automatic emergency braking can slow a vehicle to a speed where it will be less damaging to a pedestrian once struck, and if the vehicle also has crash mitigation features the impact of the crash can be further mitigated. We found that almost half of 2019 vehicle models had some combination of both pedestrian automatic emergency braking and crash mitigation features. For example, about 47 percent of 2019 vehicle models had pedestrian automatic emergency braking as either standard or optional equipment along with crash mitigation features, such as softer hoods. However, 24 percent of vehicle models had neither of these (see fig. 9). Officials from the 13 automakers we interviewed identified a variety of factors that influenced their decisions to offer vehicles with pedestrian safety features in the United States. These include a desire to achieve high safety ratings for their vehicles, as well as the following: New car assessment programs: New car assessment programs in the United States and other countries also influence why automakers may offer pedestrian safety features. For example, officials from nine of 10 automakers that responded to this question in our interview replied that Euro NCAP was a major factor to them in providing pedestrian safety features, while seven of 10 automakers responded that JNCAP was a major factor. In contrast, three of 11 automakers responded that the U.S. NCAP was a major factor in their decisions to offer vehicles with pedestrian safety features. As previously discussed, the United States, unlike the European Union and Japan, does not incorporate pedestrian safety tests into its NCAP. Independent safety testing: Independent safety testing was also a factor in why automakers may offer pedestrian safety features on vehicles. For example, officials from five automakers said that they considered IIHS safety ratings to be a major factor in their company’s decision to offer pedestrian safety features on vehicles sold in the United States. As previously discussed, IIHS began testing pedestrian crash avoidance systems on 2018 and 2019 vehicles. These tests are known as pedestrian automatic emergency braking tests and in 2020 IIHS began using the results to help determine their Top Safety Pick awards. Officials from two automakers said a company’s goal is to earn an IIHS top safety-pick rating for each of their models. Cost: Cost appeared to be less of a factor influencing whether pedestrian safety features were offered on vehicles. Officials from seven of eight automakers who responded to this question replied that costs either were a minor factor, or did not apply, in their decisions to offer vehicles with pedestrian safety features. However, officials from four automakers told us that, in general, while customers want safer vehicles, automakers have to consider what safety features could be included without increasing the overall cost. Further, one automaker’s representative said that as more manufacturers and customers are buying crash avoidance systems the costs are decreasing. The future availability of crash avoidance features may depend on several factors. Specifically, in 2016, 20 automakers voluntarily committed to making automatic emergency braking systems standard in vehicles sold in the United States by 2022. Officials from three automakers said that they planned to incorporate pedestrian automatic emergency braking into their vehicles’ automatic emergency braking systems as part of this commitment. Another factor is customer demand. One automaker said that the number of models that include pedestrian safety features in the future would depend on consumer demand or changes in regulation. Officials from another automaker said their customers often ask for features they see in Europe and ask why such features are available there but not in the United States. The auto industry officials we interviewed identified benefits and challenges with commonly available pedestrian safety features. Benefits of crash avoidance systems include the potential of eliminating or reducing car-to-pedestrian accidents. For example, officials from six automakers said that crash avoidance features were more effective than crash mitigation features because the purpose of crash avoidance features is to prevent the collision from occurring in the first place. Almost half of the automakers we interviewed (six of 13), however, reported that a primary challenge with a camera-based pedestrian automatic emergency braking system was the camera’s ability to work in low lighting or poor weather. Recently issued research has raised questions about the overall effectiveness of crash avoidance systems. In October 2019, AAA reported that based on its own assessment, some vehicles’ pedestrian safety systems were inconsistent at either slowing down or stopping a vehicle to avoid hitting a pedestrian. Specifically, the association reported that none of the crash avoidance systems on the four vehicles they tested worked in dark conditions. Auto industry officials also identified benefits and challenges with pedestrian crash mitigation features. For example, 12 of 13 automakers reported that crash mitigation features have the overall benefit of reducing the risk or severity of pedestrian injuries. Officials from eight automakers, however, said that the current federal bumper standard created challenges to offering softer, more pedestrian-friendly bumpers in the United States. Officials from the eight automakers said they offered softer bumpers in Europe or elsewhere—where there is no similar bumper standard—but do not offer softer bumpers in the United States. NHTSA officials told us the current bumper standard is primarily a cost savings standard in that it is intended to reduce repair costs and not necessarily to offer safety protection for vehicle occupants. NHTSA officials told us trade-offs are required to establish a bumper standard that addresses pedestrian safety, yet minimizes bumper damage and repair costs. NHTSA officials told us they are in the process of reevaluating the bumper damageability standard, as part of a Notice of Proposed Rulemaking, which they expect to publish in 2020. Appendix III discusses the benefits and challenges of commonly available pedestrian safety features. NHTSA has considered pedestrian safety for many years by conducting research, considering implementation of global regulations for pedestrian crash mitigation tests, and proposing pedestrian crash avoidance and mitigation tests for NCAP (see fig. 10). NHTSA’s last substantial update of NCAP was in July 2008 (with changes effective for model year 2011 vehicles). This update established additional crash tests and technical standards to protect vehicle occupants, but did not include pedestrian safety tests. In the past 10 years, NHTSA has considered but has not yet initiated a rulemaking process related to international standards for crash mitigation tests, among other actions. For example, in 2008, the United States along with other countries approved a United Nation’s international standard for pedestrian crash mitigation tests. This international standard, if implemented in the United States in a domestic regulation, would require U.S. vehicles to meet minimum performance requirements in pedestrian crash mitigation tests. The United States approved the international standard in 2008; however, NHTSA has yet to initiate a rulemaking to implement it either as part of the FMVSS or adopt it as a testing protocol through NCAP. According to NHTSA officials, implementation of the standard would require NHTSA to initiate a regulatory proceeding. Although the United States formally agreed to the standard more than 10 years ago, NHTSA officials told us that the rulemaking initiative is classified as a long-term action and that there is no timeline for such a rulemaking to implement pedestrian crash mitigation requirements. NHTSA has also conducted a range of research on pedestrian crash avoidance and mitigation tests. Specifically, NHTSA has published, contributed to, or sponsored over 55 studies and presentations on pedestrian safety issues since 2008, and NHTSA officials provided information stating that NHTSA has spent over $8.4 million to research pedestrian safety, including pedestrian automatic emergency braking and passive safety features from 2008 through 2019. In addition, officials stated that NHTSA has conducted a number of additional studies related to pedestrian safety, studies that NHTSA is currently reviewing for final publication, though officials did not provide expected publication dates. NHTSA officials told us this research serves as a body of work that supports and facilitates agency decisions and policies with respect to pedestrian safety. NHTSA’s pedestrian safety research has focused on several key issues, including developing objective test protocols and reliable test instruments for inclusion in NCAP and assessing the potential safety benefits. NHTSA officials told us there are three important elements associated with any safety tests (including pedestrian safety tests). These elements are (1) creating test protocols that measure a vehicle’s safety performance objectively, (2) validating test instruments that measure human injury, and (3) estimating the potential safety benefit of the tests. NHTSA’s pedestrian safety research includes work related to all three of these elements, as follows: Objective Test Protocols. One NHTSA study developed objective test protocols to evaluate the effectiveness of pedestrian crash avoidance systems based on analyses of crash scenarios from real- world crash data. Another NHTSA study applied pedestrian crash mitigation test protocols used by Euro NCAP to the U.S. vehicle fleet. NHTSA found that the European protocols could be used to assess the pedestrian safety performance of vehicles in the United States, but that the performance of different U.S. vehicle types could vary. Specifically, NHTSA found that “global platform” vehicles (i.e., models that include a U.S. and European variant of the same vehicle) offered more pedestrian safety than vehicles that are only marketed in the United States. Valid Test Instruments. NHTSA has been a key contributor in the development of pedestrian test instruments. For example, NHTSA has presented information on mannequins for evaluating the repeatability and accuracy of pedestrian crash avoidance systems, concluding that mannequins should be durable, realistic, and comparable in size and movement to humans. In addition, NHTSA found there are instruments that produce repeatable and reproducible measurements of pedestrian head, upper leg, and lower leg injuries on tests. Potential Safety Benefits. NHTSA has studied the potential benefits of pedestrian crash avoidance, and estimated that these technologies could reduce the number of annual vehicle-pedestrian crashes by between 620 and 5,000, and reduce the number of annual fatal vehicle-pedestrian crashes by between 110 and 810. NHTSA has also reported that Europe and Japan have responded to the high proportion of pedestrian fatalities compared to all traffic fatalities by including pedestrian protection in their respective NCAPs and requiring pedestrian protection through regulation. According to NHTSA, these actions have likely contributed to a downward trend in pedestrian fatalities in Europe and Japan. Further, an international study found that including pedestrian safety testing in consumer testing programs has real world benefits by reducing pedestrian fatalities and injuries. For example, a European study concluded that vehicles that score well in Euro NCAP pedestrian crash mitigation tests are less likely to severely injure pedestrians. As previously noted, Euro NCAP and JNCAP have included pedestrian crash mitigation tests since 1997 and 2003, respectively, and both Euro NCAP and JNCAP incorporated pedestrian crash avoidance tests in 2016. In December 2015, NHTSA proposed pedestrian crash avoidance and mitigation safety tests for NCAP by publishing a Request for Comments notice in the Federal Register. In the 2015 Request for Comments, NHTSA indicated that including these tests in NCAP could lead to a decrease in vehicle-pedestrian crashes and resulting pedestrian injuries and fatalities. In this request, NHTSA also reported that it believed the greatest gains in highway safety in coming years would result from widespread application of crash avoidance technologies and that its proposed safety tests for crash avoidance technologies, including pedestrian detection and automatic emergency braking, met NHTSA’s four prerequisites for updating NCAP. Those four prerequisites include that: a safety need is known or capable of being estimated; vehicle and equipment designs exist (or are anticipated in prototype design) that are capable of mitigating the safety need; a safety benefit is estimated based on the anticipated performance of the existing or prototype design; and a performance-based, objective test procedure exists to measure the ability of the vehicle technology to mitigate the safety issue. With regard to crash mitigation tests, NHTSA reported that it intended to use the Euro NCAP test procedures rather than those used in Japan because the European fleet make-up, including vehicle sizes and classes, is more similar to the U.S. fleet. NHTSA also reported in its 2015 Request for Comments that including pedestrian crash mitigation tests in NCAP is necessary to stimulate improvements in pedestrian crashworthiness in new vehicles sold in the United States. NHTSA, however, did not state in its 2015 Request for Comments whether the proposed crash mitigation tests met NHTSA’s prerequisites for updating NCAP, as it had for the crash avoidance tests. The proposed changes in the 2015 Request for Comment were to take effect for model year 2019 vehicles. In response to the 2015 Request for Comment, NHTSA officials told us they received 290 comments, 31 of which addressed pedestrian safety. According to the officials, the comments received were generally supportive of including pedestrian safety testing in NCAP, and commenters proposed that the U.S. tests should be consistent, or harmonized, with the tests already conducted by Euro NCAP. NHTSA officials also noted that some commenters expressed concern with test tools and proposed test scenarios. Since the 2015 proposal to include pedestrian tests in NCAP, NHTSA has continued to solicit updated information in additional Requests for Comments. Most recently, in October 2019 NHTSA announced it would seek comment on NCAP updates in 2020, and in November 2019, NHTSA requested comments on draft research test procedures for forward and rear pedestrian crash avoidance, among other technologies. However, NHTSA stated that its draft test procedures were developed for research purposes only, and the fact that it was soliciting comments on these procedures was not an indication that it would then, or at any time in the future, initiate a rulemaking related to that technology or include that technology in NCAP. NHTSA officials told us there are many actions that go into their decision- making on whether to update NCAP and that this decision-making process can take years. These actions include such things as reviewing data, ensuring the reliability and repeatability of proposed tests by validating protocols at multiple independent test laboratories, and conducting market research to obtain consumer input. In addition, NHTSA officials told us that it also uses its four prerequisites for updating NCAP, and while these prerequisites are not required by law, they represent good governance practices and are in consumers’ best interest. However, since NCAP is considered a consumer testing information program and not a regulation, there are no particular requirements for when or how final decisions would be made as to whether pedestrian safety should or should not be included in NCAP. NHTSA officials told us that ultimately the NHTSA Administrator decides whether to go forward with changes to NCAP. Although NHTSA officials told us NCAP is not a regulation, they said NHTSA generally follows the processes in the Administrative Procedure Act for informal rulemaking to update NCAP. This process includes a notice, comment, and decision process in the Federal Register for transparency. NHTSA, however, has not used this process to communicate to stakeholders the additional steps that it must take before it can make its decision on NCAP testing. In addition, although NHTSA requested and received numerous comments on including pedestrian safety tests in NCAP in 2015, as of April 2020, it has yet to respond to those comments. Leading practices for program management emphasize the importance of milestones and decision points, documentation, and clearly communicating to external stakeholders. The Project Management Institute, Inc., The Standard for Program Management stresses the importance of program management plans that align with organizational goals and objectives. Elements of such plans are to provide a roadmap that identifies such things as milestones and decision points to guide programs forward. In addition, Standards for Internal Control in the Federal Government, state that entities should externally communicate the necessary quality information to achieve the entity’s objectives. In particular, entities should communicate to external stakeholders significant matters related to risks or changes. These standards also state that documentation is necessary for design, implementation, and operating effectiveness. Compared to these leading practices, NHTSA’s process does not provide documentation of the process, decision points, or milestones to guide the program. For example, NHTSA officials could not provide us with documentation as to how it determined that the pedestrian crash avoidance tests proposed in 2015 met the four prerequisites, or how the proposed crash mitigation tests compared to the prerequisites. Other NCAPs have used various methods for documenting their process for updating their testing. For example, Euro NCAP uses a roadmap to communicate to stakeholders the planned changes for NCAP tests, the timeline of steps toward the changes, and when those changes will be effective. Officials from Euro NCAP told us the test and assessment protocols are developed in conjunction with working groups made up of automakers, equipment suppliers, test facilities, and Euro NCAP member organizations. Further, officials told us the working groups and roadmaps provide automakers with the opportunity to provide real-time input and obtain information to support their investment decisions. The lack of a documented overall process for updating NCAP affects NHTSA’s ability to achieve NCAP’s goals to provide manufacturers an incentive to improve the safety performance of new vehicles and to assist consumers with their vehicle purchasing decisions. Specifically, without a transparent process for NHTSA’s decision-making on NCAP, automakers lack information on NHTSA’s progress in evaluating proposed changes— such as those offered in the 2015 Request for Comment—and the timing of the implementation of any specific testing procedures. This is particularly important because automakers need quality information to make investments to support the development and deployment of new technologies and equipment in their product lines to meet testing requirements. For example, representatives from one automaker told us that vehicle design is a 6 to 8 year product cycle and that if NHTSA decides to implement certain tests in the middle of that cycle, it would be difficult and costly to make changes. Without a clearly documented process for making changes to NCAP, including established criteria and milestones for decisions, automakers and the public lack clarity on NHTSA’s plans for improving vehicle safety to inform investment and purchasing decisions. NHTSA has yet to make or communicate a decision as to whether it intends to include pedestrian safety tests in NCAP. As discussed above, NHTSA has conducted extensive research and requested comments on pedestrian crash avoidance and mitigation tests in 2013 and 2015. Although NHTSA reported in 2015 that these tests could lead to a decrease in vehicle-pedestrian crashes and resulting pedestrian injuries and fatalities, it has yet to make or communicate a decision about the future of NCAP in relation to pedestrian safety to stakeholders. Nine of 13 automakers we interviewed told us that a lack of communication from NHTSA on its plan for addressing pedestrian safety issues has presented a challenge to them, often because they require long lead times to develop, test, and launch new technologies. Leading practices for program management also stress the importance of communication with stakeholders and that effective stakeholder communications are key to executing program endeavors, addressing risks, and, ultimately, delivering benefits. Specifically: The Project Management Institute, Inc., The Standard for Program Management stresses the importance of managing external communications, stating that communication provides critical links for successful decision making. It also stresses the importance of providing decision-making stakeholders with adequate information to make the right decisions at the right time in order to move programs forward. Standards for Internal Control in the Federal Government states that entities should identify, analyze, and respond to risks related to achieving the defined objectives and should externally communicate the necessary quality information to achieve the entity’s objectives. As discussed above, these standards also state that management should externally communicate quality information to external stakeholders significant matters related to risks or changes. Further, the statute underlying NCAP requires NHTSA to communicate certain vehicle safety information to the public. Specifically, DOT is to provide the public with information on crash avoidance, crashworthiness, and damage susceptibility. Such information is to be provided in a simple and understandable form to allow comparison among vehicles to assist a consumer in buying a new car. NHTSA officials told us that it has not made or communicated a decision as to whether it will include pedestrian safety testing in NCAP because administration priorities have shifted since publication of the 2015 Request for Comments. Specifically, NHTSA officials told us that the agency drafted technical specifications and testing protocols for pedestrian safety tests for NCAP and posted those tests to its public web site in January 2017. After the administration changed, however, those specifications were withdrawn and not published in the Federal Register. NHTSA officials told us that, since that time, the agency has sought to conduct additional review before final decisions could be made. Although the policy decision as to whether to include pedestrian safety tests in NCAP ultimately resides within NHTSA’s discretion, NHTSA’s lack of a decision and its related rationale limits NHTSA’s ability to address emerging safety risks and to meet its strategic objectives. Specifically, in the Department of Transportation’s Enterprise Risk Profile for 2019, NHTSA recognized that increases in roadway fatalities in general—and pedestrian fatalities in particular—represent one of the top strategic risk areas for the Department. The document states that to meet its objectives, NHTSA must focus on areas where there have been increases in road deaths, including pedestrian fatalities, and advance crash avoidance and mitigation technology to prevent crashes from occurring. NHTSA also recognized the importance of using a data-driven and systematic approach that is timely and complete when making decisions. In the absence of a decision on whether to include pedestrian safety testing in NCAP, and the rationale for that decision, stakeholders lack clarity on whether NHTSA is using all of the policy tools at its disposal to address emerging safety risks and to achieve its strategic objectives. The design of vehicles and the safety features they offer can play an important role in reducing the frequency and severity of pedestrian crashes. NHTSA’s pedestrian pilot program is an important step toward addressing data gaps on the relationship between vehicle characteristics and pedestrian injuries. Without an evaluation plan that includes criteria for assessing the scalability of the pilot program, however, NHTSA lacks the tools necessary to assess whether and how the pilot should be expanded into a more robust effort to inform NHTSA’s understanding of pedestrian injury mitigation efforts. Although NHTSA has recognized that the increase in pedestrian fatalities presents a risk to the safety of the nation’s roadways, it is not well positioned to address this risk through NCAP because NHTSA does not have a clear process for making changes to the program. Documenting and communicating the process for updating NCAP, with clear criteria and decision points, would enhance NHTSA’s accountability to key stakeholders—including Congress, automakers, and consumers—and help NHTSA communicate the important policy decision as to whether to include pedestrian safety tests in NCAP. Making and communicating a decision regarding pedestrian safety testing would give automakers clarity on whether NHTSA intends to establish performance standards and tests to evaluate the pedestrian safety features that are commonly available on new vehicle models. Communicating a decision and the rationale for that decision would provide transparency and accountability to the public. We are making the following three recommendations to NHTSA. The Administrator of NHTSA should document an evaluation plan for the Crash Injury Research and Engineering Network pedestrian pilot program that includes criteria for determining whether and how to scale the pilot program to ensure that the piloted data-collection and analysis procedures will address NHTSA’s data needs related to pedestrian injuries and vehicle characteristics. (Recommendation 1) The Administrator of NHTSA should document the overall process for making changes to NCAP, including established criteria and milestones for decisions, and share this process with external stakeholders. (Recommendation 2) The Administrator of NHTSA should decide whether to include pedestrian safety tests in NCAP and NHTSA should communicate this decision and rationale to relevant stakeholders and the public. (Recommendation 3) We provided a draft of this report to the Department of Transportation for review and comment. The department provided a written response, which is reprinted in appendix IV, and technical comments that we incorporated as appropriate in the report. The department concurred with all three of our recommendations. It described various activities NHTSA has underway related to pedestrian safety, including the CIREN study, a special study initiated this year to gather detailed data on a selection of fatal pedestrian crashes, and continuing research on pedestrian crash test procedures. Regarding Recommendation 2, the department stated that it has made its procedures to change NCAP transparent and inclusive of the public. Specifically, the department stated it has published and requested comment on its proposals in the Federal Register, as we described in this report. However, the department agreed that documenting the overall process on its website would generate increased public awareness of NCAP as a consumer safety tool. While such a step could increase public awareness of NCAP, we continue to believe that any steps taken to document the overall process for making changes to NCAP should also include established criteria and milestones for decisions to enhance NHTSA’s accountability to Congress, automakers, and consumers. We are sending copies of this report to the appropriate congressional committees, the Secretary of Transportation, and the Administrator of the National Highway Traffic Safety Administration. In addition, we will make copies available to others upon request, and the report will be available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-2834, or vonaha@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix V. This report: (1) examines what is known about the relationship between motor vehicle characteristics and pedestrian injuries and fatalities, (2) describes approaches automakers have taken to address pedestrians’ safety and discusses stakeholders’ perspectives on these approaches, and (3) evaluates actions the National Highway Traffic Safety Administration (NHTSA) has taken to assess whether pedestrian safety testing should be included in its New Car Assessment Program (NCAP). For all of our objectives we reviewed pertinent federal statutes and regulations and applicable program documents. Our work covered the 2008 through 2018 timeframe, with 2018 being the most recent data available at the time of our analysis. We focused on motor vehicles as opposed to infrastructure (e.g., roadway design, highway lighting) or driver/pedestrian behavior. Although infrastructure and behavior may also contribute to pedestrian fatalities and injuries, the scope of this report was to assess motor vehicles and their role in pedestrian safety. We defined motor vehicles as passenger cars, sport utility vehicles, and light trucks and vans that were offered for sale in the United States. We excluded commercial vehicles, motorcycles, and buses. The intent was to include those vehicles that a typical consumer would purchase and the pedestrian safety features that may or may not be offered on such vehicles. Our scope also included gaining an understanding of pedestrian safety testing activities in Europe (European New Car Assessment Programme (Euro NCAP)) and Japan (Japan New Car Assessment Program (JNCAP)). We selected these programs since pedestrian safety testing is part of their NCAPs and some auto industry stakeholders identified them as being in the forefront of this type of testing. Both Europe and Japan began testing crash avoidance systems as part of their NCAPs in 2016. We interviewed officials with Euro NCAP, received a written response to questions from JNCAP, and obtained information on pedestrian safety testing from both organizations. To examine what is known about the relationship between vehicle characteristics and pedestrian injuries and fatalities, we analyzed data from three NHTSA databases for the period of 2008 through 2018: (1) Fatality Analysis Reporting System (FARS); (2) Crash Report Sampling Systems (CRSS); and (3) National Automotive Sampling System/General Estimates System (NASS/GES). To ensure the accuracy of our analysis we reviewed agency technical documentation related to these databases and ensured that our figures matched publicly available injury and fatality data contained in NHTSA publications such as its annual Traffic Safety Fact Sheets. FARS data are derived from a census of all fatal motor vehicle traffic crashes within the 50 states, Puerto Rico, and the District of Columbia and provide uniformly coded, national data on police reported fatalities. We analyzed FARS data to determine the total number of pedestrian fatalities each year as well as the number of pedestrian fatalities by vehicle age, vehicle body type, and vehicle travelling speed (speed just prior to the crash). These variables were selected based on our interviews of NHTSA officials and a review of relevant research about the relationship between pedestrian fatalities and motor vehicle characteristics. We also analyzed FARS data on the number of pedestrian fatalities by environmental characteristics such as type of roadway, light condition, and relationship to intersection, selecting these characteristics based on our interviews and research. CRSS is a sample of police reported motor vehicle crashes involving all types of motor vehicles, pedestrians, and cyclists that is used to develop national estimates of the number of injuries associated with motor vehicle crashes, among other things. The CRSS police crash report sample is selected in multiple stages to produce a nationally representative probability sample, and the target annual sample size is 50,000 police accident reports. We analyzed CRSS data from 2016 through 2018, the only years CRSS data were available, to better understand the estimated total number of pedestrian crashes as well as the estimated number of pedestrian crashes by vehicle age, vehicle body type, vehicle speed, and level of pedestrian injury severity. Similar to our analysis of FARS data, these variables were selected based on our interviews with NHTSA officials and a review of relevant research about the relationship between motor vehicle characteristics and pedestrian crashes. NASS/GES preceded CRSS and obtained its data from a nationally representative probability sample of police accident reports. We analyzed NASS/GES data from 2008 through 2015, the most recent years available within the database, to better understand historical trend data on the variables we analyzed in CRSS. Although NHTSA collected similar variables in CRSS and NASS/GES, differences in the sampling methodologies of each may contribute to differences in the estimated number of pedestrian crashes between 2008 through 2015 and 2016 through 2018 timeframes. We used agency technical documentation for CRSS and NASS/GES as well as guidance from NHTSA statisticians to estimate the sampling error associated with our estimates derived from CRSS and NASS/GES data. We express confidence levels of estimates derived from CRSS and NASS/GES data at the 95 percent confidence interval. This level means that we are 95 percent confident that the actual population values are within this interval. Additionally, for our analysis, we used CRSS and NASS/GES variables that included imputed values for items missing data on the estimated number of pedestrian crashes by vehicle age, vehicle body type, and pedestrian injury severity. We reviewed and assessed NHTSA technical documentation for their statistical imputation methodology and determined it was sufficiently reliable for us to make use of the vehicle age, body type, and injury severity variables with imputed data. In addition to analyzing NHTSA databases, we analyzed data from the Highway Loss Data Institute (HLDI), an organization affiliated with the Insurance Institute for Highway Safety (IIHS), to better understand how the U.S. vehicle fleet has changed, specifically between 2008 and 2018. HLDI collected and decoded vehicle identification numbers (VINs) for each model year between 1983 and 2018. For HLDI’s analysis, it used VINs from its member companies, among other sources, and information encoded in the VIN to determine the body styles for these VINs. According to HLDI, passenger cars include regular two-door models, regular four-door models, station wagons, minivans, sports models and luxury models, while SUVs are vehicles with conventional front-end constructions and large passenger and cargo areas which can be built on either heavy-duty chassis capable of off-road use or passenger car platforms. HLDI definitions for vehicle body type classifications differ from those used by NHTSA. According to HLDI officials, however, the classifications are comparable. For our analysis, we used these data to calculate the proportion of vehicles that were passenger cars, light trucks, or SUVs from 2008 through 2018. We also conducted interviews with federal government and non- governmental organizations about the relationship between vehicle related characteristics and pedestrian injuries and fatalities, as well as issues related to NHTSA’s pedestrian safety data and potential data gaps and limitations. To discuss NHTSA’s pedestrian safety data, we spoke with NHTSA officials from the Data Reporting and Information Division, Mathematical Analysis Division, and Vehicle Research and Test Center. We also spoke with officials from the National Transportation Safety Board, which conducts independent accident investigations and advocates for safety improvements, including those related to pedestrian safety and motor vehicles. Non-governmental organizations we spoke with included IIHS and major auto industry trade associations, such as the Alliance of Automobile Manufacturers, Association of Global Automakers, the Motor and Equipment Manufacturers Association, and the Automotive Safety Council. We also spoke with vehicle safety advocates, such as the Governors Highway Safety Association. These organizations were selected based on their relationship to the auto industry, referrals from other interviewees, and recent publications on pedestrian-motor vehicle safety issues. We also identified and reviewed studies either published or referenced by these organizations to better understand research related to pedestrian injuries and fatalities and motor vehicle characteristics. Where appropriate, we conducted a methodological review of these studies. Further, we spoke with academic researchers from six research centers across four universities with expertise in human-vehicle interaction and pedestrian-motor vehicle safety, including injury biomechanics and auto industry data analysis. These researchers were selected based on referrals from other interviewees and reviews of their organization’s websites to ensure that their research would be informative for our purposes. Although these organizations had, or have, relationships with NHTSA or the auto industry, we included them based on their expertise with issues related to our work. Based on these criteria we interviewed officials at the University of Virginia (Center for Applied Biomechanics); the Ohio State University (Center for Automotive Research; Injury Biomechanics Research Center); the University of North Carolina (Highway Safety Research Center), and the University of Michigan (University of Michigan Transportation Research Institute; International Center for Automotive Medicine). We conducted interviews with these researchers to better understand general information on the relationship between vehicle-related characteristics and pedestrian injuries and fatalities, uses and limitations of NHTSA data, and potential areas for further research. Results of our interviews are not generalizable to the universe of non-governmental organizations or researchers studying pedestrian-motor vehicle safety. We also spoke with automakers and equipment suppliers about pedestrian safety and data needs. The automakers and equipment suppliers were the same as those contacted about how automakers are addressing pedestrian safety (discussed below). Finally, we reviewed documents and interviewed NHTSA officials about the Crash Injury Research and Engineering Network (CIREN) and the associated CIREN pedestrian pilot program NHTSA recently initiated. This pilot will assess data collection approaches and methodologies for pedestrian injuries resulting from motor vehicle crashes. Specifically, we reviewed CIREN contract and methodology documents such as the 2016 CIREN Request for Proposal, 2018 CIREN Pedestrian Pilot Study Request for Proposal, Task Orders for CIREN centers participating in the pedestrian pilot study, CIREN Pedestrian Crash Process and Coding Manual, and the Pedestrian Crash Inclusion Criteria. We also interviewed NHTSA officials responsible for managing the CIREN program and the pedestrian pilot study. We assessed this program using criteria for designing successful pilot programs developed during prior GAO work. To describe the approaches automakers have taken to address pedestrian-motor vehicle safety and discuss stakeholder perspectives on these approaches, we contacted automakers that sell new vehicles in the United States. Specifically, NHTSA provided us with a list of 17 automakers that participated in the 2018 New Car Assessment Program. NHTSA officials told us they do not necessarily include automakers with low sales volumes in NCAP testing. As a result, to better ensure that we had a complete list of automakers that sell vehicles in the United States we compared the names on NHTSA’s listing to the membership lists of the Alliance for Automobile Manufacturers and the Association of Global Automakers—two major trade associations of the auto industry. Officials told us that between the two organizations we would account for most, if not all, of the automakers that sell new vehicles in the United States. Finally, we compared our list with 2018 market share data from Ward’s Automotive to identify the automakers with the highest U.S. sales. Based on our analysis, we identified 17 automakers to include in our work. However, during our contacts with automakers, we determined that one of the 17 automakers—Porsche—was part of the Volkswagen Group. Thus, our final review resulted in a total of 16 automakers to contact as part of our study (see table 2). Thirteen of the 16 automakers responded to our request for information. We developed a semi-structured interview instrument to collect information from the automakers. This instrument focused on the approaches that automakers took to address pedestrian-motor vehicle safety. The semi-structured interview instrument was peer reviewed by an independent survey specialist and pretested with two automakers before we began collecting data. Based upon on their responses, we revised and clarified the semi-structured interview instrument. In total, 13 of 16 automakers completed and submitted the semi-structured interview instrument. Those 13 automakers represented approximately 70 percent of new vehicle sales in the United States for 2018. The interview instrument asked automakers to identify pedestrian safety features on their 2019 model year vehicles, as these vehicles would have the most recent pedestrian safety features available at the time of our work. Although 12 of the 13 automakers did not respond in full to all the questions on the semi-structured interview instrument, we obtained additional information through telephone and in-person interviews conducted from May 2019 through October 2019. The results of these interviews are not generalizable to the universe of automakers that may sell vehicles in the United States. Upon completion of all the interviews, a GAO methodologist compiled the individual responses from each of the 13 automakers into a database. We used this database to perform a qualitative content analysis to identify common themes and the frequency with which the automakers identified certain issues related to pedestrian safety. A GAO analyst independently verified the themes and certain other information we received from the automakers to ensure accuracy and completeness. We also used semi-structured interview instruments to obtain information on stakeholders’ perspectives on the approaches automakers have taken to pedestrian safety. For purposes of this report, we define stakeholders as automakers, auto equipment suppliers, and auto industry trade associations. These organizations develop or deploy pedestrian safety technology in motor vehicles, or, in the case of the trade associations, are knowledgeable about the legal and regulatory issues related to pedestrian safety and the auto industry. In addition to interviewing 13 automakers, we interviewed officials from five auto equipment suppliers and four auto industry trade associations (see table 3). The five auto equipment suppliers included in our work were identified with the assistance of the Motor and Equipment Manufacturers Association, a trade association for auto industry suppliers. The organization provided us the names of seven equipment suppliers, five of which agreed to participate in our semi- structured interviews. In general, these equipment suppliers develop or produce equipment used in motor vehicle crash avoidance or crash mitigation systems. The semi-structured interview instrument asked questions about such things as crash avoidance and crash mitigation technology and the benefits and challenges of this technology. We did not assess the effectiveness of these features. Additionally, we interviewed officials from four auto industry trade associations. We conducted telephone and in-person interviews with these stakeholders from March 2019 through September 2019. In addition to automakers, equipment suppliers, and auto industry trade associations, we also interviewed NHTSA and IIHS about crash avoidance and crash mitigation technology and reviewed applicable federal regulations related to pedestrian safety. These include federal headlight and bumper standards. We also reviewed an October 2018 Notice of Proposed Rulemaking in which NHTSA agreed to evaluate proposed amendments to current federal motor vehicle headlight requirements. We discussed with NHTSA the federal headlight and bumper standards and how these relate to pedestrian safety, as well as any potential changes to these standards to better accommodate pedestrian safety. Lastly, we reviewed an October 2019 IIHS press release and an October 2019 American Automobile Association study discussing the results of pedestrian crash avoidance tests each organization performed. To assess NHTSA’s actions related to pedestrian safety and NCAP, we reviewed applicable federal laws and regulations related to vehicle safety as well as documents published in the Federal Register, such as Requests for Comments, soliciting comments on proposed NCAP changes related to pedestrian safety. NHTSA provided a high-level summary of comments received from Requests for Comments issued in 2015 and 2018 that we reviewed. We reviewed selected comments and supporting documents submitted to NHTSA as part of the docket in support of the Requests for Comment, such as those provided by auto industry trade associations, automakers, and auto equipment suppliers. We also reviewed program documents discussing how NHTSA assesses new car safety, performs NCAP safety tests, and reports the results to the public. Further, we reviewed over 55 studies and presentations on the agency’s work related to pedestrian safety. NHTSA highlighted 22 of these reports and presentations as being representative of the body of research that supported and facilitated agency decisions and policies with respect to pedestrian safety, including the 2015 and 2018 Requests for Comments. We reviewed the 22 reports and presentations and determined that 14 met our inclusion criteria, in that the reports and presentations were focused on potential pedestrian safety tests and their applicability to the U.S. vehicle fleet, the use of various test instruments, and the potential safety effects associated with technologies intended to avoid and mitigate crashes. Where appropriate, we conducted a methodological review of these studies. In addition, NHTSA officials provided additional studies after our interviews, which we also reviewed. To better understand pedestrian safety testing and issues related to incorporating such testing into NCAP, we visited NHTSA’s Vehicle Research and Test Center in East Liberty, Ohio. We interviewed officials there about NHTSA pedestrian safety research and how it supported NHTSA’s proposed pedestrian safety tests for NCAP. We also discussed the applicability of pedestrian safety tests to the U.S. vehicle fleet, including tests used by Euro NCAP. During our visit, we observed examples of a pedestrian crash mitigation test for lower leg injury and a rear-facing pedestrian crash avoidance test. We reviewed NHTSA’s budget documentation on pedestrian safety research from fiscal year 2008 to 2019, the most recent year for which data were available. We also visited and discussed pedestrian safety issues with officials of IIHS’ Vehicle Research Center in Ruckersville, Virginia. We observed a forward-facing pedestrian crash avoidance test. Further, we interviewed NHTSA officials about such things as the process for making changes to NCAP and activities associated with this process, documentation of this process, how NCAP changes are communicated to stakeholders, and NHTSA plans for determining whether to incorporate pedestrian safety tests in NCAP. Finally, we interviewed automakers, auto industry equipment suppliers, and IIHS about incorporating pedestrian safety tests into NCAP. To understand how other NCAPs address pedestrian safety, we interviewed officials from Euro NCAP and received written responses from JNCAP to a set of questions we sent them. We also reviewed supporting documents from both Euro NCAP and JNCAP on pedestrian crash avoidance and mitigation tests they perform and how such tests are scored when determining star ratings. Further, we discussed with Euro NCAP how it works with the auto industry to test vehicles and to develop future changes to Euro NCAP, including the Euro NCAP roadmap. We also reviewed selected international studies related to the real-world benefits of pedestrian safety testing performed by Euro NCAP. We determined those studies to be sufficiently reliable for our purposes. To assess how NHTSA’s process for making changes to NCAP compares to leading practices, we reviewed the Project Management Institute, Inc., The Standard for Program Management, and GAO’s Standards for Internal Control in the Federal Government. The Project Management Institute’s standards are utilized worldwide and provide guidance on how to manage various aspects of projects, programs, and portfolios. In particular, according to The Standard for Program Management, this standard provides guidance that is generally recognized to support good program-management practices for most programs, most of the time. We conducted our work from February 2019 to April 2020 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. This appendix contains additional information on pedestrian fatalities and the estimated number of pedestrians injured from 2008 through 2018. Although we included much of our pedestrian fatality analysis in the report, this appendix includes data on the number of pedestrian fatalities involving particular light conditions and relationships to intersections— environmental factors relevant to pedestrian crashes—as well as data on vehicle body types (see fig. 11, 12, and 13). We used data from the National Highway Traffic Safety Administration’s (NHTSA) Fatality Analysis Reporting System (FARS) to compile information on pedestrian fatalities. The following figures show information about the estimated number of pedestrians injured from 2008 through 2018 (see figs. 14, 15, 16, 17, and 18). These figures show pedestrians injured by age of the striking vehicle, body type of vehicle, reported speed of the vehicles, and estimated number of pedestrians with serious or fatal injuries. We used data from NHTSA’s Crash Report Sampling System (CRSS) for years 2016 through 2018, and National Automotive Sampling System/General Estimates Survey (NASS/GES) for years 2008 through 2015 to compile information on pedestrians injured. Within CRSS and NASS/GES databases, we specifically analyzed data on pedestrians injured by vehicle related characteristics such as the age, body type, and speed of vehicles that struck and injured pedestrians, as well as the estimated number of severe and fatal pedestrians injured. As part of our analysis on how automakers are addressing pedestrian safety through crash avoidance and crash mitigation technologies, we obtained the views of 13 automakers and five auto equipment suppliers. As discussed below, auto industry officials provided their views on the benefits and challenges of commonly available crash avoidance and crash mitigation technologies. Automaker and auto equipment supplier officials identified various benefits and challenges with pedestrian crash avoidance features. For example, 12 of 13 automakers reported and two of five auto equipment suppliers said that crash avoidance features have the overall potential benefit of eliminating or reducing car-to-pedestrian accidents. The Highway Loss Data Institute reported in 2017 that one automaker’s pedestrian automatic emergency braking system reduced pedestrian- related bodily injury liability claims by 35 percent compared to other vehicles manufactured by that automaker. In addition, the automaker itself found that, in Japan, its vehicles equipped with the system experienced 60 percent fewer accidents with injury compared to its vehicles without the system. Officials from automakers and auto equipment suppliers we interviewed also identified challenges with pedestrian crash avoidance technologies. Specifically, stakeholders cited some distinctions between the performance of camera-based and radar-based pedestrian automatic emergency breaking systems. Almost half of the automakers we interviewed (six of 13) reported that a primary challenge with a camera- based pedestrian automatic emergency braking system was the camera’s ability to work in low lighting and poor weather. As previously noted in this report, about 75 percent of all reported pedestrian fatalities occurred in 2018 after dark. In contrast, several automakers stated that radar based pedestrian detection systems are not dependent on light to function, but that they are less effective at identifying pedestrians than camera-based systems. Officials from another automaker said manufacturers have attempted to offset the challenges of cameras and radar by developing “fusion” systems (combination of camera and radar). These officials said, however, these systems add complexity and processing time to the technology because the system must manage two separate functions that must be processed together to identify a pedestrian. Officials from automakers said that a challenge affecting both camera- and radar-based systems was limiting the occurrence of false positives, or the activation of these systems when they are not required. Recently issued research has raised questions about the overall effectiveness of crash avoidance systems. In October 2019, the American Automobile Association (AAA) reported that, based on its own assessment, some vehicles’ pedestrian safety systems were inconsistent at either slowing down or stopping a vehicle to avoid hitting a pedestrian. For example, AAA reported that dark conditions could affect the effectiveness of available pedestrian detection systems and that none of the crash avoidance systems on the four vehicles they tested worked in dark conditions. Automaker officials told us that the performance of crash avoidance systems could be improved through updates to current vehicle headlight standards. Specifically, officials from four automakers indicated that the National Highway Traffic Safety Administration (NHTSA) should update federal standards for headlights to permit the use of adaptive driving beam headlights on new vehicles. Adaptive driving beam headlights are currently in use in European and other countries, and are different from the combination high- and low-beam systems used in the United States. In general, adaptive driving beam headlights use advanced sensors and computing technology to shape the headlamp beams to provide enhanced illumination of unoccupied portions of the road and avoid glaring other vehicles. In October 2018, NHTSA published a Notice of Proposed Rulemaking in which it tentatively concluded that federal standards for headlights do not permit adaptive driving beam systems because those systems would not comply with some of the standards. NHTSA, however, has said adaptive driving beam headlights have the potential to create significant safety benefits in avoiding collisions with pedestrians, cyclists, animals, and roadside objects by providing additional front-end illumination. Five automakers we interviewed said that they offer adaptive driving beam headlamps as a crash avoidance technology on their vehicles sold in other countries. In its October 2018 Notice of Proposed Rulemaking, NHTSA sought public comment on amending federal standards to allow the use of adaptive driving beam systems in response to a petition from an automaker. NHTSA officials said that it is in the process of developing a final rule but did not have a period for when it would be issued. Another challenge for crash avoidance systems is the federal standard for bumpers. As previously discussed in this report, this standard requires that vehicles, including their bumpers, meet specified damage criteria when bumpers are hit at 2.5 miles-per-hour (mph). Officials from five automakers said that this standard presented challenges with the placement of crash avoidance sensors. On some vehicles, crash avoidance sensors are placed in the same area where the vehicles are tested for compliance with the bumper standard. As a result, the test could damage or destroy the crash avoidance sensor. Two automaker officials told us that they have addressed this challenge by relocating the sensors to another part of the vehicle to avoid conflicts with the bumper standard. NHTSA officials told us they are in the process of reevaluating the bumper damageability standard, including the placement of sensors, as part of a Notice of Proposed Rulemaking, which they expect to publish in early 2020. Officials from automakers and auto equipment suppliers we interviewed identified benefits and challenges for pedestrian crash mitigation features. For example, 12 of 13 automakers reported and one of five auto equipment suppliers said that pedestrian crash mitigation features have the overall benefit of reducing the risk or severity of pedestrian injuries. Officials from four automakers, however, said that crash mitigation features do not protect pedestrians from the secondary impact of an accident, such as the residual injuries from hitting the pavement. Additionally, officials from six automakers said that crash avoidance features were more effective than crash mitigation features because the purpose of crash avoidance features is to prevent the collision from occurring in the first place. Similar to crash avoidance, the federal bumper standard may also affect crash mitigation systems. Officials from eight automakers said that the bumper standard created challenges to offering additional crash mitigation features in the United States, such as softer, more pedestrian friendly bumpers. Officials from the eight automakers said they offered softer bumpers in Europe or elsewhere—where there is no similar bumper standard—but do not offer softer bumpers in the United States. Some stakeholders told us the current bumper standard runs counter to pedestrian safety, and softer bumpers would help mitigate the severity of pedestrian injuries. Similarly, NHTSA officials told us the current bumper standard is primarily a cost savings standard in that it is intended to reduce repair costs and not necessarily to offer safety protection for vehicle occupants. NHTSA officials told us that establishing a bumper standard that addresses pedestrian safety, yet minimizes bumper damage and repair costs requires tradeoffs. The officials told us as part of the Notice of Proposed Rulemaking it is reviewing the broader damageability requirement. Andrew Von Ah, Director, (202) 512- 2834 or vonaha@gao.gov In addition to the contact named above, Matt Barranca (Assistant Director), Richard Jorgenson (Analyst-in-Charge), Carl Barden, Namita Bhatia-Sabharwal, Melissa Bodeau, Breanne Cave, Michelle Everett, Susan Fleming, Geoff Hamilton, Hannah Laufe, Regina Morrison, Joshua Ormond, Terry Richardson, and Michael Steinberg made significant contributions to this report.","In 2018, about 6,300 pedestrians—17 per day—died in collisions with motor vehicles in the United States, up from about 4,400 in 2008. Many factors influence pedestrian fatalities, including driver and pedestrian behavior. Vehicle characteristics are also a factor. NHTSA tests and rates new vehicles for safety and reports the results to the public through its NCAP. Currently, pedestrian safety tests are not included in NCAP. This report examines: (1) what is known about the relationship between vehicle characteristics and pedestrian fatalities and injuries, (2) approaches automakers have taken to address pedestrian safety, and (3) actions NHTSA has taken to assess whether pedestrian safety tests should be included in NCAP. GAO analyzed data on pedestrian fatalities and injuries from 2008 through 2018 (the most recent available data); reviewed NHTSA reports; and interviewed NHTSA officials. GAO also obtained information about pedestrian safety features from 13 automakers that represented about 70 percent of new vehicle sales in the United States in 2018, and compared NHTSA's actions with leading program management practices. National Highway Traffic Safety Administration (NHTSA) data show that certain vehicle characteristics related to age, body type, and the speed of the vehicle at the time of the crash are associated with increases in pedestrian fatalities from 2008 to 2018. Specifically, the number of pedestrian fatalities during this time period increased more for crashes involving vehicles that were: 11 years old or older compared to newer vehicles, sport utility vehicles compared to other passenger vehicles, and traveling over 30 miles per hour compared to vehicles traveling at lower speeds. GAO also found that NHTSA does not consistently collect detailed data on the type and severity of pedestrian injuries, but began a pilot program in 2018 to improve its data collection efforts. NHTSA, however, lacks an evaluation plan with criteria to assess whether to expand the pilot program, as called for in leading practices. As a result, NHTSA lacks information to determine how and whether it should expand the pilot to meet the agency's data needs. Automakers offer a range of approaches to address pedestrian safety. For example, pedestrian crash avoidance technologies use cameras or radar to detect an imminent crash with a pedestrian and engage a vehicle's brakes to avoid a crash. GAO found that about 60 percent of the model year 2019 vehicles offered in the United States by 13 automakers had pedestrian crash avoidance technologies as standard or optional equipment. In 2015 NHTSA proposed pedestrian safety tests for its New Car Assessment Program (NCAP), but NHTSA has not decided whether it will include such tests in the program. NHTSA has reported that crash avoidance technologies could lead to a decrease in pedestrian fatalities. Nine automakers that GAO interviewed reported that NHTSA's lack of communication about pedestrian safety tests creates challenges for new product development. NHTSA has also not documented a clear process for updating NCAP with milestones for decisions. NHTSA officials said that updating NCAP involves many actions and can take years. However, absent a final decision on whether to include pedestrian safety tests in NCAP and a documented process for making such decisions, the public lacks clarity on NHTSA's efforts to address safety risks. GAO is recommending that NHTSA (1) develop an evaluation plan with criteria for expanding its pilot program, (2) make and communicate a decision about whether to include pedestrian safety tests in NCAP, and (3) document the process for making changes to NCAP. The Department of Transportation concurred with our recommendations."
"The U.S. farm sector is vast and varied. It encompasses production activities related to traditional field crops (such as corn, soybeans, wheat, and cotton) and livestock and poultry products (including meat, dairy, and eggs), as well as fruits, tree nuts, and vegetables. In addition, U.S. agricultural output includes greenhouse and nursery products, forest products, custom work, machine hire, and other farm-related activities. The intensity and economic importance of each of these activities, as well as their underlying market structure and production processes, vary regionally based on the agro-climatic setting, market conditions, and other factors. As a result, farm income and rural economic conditions may vary substantially across the United States. Annual U.S. net farm income is the single most watched indicator of farm sector well-being, as it captures and reflects the entirety of economic activity across the range of production processes, input expenses, and marketing conditions that have prevailed during a specific time period. When national net farm income is reported together with a measure of the national farm debt-to-asset ratio, the two summary statistics provide a quick and widely referenced indicator of the economic well-being of the national farm economy. In the second of three official U.S. farm income outlook releases scheduled for 2019 (see shaded box below), ERS projects that U.S. net farm income will rise 4.8% in 2019 to $88.0 billion, up $4.0 billion from last year. Net cash income (calculated on a cash-flow basis) is also projected higher in 2019 (+7.2%) to $112.6 billion. The August 2019 net farm income forecast represents an increase from USDA's preliminary February 2019 forecast of $69.4 billion. An increase in government support in 2019, projected at $19.5 billion and up 42.5% from 2018, is the principal driver behind the rise in net farm income. Support from traditional farm programs is expected to be bolstered by large direct government payments in response to trade retaliation under the escalating trade war with China. At a projected $19.5 billion in calendar 2019, direct government payments would represent 22.2% of net farm income—the largest share since 2006 when federal subsidies represented a 27.6% share. The August forecast of $88 billion is just above (+0.9%) the 10-year average of $87.3 billion and represents continued agriculture-sector economic weakness since 2013's record high of $123.7 billion. Both net cash income and net farm income achieved record highs in 2013 but fell to recent lows in 2016 ( Figure 1 ) before trending higher in each of the last three years 2017, 2018, and 2019. Commodity prices ( Figure A-1 to Figure A-4 ) have echoed the same pattern as farm income over the 2013-2019 period. When adjusted for inflation and represented in 2018 dollars ( Figure 2 ), the net farm income for 2019 is projected to be on par with the average of $86.8 billion for net farm income since 1940. After declining for four consecutive years, total production expenses for 2019 ( Figure 16 ), at $346.1 billion, are projected up slightly from 2018 (+0.4%), driven largely by higher costs for feed, labor, and property taxes. Global demand for U.S. agricultural exports ( Figure 20 ) is projected at $134.5 billion in 2019, down from 2018 (-6.2%), due largely to a decline in sales to China. Farm asset values and debt levels are projected to reach record levels in 2019—asset values at $3.1 trillion (+2.0%) and farm debt at $415.7 billion (+3.4%)—pushing the projected debt-to-asset ratio up to 13.5%, the highest level since 2003 ( Figure 26 ). Abundant domestic and international supplies of grains and oilseeds suggest a fifth straight year of relatively weak commodity prices in 2019 ( Figure A-1 through Figure A-4 , and Table A-4 ). However, considerable uncertainty remains concerning the eventual outcome of the 2019 growing season and the prospects for improved market conditions heading into 2020. As of early September, three major factors loom over U.S. agricultural markets and contribute to current uncertainty over both supply and demand prospects, as well as market prices: 1. First, wet spring conditions led to unusual plantings delays for the corn and soybean crops. This means that crop development is behind normal across much of the major growing regions and that eventual yields will depend on beneficial fall weather to achieve full crop maturity. Also, the late crop development renders crop growth vulnerable to an early freeze in the fall. 2. Second, large domestic supplies of corn, soybeans, wheat, and cotton were carried over into 2019 ( Figure 6 ). Large corn and soybean stocks have kept pressure on commodity prices throughout the grain and feed complex in 2019. 3. Third, international trade disputes have led to declines in U.S. exports to China—a major market for U.S. agricultural products—and added to market uncertainty. In particular, the United States lost its preeminent market for soybeans—China. It is unclear how soon, if at all, the United States will achieve a resolution to its trade dispute with China or how international demand will evolve heading into 2020. U.S. agricultural production activity got off to a very late start in 2019 due to prolonged cool, wet conditions throughout the major growing regions, particularly in states across the eastern Corn Belt. This resulted in record large prevented planting acres ( Figure 3 ) and delays in the planting of the corn and soybean crops ( Table 1 ), especially in Illinois, Michigan, Ohio, Wisconsin, and North and South Dakota. As of August 22, 2019, U.S. farmers have reported to USDA that, of the cropland that they intended to plant this past spring, they were unable to plant 19.8 million acres due primarily to prolonged wet conditions that prevented field work. Such acres are referred to as ""prevent plant (PPL)"" acres. The previous record for total PPL acres was set in 2011 at 10.2 million acres. The 19.8 million PPL acres includes 11.4 million acres of corn and 4.5 million acres of soybeans—both establish new records by substantial margins. The previous record PPL for corn was 2.8 million acres in 2013, and for soybeans it was 2.1 million acres in 2015. In addition, a sizeable portion of the U.S. corn and soybean crops were planted later than usual. Traditionally, 96% of the U.S. corn crop is planted by June 2, but in 2019 by that date only 67% of the crop had been planted ( Table 1 ). Similarly, the U.S. soybean crop was planted with substantial delays. By June 16, only 67% of the U.S. soybean crop was planted, whereas an average of 93% of the crop has been planted by that date during the past five years. These planting delays have important implications for crop development as they push both crops' growing cycle into hotter, drier periods of the summer than usual and increase the risk of plant growth being shut off by an early freeze. But planting delays also increase the complexity of producer decisionmaking by pushing the planting date into the crop insurance ""late planting period,"" when insurance coverage starts to decline with each successive day of delay ( Figure 4 ). When the planting occurs after the crop insurance policy's ""final planting date,"" the ""late planting period"" comes into play. Producers must then decide whether to opt for ""prevented planting"" indemnity payments (valued at 35% of their crop insurance guarantee) or try to plant the crop under reduced insurance coverage with a heightened risk of reduced yields. Producer's choices were further complicated in 2019 by the Secretary of Agriculture's announcement on May 23 that only producers with planted acres would be eligible for ""trade damage"" assistance payments in 2019 under the Market Facilitation Program (MFP). Corn and soybeans are the two largest U.S. commercial crops in terms of both value and acreage. For the past several years, U.S. corn and soybean crops have experienced strong growth in both productivity and output, thus helping to build stockpiles at the end of the marketing year. This has been particularly true for soybean production, which has seen rapid growth in yield, acres planted, and stocks. U.S. soybean production has been expanding rapidly since 1990, largely at the expense of the wheat sector which has been steadily losing acreage over the past several decades ( Figure 5 ). This pattern reached a historic point in 2018 when, for the first time in history, U.S. soybean plantings (at 89.196 million acres) exceeded corn plantings (89.129 million acres). The strong soybean plantings in 2018, coupled with the second-highest yields on record (51.6 bushels/acres), produced a record U.S. soybean harvest of 4.5 billion bushels and record ending stocks (1 billion bushels or a 27.2% stocks-to-use ratio) that year. However, the record soybean harvest in 2018, combined with the sudden loss of the Chinese soybean market (as discussed in the "" Agricultural Trade Outlook "" section of this report) discouraged many producers from planting soybeans in 2019. This contributed to a drop off (-14%) in soybean planted acres. Most market watchers had expected to see a strong switch from soybean to corn acres in 2019 as a result of the record soybean stocks and weak prices related to the U.S.-China trade dispute. However, the wet spring made large corn plantings unlikely as corn yields tend to experience rapid deterioration when planted in June or later. Despite these indications, USDA's National Agricultural Statistics Service (NASS) released the results of its June acreage survey for corn planted acres at 91.7 million acres—well above market expectations. However, because the wet spring had caused widespread delayed planting, USDA announced that it would re-survey the 14 major corn-producing states. The updated survey results were released on August 12 and, at 90.0 million acres, confirmed higher-than-expected corn plantings. As a result, the outlook for the U.S. corn crop has been pressured by the large planted acreage estimate but filled with uncertainty over the eventual success of the crop considering that it is being grown under unusually delayed conditions. Corn ending stocks are projected to surpass 2 billion bushels for the fourth consecutive year. Strong domestic demand from the livestock sector coupled with a robust export outlook are expected to support the season average farm price for corn at $3.60/bushel in the 2019/20 marketing year, unchanged from the previous year. The outlook for the U.S. soybean crop is more certain: USDA projects a 19% drop in U.S. soybean production to 3.68 billion bushels. Despite the outlook for lower production in 2019, the record carry-over stocks from 2018, and the sudden loss of China as the principal buyer of U.S. soybeans in 2018, USDA projects lower soybean farm prices (-8%) at $8.40/bushel for the 2019/20 marketing year—the lowest farm price since 2006 ( Figure 6 ). Both wheat and upland cotton farm prices for 2019 are projected down slightly from 2018—primarily due to the outlook for continued abundant stocks as indicated by the stocks-to-use ratios. The United States is traditionally one of the world's leading exporters of corn, soybeans, and soybean products—vegetable oil and meal. During the recent five-year period from 2013/2014 to 2017/2018, the United States exported 49% of its soybean production and 15% of its corn crop. As a result, the export outlook for these two crops is critical to both farm sector profitability and regional economic activity across large swaths of the United States as well as in international markets. However, the tariff-related trade dispute between the United States and China (as well as several major trading partners) has resulted in lower purchases of U.S. agricultural products by China in 2018 and 2019 and has cast uncertainty over the outlook for the U.S. agricultural sector, including the corn and soybean markets. Because the livestock sectors (particularly dairy and cattle, but hogs and poultry to a lesser degree) have longer biological lags and often require large capital investments up front, they are slower to adjust to changing market conditions than is the crop sector. As a result, USDA projects livestock and dairy production and prices an extra year into the future (compared with the crop sector) through 2020, and market participants consider this expanded outlook when deciding their market interactions—buy, sell, invest, etc. During the 2007-2014 period, high feed and forage prices plus widespread drought in the Southern Plains—the largest U.S. cattle production region—had resulted in an 8% contraction of the U.S. cattle inventory. Reduced beef supplies led to higher producer and consumer prices and record profitability among cow-calf producers in 2014. This was coupled with then-improved forage conditions, all of which helped to trigger the slow rebuilding phase in the cattle cycle that started in 2014 ( Figure 7 ). The expansion continued through 2018, despite weakening profitability, primarily due to the lag in the biological response to the strong market price signals of late 2014. The cattle expansion appears to have levelled off in 2019 with the estimated cattle and calf population unchanged from a year earlier at 103 million. Another factor working against continued expansion in cattle numbers is that producers are now producing more beef with fewer cattle. Similar to the cattle sector, U.S. hog and poultry flocks have been growing in recent years and are expected to continue to expand in 2019. For 2019, USDA projects production of beef (+0.6%), pork (+5.0%), broilers (+1.7%), and eggs (+2.3%) to expand modestly heading into 2020. This growth in protein production is expected to be followed by continued positive growth rates in 2020: beef (+1.9%), pork (+2.8%), broilers (+1.1%), and eggs (+0.9%). A key uncertainty for the meat-producing sector is whether demand will expand rapidly enough to absorb the continued growth in output or whether surplus production will begin to pressure prices lower. USDA projects that combined domestic and export demand for 2019 will continue to grow for red meat (+1.7%) and poultry (+1.5%) but at slightly slower rates than projected meat production, thus contributing to 2019's outlook for lower prices and profit margins for livestock. The changing conditions for the U.S. livestock sector may be tracked by the evolution of the ratios of livestock output prices to feed costs ( Figure 8 ). A higher ratio suggests greater profitability for producers. The cattle-, hog-, and broiler-to-feed margins have all exhibited significant volatility during the 2017-2019 period. The hog, milk, and cattle feed ratios have trended downward during 2018 and 2019, suggesting eroding profitability. The broiler-to-feed price ratio has shown more volatility compared with the other livestock sectors but has trended upward from mid-2018 into 2019. While this result varies widely across the United States, many small or marginally profitable cattle, hog, and milk producers face continued financial difficulties. Continued production growth of between 1% and 4% for red meat and poultry suggests that prices are vulnerable to weakness in demand. In addition, both U.S. and global milk production are projected to continue growing in 2019. As a result, milk prices could come under further pressure in 2019, although USDA is currently projecting milk prices up slightly in 2019. The lower price outlook for cattle, hogs, and poultry is expected to persist through 2019 before turning upward in 2020 ( Table A-4 ). Projected farm-sector revenue sources in 2019 include crop revenues (46% of sector revenues), livestock receipts (42%), government payments (5%), and other farm-related income (8%), including crop insurance indemnities, machine hire, and custom work. Total farm sector gross cash income for 2019 is projected to be up (+2.2%) to $425.3 billion, driven by increases in both direct government payments (+42.5%) and other farm-related income (+19.3). Cash receipts from crop receipts (-1.7%) and livestock product (+0.5%) are down (-0.6%) in the aggregate ( Figure 9 ). Total crop sales peaked in 2012 at $231.6 billion when a nationwide drought pushed commodity prices to record or near-record levels. In 2019, crop sales are projected at $193.7 billion, down 1.7% from 2018 ( Figure 10 ). Projections for 2019 and percentage changes from 2018 include Feed crops—corn, barley, oats, sorghum, and hay: $56.3 billion (+0.4%); Oil crops—soybeans, peanuts, and other oilseeds: $36.3 billion (-14.0%); Fruits and nuts: $29.5 billion (+1.7%); Vegetables and melons: $19.6 billion (+6.0%); Food grains—wheat and rice: $12.3 billion (+6.5%); Cotton: $7.5 billion (-7.4%); and Other crops including tobacco, sugar, greenhouse, and nursery: $31.2 billion (+2.8%). The livestock sector includes cattle, hogs, sheep, poultry and eggs, dairy, and other minor activities. Cash receipts for the livestock sector grew steadily from 2009 to 2014, when it peaked at a record $212.3 billion. However, the sector turned downward in 2015 (-10.7%) and again in 2016 (-14.1%), driven largely by projected year-over-year price declines across major livestock categories ( Table A-4 and Figure 12 ). In 2017, livestock sector cash receipts recovered with year-to-year growth of 8.1% to $175.6 billion. In 2018, cash receipts increased slightly (+0.6%). In 2019, cash receipts are projected up 0.5% for the sector at $177.4 billion as cattle, hog, and dairy sales offset declines in poultry. Projections for 2019 (and percentage changes from 2018) include Cattle and calf sales: $67.3 billion (+0.3%); Poultry and egg sales: $38.9 billion (-15.8%); Dairy sales: valued at $39.7 billion (+12.7%); Hog sales: $24.5 billion (+16.2%); and Miscellaneous livestock: valued at $7.0 billion (+2.1%). Historically, government payments have included Direct payments (decoupled payments based on historical planted acres), Price-contingent payments (program outlays linked to market conditions), Conservation payments (including the Conservation Reserve Program and other environmental-based outlays), Ad hoc and emergency disaster assistance payments (including emergency supplemental crop and livestock disaster payments and market loss assistance payments for relief of low commodity prices), and Other miscellaneous outlays (including market facilitation payments, cotton ginning cost-share, biomass crop assistance program, peanut quota buyout, milk income loss, tobacco transition, and other miscellaneous payments). Projected government payments of $19.5 billion in 2019 would be up 42.5% from 2018 and would be the largest taxpayer transfer to the agriculture sector (in absolute dollars) since 2005 ( Figure 14 and Table A-4 ). The surge in federal subsidies is driven by large ""trade-damage"" payments made under the MFP initiated by USDA in response to the U.S.-China trade dispute. MFP payments (reported to be $10.7 billion) in 2019 include outlays from the 2018 MFP program that were not received by producers until 2019, as well as expected payments under the first and second tranches of the 2019 MFP program. USDA ad hoc disaster assistance is projected higher year-over-year at $1.7 billion (+87.1%). Payments under the Agricultural Risk Coverage and Price Loss Coverage programs are projected lower (-12.4%) in 2019 at a combined $2.8 billion compared with an estimated $3.2 billion in 2018 (see ""Price Contingent"" in Figure 14 ). Conservation programs include all conservation programs operated by USDA's Farm Service Agency and the Natural Resources Conservation Service that provide direct payments to producers. Estimated conservation payments of $3.7 billion are forecast for 2019, down slightly (-8.4%) from $4.0 billion in 2018. Total government payments of $19.5 billion represents a 5% share of projected gross cash income of $425.3 billion in 2019. In contrast, government payments are expected to represent 22% of the projected net farm income of $88.0 billion. The importance of government payments as a percentage of net farm income varies nationally by crop and livestock sector and by region. The 2018 farm bill ( P.L. 115-334 ) made several changes to the previous Margin Protection Program (MPP), including a new name—the Dairy Margin Coverage (DMC) program—and expanded margin coverage choices from the original range of $4.00-$8.00 per hundredweight (cwt.). Under the 2018 farm bill, milk producers have the option of covering the milk-to-feed margin at a $9.50/cwt. threshold on the first 5 million pounds of milk coverage under the program. The DMC margin differs from the USDA-reported milk-to-feed ratio shown in Figure 8 but reflects the same market forces. As of August 2019, the formula-based milk-to-feed margin used to determine government payments was at $9.45/cwt., just below the newly instituted $9.50/cwt. payment threshold ( Figure 15 ), thus increasing the likelihood that DMC payments may be less available in the second half of 2019. In total, the DMC program is expected to make $600 million in payments in 2019, up from $250 million under the previous milk MPP in 2018. Total production expenses for 2019 for the U.S. agricultural sector are projected to be up slightly (+0.4%) from 2018 in nominal dollars at $346.1 billion ( Figure 16 ). Production expenses peaked in both nominal and inflation-adjusted dollars in 2014, then declined for five consecutive years in inflation-adjusted dollars. However, in nominal dollars production expenses are projected to turn upward in 2019—the first upward turn since 2014. Production expenses affect crop and livestock farms differently. The principal expenses for livestock farms are feed costs, purchases of feeder animals and poultry, and hired labor. Feed costs, labor expenses, and property taxes are all projected up in 2019 ( Figure 17 ). In contrast, fuel, land rent, interest costs, and fertilizer costs—all major crop production expenses—are projected lower. But how have production expenses moved relative to revenues? A comparison of the indexes of prices paid (an indicator of expenses) versus prices received (an indicator of revenues) reveals that the prices received index generally declined from 2014 through 2016, rebounded in 2017, then declined again in 2018 ( Figure 18 ). Farm input prices (as reflected by the prices paid index) showed a similar pattern but with a smaller decline from their 2014 peak and have climbed steadily since mid-2016, suggesting that farm sector profit margins have been squeezed since 2016. Renting or leasing land is a way for young or beginning farmers to enter agriculture without incurring debt associated with land purchases. It is also a means for existing farm operations to adjust production more quickly in response to changing market and production conditions while avoiding risks associated with land ownership. The share of rented farmland varies widely by region and production activity. However, for some farms it constitutes an important component of farm operating expenses. Since 2002, about 39% of agricultural land used in U.S. farming operations has been rented. The majority of rented land in farms is rented from non-operating landlords. Nationally in 2017, 29% of all land in farms was rented from someone other than a farm operator. Some farmland is rented from other farm operations—nationally about 8% of all land in farms in 2017 (the most recent year for which data are available)—and thus constitutes a source of income for some operator landlords. Total net rent to non-operator landlords is projected to be down (-2.1%) to $12.5 billion in 2019. Average cash rental rates for 2019 were up (+1.4%) year-over-year ($140 per acre versus $138 in 2018). National average rental rates—which for 2019 were set the preceding fall of 2018 or in early spring of 2019—dipped in 2016 but still reflect the high crop prices and large net returns of the preceding several years, especially the 2011-2014 period ( Figure 19 ). The national rental rate for cropland peaked at $144 per acre in 2015. U.S. agricultural exports have been a major contributor to farm income, especially since 2005. As a result, the financial success of the U.S. agricultural sector is strongly linked to international demand for U.S. products. Because of this strong linkage, the downturn in U.S. agricultural exports that started in 2015 ( Figure 20 ) deepened the downturn in farm income that ran from 2013 through 2016 ( Figure 1 ). Since 2018, the U.S. agricultural sector's trade outlook has been vulnerable to several international trade disputes, particularly the ongoing dispute between the United States and China. A return to market-based farm income growth for the U.S. agricultural sector will likely necessitate improved international trade prospects. USDA projects U.S. agricultural exports at $134.5 billion in FY2019, down (-6.2%) from $143.4 billion in FY2018. Export data include processed and unprocessed agricultural products. This downturn masks larger country-level changes that have occurred as a result of ongoing trade disputes (as discussed below). In FY2019, U.S. agricultural imports are projected up at $129.3 billion (1.4%), and the resultant agricultural trade surplus of $5.2 billion would be the lowest since 2006. A substantial portion of the surge in U.S. agricultural exports that occurred between 2010 and 2014 was due to higher-priced grain and feed shipments, including record oilseed exports to China and growing animal product exports to East Asia. As commodity prices have leveled off, so too have export values (see the commodity price indexes in Figure A-1 and Figure A-2 ). In FY2017, the top three markets for U.S. agricultural exports were China, Canada, and Mexico, in that order. Together, these three countries accounted for 46% of total U.S. agricultural exports during the five-year period FY2014-FY2018 ( Figure 21 ). However, in FY2019 the combined share of U.S. exports taken by China, Canada, and Mexico is projected down to 38% largely due to lower exports to China. The ordering of the top markets in 2019 is projected to be Canada, Mexico, the European Union (EU), Japan, and China, as China is projected to decline as a destination for U.S. agricultural exports. From FY2014 through FY2017, China imported an average of $26.2 billion of U.S. agricultural products. However, USDA forecasts China's imports of U.S. agricultural products to decline to $20.5 billion in FY2018 and to $10.9 billion in FY2019 as a result of the U.S.-China trade dispute. The fourth- and fifth-largest U.S. export markets have traditionally been the EU and Japan, which accounted for a combined 17% of U.S. agricultural exports during the FY2014-FY2018 period. These two markets have shown limited growth in recent years when compared with the rest of the world. However, their combined share is projected to grow to 19% in FY2019 ( Figure 21 ). The ""Rest of World"" (ROW) component of U.S. agricultural trade—South and Central America, the Middle East, Africa, and Southeast Asia—has shown strong import growth in recent years. ROW is expected to account for 43% of U.S. agricultural exports in FY2019. ROW import growth is being driven in part by both population and GDP growth but also from shifting trade patterns as some U.S. products previously targeting China have been diverted to new markets. Over the past four decades, U.S. agricultural exports have experienced fairly steady growth in shipments of high-value products—including horticultural products, livestock, poultry, and dairy. High-valued exports are forecast at $94.0 billion for a 69.9% share of U.S. agricultural exports in FY2019 ( Figure 22 ). In contrast, bulk commodity shipments (primarily wheat, rice, feed grains, soybeans, cotton, and unmanufactured tobacco) are forecast at a record low 30.1% share of total U.S. agricultural exports in FY2019 at $40.5 billion. This compares with an average share of over 60% during the 1970s and into the 1980s. As grain and oilseed prices decline, so will the bulk value share of U.S. exports. The share of agricultural production (based on value) sold outside the country indicates the level of U.S. agriculture's dependence on foreign markets, as well as the overall market for U.S. agricultural products. As a share of total farm and manufactured agricultural production, U.S. exports were estimated to account for 19.8% of the overall market for agricultural products from 2008 through 2016—the most recent data year for this calculation ( Figure 23 ). The export share of agricultural production varies by product category: At the upper end of the range for export shares, the bulk food grain export share has varied between 50% and 80% since 2008, while the oilseed export share has ranged between 47% and 58%. The mid-spectrum range of export shares includes the export share for fruit and tree nuts, which has ranged from 37% to 45%, while meat products have ranged from 27% to 41%. At the low end of the spectrum, the export share of vegetable and melon sales has ranged from 15% to 18%, the dairy products export share from 9% to 24%, and the agricultural-based beverage export share between 7% and 13%. The U.S. farm income and asset-value situation and outlook suggest a relatively stable financial position heading into 2019 for the agriculture sector as a whole—but with considerable uncertainty regarding the downward outlook for prices and market conditions for the sector and an increasing dependency on international markets to absorb domestic surpluses and on federal support to offset lost trade opportunities due to ongoing trade disputes. Farm asset values—which reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments—are projected to be up 2.0% in 2019 to a nominal $3.1 trillion ( Table A-3 ). In inflation-adjusted terms (using 2018 dollars), farm asset values peaked in 2014 ( Figure 24 ). Nominally higher farm asset values are expected in 2019 due to increases in both real estate values (+2.0%) and nonreal-estate values (+2.1%). Real estate is projected to account for 83% of total farm sector asset value. Crop land values are closely linked to commodity prices. The leveling off of crop land values since 2015 reflects stagnant commodity prices ( Figure 25 ). For 2019, USDA forecasts that prices for most major commodities will decline from 2018—wheat, barley, soybeans, cotton, choice steers, broilers, and eggs lower; sorghum, oats, rice, and pork products higher ( Table A-4 ). However, these projections are subject to substantial uncertainty associated with international commodity markets. Total farm debt is forecast to rise to a record $415.7 billion in 2019 (+3.4%) ( Table A-3 ). Farm equity—or net worth, defined as asset value minus debt—is projected to be up slightly (+1.8%) at $2.7 trillion in 2019 ( Table A-3 ). The farm debt-to-asset ratio is forecast up in 2019 at 13.5%, the highest level since 2003 but still relatively low by historical standards ( Figure 26 ). A farm can have both an on-farm and an off-farm component to its income statement and balance sheet of assets and debt. Thus, the well-being of farm operator households is not equivalent to the financial performance of the farm sector or of farm businesses because of the inclusion of nonfarm investments, jobs, and other links to the nonfarm economy. Average farm household income (sum of on- and off-farm income) is projected at $116,060 in 2019 ( Table A-2 ), up 4.7% from 2018 but 13.5% below the record of $134,165 in 2014. About 17% ($20,075) of total farm household income is from farm production activities, and the remaining 83% ($95,985) is earned off the farm (including financial investments). The share of farm income derived from off-farm sources had increased steadily for decades but peaked at about 95% in 2000 ( Figure 27 ). Since 2014, over half of U.S. farm operations have had negative income from their agricultural operations. Since the late 1990s, farm household incomes have surged ahead of average U.S. household incomes ( Figure 28 ). In 2017 (the last year for which comparable data were available), the average farm household income of $111,744 was about 30% higher than the average U.S. household income of $86,220 ( Table A-2 ). Figure A-1 to Figure A-4 present USDA data on monthly farm prices received for several major farm commodities—corn, soybeans, wheat, upland cotton, rice, milk, cattle, hogs, and chickens. The data are presented in an indexed format where monthly price data for year 2010 = 100 to facilitate comparisons. USDA Farm Income Data Tables Table A-1 to Table A-3 present aggregate farm income variables that summarize the financial situation of U.S. agriculture. In addition, Table A-4 presents the annual average farm price received for several major commodities, including the USDA forecast for the 2018-2019 marketing year.","This report uses the U.S. Department of Agriculture's (USDA) farm income projections (as of August 30, 2019) and agricultural trade outlook update (as of August 29, 2019) to describe the U.S. farm economic outlook. According to USDA's Economic Research Service (ERS), national net farm income—a key indicator of U.S. farm well-being—is forecast at $88 billion in 2019, up $4 billion (+4.8%) from last year. However, the forecast rise in 2019 net farm income is largely the result of a 42.5% increase in government payments to the agricultural sector valued at $19.5 billion (highest since 2005). USDA's support outlays forecast for 2019 include nearly $11 billion in direct payments made under trade assistance programs intended to help offset foreign trade retaliation against U.S. agricultural products, as well as payments under traditional farm programs. Without this federal support, net farm income would be lower, primarily due to the outlook for continued weak prices for most major crops. Commodity prices are under pressure from large planted acreage estimates of corn and soybeans in 2019, large carry-in stocks from a record soybean and near-record corn harvest in 2018, and diminished export prospects due to the ongoing trade dispute with China. Should these conditions persist into 2020, they would signal the potential for continued dependence on federal programs to sustain the U.S. agricultural sector in 2020. Since 2008, U.S. agricultural exports have accounted for a 20% share of U.S. farm and manufactured or processed agricultural sales. In 2018, total agricultural exports were estimated up 2% at $143.4 billion. However, abundant supplies in international markets, strong competition from major foreign competitors, and the ongoing U.S.-China trade dispute are expected to shift trade patterns and lower U.S. agricultural export prospects significantly (-6%) to a projected $134.5 billion in 2019. Farm asset value in 2019 is projected up from 2018 to $3.1 trillion (+2%). Farm asset values reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments. U.S. farmland values are projected to rise 1.8% in 2019, similar to the increases of 1.9% in 2018 and 2.3% in 2017. Because they comprise such a large portion of the U.S. farm sector's asset base (83%), change in farmland values is a critical barometer of the farm sector's financial performance. However, another critical measure of the farm sector's well-being is aggregate farm debt, which is projected to be at a record $415.7 billion in 2019—up 3.4% from 2018. Both the debt-to-asset and the debt-to-equity ratios have risen for seven consecutive years, suggesting a weakening of the financial situation for the U.S. farm sector. At the farm household level, average farm household incomes have been well above average U.S. household incomes since the late 1990s. However, this advantage derives primarily from off-farm income as a share of farm household total income. Since 2014, over half of U.S. farm operations have had negative income from their agricultural operations. Furthermore, the farm household income advantage over the average U.S. household has narrowed in recent years. In 2014, the average farm household income (including off-farm income sources) was about 77% higher than the average U.S. household income. In 2017 (the last year with comparable data), that advantage was expected to decline to 30%."
"The Secret Service has processes to vet individuals differently depending on the person’s expected proximity to the President, using a combination of physical screening and background checks, as illustrated in figure 1. According to Secret Service officials, physical screening includes the use of equipment such as wands and magnetometers to secure the property. Background checks assess in part whether an individual has a history of criminal activity. In some cases, enhanced background checks identify other types of threats. The Secret Service develops and executes a security plan to ensure that the outer, middle, and inner layers at the travel location are secure. Officials from the Secret Service confirmed that agency policies aim to provide comprehensive planning guidance for their agents’ activities but are not meant to be all inclusive. Outer Layer: The Secret Service uses physical screening measures to establish a layer of security around the Mar-a-Lago property. According to Secret Service officials, state and local law enforcement and the U.S. Coast Guard may monitor entry onto the property or perform visual checks of individuals entering the property and surrounding waterways. Depending on where the President is, guests may be required to pass through a physical security checkpoint that employs magnetometers, wands, and visual checks to assess physical threats. Middle Layer: Officials from the Secret Service said that they use physical screening measures for individuals and any rooms that the President may access during his visit. Officials told us that if they are notified of the President’s planned arrival to a specific room, they will secure that room. Inner Layer: In advance of the President’s arrival, the Secret Service has a process requiring vetting of individuals who are expected to be within close proximity to the President for a planned purpose or in certain secure areas. According to Secret Service officials, individuals who need access to secure areas but who are not expected to interact directly with the President, such as wait staff and other workers, are to undergo a background check in addition to physical screening. Individuals who are expected to meet the President are to undergo a background check and an enhanced background check. Officials from the Secret Service said that they are responsible for collecting the findings from these checks and making recommendations to the Executive Office of the President on whether individuals with derogatory findings should be allowed to access a space. According to officials from the Secret Service, staff at Mar-a-Lago routinely undergo background checks. In order to conduct the background check, the Secret Service is to use personally identifiable information for each individual, and those Individuals’ names may be checked against indexes maintained by the Secret Service and other federal, state, and local law enforcement organizations. The Secret Service’s guidance notes that submission of the requested information to run a background check is based on individuals voluntarily providing the needed information. In order to conduct an enhanced background check, the Secret Service collaborates with the Federal Bureau of Investigation and other federal agency partners. According to officials from the Secret Service, the Executive Office of the President is responsible for identifying individuals who are expected to meet with the President and providing the Secret Service with the names and the personally identifiable information needed to complete these checks. According to Secret Service guidance, White House staff is expected to submit all names to the Secret Service at least 72 hours in advance of the President’s arrival. Advance agents are also responsible for setting deadlines for completing background checks. Officials from the Secret Service said that, based on the information received from these checks, the Secret Service will make a recommendation to the Executive Office of the President on whether an individual should be granted access to the President. According to these officials, the Executive Office of the President ultimately determines whether or not an individual will have access. However, the Secret Service is responsible for ensuring that the area is safe and that the individual is physically screened. DOD’s White House Communications Agency and the Secret Service each have specific responsibilities for establishing secure communications and secure areas for handling classified information when the President travels to domestic locations, such as Mar-a-Lago. DOD’s White House Communications Agency: This organization is an information technology unit within DOD that supports the President and his staff during presidential trips. This organization’s mission is to provide information services to the President, Vice President, National Security Staff, Secret Service, and others when directed. According to agency guidance and officials, the White House Communications Agency is responsible for installing secure communications equipment that enables the exchange of classified information in areas that may be used by these entities. Secret Service: According to officials from the Secret Service, they send an advance team that coordinates with the White House Communications Agency to set up a conference center for the President where classified information may be exchanged, among other things. These officials stated that they provide security at the entrance of this conference center and perform security sweeps to ensure that it is safe and secure. DOD and the Secret Service coordinate to establish and secure several areas that are available for handling classified information when the President travels to locations such as Mar-a-Lago, as shown in figure 2. These areas include a conference center, spaces used by staff of the National Security Council and Executive Office of the President, and presidential transportation vehicles. Details associated with these areas and facilities are sensitive and have been omitted from this report. The Secret Service and DOD are subject to regulations governing reimbursements to employees for official travel. Processes exist to review these travel-related expenses when personnel from these agencies travel. These processes are the same when personnel accompany the President to Mar-a-Lago. Two regulations implement statutory requirements and executive branch policies for travel, allowing agencies to pay for or reimburse their employees’ per diem expenses (lodging, meals and incidental expenses) and other travel-related expenses: The Federal Travel Regulation (FTR), issued by the General Services Administration applies to the Secret Service’s personnel. The Joint Travel Regulations (JTR), issued by the Department of Defense apply to DOD personnel. Both regulations allow agencies to pay for employees’ daily expenses when they are traveling within the continental United States, based on allowances set by the General Services Administration for the applicable location and date (per diem rates) or the actual expense of travel. Under the Federal Travel Regulation, the maximum amount that a civilian employee may be reimbursed is 300 percent of the applicable per diem rate. The Joint Travel Regulations allow uniformed service members to be reimbursed up to 300 percent of the per diem rate when they are traveling in the continental United States, but they can be reimbursed more than 300 percent of the per diem rate for lodging when traveling outside the continental United States. Officials from the Secret Service stated that they apply the same cost oversight processes for all presidential travel. Expenses for lodging and operational space are centrally billed to the agency, and employee meals and incidental expenses are reimbursed to the traveler. In accordance with policy, the Secret Service tries to acquire lodging at the General Services Administration’s per diem lodging rate and must submit a waiver request for any room that exceeds this designated rate by any amount. The Secret Service field office closest to the travel destination is responsible for arranging for these spaces, negotiating rates, and if necessary submitting a waiver request to officials in the Secret Service’s Logistics Resource Center. The Logistics Resource Center is to review the waiver request, determine whether a more cost effective method exists to meet the need, and approve or reject the request. In some cases, the Secret Service may not be able to acquire rooms at the per diem lodging rate, or agents may need rooms for operational purposes that exceed 300 percent of the per diem rate, which is more than is allowed for lodging under the Federal Travel Regulation. For example, the Secret Service may use a room for operational purposes or reserve rooms adjacent to the President to better protect him. In addition, to meet operational demands, the Secret Service may require a certain number of agents to stay at the hotel in which the President is staying, so that they are within a certain proximity of the President at all times. Furthermore, officials from the Secret Service said that members of the Secret Service canine teams must stay at hotels that allow animals, and rooms at these hotels may exceed the General Services Administration lodging rate. The authorities the Secret Service has relied on to pay for hotel rooms needed to meet its operational requirements do not limit how much the agency can pay. Further, Congress passed a law in May of 2017 excepting the Secret Service from regulatory caps on room rentals, regardless of room purpose. Nevertheless, consistent with the Secret Service waiver process, personnel are still required to submit waiver requests for operational spaces to justify the need to book rooms during the President’s trips to Mar-a-Lago at prices higher than the General Service Administration lodging rates. We confirmed that a blanket waiver request was submitted and approved for all rooms at Mar-a-Lago that exceeded the General Services Administration per diem lodging rate during the President’s trips to Mar-a-Lago that are covered by this review. Additionally, we reviewed Secret Service documentation and confirmed that Secret Service personnel did not exceed the 300 percent threshold for lodging. For meals and incidental expenses, the Secret Service’s employees who are on official duty are to submit a claim for reimbursement electronically or by paper and receipts, as applicable, at the conclusion of the trip. Approving officials are to approve (or deny) expenses, and the Secret Service’s Financial Management Division authorizes reimbursement for approved travel. DOD personnel use the same processes for travel to Mar-a-Lago as they do for other Presidential trips to oversee costs for lodging, meals, and incidental expenses. According to officials from DOD’s Defense Travel Management Office, their office establishes travel policy that applies to the four organizations that travel in support of the President’s trips. DOD personnel use the Defense Travel System to submit travel documents, including vouchers and receipts, as applicable. According to officials, lodging may be booked and reimbursed on an individual basis or centrally billed if a block of rooms is needed over the same period. Meals and incidental expenses are reimbursed to the traveler. Like Secret Service’s personnel, DOD personnel must obtain approval from an authorizing official prior to the trip to exceed the General Services Administration per diem lodging rate, consistent with the Federal Travel Regulation and Joint Travel Regulations. According to officials from the Defense Travel Management Office, DOD typically would not reimburse expenses above the approved lodging rate if lodging at the approved rate was available within the region. However, officials from the Defense Finance and Accounting Service indicated that presidential trips may require such a deviation. These approvals are to be tracked in the Defense Travel System. The White House Military Office, which includes the White House Communications Agency, also sends personnel with the President when he travels. White House Communications Agency officials told us that its lodging and operational space for these personnel are typically coordinated by the White House Travel Office and that DOD personnel pay for the associated costs and seek reimbursement from DOD after the trip is complete. According to officials from the White House Communications Agency, some personnel are required to remain at, or near, the Mar-a-Lago property. If they are not required to stay at or near the property, they will try to obtain lodging at hotels in the area at the General Services Administration’s per diem rate for lodging. DOD officials told us that according to the Joint Travel Regulations, DOD is not authorized to pay or reimburse daily expenses above the 300 percent ceiling. In connection with the President’s travel to Mar-a-Lago between February 3, 2017 and March 5, 2017, DOD personnel exceeded the General Services Administration per diem rate but did not exceed the 300 percent threshold. According to officials from the Defense Travel Management Office, operational space used for official business is governed by the Federal Acquisition Regulation. White House Communications Agency officials told us that they have generally used space near the Mar-a-Lago property but leased property, effective September 2017, near Mar-a-Lago to reduce the cost of supporting the President’s trips to the property. Treasury has regular processes for receiving payments designated as gifts to the United States and gifts to reduce the public debt. Treasury officials stated that any payments received from The Trump Organization or the President that are designated as gifts would be handled using these processes. Under federal law, Treasury may receive general gifts to the U.S. Government and may also receive gifts to reduce the public debt. Treasury has developed processes to accept these types of payments, as shown in figure 3. Treasury officials said there are three accounts available to receive payments as gifts—a general gift account, a general fund receipts account, and an account for gifts to reduce the public debt. Any of these accounts could receive payments designated as gifts by the President or The Trump Organization. Treasury officials told us they would deposit such payments into the account for gifts to the U.S. Government unless the payment source specified that the funds should be used to reduce the public debt. Treasury received one payment from The Trump Organization, for $151,470 that was submitted through Treasury’s processes on February 22, 2018. In May 2017, The Trump Organization issued a policy addressing profits generated from foreign government patronage at its businesses. The Trump Organization’s policy states that it will make a single lump-sum payment annually after the end of its fiscal year, which ends on December 31st. We did not identify any other payments that Treasury received from The Trump Organization or the President between January 21, 2017, and August 1, 2018. In September 2018, an attorney for The Trump Organization confirmed that the organization had not made any payments since February 22, 2018. We provided copies of this draft report to DOD, DHS, the Department of Justice, the General Services Administration, the Department of Treasury, and the Executive Office of the President for comment. We also provided a section to the Trump Organization for comment. DHS provided written comments, which are reprinted in their entirety in appendix I. DHS, DOD, the Department of Treasury and the Department of Justice also provided technical comments, which we incorporated into this report as appropriate. The Executive Office of the President and the Trump Organization provided no comments. As agreed with your offices, unless you publicly release this report earlier, we will not issue the report until 30 days from the report date. At that time, we will also provide copies to the Secretary of Defense, the Director of the Secret Service, the Secretary of Homeland Security, the Attorney General, the Director of the Federal Bureau of Investigation, the Administrator of the General Services Administration, and the Secretary of the Treasury. In addition, this report will be available at no charge on the GAO website at www.gao.gov. If you or your staff have any questions about this report, please contact Joseph (Joe) Kirschbaum at (202) 512-9971 or at KirschbaumJ@gao.gov or Diana Maurer at (202) 512-9627 or at MaurerD@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in Appendix II. In addition to the contacts named above, Gina R. Hoffman, Assistant Director; Joseph P. Cruz, Assistant Director; Tracy Barnes, Nicholas Benne, Jennifer Kamara, Joanne Landesman, Amie Lesser, Thomas Lombardi, Carol Petersen, Michael Silver, Janet Temko-Blinder, Christopher Turner, Kayli Westling, and Alex Winograd made key contributions to this report.","The President has made numerous trips to the Mar-a-Lago property in Palm Beach, Florida, during which he met with foreign leaders and conducted presidential activities. GAO was asked to review the establishment of secure areas for use by the President at Mar-a-Lago. This report provides information on, among other things, (1) vetting of individuals expected to be near the President; (2) efforts to establish secure areas for handling classified information; and (3) regulations and processes for agency expenditures on employees who travel with the President. This is a public version of a sensitive report that GAO issued in October 2018. Information that the Secret Service and DOD deemed sensitive has been omitted. GAO analyzed laws, regulations, policies, and procedures; reviewed agreements between federal agencies and trip after-action reports; and interviewed DOD and Secret Service officials. GAO also reviewed vouchers from the four presidential trips to Mar-a-Lago from February 3, 2017 through March 5, 2017.GAO also reviewed documentation and descriptions of specific security practices with DOD and Secret Service officials. The Executive Office of the President has not responded to requests regarding its role in assisting DOD and the Secret Service in carrying out their responsibilities. The U.S. Secret Service (Secret Service) vets individuals differently depending on the person's expected proximity to the President when he travels, including during his visits to Mar-a-Lago. According to Secret Service officials, vetting may include using physical screening (measures to detect physical threats to the president and secure the property) and background checks intended to identify individuals who have prior criminal activity or present other types of threats. Individuals at Mar-a-Lago who are not expected to meet with the President or enter spaces the President may visit pass through an outer layer of security consisting of physical screening checkpoints surrounding the property. The Secret Service physically screens all individuals who will access areas where the President will be present, such as a dining room. According to Secret Service officials, individuals who have a meeting with the President generally undergo both physical screening and enhanced background checks. The Department of Defense (DOD) and the Secret Service coordinate to establish and secure several areas that are suitable for handling classified information when the President travels to Mar-a-Lago. These areas include a conference center, spaces used by staff of the National Security Council and the Executive Office of the President, and presidential transportation vehicles. Details associated with these areas and facilities are sensitive and have been omitted from this report. The Secret Service and DOD are subject to regulations that govern the reimbursement of employees for official travel expenses. Both organizations have processes to review these travel-related expenses when their personnel travel with the President and try to acquire lodging at the General Services Administration's per diem lodging rate. When the Secret Service is not able to acquire rooms at the per diem lodging rate, including when it needs rooms for operational purposes that exceed 300 percent of the per diem rate (a threshold set by the General Services Administration), employees must submit a waiver request. DOD personnel must also obtain approval when costs exceed the General Services Administration's lodging rate. Our review of DOD vouchers and Secret Service documentation confirmed that personnel did not exceed the 300 percent threshold for lodging during the Mar-a-Lago trips examined in this review. We assessed the costs of Presidential travel in a separate report."
"The remnants of the Vietnam War (1963-1975) and other regional conflicts have left mainland Southeast Asia as a region heavily contaminated with unexploded ordnance, or UXO. More than 45 years after the United States ceased its extensive bombing of Cambodia, Laos, and Vietnam, hundreds of civilians are still injured or killed each year by UXO from those bombing missions or by landmines laid in conflicts be tween Cambodia and Vietnam (1975-1978), China and Vietnam (1979-1990) and during the Cambodian civil war (1978-1991). While comprehensive surveys are incomplete, it is estimated that more than 20% of the land in Cambodia, Laos, and Vietnam are contaminated by UXO. Over more than 25 years, Congress has appropriated more than $400 million to assist Cambodia, Laos, and Vietnam in clearing their land of UXO. More than 77% of the assistance has been provided via programs funded by the Department of State. In addition, the United States has provided treatment to those individuals maimed by UXO through U.S. Agency for International Development (USAID) programs and the Leahy War Victims Fund. Despite ongoing efforts by the three countries, the United States, and other international donors, it reportedly could take 100 years or more, at the current pace, to clear Cambodia, Laos, and Vietnam of UXO. During that time period, more people will likely be killed or injured by UXO. In addition, extensive areas of the three nations will continue to be unavailable for agriculture, industry, or habitation, hindering the economic development of those three nations. In 2016, President Obama pledged $90 million over a three-year period for UXO decontamination programs in Laos—an amount nearly equal to the total of U.S. UXO assistance to that nation over the previous 20 years. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provides $196.5 million globally for ""conventional weapons destruction,"" including $159.0 million for ""humanitarian demining,"" under the Department of State's International Security Assistance programs. Of the humanitarian demining funds, $3.85 million is appropriated for Cambodia, $30.0 million for Laos, and $15.0 million for Vietnam. The act also provides $13.5 million for global health and rehabilitation programs under the Leahy War Victims Fund. Moving forward, the 116 th Congress will have an opportunity to consider what additional efforts, if any, the U.S. government should undertake to address the war legacy issue of UXO in mainland Southeast Asia in terms of the decontamination of the region and the provision of medical support or assistance to UXO victims. Beyond the immediate assistance such UXO-related programs would provide to Cambodia, Laos, and Vietnam, U.S. aid on this war legacy issue may also foster better bilateral ties to those nations. For example, some observers view U.S. assistance to Vietnam for the war legacy issue of Agent Orange/dioxin contamination as playing an important role in improving bilateral relations. Unexploded ordnance (UXO) is defined as military ammunition or explosive ordnance which has failed to function as intended. UXO is also sometimes referred to as Explosive Remnants of War (ERW) or ""duds"" because of their failure to explode or function properly. UXO includes mines, artillery shells, mortar rounds, hand or rocket-propelled grenades, and rocket or missile warheads employed by ground forces (see Figure 1 ). Aerial delivered bombs, rockets, missiles, and scatterable mines that fail to function as intended are also classified as UXO. While many of these weapons employ unitary warheads, some weapons—primarily certain artillery shells, rocket and missile warheads and aerial bombs—employ cluster munitions, which disperse a number of smaller munitions as part of their explosive effect. Often times, these submunitions fail to function as intended. In addition, abandoned or lost munitions that have not detonated are also classified as UXO. The probability of UXO detonating is highly unpredictable; it depends on whether or not the munition has been fired, the level of corrosion or degradation, and the specific arming and fusing mechanisms of the device. ""Similar items may respond very differently to the same action—one may be moved without effect, while another may detonate. Some items may be moved repeatedly before detonating and others may not detonate at all."" In all cases, UXO poses a danger to both combatants and unaware and unprotected civilians. Military munitions are used in a variety of ways. Some are used in direct force-on-force combat against troops, combat vehicles, and structures. Others, such as emplaced anti-personnel and anti-vehicle mines or scatterable mines, can be used to attack targets, deny enemy use of key terrain, or establish barriers to impede or influence enemy movement. Cluster munitions can either explode on contact once dispensed or can remain dormant on the ground until triggered by human or vehicular contact. The military utility of cluster weapons is that they can create large areas of destruction, meaning fewer weapons systems and munitions are needed to attack targets. Two particular classes of ordnance—mines and cluster munitions—have received a great deal of attention. Emplaced mines by their very nature pose a particular threat because they are often either buried or hidden and, unless their locations are recorded or some type of warning signs are posted, they can become easily forgotten or abandoned as the battlefield shifts over time. Cluster munitions are dispersed over an area and are generally smaller than unitary warheads, which can make them difficult to readily identify (see Figure 2 ). Since the conclusion of the Vietnam War, many of the newer mines and cluster munitions have a self-destruct or disarming capability. However, as long as their explosive charge remains viable, they pose a hazard to people. Both mines and cluster munitions have been subject to international protocols to limit or ban their development, transfer, and use. The 1999 Ottawa Convention ""prohibits the use, stockpiling, production, and transfer of anti-personnel landmines (APLs). It requires states to destroy their stockpiled APLs within four years and eliminate all APL holdings, including mines currently planted in the soil, within 10 years."" The 2010 Convention on Cluster Munitions prohibits all use, stockpiling, production and transfer of cluster munitions. The United States has refused to sign either convention, citing the military necessity of these munitions. The United States has, however, been a States Party to the Convention on the Use of Certain Conventional Weapons (CCW) since 1995, which ""aims to protect military troops from inhumane injuries and prevent noncombatants from accidentally being wounded or killed by certain types of arms."" In 2009, the United States ratified Protocol V of the CCW, Explosive Remnants of War. Protocol V ""covers munitions, such as artillery shells, grenades, and gravity bombs, that fail to explode as intended, and any unused explosives left behind and uncontrolled by armed forces."" Under Protocol V ""the government controlling an area with explosive remnants of war is responsible for clearing such munitions. However, that government may ask for technical or financial assistance from others, including any party responsible for putting the munitions in place originally, to complete the task. No state-party is obligated to render assistance."" The United States has undertaken a variety of initiatives—including mandating changes to munitions design and adopting federal safeguards and policy regulating their usage—to help limit the potential hazards posed to noncombatants by these UXO. On June 19, 2008, then-Secretary of Defense Robert Gates issued a new policy on the use of cluster munitions. The policy stated that ""[c]luster munitions are legitimate weapons with clear military utility,"" but it also recognized ""the need to minimize the unintended harm to civilians and civilian infrastructure associated with unexploded ordnance from cluster munitions."" To that end, the policy mandated that after 2018, ""the Military Departments and Combatant Commands will only employ cluster munitions containing submunitions that, after arming, do not result in more than 1% unexploded ordnance (UXO) across the range of intended operational environments."" On November 30, 2017, then-Deputy Secretary of Defense Patrick Shanahan issued a revised policy on cluster munitions. The revised policy reverses the 2008 policy that established an unwaiverable requirement that cluster munitions used after 2018 must leave less than 1% of unexploded submunitions on the battlefield. Under the new policy, combatant commanders can use cluster munitions that do not meet the 1% or less unexploded submunitions standard in extreme situations to meet immediate warfighting demands. Furthermore, the new policy does not establish a deadline to replace cluster munitions exceeding the 1% rate, and these munitions are to be removed only after new munitions that meet the 1% or less unexploded submunitions standard are fielded in sufficient quantities to meet combatant commander requirements. However, the new DOD policy stipulates that the Department ""will only procure cluster munitions containing submunitions or submunition warheads"" meeting the 2008 UXO requirement or possessing ""advanced features to minimize the risks posed by unexploded submunitions."" Although UXO in Southeast Asia can date back to World War II, the majority of the hazard is attributed to the Vietnam War. While an undetermined amount of UXO associated with the Vietnam War was from ground combat and emplaced mines, an appreciable portion of UXO is attributed to the air war waged by the United States from 1962 to 1973, considered by some to be one of the most intense in the history of warfare. One study notes the United States dropped a million tons of bombs on North Vietnam. Three million more tons fell on Laos and Cambodia—supposedly ""neutral"" countries in the conflict. Four million tons fell on South Vietnam—America's ally in the war against communist aggression. When the last raid by B-52s over Cambodia on August 15, 1973, culminated American bombing in Southeast Asia, the United States had dropped more than 8 million tons of bombs in 9 years. Less than 2 years later, Cambodia, Laos, and South Vietnam were communist countries. The U.S. State Department in 2014 characterized the problem by country. Cambodia: Nearly three decades of armed conflict left Cambodia severely contaminated with landmines and unexploded ordnance (UXO). The Khmer Rouge, the Royal Cambodian Armed Forces (RCAF), the Vietnamese military, and, to a lesser extent, the Thai army, laid extensive minefields during the Indochina wars. These minefields are concentrated in western Cambodia, especially in the dense ""K-5 mine belt"" along the border with Thailand, laid by Vietnamese forces during the 1980s. UXO—mostly from U.S. air and artillery strikes during the Vietnam War and land battles fought along the border with Vietnam—contaminates areas in eastern and northeastern Cambodia. While the full extent of contamination is unknown, the Landmine and Cluster Munition Monitor reports that a baseline survey completed in 2012 of Cambodia's 124 mine-affected districts found a total of 1,915 square kilometers (739 square miles) of contaminated land. Laos: Laos is the most heavily bombed country per capita in the world as a result of the Indochina wars of the 1960s and 1970s. While landmines were laid in Laos during this period, UXO, including cluster munitions remnants (called ""bombies"" in Laos), represents a far greater threat to the population and account for the bulk of contamination. UXO, mostly of U.S. origin, remains in the majority of the country's 18 provinces. Vietnam: UXO contaminates virtually all of Vietnam as a result of 30 years of conflict extending from World War II through the Vietnam War. The most heavily contaminated provinces are in the central region and along the former demilitarized zone (DMZ) that divided North Vietnam and South Vietnam. Parts of southern Vietnam and areas around the border with China also remain contaminated with UXO. The Kingdom of Cambodia is among the world's most UXO-afflicted countries, contaminated with cluster munitions, landmines, and other undetonated weapons. U.S. bombing of northeastern Cambodia during the Vietnam War, the Vietnamese invasion in 1979, and civil wars during 1970s and 1980s all contributed to the problem of unexploded ordnance. In 1969, the United States launched a four-year carpet-bombing campaign on Cambodia, dropping 2.7 million tons of ordnance, including 80,000 cluster bombs containing 26 million submunitions or bomblets. Up to one-quarter of the cluster bomblets failed to explode, according to some estimates. In addition, the Vietnamese army mined the Cambodia-Thai border as it invaded the country and took control from the Khmer Rouge in 1979. The Vietnamese military, Vietnam-backed Cambodian forces, the Khmer Rouge, and Royalist forces reportedly all deployed landmines during the 1979-1989 civil war period. Cambodian Prime Minister Hun Sen occasionally has referred to the U.S. bombing of Cambodia, which occurred between 1969 and 1973, when criticizing the United States; however, the historical event has not been a major issue in recent U.S.-Cambodian relations. There have been over 64,700 UXO casualties in Cambodia since 1979, including over 19,700 deaths. The Cambodia Mine/ERW Victim Information System (CMVIS) has recorded an overall trend of significant decreases in the number of annual casualties: 58 in 2017 compared to 111 in 2015, 186 in 2012 and 286 in 2010. Despite progress, the migration of poor Cambodians to the northwestern provinces bordering Thailand, one of the most heavily mined areas in the world, has contributed to continued casualties. Cambodia, with 25,000 UXO-related amputees, has the highest number of amputees per capita in the world. The economic costs of UXO include obstacles to infrastructure development, land unsuitable for agricultural purposes, and disruptions to irrigation and drinking water supplies. Open Development Cambodia, a website devoted to development-related data, reports that since the early 1990s, about 580 square miles (1,500 square kilometers) of land has been cleared of UXO.  Estimates of the amount of land still containing UXO vary. According to some reports, about 50% of contaminated land has been cleared, and an estimated 630 square miles (1,640 square kilometers) of land still contain UXO. Many of the remaining areas are the most densely contaminated, including 21 northwestern districts along the border with Thailand that contain anti-personnel mines laid by the Vietnamese military and that account for the majority of mine casualties. Between 1993 and 2017, the U.S. government contributed over $133.6 million for UXO removal and disposal, related educational efforts, and survivor assistance programs in Cambodia. These activities are carried out largely by U.S. and international nongovernmental organizations (NGOs), in collaboration with the Cambodian Mine Action Center, a Cambodian NGO, and the Cambodian government. USAID's Leahy War Victims Fund has supported programs to help provide medical and rehabilitation services and prosthetics to Cambodian victims of UXO. Nonproliferation, Anti-terrorism, Demining and Related Programs (NADR) funding for demining activities was $5.5 million in both 2015 and 2016, $4.2 in 2017, and $2.9 million in 2018. Global donors contributed over $132 million between 2013 and 2017, mostly for clearance efforts. In 2017, the largest contributors of demining and related assistance were the United States, United Kingdom, Australia, Japan, and Germany, providing approximately $10.6 million in total. In 2018, the Cambodian government and Cambodian Mine Action and Victim Assistance Authority (CMAA), a government agency, launched the National Mine Action Strategy (NMAS) for 2018-2025. The goal of removing UXO from all contaminated areas by 2025 would require the clearance of 110 square kilometers per year at a cost of about $400 million. The NMAS estimated that at the current rate of progress, however, Cambodia would need a little over 10 years to complete clearance of all known mined areas. Some experts are concerned that declining international assistance could jeopardize clearance goals. In 2017, total international demining support to Cambodia decreased by 61%, largely due to lower contributions from Australia and Japan. From 1964 through 1973, the United States military reportedly flew 580,000 bombing runs and dropped over 2 million tons of cluster munitions, including over 270 million cluster bombs, on the small land-locked country. The total was more than the amount dropped on Germany and Japan combined in World War II. An estimated one-third of these munitions failed to explode. The Lao government claims that up to 75-80 million submunitions or bomblets released from the cluster bombs remain in over one-third of the country's area. Military conflicts during the French colonial period and the Laotian Civil War during the 1960s and 1970s have also contributed to the problem of UXO/ERW. The U.S. bombing campaign in Laos was designed to interdict North Vietnamese supply lines that ran through Laos. The bombing campaign also supported Lao government forces fighting against communist rebels (Pathet Lao) and their North Vietnamese allies. Cluster munitions were considered the ""weapon of choice"" in Laos because they could penetrate the jungle canopy, cover large areas, and successfully attack convoys and troop concentrations hidden by the trees. The most heavily bombed areas in Laos were the northeastern and southern provinces, although UXO can be found in 14 of the country's 17 provinces. The bombings in the northeast were intended to deny territory, particularly the Plain of Jars, to Pathet Lao and North Vietnamese forces and, in the south, to sever the Ho Chi Minh Trail, which crossed the border into eastern Laos. The northeastern part of Laos was also used as a ""free drop zone"" where planes that had taken off from bases in Thailand and had been unable to deliver their bombs, could dispose of them before returning to Thailand. According to the Geneva-based Landmine and Cluster Munition Monitor , since 1964, there have been over 50,000 mine and ERW casualties in Laos, including over 29,000 people killed. An estimated 40% of victims are children. In 2012, the Lao government's Safe Path Forward Strategic Plan II set a target to reduce UXO-related casualties to 75 per year by 2020, from levels between 100-200 victims annually during the 2000s. The country has already met these goals: in 2017, the number of reported casualties was 41, including four killed. Cluster munitions have hampered economic development in the agricultural country. UXO contamination affects one-quarter of all Lao villages, and 22% of detonations occur through farming activities. Unexploded ordnance adversely affects not only agricultural production, but also mining, forestry, the development of hydropower projects, and the building of roads, schools, and clinics. Expenditures on demining efforts and medical treatment divert investment and resources from other areas and uses. Many injured UXO survivors lose the ability to be fully productive. According to the Lao government, there appears to be a significant correlation between the presence of UXO and the prevalence of poverty. Lao PDR officials state that the country needs $50 million annually for ongoing UXO/ERW clearance, assistance to victims, and education, of which the Lao government contributes $15 million. International assistance comes from numerous sources, including Japan, the United States, and the United Nations Development Program (UNDP). The United States has contributed a total of $169 million for UXO clearance and related activities since 1995, with funding directed to international NGOs and contractors. That makes Laos the third largest recipient of conventional weapons destruction funding over that period, after Afghanistan and Iraq. In 2016, the United States announced a three-year, $90 million increase in assistance covering FY2016-FY2018. Half the amount, or $45 million, is aimed at conducting the first nationwide cluster munitions remnant survey, while the other half is aimed at clearance activities. Since the early 1990s, the U.S. Department of Defense (DOD) has been involved in training Lao personnel in demining techniques. U.S. UXO clearance and related humanitarian aid efforts, administered by the State Department (DOS), began in 1996. U.S. support also helped to establish the Lao National Demining Office, the UXO Lao National Training Center, and the Lao National Regulatory Authority. The United States finances the bulk of its mine clearance operations through the NADR foreign aid account. NADR demining programs constitute the largest U.S. assistance activity in Laos, which receives little U.S. development aid compared to other countries in the region. It has been channeled primarily to international nongovernmental organizations (NGOs), the UNDP's trust fund for UXO clearance, and the Lao National Unexploded Ordnance Program (UXO Lao). Laos also has received humanitarian assistance through the USAID Leahy War Victims Fund for prosthetics, orthotics, and rehabilitation ($1.4 million in 2011-2013). For many years in the 1990s and 2000s, UXO-related clearance programs were one of the primary areas of substantive cooperation between the United States and Laos. Some argue that such activity has helped foster bilateral ties with a country whose authoritarian government is deeply inward looking. When President Obama became the first U.S. President to visit Laos in 2016, announcing the $90 million UXO aid package, he said: ""Given our history here, I believe that the United States has a moral obligation to help Laos heal. And even as we continue to deal with the past, our new partnership is focused on the future."" War Legacy issues—Agent Orange/dioxin contamination, MIAs, and UXO—played an important role in the reestablishment of diplomatic relations between the United States and Vietnam, and it led to the development of a comprehensive partnership between the two nations. Vietnam's voluntary effort to locate and return the remains of U.S. MIAs was a significant factor in the restoration of diplomatic relations. U.S. assistance to decontaminate Da Nang airport of Agent Orange/dioxin likely contributed to the two nations' move to a comprehensive partnership. While not as prominent, U.S. UXO assistance to Vietnam most likely has been a factor in establishing trust between the two governments. The UXO in Vietnam are remnants from conflicts spanning more than a century, potentially as far back as the Sino-French War (or Tonkin War) of 1884-1885 and as recent as the Cambodian-Vietnamese War (1975-1978) and the border conflicts between China and Vietnam from 1979 to 1991. According to one account, during Vietnam's conflicts with France and the United States (1945-1975), more than 15 million tons of explosives were deployed—four times the amount used in World War II. It is generally presumed, however, that the majority of the UXO in Vietnam are from the Vietnam War, also known in Vietnam as ""the Resistance War Against America"" (1955-1975). Estimates of the amount of UXO in Vietnam vary. According to one source, ""at least 350,000 tons of live bombs and mines remain in Vietnam."" Another source claims ""around 800,000 tons of unexploded ordnance remains scattered across the country."" Viewed in terms of land area, the Vietnamese government estimates that between 6.1 and 6.6 million hectares (23,500-25,500 square miles) of land in Vietnam—or 19% to 21% of the nation—is contaminated by UXO. An official Vietnamese survey started in 2004 and completed in 2014 estimated that 61,308 square kilometers (23,671 square miles) was contaminated with UXO. According to the survey, UXO is scattered across virtually all of the nation, but the province of Quang Tri, along the previous ""demilitarized zone"" (DMZ) between North and South Vietnam, is the most heavily contaminated (see Figure 3 ). Figures on the number of UXO casualties in Vietnam also vary. One source says, ""No one really knows how many people have been injured or killed by UXO since the war ended, but the best estimates are at least 105,000, including 40,000 deaths."" In its report on UXO casualties in Vietnam, however, the Landmine and Cluster Munition Monitor listed the casualty figures for 1975-2017 as 38,978 killed and 66,093 injured. For 2017 only, the Landmine and Cluster Munition Monitor reported eight deaths and six injured. A survey of UXO casualties determined that the three main circumstances under which people were killed or injured by UXO were (in order): scrap metal collection (31.2%); playing/tampering (27.6%); and cultivating or herding (20.3%). In some of Vietnam's poorer provinces, people proactively seek out and collect UXO in order to obtain scrap metal to sell to augment their income, despite the inherent danger. On March 8, 2018, Vietnam's Ministry of National Defence (MND) established the Office of the Standing Agency of the National Steering Committee of the Settlement of Post-war Unexploded Ordnance and Toxic Chemical Consequences, or Office 701, to address the nation's UXO issue. Office 701 is responsible for working with individuals and organizations to decontaminate Vietnam of UXO to ensure public safety, clean the environment, and promote socio-economic development. Under a 2013 directive by the Prime Minister, the Vietnam National Mine Action Center (VNMAC) was established within the MND with responsibility for proposing policy, developing plans, and coordinating international cooperation for UXO clearance. The MND's Center for Bomb and Mine Disposal Technology (BOMICEN) is the central coordinating body for Vietnam's UXO clearance operations. In addition, Vietnam created a Mine Action Partnership Group (MAPG) to improve coordination of domestic and international UXO clearance operations. BOMICEN typically sets up project management teams (PMTs) that work with provincial or local officials to identify, survey, and decontaminate UXO. The PMTs usually interview local informants about possible UXO sites and then conduct field evaluations to determine if UXO is present and suitable for removal by Vietnam's Army Engineering Corps. The PMTs also collect information about the decontamination site and report back to BOMICON about the location and type of UXO removed. Besides the clearance operations directly conducted by Vietnam, several nations and international organizations conduct UXO removal projects in Vietnam, including the Danish Demining Group (DDG), the Mines Advisory Group (MAG), Norwegian People's Aid (NPA), and PeaceTrees Vietnam. In 2016, the Korea International Cooperation Agency (KOICA), in cooperation with VNMAC and the United Nations Development Programme (UNDP), initiated a $32 million, multi-year UXO project in the provinces of Binh Dinh and Quang Binh. The joint project began operations in March 2018 and is scheduled to end in December 2020. NGOs working in Vietnam report some issues in their collaboration with the MND, which has declared portions of contaminated provinces off limits for UXO surveying and decontamination. Many of these areas contain villages and towns inhabited by civilians. In addition, the MND has not been providing information about any UXO clearance efforts being conducted in these areas. The lack of information sharing has hindered efforts to establish a nationwide UXO database that is being used to refine UXO location and clearance techniques. Since 1993, the United States has provided UXO and related assistance to Southeast Asia via several different channels, including the Center for Disease Control (CDC), the Department of Defense (DOD), the Department of State (DOS), and the U.S. Agency for International Development (USAID)(see Table 1 ). For all three countries covered by this report, most of the assistance has been provided by DOS through its Nonproliferation, Anti-terrorism, Demining and Related Programs/Conventional Weapons Destruction (NADR-CWD) account. USAID assistance to Cambodia, Laos, and Vietnam has consisted primarily of Leahy War Victims Fund programs for prostheses, physical rehabilitation, training, and employment. Laos, Cambodia, and Vietnam have been the largest recipients of U.S. conventional weapons destruction (CWD) funding in East Asia. In December 2013, the United States and Vietnam signed a Memorandum of Understanding on cooperation to overcome the effects of ""wartime bomb, mine, and unexploded ordnance"" in Vietnam. In their November 2017 joint statement, President Trump and President Tran Dai Quang ""committed to cooperation in the removal of remnants of explosives from the war."" Department of State and USAID demining and related assistance support the work of international NGOs in Cambodia, Laos, and Vietnam. International NGOs work primarily with local NGOs in Cambodia and, to a greater extent, collaborate with government entities in Laos and Vietnam. The main areas of assistance are clearance, surveys, and medical assistance. In Cambodia, the Department of State and USAID support programs that collaborate with and train Cambodian organizations in clearance activities, conduct geographical surveys, help process explosive material retrieved from ERW, and provide mine risk education. In Laos, U.S. assistance includes clearance and survey efforts, medical and rehabilitation services, education and training assistance to victims and families, and mine risk education. In Vietnam, the United States provides mine clearance and survey support, capacity building programs, and medical assistance and vocational training for victims. DOD's role in remediating UXO in Southeast Asia falls under the category of ""Support to Humanitarian Mine Action (HMA)."" Chairman of the Joint Chiefs of Staff (CJCS) Instruction ""Department of Defense Support to Humanitarian Mine Action, CJCSI 3207.0IC"" dated September 28, 2018, covers DOD's responsibilities in this regard. DOD's stated policy is to relieve human suffering and the adverse effects of land mines and other explosive remnants of war (ERW) on noncombatants while advancing the Combatant Commanders' (CCDRs') theater campaign plan and U.S. national security objectives. The DOD HMA program assists nations plagued by land mines and ERW by executing ""train-the-trainer"" programs of instruction designed to develop indigenous capabilities for a wide range of HMA activities. It is important to note that U.S. Code restricts the extent to which U.S. military personnel and DOD civilian employees can actively participate in UXO activities as described in the following section: Exposure of USG Personnel to Explosive Hazards. By law, DOD personnel are restricted in the extent to which they may actively participate in ERW clearance and physical security and stockpile management (PSSM) operations during humanitarian and civic assistance. Under 10 U.S.C. 401(a)(1), Military Departments may carry out certain ""humanitarian and civic assistance activities"" in conjunction with authorized military operations of the armed forces in a foreign nation. 10 U.S.C. 407(e)(1) defines the term ""humanitarian demining assistance"" (as part of humanitarian and civic assistance activities) as ""detection and clearance of land mines and other ERW, and includes the activities related to the furnishing of education, training, and technical assistance with respect to explosive safety, the detection and clearance of land mines and other ERW, and the disposal, demilitarization, physical security, and stockpile management of potentially dangerous stockpiles of explosive ordnance."" However, under 10 U.S.C. 407(a)(3), members of the U.S. Armed Forces while providing humanitarian demining assistance shall not ""engage in the physical detection, lifting, or destroying of land mines or other explosive remnants of war, or stockpiled conventional munitions (unless the member does so for the concurrent purpose of supporting a United States military operation)."" Additionally, members of the U.S. Armed Forces shall not provide such humanitarian demining and civic assistance ""as part of a military operation that does not involve the armed forces."" Under DOD policy, the restrictions in 10 U.S.C. 407 also apply to DOD civilian personnel. In general terms, U.S. law restricts DOD to ""train-the-trainer"" type UXO remediation activities unless it is required as part of a U.S. military operation involving U.S. armed forces. U.S. Indo Pacific Command (USINDOPACOM) is responsible for U.S. military activities in Vietnam, Cambodia, and Laos. As part of USINDOPACOM's Theater Campaign Plan, selected UXO remediation activities for Vietnam, Cambodia, and Laos are briefly described in the following sections: Vietnam: USINDOPACOM has tasked U.S. Army Pacific (USARPAC) as the primary component responsible for land-based UXO operations and the Pacific Fleet (PACFLT) as the primary component responsible for underwater UXO operations in Vietnam. FY2018 accomplishments and FY2019 and FY2020 plans are said to include: FY2018 : Trained individuals on International Mine Action Standards (IMAS) Level I and II; Trained individuals on Explosive Ordnance Disposal (EOD) instructor development; Familiarized individuals on EOD equipment; Conducted medical first responder training; Trained individuals on medical instructor development; Trained individuals on underwater remote vehicle operations; and Trained individuals on ordnance identification. FY2019 : Continue training on International Mine Action Standards Level I; Train individuals on how to develop training lanes for demining; Exercise IMAS Level I concepts; Increase Vietnamese medical first responder force structure; and Continue EOD instructor development. FY2020 : Plan to train on IMAS Level II with qualified IMAS Level I students; Plan to enhance advanced medical-related technique training; Plan to train in demolition procedures; Plan to train in maritime UXO techniques; Plan to conduct mission planning and to conduct a full training exercise; and Plan to conduct instructor development. Cambodia: USINDOPACOM has tasked Marine Forces Pacific (MARFORPAC) to be responsible for land-based UXO operations in Cambodia. Plans for FY2019 through FY2021 include: FY2019 : Train in IMAS EOD Level I; Train on EOD instructor development; Familiarize students on EOD Level I equipment; Review medical first responder training; Train on medical instructor development; Train in ordnance identification; and Train in IMAS Demining Non-Technical Survey/Technical Survey (NTS/TS) techniques. FY2020 : Plan to continue to develop capacity with IMAS EOD Level I and II training; Plan to continue to build capacity with IMAS Demining Non-Technical Survey/Technical Survey techniques; If EOD Level I and II training successful, plan to initiate EOD Level III training in late FY2020; Plan to increase student knowledge of lane training development; Plan to exercise IMAS Level II concepts; Plan to increase Cambodian medical first responder force structure; and Plan to continue EOD instructor development. FY2021 : Plan to train on IMAS EOD Level II and EOD Level III with the qualified Level I and Level II students to increase their numbers; Plan to train on IMAS Demining NTS/TS with the qualified students to increase their numbers; Plan to enhance advanced medical-related techniques; Plan to train in demolition procedures; Plan to conduct mission planning and a full training exercise; and Plan to conduct instructor development events. Laos: USINDOPACOM has tasked Marine Forces Pacific (MARFORPAC) to be responsible for land-based UXO operations in Laos. Plans for FY2019 through FY2021 include: FY2019: Conduct training on IMAS EOD Level I; Conduct training on EOD instructor development; Conduct familiarization on EOD Level I equipment; Conduct a review of medical first responder training; Conduct medical instructor development training; and Conduct training on ordnance identification. FY2020 : Plan to continue to build capacity with training in IMAS EOD Level I and II; Plan to increase knowledge on lane training development; Plan to exercise IMAS Level II concepts; Plan to increase medical first responder force structure and knowledge; and Plan to continue EOD instructor development. FY2021 : Plan to train on IMAS EOD Level II with the qualified Level I and Level II students to increase their numbers; Plan to enhance advance medical-related techniques; Plan to train in demolition procedures; Plan to conduct mission planning and conduct a full training exercise; and Continue to conduct instructor development. The U.S. government has been providing UXO-related assistance to Southeast Asia for over 25 years, with contributions amounting to over $400 million. Despite this sustained level of support, as well as the efforts of the governments of Cambodia, Laos, and Vietnam, it may take decades to clear these three nations of the known UXO contamination. These estimates, however, are based on incomplete information, as systematic nationwide UXO surveys have not been completed in either Cambodia or Laos. The Legacies of War Recognition and Unexploded Ordnance Removal Act ( H.R. 2097 ) would authorize $50 million each year for fiscal years 2020 to 2024 for address the UXO issue in Cambodia, Laos, and Vietnam. The legislation also would authorize the President to provide humanitarian assistance for developing national UXO surveys, UXO clearance, and support for capacity building, risk education and UXO victims assistance in each nation. It would require the President to provide an annual briefing on related activities to the House Committee on Appropriations, the House Committee on Foreign Affairs, the Senate Committee on Appropriations, and the Senate Committee on Foreign Relations. Southeast Asia's ongoing UXO challenge may present a number of issues for Congress to consider and evaluate. Among those issues are F undin g levels —It is uncertain how much money it would take to decontaminate all three nations or provide adequate assistance to their UXO victims. Given this uncertainty, is the level of U.S. assistance being provided to Cambodia, Laos, and Vietnam to conduct humanitarian demining projects adequate to significantly reduce the UXO casualty risk in a reasonable time period? In addition, is the recent distribution of funding across the three nations equitable given their relative degrees of UXO contamination and their internal ability to finance demining projects? Coordination across agencies —Is there appropriate coordination across the U.S. agencies—the Department of Defense, the Department of State, and USAID—in providing demining assistance in Southeast Asia? Are these agencies utilizing the appropriated funds efficiently and effectively? Focus on clearance —Most of the appropriated funds have been for humanitarian demining projects and technical support, with less funding for assistance to UXO victims. The focus on clearance, rather than assistance on UXO victims, may in part be due to a concern about possible post-conflict liability issues. In light of past practices, should the U.S. government increase its support for UXO victims in Cambodia, Laos, and Vietnam beyond those being currently provided via the Leahy War Victims Fund? Implications for bilateral relations —Has the amount and types of U.S. UXO assistance to Cambodia, Laos, and Vietnam been a significant factor in bilateral relations with each of those nations? In Vietnam, work on war legacy issues formed an early part of building normalized relations in the post-War period—ties that have broadened into closer strategic and economic linkages. In Cambodia and Laos, UXO-related assistance has been one of the broadest areas for substantive cooperation between the United States and two countries with which the United States has had relatively cool relations. Would a change in the amount or type of assistance provided be beneficial to U.S. relations with Cambodia, Laos, or Vietnam? Should the U.S. government use UXO assistance to pressure other entities, such as Vietnam's MND, to be more cooperative in the UXO decontamination effort? UXO p revention —The Department of Defense has implemented a policy that is to eventually replace all cluster munitions with ones whose failure rate is below 1%. Should the U.S. government undertake additional efforts to reduce the amount of post-conflict UXO from U.S. munitions, including prohibiting the use of U.S. funding for certain types of submunitions that may leave UXO? Given DOD's current views and policies on cluster munitions and landmines, does this preclude the United States from joining the 2010 Convention on Cluster Munitions or 1999 Ottawa Convention on Landmines? Precedents and lessons for other parts of the world —Are there lessons that can be drawn from U.S. assistance for UXO clearance and victim relief in Southeast Asia that may be applicable to programs elsewhere in the world, including Afghanistan and Iraq? Have the levels of assistance the United States has offered in Southeast Asia signaled a precedent for other parts of the world? During the 115 th Congress, legislation was introduced that would have addressed some of these general issues associated with UXO, though none directly addressed the current situation in Southeast Asia. The Unexploded Ordnance Removal Act ( H.R. 5883 ) would have required the Secretary of Defense, in concurrence with the Secretary of State, to develop and implement a strategy for removing UXO from Iraq and Syria. The Cluster Munitions Civilian Protection Act of 2017 ( H.R. 1975 and S. 897 ) would have prohibited the obligation or expenditure of U.S. funds for cluster munitions if, after arming, the unexploded ordnance rate for the submunitions was more than 1%. ","More than 40 years after the end of the Vietnam War, unexploded ordnance (UXO) from numerous conflicts, but primarily dropped by U.S. forces over Cambodia, Laos, and Vietnam during the Vietnam War, continues to cause casualties in those countries. Over the past 25 years, the United States has provided a total of over $400 million in assistance for UXO clearance and related activities in those three countries through the Department of Defense (DOD), Department of State (DOS), and United States Agency for International Development (USAID), as well as funding for treatment of victims through USAID and the Leahy War Victims fund. Although casualty numbers have dropped in recent years, no systematic assessment of affected areas has been done, and many observers believe it may still take decades to clear the affected areas. War legacy issues such as UXO clearance and victim assistance may raise important considerations for Congress as it addresses the impact of U.S. participation in conflicts around the world and how the United States should deal with the aftermath of such conflicts. The continued presence of UXO in Southeast Asia raises numerous issues, including appropriate levels of U.S. assistance for clearance activities and victim relief; coordination in efforts among DOD, DOS, and USAID; the implications of U.S. action on relations with affected countries; whether U.S. assistance in Southeast Asia carries lessons for similar activity in other parts of the world, including Iraq and Afghanistan; and, more generally, efforts to lessen the prevalence of UXO in future conflicts. Many observers argue that U.S. efforts to address UXO issues in the region, along with joint efforts regarding other war legacy issues such as POW/MIA identification and Agent Orange/dioxin remediation, have been important steps in building relations with the affected countries in the post-war period. These efforts that have proceeded furthest in Vietnam, where the bilateral relationship has expanded across a wide range of economic and security initiatives. In Cambodia and Laos, where bilateral relations are less developed, UXO clearance is one of the few issues on which working-level officials from the United States and the affected countries have cooperated for years. Although some Cambodians and Laotians view U.S. demining assistance as a moral obligation and the U.S. government has viewed its support for UXO clearance as an important, positive aspect of its ties with the two countries, the issue of UXO has not been a major factor driving the relationships. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provides $196.5 million for ""conventional weapons destruction"" around the world, including $159.0 million for ""humanitarian demining,"" with $3.85 million appropriated for Cambodia, $30.0 million for Laos, and $15.0 million for Vietnam. The Legacies of War Recognition and Unexploded Ordnance Removal Act ( H.R. 2097 ) would authorize $50 million per year for fiscal years 2020 to 2024 for humanitarian assistance in Cambodia, Laos, and Vietnam to develop national UXO surveys, conduct UXO clearance, and finance capacity building, risk education, and support for UXO victims."
"DOD began the F-35 development program in October 2001 with plans to produce next-generation aircraft to replace aging aircraft in the military services’ inventories. Figure 1 shows the F-35 in flight. The program has developed and is delivering three variants of the F-35 aircraft; the F-35A conventional takeoff and landing variant for the Air Force, the F-35B short takeoff and vertical landing variant for the Marine Corps, and the F-35C carrier-suitable variant for the Navy. The characteristics of the services’ variants are similar, but each service’s variant also has unique operating requirements. For example, the Marine Corps requires that the F-35B be capable of operating from aircraft carriers, amphibious ships, and main and austere operating bases alike, requiring the ability to conduct short take offs and vertical landings. In March 2005, we found that the F-35 program had started development without adequate knowledge of the aircraft’s critical technologies or a solid design. Further, DOD’s acquisition strategy called for high levels of concurrency between development and production, which runs counter to best practices for major defense acquisition programs. In our prior work, we identified the F-35 program’s lack of adequate knowledge and high levels of concurrency as the major drivers of the program’s significant cost and schedule growth, and other performance shortfalls. Since the development program began in 2001, it has been restructured three times with revised cost and schedule estimates. The most recent restructuring was initiated in 2010 when the program’s cost estimates exceeded certain thresholds established by statute—a condition known as a critical Nunn-McCurdy breach. DOD subsequently certified to Congress in June 2010 that the program was essential to national security and needed to continue. DOD then established a new acquisition program baseline in 2012 that added $162.7 billion to the program’s cost estimate and extended the original delivery schedule by 5-6 years. Since then, the program’s cost and schedule estimates, as well as the expected number of aircraft to be delivered, have remained relatively stable, as shown in table 1. Of the F-35’s $406 billion estimated acquisition cost, DOD needs a majority of the funding ($270.3 billion) to purchase aircraft over the next 26 years. Of that future funding, the program plans to spend between $9.6 billion and $14 billion each year through fiscal year 2031. In addition, the program’s sustainment costs to operate and maintain the F-35 fleet over the next 52 years are estimated to be $1.12 trillion. Though the program’s total planned quantities have been relatively stable, the program’s timeframes for procuring these aircraft have changed multiple times. Since the start of development, the program has pushed the procurement of more than half of the total aircraft planned into the future, mostly due to significant concurrency between development and production. Specifically, the program office had originally planned to procure almost 2,000 aircraft by fiscal year 2019. However, according to the current plan, by the end of 2019, the program will have procured just over 500 aircraft. The F-35 baseline aircraft development program was complete in April 2018, when developmental testing concluded. As we reported in June 2018, the program office reported it had met all nine of its capability thresholds—or the minimum acceptable value for each capability—and delivered three of those nine capabilities. However, we also reported that the program has to complete operational testing before DOD can determine if the six remaining capabilities have been delivered. The purpose of operational testing is to assess the effectiveness, suitability, survivability, lethality, and mission capability of the F-35, including the information systems and the air vehicle, in an operationally representative environment. Operational testing includes cyber security assessments, some of which have been conducted. Production of the F-35 began in 2007 while development was in its early stages and before developmental flight testing had started. As a result of this concurrent development, the 357 aircraft delivered through 2018 will need retrofits to fix deficiencies and design issues found during testing. The program’s total estimated cost of concurrency is $1.4 billion. The program office plans for over 500 aircraft to be procured by the time operational testing is completed. Until operational testing is complete, there is a risk that additional problems with the aircraft may be identified. As a result, the concurrency costs of retrofitting delivered aircraft could increase. The F-35 program started formal operational testing in December 2018 after a 3-month delay. This testing was delayed for two main reasons: (1) to resolve critical deficiencies and (2) to accommodate an unexpected grounding following the crash of an F-35B in September 2018. According to a test official, the program expects to complete testing in December 2019, about three months later than planned due to delays with the simulator that is used for more complex testing. Figure 2 shows the program’s planned end to developmental testing and planned timeframes for operational testing for 2012 and the past four years and the delays the program has realized each year since the program was re-baselined in 2012. The operational testing was delayed for the following two main reasons. Resolution of deficiencies: First, before the program could begin operational testing, it had to resolve critical deficiencies with the aircraft that were identified during development testing. The program categorizes deficiencies according to their potential impact on the aircraft’s performance. Category 1 deficiencies are considered critical and could jeopardize safety, security, or another requirement. Category 2 deficiencies are those that could impede or constrain successful mission accomplishment. In January 2018, the F-35 program had 966 open deficiencies—111 category 1 and 855 category 2. At that time, the program planned to move forward before resolving all of them. In June 2018, we recommended that the Secretary of Defense direct the F-35 program to resolve all these deficiencies before the program’s October 2019 full-rate production decision. According to DOD officials, over the past year, the program has made progress in reducing the number of open deficiencies by resolving, re-categorizing, closing, or combining them. For example, in 2018, the program resolved nearly 50 category 1 deficiencies and re- categorized over 50 others to category 2. As a result, the program received approval from the Under Secretary of Defense for Acquisition and Sustainment to begin formal operational testing with 13 category 1 deficiencies and almost 900 category 2 deficiencies. According to the Program Executive Officer, none of the open category 1 deficiencies are a safety of flight concern, and all of them have operational workarounds. A current example of an open category 1 deficiency is with lines on the F- 35’s landing gear, which can rupture when a tire blows, potentially causing loss of a major aircraft system such as the brakes. Such an event requires some repair work to the landing gear, but contractor officials explained that it is not a safety concern. According to the program office, it is not a safety concern because the current workaround for this deficiency is pilot training to avoid braking on the side of the blown tire. Program test officials said that testing with deficiencies is not uncommon and they will continue to work to address them, but some may not be fully resolved for several years. Unexpected grounding: In October 2018, the F-35 fleet was grounded after the program identified a manufacturing fault with an engine fuel tube—a component in the F-35 engine produced by Pratt & Whitney. The fault was found in an inspection that stemmed from an F-35B crash in September 2018. This was the first crash of an F-35. Of the 23 operational test aircraft, the program replaced the fuel tubes on 18 aircraft by the start of operational testing in December 2018, which contributed to the 3-month delay. This and other key technical risks are described in more detail in appendix III. In addition to starting operational testing and the unexpected grounding, the program and the airframe contractor Lockheed Martin experienced other major events over the past year, as shown in figure 3. For example, the United States completed its first F-35 combat mission in September 2018 when an F-35B successfully hit a target in Afghanistan. The program took steps to mitigate delays to the start of operational testing. For example, the program office, in coordination with DOT&E, received approval to conduct some preoperational testing events starting in January 2018, before the official start date in December. According to DOT&E officials, the outcome of these preoperational test events should count towards the completion of operational testing. This included cold weather testing in Alaska, which took advantage of appropriate weather conditions. Despite the 3-month delay, program officials stated that they consider the F-35 operational test schedule to be adequate for addressing schedule risks, which pertain to unresolved deficiencies and potential problems with the availability of test and support aircraft, ground systems, test ranges, and necessary test models and simulations. According to a test official, as of April 2019, some of these risks have been realized, such as the delay with the simulator, and as a result, the end of operational testing is now planned for December 2019. In addition, there is the possibility of new deficiencies emerging from operational testing. Unresolved deficiencies: Existing or new deficiencies could negatively affect test results. According to DOT&E officials, since the start of operational testing, four new category 1 deficiencies have been identified, bringing the total to 17. According to DOD officials, it would not be unexpected during the course of operational testing for the program to discover additional deficiencies that may require resolution and re-testing. Availability of test and support aircraft: According to test officials, F-16s and F-18s are needed to represent adversaries during F-35 operational tests. These assets may not be available because they also support other test programs. According to officials, the F-35 program does not have control over the availability of these aircraft and must work with the Navy and Air Force to negotiate their use. In addition, the limited availability of F-35 test aircraft, in part due to R&M issues and shortages of replacement parts, may also pose a challenge to completing test events, according to officials. Availability of ground systems: Ground systems required for operational testing, such as the DOT&E developed Radar Signal Emulators, are late in development and may not be available when required. According to DOT&E officials, the emulators imitate modern threat radar capabilities of adversarial nations but their integration with the test range is approximately a year behind schedule. The program is currently using other threat simulators. DOT&E officials stated that they are working to have the radars ready by the spring of 2019, when needed. Availability of test ranges: Test officials at Edwards Air Force Base expressed concern about the availability of test ranges, which the F- 35 program shares with other programs. According to test officials, the F-35 was the fifth in line, in terms of priority, to use the range at Edwards Air Force Base, as of October 2018. DOT&E officials, however, stated that they did not observe any range availability issues during the F-35’s first month of operational testing. Availability of test models and simulations: According to program officials, the program’s testing simulator, which runs the F-35’s mission systems software and provides test scenarios that cannot be replicated in a real-world environment, will not be complete until at least November 2019. Completion of the testing simulator was originally scheduled for the end of 2017. Any additional delays in operational testing could affect another upcoming program decision: DOD’s decision to begin full-rate production in December 2019. This decision is typically made after operational testing is completed. The F-35 program has made slow, sustained progress in improving the F- 35’s R&M. R&M determines the likelihood that the aircraft will be in maintenance rather than available for operations. Each F-35 aircraft variant is measured against eight R&M metrics, four of which are in part of the contract. All F-35 variants are generally performing near or above targets for half of the R&M metrics while the other four are still falling short, which is the same as last year. While the program is on track to meet the targets for half of the metrics, the program has not taken adequate steps to ensure the targets for the others will be met. While DOD has an action plan to improve R&M, its guidance does not define specific, measurable objectives for what the desired goals for the F-35’s R&M performance should be. Furthermore, the program office has not prioritized funding for projects that will improve the R&M metrics that are not meeting their targets. All F-35 variants are measured against eight R&M metrics’ targeted performance levels, and all variants are generally performing near or above targets for four of the eight R&M metrics. This represents little change from their overall performance last year. All eight R&M metrics are described in the program’s Operational Requirements Document (ORD)—the document that outlines the requirements DOD and the military services agreed the F-35 should meet. However, in December 2018, DOT&E reported that, although performance for the four under- performing metrics has shown slow growth over the years, none of these metrics were meeting interim goals needed to reach requirements at each variant’s maturity. Each F-35 variants’ R&M performance against these metrics’ targets is shown in table 2. Since the program began tracking R&M performance in 2009, the program has seen small, annual improvements. Over the past year, all variants showed a slight improvement in targeted performance levels for one metric, the mean flight hours between failures (design controlled), but saw little or no discernable improvement for the four metrics not meeting targets. However, based on current performance, the program does not expect to meet those targets by full aircraft maturity. According to F-35 program officials, the ORD R&M metrics should be re-evaluated to determine more realistic R&M performance metrics, but they have not yet taken actions to do so. Until it does so, the program office remains accountable for ensuring those ORD R&M metrics are achieved. In June 2018, we recommended that the F-35 program identify what steps it needs to take to ensure the F-35 aircraft meet R&M requirements before each variant reaches maturity and update its R&M Improvement Program (RMIP)—DOD’s action plan for prioritizing and funding R&M improvement projects—with these steps. DOD concurred with our recommendation but has yet to take substantive actions to address it. It did, however, complete 16 improvement projects since we last reported on this. Despite completing these projects, there were not significant gains in the R&M metrics not meeting targets. Program officials advised, however, that measurable improvements in R&M can take time to manifest. To speed this process, the program is accelerating planned upgrades to older aircraft where appropriate, which officials stated should translate to an overall improvement in the program’s R&M performance. The F-35 program office has estimated that implementing all of the identified improvement projects currently contained in its RMIP could result in potential life cycle cost savings of over $9.2 billion by improving the F-35’s R&M. As of December 2018, the guidance the F-35 program office has used to implement the RMIP does not define specific, measurable objectives for what the desired goals for the F-35’s R&M performance should be or align improvement projects with R&M goals. Furthermore, the RMIP has not been a funding priority. Federal internal control standards state that programs should define objectives when implementing programs such as the RMIP. Although the F-35 program RMIP’s guidance has a general goal of improving R&M, it does not identify achieving the targets for the eight R&M metrics the program tracks as an objective. Program officials acknowledged that the RMIP’s guidance does not include such an objective. Instead, officials are using the RMIP to prioritize and fund projects that will improve aircraft availability and mission capability—neither of which are included in the eight R&M metrics, but are necessary and important initiatives. Officials stated that by prioritizing these projects, they will eventually improve performance under all R&M metrics, including the four that are not meeting targets. The RMIP’s guidance, however, does not discuss these priorities or align improvement projects with the eight R&M metrics. In our prior work on weapon system acquisitions, we have identified a number of best practices for improving program outcomes, such as clearly establishing well-defined requirements and securing stable funding that matches resources to requirements. The F-35 program office has not prioritized or dedicated funding in its budget to improve R&M in part because program officials explained that they have been focused on initiatives intended to lower the cost of the aircraft. Further, any current funding for R&M improvement projects comes from the program’s operation and maintenance funds, which are only available for one fiscal year. Officials further explained that, if such funding runs out or is used by the program for other efforts, then R&M projects will go unfunded or be suspended until new funding is available. In fiscal year 2018, for example, while some R&M improvement projects were completed, several other projects were suspended when that year’s funding ran out. According to officials, these projects may not be started back up until fiscal year 2019. In addition, most of the R&M improvement projects that were approved in fiscal year 2018 were not funded. For example, as of December 2018, according to a contractor representative, all of the identified improvement projects currently unfunded in the program’s RMIP would cost about $30 million to implement, but are on hold and waiting to be funded. Program officials stated that they are in the process of revising the RMIP and have considered including more specific objectives, such as a focus on improving aircraft availability and mission capability and a focus on improving R&M performance where the ORD R&M metrics’ targets are not being met. Additionally, in its 2019 annual lifecycle sustainment plan, the program office noted that a dedicated annual budget for R&M improvement projects would benefit the program. According to the program, any revisions to the RMIP and changes to how it will be funded, however, will not be complete until April 2019 or later. Without defining measurable objectives in its RMIP guidance for meeting all eight R&M metrics and aligning which improvement projects will ensure those metrics are met, the program is at risk of not fully meeting its R&M goals. Further, without prioritizing funding for improving R&M, projects may continue to be either prematurely suspended or never get underway. As a result, the warfighter may accept aircraft that (1) are less reliable than originally described in the program’s ORD, and (2) have operation and sustainment costs that may raise affordability questions. With development of the baseline program complete, the program is transitioning to early development and testing for modernization efforts known as Block 4, which are expected to cost about $10.5 billion. The F- 35 program plans to award Block 4 development contracts starting in May 2019, before completing a business case—a baseline cost and schedule estimate to track the program’s performance going forward. In doing so, the program will commit resources without adequate knowledge of Block 4’s full cost, schedule, and level of technology maturity, putting Block 4 at risk of experiencing cost and schedule overruns similar to those experienced by the baseline program during its development. The National Defense Authorization Act for Fiscal Year 2017 required DOD to submit a report containing certain elements of an acquisition program baseline—in essence, a full program business case—to include the cost, schedule, and performance information for Block 4. In 2018, we found that DOD’s report to Congress was incomplete but included information on some elements of the Block 4 acquisition program baseline. In its report, DOD stated that the acquisition program baseline would continue to be refined over the next year. As a result, we presented a matter for congressional consideration to restrict Block 4 funding until the program established a complete business case. DOD’s report to Congress also outlined the F-35 program office’s new development approach to deliver Block 4 capabilities—new requirements beyond the baseline aircraft capabilities to address evolving threats. As we reported in June 2018, this new approach, meant to deliver capabilities to the warfighter faster, is referred to as Continuous Capability Development and Delivery (C2D2). This approach consists of 6-month development cycles in which small groups of capabilities will be developed, tested, and delivered as they are matured. In January 2018, the F-35 program started using this C2D2 approach to develop and test software updates to address deficiencies identified during testing. According to the contractor, the first two software updates also established a foundation for new Block 4 capabilities to be fully developed later. According to program officials, as of December 2018, the program has executed contract actions valued over $1.4 billion to establish testing facilities and support early Block 4 development of capabilities the program plans to deliver through 2024. According to DOD’s January report, results from this work will help the program inform its Block 4 business case. The F-35 program plans to award Block 4 development contracts without knowledge of the effort’s full cost or the maturity of critical technologies. Over the past year, the program has been working to complete its business case for Block 4, including incorporating Block 4 activities into its acquisition strategy—which was approved in October 2018. However, three key Block 4 business case documents will not be ready before the program’s planned May 2019 contract awards for development efforts. Independent technology readiness assessment: Although the contracts for Block 4 development efforts are planned to be awarded in May 2019, the program will not conduct an independent technology readiness assessment by that time. A technology readiness assessment is a systematic, evidence-based process that evaluates the maturity of hardware and software technologies critical to the performance of a larger system or the fulfillment of the key objectives of an acquisition program. According to a program official, the program will conduct its own assessments on a rolling basis as initial capabilities are developed. The official stated that technologies will not be integrated into the aircraft until they are adequately mature. The program office plans to conduct a partial assessment of initial capabilities sometime between October and December 2019 with additional assessments to follow. However, without an independent technology readiness assessment, the program has not identified potential critical technology elements and as a result, may be at risk of delaying the delivery of new capabilities. Test and evaluation master plan: Although the F-35 program has begun testing Block 4 capabilities, it does not have an approved test and evaluation master plan. The test and evaluation master plan documents the overall structure, strategy, and objectives of the test program as well as the associated resources needed for execution. It provides a framework for the program office to provide detailed test plans and subsequently determine the resources needed. Test officials have expressed concerns about the lack of an approved test plan, uncertain funding, the number of test aircraft available, and the draft test schedule, among other things. Officials were also concerned as to whether the Block 4 test aircraft would be in the same configuration as fielded aircraft, which are in earlier configurations than the test fleet. Further, DOT&E stated in its annual report that it considers the current Block 4 schedule to be high risk due to the large amount of planned capabilities that will be developed and tested in 6- month development cycles. An approved, properly resourced test plan is essential for planning and preparing for adequate testing of the Block 4 capabilities. Without an approved test and evaluation master plan, the F-35 program is providing the test authorities with capabilities to be tested without giving them the necessary direction on how to adequately prepare to conduct the tests. Specifically, test officials stated the F-35 program office has not provided details on which capabilities are planned for each testing development cycle making it difficult to execute testing. While this is still a concern, F-35 program officials explained that over the past 3 months they have been providing the test authorities with the direction needed to conduct testing. Independent cost estimate: The Block 4 independent cost estimate, which details the program’s total estimated life cycle cost, is not complete. In August 2017, we reported that DOD estimated the development funding needed for the first phase of modernization for Block 4 to be over $3.9 billion through 2022. Since then, the program incorporated more scope and fidelity into the Block 4 cost estimate, which has increased to $10.5 billion for Block 4 capabilities planned through 2024. The program office has provided its Block 4 cost estimate to the Cost Assessment and Program Evaluation office (CAPE) for an independent cost estimate. According to CAPE officials, they will provide the independent cost estimate between October and December 2019 to support the program’s full-rate production decision, but this would occur several months after the program plans to award the Block 4 development contracts. Without an independent cost estimate, Congress does not have insight into the full potential cost of the Block 4 effort. The expected completion dates for these documents are between October and December 2019, at the earliest. Figure 4 shows key Block 4 dates, the planned development contract awards, and planned completion dates for the remaining business case documents. Major defense acquisition programs generally follow DOD acquisition policy, which states that prior to the release of a development contract request for proposal, program officials should have confidence that program requirements are firm. Program officials should also clearly state that the risk of committing to development has been reduced or will be adequately reduced prior to contract award. According to best practices identified by GAO, without several of the business case documents completed, program officials cannot have a high level of confidence that the requirements are firm and that the risk to committing an estimated $10.5 billion in funding to Block 4 has been adequately reduced. According to program officials, business case documents have not been completed because they took a step back to re-examine their approach and the cost estimate for Block 4 that DOD established in 2017. Counter to acquisition best practices, the program plans to initiate additional development work before they acquire the requisite knowledge of the necessary levels of technology maturity and funding. Program officials have reported the planned modernization contracting efforts shown in table 3. If program officials move ahead with awarding Block 4 contracts without gaining the knowledge that a full business case could would provide, Block 4 modernization efforts will be at risk of experiencing the same kind of cost and schedule growth the baseline development program experienced. With a few exceptions, the negotiated prices for all F-35 variants have generally been decreasing with each production lot, and more aircraft are being procured in each lot. In particular, the F-35A’s price has decreased in each subsequent production lot, with the most recent price per aircraft at $89 million in lot 11, as shown in figure 5 below. In 2018, we reported that while the F-35 program faces affordability challenges, it was investing in several projects to reduce production and sustainment costs. According to DOD, to improve production affordability, the F-35 program office is continuing to make investments to lower the price of an F-35A to below $80 million by lot 13. To realize this goal, the F-35 program office and the prime contractor are increasing the production rate and investing in various initiatives to lower production costs. For example: According to the program office, it has invested a total of $320.3 million in efforts to improve manufacturing processes that it estimates could result in up to $7.9 billion in savings over the life of the program. In addition, the prime contractor has invested $90 million and plans to invest an additional $25 million to lower its production costs. DOD issued a contract announcement for economic order quantity purchases for use in production lots 13-14. This approach involves making large purchases of components that will be used across multiple procurement lots of aircraft to reduce production costs by buying components in bulk and achieving economies of scale. The program had expected $1.2 billion in cost savings from this effort, but according to estimates from the CAPE, cost savings will more likely be $595 million. In addition, according to program officials, once the program achieves full-rate production, it plans to utilize a multi-year procurement strategy, beginning in fiscal year 2021. This strategy is intended to have similar benefits as the economic order quantity purchases by providing industry with a stable, long-term demand. According to Pratt & Whitney, the cost of the engine is also declining. For example, the price of the F-35A and C engine dropped by $100,000 per engine over the past year. The most recent negotiated price is $11.9 million per engine. The F-35 airframe and engine contractors saw a significant increase in their production rates in 2018, but faced some production challenges as well. The airframe contractor—Lockheed Martin—increased its production rate by 50 percent and delivered a total of 91 aircraft in 2018, with a total of 267 aircraft on its production floor or in contract negotiations as of December 2018, as shown in figure 6. In addition, Lockheed Martin delivered more aircraft on time. In 2012, none of the planned aircraft deliveries were on time whereas in 2018, 58 percent were on time. To incentivize the contractor to improve on-time deliveries, the program office has added a performance incentive fee to the lot 11 production contract. Table 4 shows some improvements in Lockheed Martin’s production metrics since 2012 and over the past 2 years. Between 2012 and 2017, Lockheed Martin saw some improvement for all variants’ production metrics, with the F-35A showing improvements through 2018. However, over the past year, several metrics for the F- 35Bs and F-35Cs saw a decline. According to Lockheed Martin, it faced several challenges with the increased production rate which led to these declines. For example, since January 2018, the contractor hired around 900 new personnel, nearly 30 percent of its workforce, all of whom needed training. According to officials, this influx of new personnel led to an increase in the average labor hours for the F-35C and the number of hours required for scrap, rework, and repair of the F-35B and F-35C. According to the contractor, as the newly hired personnel gain more experience in the production processes, the average labor hours it takes to build an F-35C should start decreasing again. The contractor faced several production quality issues and parts delays, which it worked to address over the past year. For instance, we reported last year that due to a fault in the production process, Lockheed Martin halted deliveries after the Air Force identified corrosion between the aircraft’s surface panels and the airframe because Lockheed Martin did not apply primer when the panels were attached. The program office stated that Lockheed Martin and the F- 35 Program Executive Officer reached a mutual agreement on the cost to resolve this issue, the details of which have not been disclosed publicly. With the production rate increase, the supply chain was strained to deliver parts on time, which led to increases in material shortages for key components, such as the radar. Pratt & Whitney has also increased production over the past year and has shown similar manufacturing performance for the F-35 engine as in past years; however, it had fewer on-time deliveries in 2018 due to the challenges it faced, including an increase in the average number of quality issues per engine. Pratt & Whitney’s production rate increased by 10 percent over the past year, with 81 engines delivered in 2018. Table 5 shows the trends in Pratt & Whitney production metrics’ performance. According to Pratt & Whitney, its late engine deliveries increased in 2018 partially due to a subcontractor that did not have all of the needed tooling in place to produce more F-35B engines. To address this and other issues causing the late deliveries, Pratt & Whitney is taking lessons learned from its other production facilities and applying them to the F-35’s engine production. The F-35 program has overcome significant hurdles in its 18 years of development of the baseline aircraft, which was completed last year. One recent hurdle that it overcame was resolving many critical deficiencies found during developmental testing, which allowed the program to begin operational testing this past December. Other hurdles remain, including with the F-35’s reliability and maintainability (R&M). Four of the eight R&M metrics continue to fall short of meeting performance targets. Program officials stated that the Operational Requirements Document (ORD) R&M targets need to be re-evaluated to determine more realistic R&M performance metrics but have not yet taken actions to do so. Until the program re-evaluates the targets, it is accountable for achieving those requirements. Furthermore, funding improvement efforts have not been a priority for the program. As a result, over the past year, some projects were started, several were halted while underway, and others are on hold, waiting for funding. As long as targets under all of the R&M metrics continue to fall short, the U.S. military services and the taxpayer will have to settle for aircraft that are less reliable and more costly to maintain than originally planned. Also, with continuing concerns about the program’s long-term affordability, the program is missing a prime opportunity to infuse affordability into the aircraft’s future with better R&M performance. As the program is considering revisions to its R&M Improvement Program (RMIP), it is in a good position to clearly define and communicate its R&M objectives for the aircraft to meet the targets under all of its eight R&M metrics. Until it does so, the program office will not know whether the steps it is taking now are sufficient to ensure each F-35 variant achieves its R&M requirements in the future. As we have reported in the past, the F-35 program started its development before it was ready. It is now at risk of doing the same thing with the Block 4 modernization effort. Since we last reported in June 2018, the program has still not established a solid business case to commit funding and other resources to developing new capabilities for the aircraft. This could result in the program delivering technologies late and over cost estimates. Finally, the program has committed a significant amount of funding to support Block 4, but it has not completed an independent cost estimate of the life-cycle cost. Consequently, Block 4 may follow in the footsteps of the F-35’s baseline program which saw significant cost and schedule growth during its development. This approach leaves the F-35 program, DOD, Congress, and the U.S. military services without key information to make decisions regarding Block 4. We are making the following five recommendations to the Department of Defense: The Secretary of Defense should ensure that the F-35 program office assesses whether the ORD R&M targets are still feasible and revise the ORD accordingly. (Recommendation 1) The Secretary of Defense should ensure that the F-35 program office, as it revises its RMIP, identifies specific and measurable R&M objectives in its RMIP guidance. (Recommendation 2) The Secretary of Defense should ensure that the F-35 program office, as it revises its RMIP, identifies and documents which RMIP projects will achieve the identified objectives of the RMIP guidance. (Recommendation 3) The Secretary of Defense should ensure that the F-35 program office prioritizes funding for the RMIP. (Recommendation 4) The Secretary of Defense should ensure that the F-35 program office completes its business case, at least for the initial Block 4 capabilities under development, before initiating additional development work, to include: an independent cost estimate; an approved test and evaluation master plan which addresses resources, aircraft shortfalls, and funding; and an independent technology readiness assessment. (Recommendation 5) We provided a draft of this report to DOD for review and comment. Our initial draft report contained only recommendations 2 through 5 above. During the comment period, DOD officials provided additional information about the program’s R&M performance concerning whether the ORD targets continue to be feasible and should be re-examined. As a result, we added our first recommendation above—that the F-35 program office assess whether the ORD R&M targets are still feasible and revise the ORD accordingly. DOD provided written comments on our report, which are reprinted in appendix IV. DOD concurred with our four recommendations on R&M but did not concur with our last recommendation on the Block 4 modernization. DOD also provided technical comments, which were incorporated as appropriate. In concurring with our four R&M recommendations, DOD stated that it would review its R&M requirements and possibly revise them, update its RMIP guidance, and plan for R&M funding going forward. DOD officials did not concur with our recommendation that the F-35 program office complete its business case before initiating additional development work. DOD stated that the F-35 program office has adequate cost, schedule, and technical maturity knowledge to begin the development of initial Block 4 capabilities. DOD also outlined when some of the remaining Block 4 business case documents would be complete. As we stated in our report, these documents will not be complete until after the contracts to initiate additional Block 4 development work will be awarded. We maintain that completing its business case before initiating additional development work would put DOD and the program in a better position to effectively and successfully develop Block 4 capabilities. We are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, the Under Secretary of Defense for Acquisition and Sustainment, the Secretary of the Air Force, the Secretary of the Navy, and the Commandant of the Marine Corps. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-4841 or sullivanm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix V. Key program event Start of system development and demonstration approved. Primary GAO conclusions/recommendations Critical technologies needed for key aircraft performance elements are not mature. We recommended that the program should delay start of system development until critical technologies are matured to acceptable levels. DOD response and actions DOD did not concur with our recommendation. DOD did not delay the start of system development and demonstration stating technologies were at acceptable maturity levels and that it will manage risks in development. Program sets in motion plan to enter production in 2007 shortly after first flight of the non-production representative aircraft. The program was entering production with less than 1 percent of testing complete. We recommended that the program delay investing in production until flight testing shows that the Joint Strike Fighter performs as expected. DOD partially concurred but did not delay start of production because it believed the risk level was appropriate. The program was restructured to reflect findings from a recent independent cost team and independent manufacturing review team. As a result, development funds increased, test aircraft were added, the schedule was extended, and the early production rate decreased. Costs and schedule delays inhibited the program’s ability to meet needs on time. We recommended that the program complete a comprehensive cost estimate and assess warfighter and initial operational capability requirements. We suggested that Congress require DOD to tie annual procurement requests to demonstrated progress. DOD continued restructuring, increasing test resources, and lowering the production rate. Independent review teams evaluated aircraft and engine manufacturing processes. Cost increases later resulted in a Nunn- McCurdy breach. Military services completed the review of capability requirements, as we recommended. The program incorporated positive and more realistic restructuring actions taken since 2010, including more time and funding for development and deferred procurement of more than 400 aircraft to future years. The program was moving in the right direction but needed to fully validate design and operational performance and at the same time make the system affordable. We did not make recommendations to DOD in this report. DOD agreed with GAO’s observations. Key program event The services established initial operational capabilities dates in 2013. The Marine Corps and Air Force planned to field initial operational capabilities in 2015 and 2016, respectively, and the Navy planned to field its initial capability in 2018. Primary GAO conclusions/recommendations Delays in developmental flight testing of the F-35’s critical software may hinder delivery of the warfighting capabilities to the military services. We recommended that DOD conduct an assessment of the specific capabilities that can be delivered and those that will not likely be delivered to each of the services by their established initial operational capability dates. DOD response and actions DOD concurred with our recommendation. On June 22, 2015, the Under Secretary of Defense for Acquisition, Technology, and Logistics issued a Joint Strike Fighter software development report, which met the intent of GAO’s recommendation. DOD planned to begin what it refers to as a block buy contracting approach that was anticipated to provide cost savings. In addition, DOD planned to manage the follow-on modernization program under the current F-35 program baseline and not as its own separate major defense acquisition program. The terms and conditions of the planned block buy and managing follow-on modernization under the current baseline could present oversight challenges for Congress. We recommended that the Secretary of Defense hold a milestone B review and manage follow-on modernization as a separate major defense acquisition program. DOD did not concur with our recommendation. DOD viewed modernization as a continuation of the existing program and the existing oversight mechanisms, including regularly scheduled high-level acquisition reviews, would be used to manage the effort. The DOD F-35 program office was considering contracts for economic order quantity of 2 years’ worth of aircraft parts followed by a separate annual contract for procurement of lot-12 aircraft with annual options for lot-13 and lot-14 aircraft. However, as of January 2017, contractors stated they were still negotiating the terms of this contract; therefore, the specific costs and benefits remained uncertain. Program officials projected that the program would only need $576.2 million in fiscal year 2018 to complete baseline development. At the same time, program officials expected that more than $1.2 billion could be needed to commit to Block 4 and economic order quantity in fiscal year 2018. GAO recommended DOD use historical data to reassess the cost of completing development of Block 3F, complete Block 3F testing before soliciting contractor proposals for Block 4 development, and identify for Congress the cost and benefits associated with procuring economic order quantities of parts. DOD did not concur with the first two recommendations and partially concurred with the third while stating that it had finalized the details of DOD and contractor investments associated with an economic order quantity purchase and would brief Congress on the details, including costs and benefits of the finalized economic order quantity approach. Key program event The program office determined that it could not resolve all open deficiencies found in developmental testing within the development program, and they would need to be resolved through post-development contract actions. DOD provided a report to Congress outlining preliminary plans to modernize the F-35. It stated it planned to develop a full acquisition program baseline for the modernization effort in 2018 and provide a report to Congress by March 2019. Primary GAO conclusions/recommendations The program office plans to resolve a number of critical deficiencies after full-rate production. We recommended that the F-35 program office resolve all critical deficiencies before making a full- rate production decision, and identify steps needed to ensure the F-35 meets reliability and maintainability requirements before each variant reaches maturity. We also suggested that Congress consider providing in future appropriations that no funds shall be available for obligation for F-35 Block 4 until DOD provides a report setting forth its complete acquisition program baseline for the Block 4 effort to the congressional defense committees. DOD response and actions DOD concurred with both recommendations and identified actions that it would take in response. The National Defense Authorization Act for fiscal year 2019 included a provision limiting DOD from obligating or expending more than 75 percent of the appropriations authorized under the Act for the F-35 continuous capability development and delivery program until 15 days after the Secretary of Defense submits to the congressional defense committees a detailed cost estimate and baseline schedule. The National Defense Authorization Act for fiscal year 2015 included a provision for GAO to review the F-35 acquisition program annually until the program reaches full-rate production. This is the fourth report under that provision. In this report, we (1) provide information on the program’s progress toward completing testing of the baseline aircraft; (2) assess the aircraft’s current reliability and maintainability (R&M) status; (3) assess the program’s modernization efforts (to add new aircraft capabilities), known as Block 4; and (4) provide information on the program’s production costs and efficiency initiatives. To provide information on progress in the F-35’s development, we reviewed the program’s costs, schedule, and performance plans and compared the actual progress in each area with the goals established in its 2012 baseline to identify any significant trends. We also reviewed the F-35’s selected acquisition report and its fiscal year 2019 budget request. To assess progress in testing, we reviewed test results and associated reports, program briefings, and internal DOD program analyses. We interviewed officials from the program office, military test authorities, and contractors—Lockheed Martin (airframe) and Pratt & Whitney (engine)— on key aspects of F-35 development progress, including flight testing, future test plans, and recent findings from test events. We also interviewed the Director, Operational Test and Evaluation office and F-35 program developmental and operational test pilots. To assess the program’s progress in achieving its R&M targets, we obtained and analyzed its monthly reports on R&M performance from January 2018 through December 2018. We compared these to the program’s R&M targets documented in the F-35 Operational Requirements Document and the Joint Contract Specification. We examined program data for the metrics’ performance across 12 months to identify any trends. We assessed the reliability of this data by reviewing supporting documentation and interviewing program office officials who track reliability metrics and other knowledgeable DOD officials. We also reviewed the program’s Reliability and Maintainability Improvement Program’s guidance to determine if it contained specific and measurable objectives and the projects needed to meet those objectives. We determined that the R&M metric data were sufficiently reliable for our purposes of determining whether the program will meet its targets. To assess the program’s Block 4 modernization plans, we reviewed documents that GAO best practices identify should be completed prior to awarding a development contract. We interviewed DOD and program office officials, and contractor representatives regarding the program’s Block 4 activities to date and future plans. We compared the program’s accomplishments over the past year and its future plans to the product development best practices identified by GAO. We reviewed the fiscal year 2019 budget request to identify costs associated with the Block 4 effort. We obtained contract documents for Block 4 activities between March 2014 and December 2018 to determine the total amount of funding that has been obligated to Block 4 and the scope of work that has been contracted. To provide information on ongoing manufacturing performance and the program’s plans to achieve full rate production, we obtained and analyzed the prime contractor’s production metrics and its aircraft delivery rates and from 2012 through 2018. We compared this performance to the program’s procurement plans from its selected acquisition reports since 2003. We reviewed metrics and briefings provided by the program office, Lockheed Martin, Pratt & Whitney, and the Defense Contract Management Agency to identify progress in improving manufacturing processes. We analyzed changes in delivery dates for lot 10 aircraft delivered in 2018. We discussed reasons for any delivery delays and plans for improvement with officials from Lockheed Martin and Pratt & Whitney. We obtained cost investment and savings estimates and discussed cost and manufacturing efficiency initiatives, such as the economic order quantity purchases, with the contractors and program office officials to understand potential cost savings and plans. We also obtained and analyzed metrics on parts and aircraft quality through December 2018 and discussed steps taken to improve quality and deliveries with Lockheed Martin and Pratt & Whitney officials. We determined that the contractor’s production metrics and delivery dates were sufficiently reliable for our purposes of determining production efficiency and deliveries. We conducted this performance audit from June 2018 to April 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. The F-35 program continues to address technical risks discovered in testing. Since our 2018 report, the program identified new risks with the canopy, fuel tubes, and cockpit, described below. The program has also incorporated design changes that have mitigated technical risks that we previously highlighted. The status of the Department of Defense’s (DOD) efforts to address these issues follows. Canopy Coating De-laminations and Corrosions: The F-35 fleet has experienced approximately 20 incidents of the canopy transparencies delaminating after less than 100 flight hours. The contractor is currently testing numerous solutions for the de-laminations, with intentions of completing testing by January 2019. F-35 aircraft are also experiencing canopy corrosion resulting from moisture intrusion due to the aircraft’s adhesive cracking under pressure and insufficient tape adhesion. The program has identified the need to modify over 173 canopies over 4 years. The contractor has begun to incorporate alternative material and tape into production, and released standardized repair procedures to mitigate this issue. Engine Fuel Tubes: In September 2018, a manufacturing fault in an engine fuel tube caused an in-flight failure, which resulted in an F-35B crash. The investigation identified several other life-limited fuel tubes in each F-35 variant. The fleet was grounded while all aircraft were inspected, and any fuel tubes identified were replaced or will be replaced by June 2019. Cockpit Display: In November 2018, operational test pilots experienced the cockpit display freezing and blanking, and identified the problem as a category 1 deficiency. The display issues occurred after a software update. The start of operational testing was delayed until the contractor could provide a software update to correct the problem, which was accomplished with a work-around in December 2018. Helmet Mounted Display: During low-light flights, the Helmet Mounted Display’s technology cannot display pure black, causing a green glow on the screen which makes it difficult to see the full resolution of the night vision video feed. The contractor is developing a new system to avoid this effect, and the contractor delivered this system to the test fleet in September 2018 with final flight testing planned through January 2019. Figure 7 is a photograph of the Helmet Mounted Display. Aerial refueling probes: The F-35B and F-35C variants use a “hose and drogue” system in which an aerial refueling tanker aircraft extends a long, flexible refueling hose and a parachute-like metal basket that provides stability, the receiving aircraft then connects to the drogue basket with its extendable refueling probe, as shown in figure 8. The refueling probe tips are meant to break in the event there is a stress occurring during refueling. However, the breaking is occurring more often than expected. Since April 2014, more than 20 incidents have occurred where the F-35’s aerial refueling probes broke off while conducting aerial refueling, leading to a restriction of aerial refueling operations. Tire service life: We reported in June 2018, the average service life of tires on the F-35B is below 10 landings. Lockheed Martin is currently working with three tire manufacturers to develop a new design with the goal of 20 landings. Testing of the new tires will occur throughout 2019. Figure 9 shows an F-35B during a landing. Life support system: The program has identified over 35 pilot physiological events, of which nearly 30 occurred in-flight. An action team made of government officials, contractors, and doctors completed their work by May 2018. A root cause investigation did not identify any F-35 system deficiencies, but reported it was difficult to fully determine the problem due to a lack of real-time data. Contracting officials stated that this is partially because the technology has not yet been developed to monitor pilot’s health in flight, in real time. The prime contractor continues to try to develop a means to monitor pilot health. In addition to the contact named above, the following staff members made key contributions to this report: Justin Jaynes (Assistant Director), Jennifer Baker, Emily Bond, Brandon Booth, Erin Butkowski, Matthew T. Crosby, Desirée E. Cunningham, R. Eli DeVan, Laura Jezewski, Jennifer Leotta, Meghan Perez, Hai Tran, Abby Volk, Mary Weiland, Alyssa Weir, and Robin M. Wilson. F-35 Joint Strike Fighter: Development is Nearly Complete, but Deficiencies Found in Testing Need to Be Resolved. GAO-18-321. Washington, D.C.: June 5, 2015. Warfighter Support: DOD Needs to Share F-35 Operational Lessons Across the Military Services. GAO-18-464R. Washington, D.C.: April 25, 2018. F-35 Aircraft Sustainment: DOD Needs to Address Challenges Affecting Readiness and Cost Transparency. GAO-18-75. Washington, D.C.: October 26, 2017. F-35 Joint Strike Fighter: DOD’s Proposed Follow-on Modernization Acquisition Strategy Reflects an Incremental Approach Although Plans Are Not Yet Finalized. GAO-17-690R. Washington, D.C.: August 8, 2017. F-35 Joint Strike Fighter: DOD Needs to Complete Developmental Testing Before Making Significant New Investments. GAO-17-351. Washington, D.C.: April 24, 2017. F-35 Joint Strike Fighter: Continued Oversight Needed as Program Plans to Begin Development of New Capabilities. GAO-16-390. Washington, D.C.: April 14, 2016. F-35 Sustainment: DOD Needs a Plan to Address Risks Related to Its Central Logistics System. GAO-16-439. Washington, D.C.: April 14, 2016. F-35 Joint Strike Fighter: Preliminary Observations on Program Progress. GAO-16-489T. Washington, D.C.: March 23, 2016. F-35 Joint Strike Fighter: Assessment Needed to Address Affordability Challenges. GAO-15-364. Washington, D.C.: April 14, 2015. F-35 Sustainment: Need for Affordable Strategy, Greater Attention to Risks, and Improved Cost Estimates. GAO-14-778. Washington, D.C.: September 23, 2014. F-35 Joint Strike Fighter: Slower Than Expected Progress in Software Testing May Limit Initial Warfighting Capabilities. GAO-14-468T. Washington, D.C.: March 26, 2014. F-35 Joint Strike Fighter: Problems Completing Software Testing May Hinder Delivery of Expected Warfighting Capabilities. GAO-14-322. Washington, D.C.: March 24, 2014. F-35 Joint Strike Fighter: Restructuring Has Improved the Program, but Affordability Challenges and Other Risks Remain. GAO-13-690T. Washington, D.C.: June 19, 2013. F-35 Joint Strike Fighter: Current Outlook Is Improved, but Long-Term Affordability Is a Major Concern. GAO-13-309. Washington, D.C.: March 11, 2013. Fighter Aircraft: Better Cost Estimates Needed for Extending the Service Life of Selected F-16s and F/A-18s. GAO-13-51. Washington, D.C.: November 15, 2012. Joint Strike Fighter: DOD Actions Needed to Further Enhance Restructuring and Address Affordability Risks. GAO-12-437. Washington, D.C.: June 14, 2012. Joint Strike Fighter: Restructuring Added Resources and Reduced Risk, but Concurrency Is Still a Major Concern. GAO-12-525T. Washington, D.C.: March 20, 2012.","In 2018, DOD sent an F-35 aircraft to its first combat mission and started initial operational testing. DOD now plans to spend over $270 billion to buy more than 2,000 F-35 aircraft over the next 26 years. Since 2011, GAO has found the need for more attention to the F-35's R&M performance to achieve an operationally suitable system. The National Defense Authorization Act for Fiscal Year 2015 included a provision for GAO to review the F-35 acquisition program until it reaches full-rate production. This is GAO's fourth report under this provision. This report assesses, among other objectives, (1) the program's progress in meeting R&M requirements (such as mission reliability) and (2) its plans for spending on new capabilities. GAO reviewed and analyzed management reports and historical test data; discussed key aspects of F-35 development with program management and contractor officials; and compared acquisition plans to DOD policies and GAO acquisition best practices. The F-35 program has made slow, sustained progress in improving the aircraft's reliability and maintainability (R&M). The F-35 aircraft (see figure) are assessed against eight R&M metrics, which indicate how much time the aircraft will be in maintenance rather than operations. Half of these metrics are not meeting targets. While the Department of Defense (DOD) has a plan for improving R&M, its guidance is not in line with GAO's acquisition best practices or federal internal control standards as it does not include specific, measurable objectives, align improvement projects to meet those objectives, and prioritize funding. If the R&M requirements are not met, the warfighter may have to settle for a less reliable and more costly aircraft than originally envisioned. In 2019, the F-35 program will start modernization efforts—estimated to cost $10.5 billion—for new capabilities to address evolving threats, without a complete business case, or a baseline cost and schedule estimate. Key documents for establishing the business case, such as an independent cost estimate and an independent technology assessment, will not be complete until after the program plans to award development contracts (see figure). Without a business case—consistent with acquisition best practices—program officials will not have a high level of confidence that the risk of committing to development has been reduced adequately prior to contract awards. Moving ahead without a business case puts F-35 modernization at risk of experiencing cost and schedule overruns similar to those experienced by the original F-35 program during its development. GAO is making five recommendations to DOD, including that it identify specific and measurable R&M improvement objectives, align improvement projects, and prioritize resources to meet them. In addition, DOD should complete its business case for modernization before beginning additional development efforts. DOD did not concur with this recommendation, but did concur with the R&M recommendations and plans to take action to address them."
"On August 1, 2018 , the World Health Organization (WHO) reported a new Ebola outbreak in eastern DRC, about a week after having declared the end of a separate outbreak in the west of the country. As of September 24, 2019, the WHO had reported 3,175 cases in the current outbreak, including 2,119 deaths. About 58% of all cases have been women and 28% children. The current outbreak is the 10 th on record in DRC, the largest to have occurred in the country, and the second largest ever, after the 2014-2016 Ebola outbreak in West Africa. Cases have been concentrated in North Kivu and Ituri provinces ( Figure 1 ), where long-running conflicts had already caused a protracted humanitarian crisis and are complicating Ebola control efforts. The number of new Ebola cases identified per week has fluctuated since the start of the outbreak ( Figure 2 ), but has generally trended downward slowly since peaking in April 2019. The current outbreak has coincided with a fraught political transition process in DRC. A new president, parliament, provincial-level assemblies, and governors were elected between late 2018 and mid-2019, after years of delays, gridlock, political violence, and repression of opposition voices. Election delays in the Ebola-affected areas, an opposition stronghold, heightened tensions and spurred conspiracy theories, arguably hindering Ebola response. President Felix Tshisekedi, inaugurated in January 2019, was previously an opposition figure, but the coalition of his predecessor Joseph Kabila won supermajorities in parliament and at the provincial level. Observers questioned the legitimacy of the election results, and tense negotiations between the two political blocs (Tshisekedi's and Kabila's) delayed the naming of a new cabinet until late August 2019, while complicating relations between the national and provincial/local officials. Several factors have foiled outbreak control efforts, including low Ebola awareness (early symptoms are similar to other common ailments like malaria), community distrust of health interventions, belated visits to health facilities (at which point survival prospects decline rapidly), and infection prevention control lapses in health facilities. Attacks by militia and criminal groups, political protests, health worker strikes, and security force abuses have also disrupted and impeded the response. In mid-September, for example, violent attacks in a new hotspot (Lwemba, Ituri Province) after the death of a local healthcare worker from Ebola prompted the indefinite suspension of Ebola control activities in the area. As a result, new cases continue to stem from unknown chains of transmission, and deaths continue to occur outside Ebola treatment centers. U.S. officials and other health experts have repeatedly raised concerns about broader challenges in DRC related to its health care system, political tensions, local grievances, and instability. USAID Administrator Mark Green testified to Congress in April 2019 that in DRC, ""You have a failed democracy in many, many ways…. It will take more than simply a medical approach. It will take a development approach to try to tackle this terrible disease and to contain its outbreak."" After traveling to DRC in August 2019, Administrator Green wrote, ""Decades of corrupt, authoritarian rule during which communities were denied any meaningful voice in their government have undermined the Congolese people's trust in institutions."" Health experts have been troubled by reports of Ebola cases in major DRC cities (including the capital of North Kivu, Goma) and outside of DRC. Between June and August 2019, a total of four cross-border cases were detected in Uganda. Observers expressed optimism about the rapid detection and containment of these cases, but new concerns have arisen about subsequent suspected cases in Tanzania. In mid-September, WHO was informed by unofficial sources of a number of suspected Ebola cases in that country, including in the capital city of Dar es Salaam, while Tanzanian authorities asserted that there were no confirmed or suspected Ebola cases in the country. WHO has reportedly since sent personal protective equipment (PPE) and vaccination supplies to Tanzania, and recommended that the sickened patients (one of whom reportedly died) receive secondary confirmation testing at a WHO facility. As of September 21, none of the cases had received secondary confirmation. Ebola control in other neighboring countries such as South Sudan, Burundi, or Central Africa Republic, which have minimal state capacity and are affected by protracted conflicts and political crises, could be highly challenging if required. Outbreak control, treatment, and disease surveillance activities are being carried out primarily by DRC government employees (including health workers and frontline workers, who provide routine and essential services), as well as by international nongovernmental organizations, with U.N. agencies (including the WHO), other multilateral entities (including the World Bank), and foreign governments providing funding, expertise, coordination, and logistical assistance. Classic Ebola outbreak control protocol entails infection prevention control (IPC) in health care facilities; management and isolation of patients in Ebola Treatment Centers (ETCs); fever surveillance with rapid diagnosis; tracing of Ebola cases and their contacts; and community awareness and adherence to IPC protocols, safe patient and body transport, safe burials, and household and environmental decontamination. The extraordinary conditions on the ground in affected areas of eastern DRC have limited the effectiveness of conventional control measures, however, and are requiring ever-evolving strategies for containment, including aggressive vaccination campaigns (see text box below). Since the WHO declared the outbreak to be a Public Health Emergency of International Concern (PHEIC) in July 2019, it has sought to garner additional donor funds, as well as international support for addressing the political and security issues affecting Ebola control. In July 2019, the WHO and the DRC Ministry of Health (MoH) released a fourth strategic response plan to ""definitively defeat"" the Ebola epidemic ( Table 1 ). The strategic plan is expected to cost over $462 million, including about $288 million for the public health response portion ( Table 1 ). In July 2019, the World Bank announced that it would provide $300 million toward the plan, about half of which would support the public health response, on top of prior funding commitments (discussed below). The public health portion of the strategic plan, covering July 1 through December 31, 2019, purportedly takes into account lessons learned from the third strategic response plan (February through July 2019). This portion of the plan is based on strengthening political commitment, security, and operational support to improve acceptance of the response and access to insecure areas; deepening support for addressing the varied needs of communities affected by Ebola (beyond a single-minded focus on containment efforts), as a means toward fostering community ownership and involvement in Ebola responses; improving financial planning, monitoring and reporting; and bolstering preparedness of neighboring provinces and countries. The World Bank has urged other countries to provide additional support, and the WHO Director-General has urged donors to address disbursement delays. As of September 11, 2019, the WHO had received less than $60 million of the $288 million it sought for the current phase of the public health response. The United States is the top country donor for the public health response and has provided almost $158 million for the Ebola humanitarian response, largely supporting activities by nongovernmental organizations (NGOs), as discussed below. DRC government employees and other Congolese nationals are the primary responders to the Ebola epidemic on the ground. As WHO Executive Director for Health Emergencies Dr. Michael Ryan noted in June 2019, ""If you go into the treatment facilities now it is Congolese doctors and nurses in the front line. There may be NGO or WHO badges on the tents but the doctors and nurses are Congolese; surveillance officers are Congolese; 80% of the vaccinators in this response are Congolese."" The DRC government has provided health workers and administrative personnel, hired local frontline workers, organized volunteers, and conducted information awareness campaigns. The government has also offered certain health services free of charge in selected government health facilities, with donor support (discussed below). From the start of the current outbreak, the DRC government's health responses were coordinated by the MoH, as in past Ebola outbreaks in DRC. In July 2019, however, President Tshisekedi transferred coordination responsibilities to an expert committee headed by the director of DRC's biomedical research institute, Dr. Jean-Jacques Muyembe, who reports directly to the president. Dr. Muyembe is a recognized expert on Ebola who helped investigate the first known outbreak of the disease, in DRC in 1976. Then-Health Minister Dr. Oly Ilunga resigned following Dr. Muyembe's appointment, citing a dilution of his authority as well as confusion about the coordination of DRC government Ebola responses, an insufficient focus on the health system, and opposition to utilizing the Johnson & Johnson experimental vaccine (see text box above). Ilunga was subsequently the target of scathing criticism in the leaked report of a DRC government investigative commission, which indicated, among other things, that Ilunga and his team had displayed an ""aggressive and ostentatious attitude"" when visiting the outbreak area and had squandered Ebola response funds on fancy cars and hotel rooms. These developments have suggested an internal power struggle over policy and control of funds for Ebola response. Humanitarian experts, including U.S. officials, have repeatedly asserted that broader humanitarian access and security issues have stymied outbreak control efforts, and that international response efforts require increased coordination and transparency. In response to such concerns, in May 2019 U.N. Secretary-General António Guterres appointed MONUSCO Deputy Special Representative David Gressly, a U.S. citizen, to serve as a new U.N. Emergency Ebola Response Coordinator charged with establishing a ""strengthened coordination and support mechanism"" for Ebola response. While the WHO is to continue to lead ""all health operations and technical support activities to the government,"" Gressly is leading a broader U.N.-wide effort to strengthen political engagement, financial tracking, humanitarian coordination, and ""preparedness and readiness planning"" for Goma and surrounding countries. Gressly, who continues to report to the head of MONUSCO, portrayed his new role as a reflection of the need for ""more than just a public health response."" The WHO has deployed some 700 personnel to DRC since the current outbreak began. These personnel are coordinating the public health response and providing operational and technical support to DRC government personnel and other actors. Particular areas of focus include detection and rapid isolation of Ebola cases, intensification of rapid multidisciplinary public health actions for Ebola cases, community engagement, and health system strengthening. In addition, the WHO is coordinating regional readiness exercises and assessments in adjacent areas of DRC and neighboring countries. Vaccination and disease surveillance efforts have been bolstered in Uganda, Rwanda, and Burundi. The World Bank has stepped up its role in supporting the Ebola response effort since mid-2019. On July 24, the World Bank Group announced it was mobilizing up to $300 million—to be financed through the Bank's International Development Association and its Crisis Response Window—on top of $100 million disbursed previously through the International Development Association and the Bank's Pandemic Emergency Financing Facility (PEF). The PEF announced a further $30 million disbursement for DRC on August 23, 2019. World Bank resources have financed free health care and essential medicines in clinics in all affected areas, hazard pay for frontline health workers, handwashing stations, mobile laboratories, decontamination teams, psychosocial support teams, community engagement campaigns, and vaccination efforts. The injection of new resources aims to build on existing World Bank support to strengthen the DRC health system. The African Union (AU) Africa Centers for Disease Control and Prevention (Africa CDC) has supported international response efforts by deploying members of its voluntary response corps to DRC and neighboring countries. Africa CDC voluntary responders include epidemiologists and anthropologists, as well as communication, laboratory, and logistics experts from various African countries who are ""on standby for emergency deployment."" To date, these responders have trained local health workers and community volunteers, set up laboratories, supplied personal protective equipment, and trained people in port-of-entry screening. USAID and the U.S. Centers for Disease Control and Prevention (CDC) deployed staff to DRC and the region when the outbreak was first detected in August 2018. The United States is also the top country donor to the Ebola response effort, as noted above. As of September 10, USAID had announced more than $148 million for direct support to the Ebola response within DRC and another $9.8 million to support preparedness and prevention activities in neighboring countries. Those funds were drawn primarily ($156.1 million) from unobligated FY2015 International Disaster Assistance (IDA) funds that Congress appropriated on an emergency basis for Ebola response during the West Africa outbreak ( P.L. 113-235 ). According to USAID, the available balance of FY2015 emergency IDA Ebola funds stood at $105.5 million as of September 9. More broadly, the United States is the top bilateral humanitarian donor to DRC and the top financial contributor to MONUSCO, which is providing logistical and security support to Ebola response efforts. USAID Administrator Green testified before Congress in April 2019 that ""there is sufficient money for fighting Ebola in DRC,"" asserting that nonfinancial challenges posed the primary constraint to containment efforts. U.S. funding commitments have continued to grow since then, however, as the outbreak has persisted and broadened. U.S. personnel are providing technical support from Kinshasa, Goma, and neighboring Rwanda and Uganda, while implementing partners (U.N. agencies and NGOs) are administering Ebola response efforts within the outbreak zone with U.S. resources. The Administration has placed strict constraints on the movement of U.S. personnel to and within affected areas, due to security threats. In September 2018, USAID and CDC withdrew personnel from the immediate outbreak zone due to security concerns, despite CDC's stated preference to maintain staff in the field. U.S. support for outbreak control has included the following: USAID has provided grant funding to NGOs and U.N. entities carrying out Ebola response and preparedness activities, drawing primarily on IDA funds (as noted above). In October 2018, USAID deployed a Disaster Assistance Response Team (DART) to coordinate the U.S. response in support of the DRC government, the WHO, and other partners. USAID Ebola response funds have supported disease surveillance, infection prevention and control, safe and dignified burials, water and sanitation aid, prepositioning of medical supplies, humanitarian coordination, and logistics. U.S. bilateral economic and health aid funding for DRC has also supported programs that may ease humanitarian access or otherwise complement Ebola response activities. CDC personnel have provided direct technical support to the DRC government, the WHO, and USAID's DART for disease surveillance, contact tracing, data management, infection protection and control, risk communication and community engagement, laboratory strengthening, emergency management, and surveillance at points of entry. CDC staff also have supported Ebola preparedness efforts in neighboring countries. The Department of Defense has supplied laboratory training to Ugandan researchers and has partnered with them to conduct clinical Ebola vaccine trials. Security threats have periodically forced the temporary cessation of Ebola case management in some areas, interrupted contact tracing, and frustrated surveillance efforts in high-transmission areas. Dozens of armed groups are active in the areas most affected by the outbreak. These include an array of local militias, along with the Allied Democratic Forces (ADF), a relatively large and opaque group implicated in attacks on U.N. peacekeepers, local military forces, and civilians. Road travel is often dangerous, with frequent reports of militia attacks, armed robbery, and kidnappings. In April 2019, the Islamic State claimed responsibility for an attack on local soldiers previously attributed to the ADF, the latest in a series of signs of emerging ties between the two. State security force personnel reportedly maintain ties with armed groups and have been implicated in atrocities, including civilian massacres in Beni territory since 2014. Local mistrust of government officials and outsiders (including Congolese who are not from the immediate area)—sometimes rooted in conflict dynamics, ethnic tensions, and political friction—has prompted some community resistance to Ebola control efforts and led to attacks on health workers and facilities, including Ebola treatment centers. Some communities in Beni and Butembo have long opposed DRC's central government and complained of neglect and persecution. WHO officials have urged broader international support for ""political mediation, engagement with opposition, and negotiated solutions,"" asserting that ""[j]ust purely focusing on community engagement and participation will not fix what are deep seated political issues that need to be addressed at a higher level."" Perceptions that outsiders are profiting financially from the outbreak, or that international intervention is driven more by fear of contagion than concern for locals' wellbeing, appear to have fueled conspiracy theories and community resistance. At a July 15 donors event on Ebola response in Geneva, WHO Director-General Dr. Tedros Adhanom Ghabreyesusi said that Congolese in the outbreak zone had asked him, ""Are you here to help us, or to prevent this thing from coming to you? Are you doing this for us, or for yourself?"" He added, ""It embarrasses me.… We should not appear to be seen as if we are parachuting in and out because of Ebola."" DRC's then-Health Minister argued in the same meeting that local perceptions that the response was bringing cash into the region had fueled threats to health workers, including kidnappings. Local perceptions that donors are more concerned with preventing the spread of Ebola to their countries than with helping Congolese communities are rooted, in part, in enduring health challenges. Maternal and infant deaths, for example, have for years regularly exceeded the current count of Ebola deaths but have received comparatively little attention. Authorities have redirected health resources in some areas for Ebola control, deepening local frustrations. Vaccination campaigns have also been interrupted in some Ebola hotspots. In Ituri province, for example, inadequate supply of measles vaccine has limited containment of a measles outbreak that began in January and has infected over 161,000 people, claiming over 3,000 lives. Health workers also are fighting a cholera outbreak that has infected over 15,000 people and killed at least 287. The WHO has reported that Ebola transmission is likely occurring in ill-equipped and understaffed health facilities. Inconsistent adherence to infection prevention and control, periodic disruptions in supply chain systems, and limited access to water for handwashing in some health facilities have complicated Ebola control efforts. In addition, some health workers have refused to wear personal protective equipment in health facilities or perform rudimentary infection prevention and control measures due to threats of violence by some members of the community. As of August 27, 2019, 156 health workers had contracted Ebola, at least 34 of whom had died. The MoH, WHO, and other partners have identified health facilities of concern and are addressing lapses in triage, case detection, and infection prevention and control. Community Engagement. The WHO and implementing partners have worked to deepen local engagement, with some reported positive results. Local Ebola committees in Butembo and Katwa (at the center of the outbreak zone in North Kivu), for example, are chaired and managed by community members who plan Ebola awareness and sensitization campaigns. Improved community engagement has reportedly contributed to increased participation in vaccine campaigns and safe and dignified burial practices. For example, the WHO reported in July 2019 that a high-risk contact in Katwa had sought vaccination and offered to bring other contacts. In an effort to reduce the risk of transmission and broaden access to Ebola treatment and case finding, the WHO also plans to establish smaller patient transit centers closer to communities. Replicating engagement activities in emergent hot spots remains a challenge, however. Ebola Therapeutics Advance. In August 2019, a clinical trial of four investigational Ebola treatments in DRC identified two ""strong performers,"" leading the WHO to state that ""these are the only drugs that future patients will be treated with."" The trial, launched in late 2018, was co-sponsored by DRC's national biomedical research institute and the U.S. National Institutes of Health, and was carried out by an international research consortium coordinated by the WHO. In FY2015, in the context of the West Africa outbreak, Congress appropriated $5.1 billion for Ebola response and preparedness on an emergency basis, including $1.436 billion in multiyear International Disaster Assistance (IDA) funds (Title IX of Division J, P.L. 113-235 ). U.S. funding for responding to the current outbreak has drawn primarily on the unobligated balance of these IDA funds. According to USAID, $105.5 million of these funds remained available for expenditure as of September 9, 2019. Should the outbreak continue or expand in new ways, Congress may consider what funding mechanisms, if any, the United States might use to support Ebola control. At the same time, the United States remains the lead country donor to the current Ebola response effort. Members may examine the U.S. role, vis-à-vis other actors (including other countries, multilateral entities, and private sources), in financing Ebola response activities, and may debate strategies for securing additional contributions from other donors. DRC is ranked as ""Tier III"" (worst) under the Trafficking Victims Protection Act (TVPA, P.L. 106-386 , as amended), which triggers prohibitions on certain types of U.S. aid absent a full or partial presidential waiver. In FY2019, in a departure from previous practice, President Trump did not partially waive the restrictions for DRC. Thus, pursuant to the TVPA, no ""nonhumanitarian, nontrade-related"" assistance may be provided ""to the government"" of DRC. IDA funds, the core source of funding for U.S. Ebola response support to date, are exempt from the TVPA restrictions (22 U.S.C. §7102[10]). The TVPA further exempts economic and development assistance ""in support of programs of nongovernmental organizations."" In practice, the Administration has interpreted the TVPA restrictions to apply broadly to various programs funded through the Development Assistance (DA) and Economic Support Fund (ESF) accounts, including some that would be implemented by NGOs, though it has not publicly provided a full account of affected activities. Some Members of Congress have expressed concern that some U.S. assistance that could help promote humanitarian access in Ebola-affected areas has been held up as a result. Testifying before the Senate in July 2019, a senior USAID official affirmed that some FY2018 aid resources that could help with Ebola control remained restricted in connection with the TVPA, but he and other Administration witnesses did not provide further details. Two bills introduced in the 116 th Congress ( S. 1340 , the Ebola Eradication Act of 2019, and H.R. 3085 , a House companion bill) would authorize assistance for a range of activities that could help lower community resistance or otherwise support Ebola control efforts in DRC and neighboring states, ""notwithstanding"" the TVPA restrictions. S. 1340 passed the Senate on September 23, 2019. Similar language was included in a draft FY2020 State, Foreign Operations Appropriations bill circulated by the Senate Appropriations Committee on September 18, 2019. That bill would also broadly provide at least $298.3 million in U.S. bilateral assistance for ""stabilization, global health, and bilateral economic assistance"" to DRC—slightly higher than the U.S. allocation for DRC in recent years, not counting food aid—""including in areas affected by, and at risk from, the Ebola virus disease."" The current Ebola outbreak has prompted resumption of discussions about strengthening health systems worldwide, particularly with regard to pandemic preparedness. In 2014, during the Obama Administration, the United States and the WHO co-launched the Global Health Security Agenda (GHSA) to improve countries' ability to prevent, detect, and respond to infectious disease threats. The United States, the largest donor to this multilateral effort, pledged to support it with $1 billion from FY2015 through FY2019. The Trump Administration has built on these efforts. In May 2019, the White House released the United States Government Global Health Security Strategy , which outlined the U.S. role in extending the Global Health Security Agenda and improving global health security worldwide. Although the Trump Administration, through the strategy and public statements, has supported extending the GHSA through 2024, officials have not provided comprehensive information on what that support would entail. Members of Congress may continue to debate what role, if any, the United States should play in supporting global health system strengthening efforts to bolster global health security, and whether to adjust funding levels to meet ongoing and future infectious disease threats. Through regular appropriations, disease outbreak prevention and global health security efforts are funded through USAID pandemic influenza and CDC global health protection line items ( Table 2 ). On September 19, 2019, the House passed the Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 ( H.R. 4378 ), which would authorize the transfer to the CDC of up to $20 million for Ebola preparedness and response activities from the Infectious Disease Rapid Response Reserve Fund. Other relevant bills introduced in the 116 th Congress include H.R. 2166 , which would codify U.S. engagement in the GHSA as specified in an executive order issued by the Obama Administration, and H.R. 826 , which seeks to facilitate research and treatment of neglected tropical diseases, including Ebola.","The Ebola outbreak in the Democratic Republic of Congo (DRC) that began in August 2018 has eluded international containment efforts and posed significant challenges to local and international policymakers. The current outbreak is the 10 th and largest on record in DRC, and the world's second largest ever (after the 2014-2016 West Africa outbreak). On July 17, 2019, the World Health Organization (WHO) declared the current DRC outbreak to be a Public Health Emergency of International Concern (PHEIC) and called for increased donor funding. To date, the U.S. Agency for International Development (USAID) has announced nearly $158 million to support the response to the outbreak in DRC and neighboring countries, most of which has been funded through USAID-administered International Disaster Assistance (IDA) funds appropriated by Congress in FY2015. Challenges Broad challenges in DRC—including unresolved armed conflicts, shortfalls in the local health care system, political tensions, community grievances, and criminal activities—have hindered outbreak control. The main outbreak zone is an area of eastern DRC where long-running conflicts had already caused a protracted humanitarian crisis. In addition, the outbreak has coincided with a fraught political transition process in DRC, where a former opposition figure, Felix Tshisekedi, was inaugurated president in January 2019. The electoral process and tense negotiations over a coalition government have complicated Ebola response efforts, as well as coordination between national and provincial officials. Ebola and related response efforts have also diverted or interrupted already limited local health resources in affected areas. This phenomenon, in turn, has been linked to interruptions in routine immunization campaigns. Inadequate measles vaccine supplies have limited capacity to control a measles outbreak in DRC that began in January 2019 and has claimed more than 3,000 lives. Since June 2019, a handful of Ebola-infected individuals have been identified in the large city of Goma in eastern DRC (a staging area for humanitarian operations and U.N. peacekeeping activities in the country), in the city of Bukavu (south of the main outbreak zone), and in Uganda. Suspected cases were reported, but not confirmed, in Tanzania in mid-September 2019. Transmission outside the outbreak zone has been limited to date, which may be attributable to internationally supported surveillance and prevention efforts, as well as the use of an investigational vaccine. Concerns nevertheless persist that cases could spread to new areas and/or countries. Uganda (which borders the most affected areas in DRC) has prior experience in Ebola control, but Rwanda, Tanzania, and Burundi do not. Minimal state capacity and protracted conflict in South Sudan and the Central African Republic suggest that a coordinated disease control response in either setting could be highly challenging. Issue s for Congress A potential issue for Congress is the level of funding allocated for global health security and pandemic preparedness versus outbreak response, with funding for outbreak response to date outweighing support for global outbreak prevention. Separately, the State Department's designation of DRC as a ""Tier III"" (worst-performing) country under the Trafficking Victims Protection Act (TVPA, Division A of P.L. 106-386 , as amended) triggers restrictions on certain types of U.S. aid (not including IDA-funded activities). Several bills would authorize U.S. funding for programs intended to lower community resistance and otherwise support Ebola control in DRC and neighboring states, ""notwithstanding"" the TVPA restrictions. These include S. 1340 , the Ebola Eradication Act of 2019, which passed the Senate in September 2019; H.R. 3085 , a House companion bill; and a Senate committee draft of the FY2020 Department of State, Foreign Operations, and Related Programs appropriations bill circulated on September 18, 2019. Some Members of Congress have also monitored State Department security policies that have restricted U.S. government experts' travel to and within the outbreak zone."
"VA’s process for deciding veterans’ eligibility for disability compensation begins when a veteran submits a claim to VA. Staff in one of VBA’s 57 regional offices assist the veteran by gathering additional evidence, such as military and medical records, that is needed to evaluate the claim. Based on this evidence, VBA decides whether the veteran is entitled to compensation and, if so, how much. A veteran dissatisfied with the initial claim decision can generally appeal within 1 year from the date of the notification letter sent by VBA. Under the current appeals process (now referred to by VA as the legacy process), an appeal begins with the veteran filing a Notice of Disagreement. VBA then re-examines the case and generally issues a Statement of the Case that represents its decision. A veteran dissatisfied with VBA’s decision can file an appeal with the Board. In filing that appeal, the veteran can indicate whether a Board hearing is desired. Before the Board reviews the appeal, VBA prepares the file and certifies it as ready for Board review. If the veteran requests a hearing to present new evidence or arguments, the Board will hold a hearing by videoconference or at a local VBA regional office. The Board reviews the evidence and either issues a decision to grant or deny the veteran’s appeal or refers the appeal back to VBA for further work. According to VA’s appeals plan, VA intends to implement the Act by February 2019, by replacing the current appeals process with a process offering veterans who are dissatisfied with VBA’s decision on their claim five options. Two of those options afford the veteran an opportunity for an additional review of VBA’s decision within VBA, and the other three options afford them the opportunity to bypass additional VBA review and appeal directly to the Board. Under the new appeals process, the two VBA options will be: 1. Request higher-level review: The veteran asks VBA to review its initial decision based on the same evidence but with a higher-level official reviewing and issuing a new decision. 2. File supplemental claim: The veteran provides additional evidence and files a supplemental claim with VBA for a new decision on the claim. The veteran can also request a VBA hearing. The three Board options will be: 3. Request Board review of existing record: The veteran appeals to the Board and asks it to review only the existing record without a hearing. 4. Request Board review of additional evidence, without a hearing. 5. Request Board review of additional evidence, with a hearing. In November 2017, VA initiated a test of the new VBA higher-level review and supplemental claim options. According to VA’s appeals plan, a purpose of this test—the Rapid Appeals Modernization Program (RAMP)—is to reduce legacy appeals by providing veterans with a chance for early resolution of their claims within VBA’s new process. Participation in RAMP is voluntary, but veterans must withdraw their pending legacy appeal to participate, according to VA’s appeals plan. In our March 2018 report, we found that VA’s November 2017 plan for implementing a new disability appeals process while attending to appeals under way in the current (legacy) process, addressed 17 of 22 elements required by the Act. For the 5 remaining elements, we found that it partially addressed 4 elements related to implementation monitoring, productivity projecting, and workforce planning, and did not address 1 element related to identifying total resources. This element called for delineating the resources needed by VBA and the Board to implement the new appeals process and address legacy appeals. We recommended in March 2018 that VA address all 22 required elements in the Act in VA’s appeals plan to Congress—including delineating resources required for all VBA and Board appeals options— using sensitivity analyses and results from its test, RAMP, where appropriate and needed. Since our March 2018 report, VA has taken some action on each of the five elements that we found were not fully addressed at that time. For example, VA added details related to projecting staff productivity, identifying total resources, as well as determining personnel requirements and productivity projections for processing appeals. For identifying total resources, VA added FTE information for other offices that help implement the appeals process and prepared a model to project resource needs. Although VA now addresses the 1 element related to projecting productivity, it only partially addresses 4 elements related to monitoring implementation, workforce planning, and delineating the total resources. For example, as of November 2018, VA’s plan does not contain metrics for monitoring implementation. Moreover, for total resources, the updated plan does not delineate the total resources required by VBA and the Board, such as the resources necessary for information technology and training. We acknowledge that in some cases delineating total resources could prove challenging, such as delineating information technology resources for the legacy and new appeals processes. We also acknowledge that implementing corrective actions to fully address these 4 elements may be challenging within the next several weeks, but we continue to believe VA has an opportunity to further address these 4 elements as part of certifying the agency’s readiness prior to the full implementation of the new process. In our March 2018 report, we found gaps in VA’s planning for how it will monitor and assess performance of the new appeals process when it is implemented. Specifically, we reported that the plan did not (1) establish timeliness goals for two of the three Board options (i.e., Board review of additional evidence without a hearing and Board review of additional evidence with a hearing); (2) articulate aspects of performance important for managing appeals, such as accuracy of decisions, veteran satisfaction with the process, or cost; (3) explain how the performance of the new appeals process would be compared to that of the legacy process; or (4) explain how the agency would monitor relative workloads of, and resources devoted to, the new and legacy appeals processes. To address these gaps, we recommended that VA clearly articulate in its appeals plan how VA will monitor and assess the new appeals process compared to the legacy process, including specifying a balanced set of goals and measures—such as timeliness goals for all VBA appeals options and Board dockets, and measures of accuracy, veteran satisfaction, and cost—and related baseline data. Articulating a balanced set of goals that cover key aspects of managing appeals is important to avoid promoting skewed behaviors (e.g., favoring timeliness over accuracy) and to fully understanding performance. In its progress reports, VA addressed some but not all aspects of this recommendation (see table 1). VA has made progress in monitoring performance and addressing workload changes in its new and legacy appeals processes, but still lacks a complete set of balanced goals and measures. As we noted in our July 2018 testimony, VA has developed sensitivity models and other analyses to monitor and forecast future VBA and Board workloads, production, and staffing requirements to help VA manage the legacy and new appeals processes. However, VBA and the Board have yet to specify a complete set of balanced goals for monitoring the performance of the new appeals processes. According to the November 2018 progress report, the Board plans to develop timeliness goals after VA fully implements the new appeals process. Until VA fully develops a set of balanced goals and measures, the agency risks not fully understanding how well the reforms are performing. Regarding comparing the performance of the new and legacy appeals processes, VA has previously reported that the agency plans to implement the reporting requirements in section 5 of the Act. This section requires VA to report performance measures related to, among other things, timeliness, productivity, and outcomes, without specifying whether or how VA should compare performance of the new versus legacy processes. In November 2018, VBA and Board officials told us they intend to use timeliness and productivity metrics from section 5 to compare the two processes. However, in its updated plans to date, VA has been reporting average timeliness of decisions made to date under RAMP—VA’s test of the two VBA options—without reporting the average time cases are pending. Moreover, VA has not been reporting timeliness data on both decisions and pending cases according to the month that they entered into RAMP, which present a more balanced indication of performance and trends. In November 2018 VBA and Board officials told us they would consider reporting timeliness using a monthly cohort that reflects when appeals were filed. VBA and Board officials also said they have taken steps to collect, through surveys, comparable information on veterans’ satisfaction with the new and legacy appeals processes. According to VBA and Board officials, they have pre-tested the surveys—which is considered a best practice by survey methodologists—and are coordinating the survey efforts with one another. VBA and Board officials also told us that the agency will report on accuracy and outcomes (grants and denials of claims) in the new process. However, they also stated that these measures would not provide a fair comparison with the legacy process because the Act eliminated several of the requirements formerly required in the legacy appeals administrative processes. Although VA officials said they would develop a plan for comparing the performance of the two appeals processes after the new process is fully implemented, they did not indicate how soon they would do so. Developing such a plan would better position the agency to fully understand whether the new process is an improvement. Our March 2018 report identified elements of a high-quality and reliable implementation schedule that were missing from VA’s master schedule for appeals reform. Specifically, we reported that VA’s high-level master schedule—which the agency included with its November 2017 plan—did not (1) include all key activities; (2) show which activities must finish prior to the start of other activities, or the amount of time an activity could be delayed before the delay affects VA’s estimated implementation date; (3) reflect interim goals and milestones for monitoring implementation; or (4) assign resources for activities. We recommended that VA augment the master schedule for its appeals plan to reflect all activities—such as modifications to information technology systems—as well as assigned responsibilities, interdependencies, start and end dates for key activities for each workgroup, and resources. These steps establish accountability and reduce overall risk of implementation failures. In response to our recommendation, the Board, VBA and other VA administrations made progress over time with developing and integrating underlying plans into the integrated master schedule (IMS) in spring and summer 2018. According to VA officials, VA set a baseline schedule for implementing appeals reform in response to the potential February 2019 implementation date established in the Act. Since November 2017, VA’s plan and progress reports have stated that VA uses an agency-wide governance structure to coordinate implementation, and regularly uses the schedule as a management tool for monitoring progress on appeals reform. For example, the Board’s project manager meets regularly with those responsible for major activities to check progress, including weekly meetings with leadership, and identifies and corrects issues related to schedule execution. In October 2018, VA provided us with lower-level schedules and information that allowed us to conduct a more detailed assessment of VA’s IMS against applicable best practices criteria. The six criteria we assessed lower-level schedules against were: Capturing all activities: schedule should reflect all activities necessary to perform work to accomplish a project’s objective. Sequencing activities: activities should be logically sequenced in the order they are to be carried out so that critical program dates can be met. Assigning resources: schedule should reflect all resources necessary to complete work, verify whether resources will be available, and identify any constraints. Verifying horizontal and vertical traceability: schedule should be rational and logically sequenced, account for interdependencies among activities, and provide a way to evaluate the current status (horizontal traceability). Also, the various levels of a schedule— summary, intermediate, and detailed—should be consistent with one another and enable different teams to work to the same schedule expectations (vertical traceability). Updating the schedule using actual progress and logic: maintain and continually update the schedule to reflect a realistic forecast of start and end dates of activities. Maintaining a baseline schedule: use original configuration of the program plan as a point of comparison for the current plan to manage scope, timeframes, and required resources. We found that, while VA has made progress with providing more detail, its master and underlying schedules only minimally met sound practices for project management. Specifically, as with our March 2018 assessment, we found that the schedule does not contain enough detail to manage the work or provide a realistic representation of the resources and time needed for this project. For example, the schedule did not contain a work breakdown structure that defines the work, activities, and resources necessary to accomplish implementation. Moreover, half of all the remaining activities are missing logic that shows which activities must finish prior to the start of other activities. In addition, the schedule contains an invalid critical path, meaning that the schedule does not present the amount of time that key activities could be delayed before such delays affect VA’s estimated implementation date. Without a valid critical path, management cannot focus on activities that will detrimentally affect the key program milestones and deliveries if they slip. To address our March 2018 recommendation, VA would need to ensure that all activities are accounted for, that scheduled activities appear in the correct order, that resources are properly allocated, that all activities appear on the critical path, and that a schedule risk analysis accounts for all risks. We provide a more detailed explanation of our assessment results in appendix I. In addition, establishing an overly optimistic schedule can reduce capacity for carrying out a project and potentially create pressure to sacrifice the quality of work activities to meet deadlines. Moreover, many of VA’s activities are slated to be concurrently completed just before implementation, posing a significant risk to implementing reform in February. For example, according to VA’s schedule, the agency needs to complete 117 activities after January 1, 2019. Further, other VA efforts to redesign or update key aspects of VA’s disability compensation process—including the Veterans Benefits Management System (VBMS)—were not driven by robust, comprehensive planning and did not achieve their schedule goals. While VA intends to start full implementation in February, we do not know the extent to which the lack of a robust schedule poses risks to successful and smooth implementation. Even if taking corrective actions to address our findings may not be feasible before February, incorporating such lessons learned into future project planning could help VA improve its project scheduling capabilities. In our March 2018 report, we found that VA’s appeals plan could more fully assess key risks related to implementing the new appeals process. In particular, we found that VA’s plan did not include testing of new Board options or clearly define how it would assess the RAMP test of the VBA- only options before implementing them more broadly. Further, we reported that VA’s plan had not comprehensively reflected key risks because the agency had not established a complete and balanced set of goals and measures, which are a necessary pre-condition to effectively assessing risk. We recommended that VA ensure that the appeals plan more fully addresses risk associated with appeals reform by, for example, assessing risks against a balanced set of goals and measures, articulating success criteria and an assessment plan for RAMP, and testing or conducting sensitivity analyses of all five appeals options before fully implementing the new appeals process. In its progress reports, VA took many steps to address our recommendation, although key steps are remaining for VA to better assess risks associated with implementing appeals reform and managing appeals workloads in the legacy process (see table 2). Sound redesign and change management practices both suggest that tests be rigorously monitored and evaluated and that further roll-out occur only after an agency takes any needed corrective action and determines that the new process is achieving previously identified success criteria. Until VA takes these remaining steps, it may not have comprehensively addressed key risks to better position the agency for successful implementation of appeals reform. In conclusion, VA is undertaking an ambitious effort to reform its disability appeals process—while onboarding hundreds of new staff and implementing new technology—that will affect the lives of hundreds of thousands of veterans with disabilities for years to come. Consistent with our prior recommendations, VA has made concrete progress to improve its planning for disability appeals reform while it attends to legacy appeals. Efforts such as resuming sensitivity analysis to monitor workloads and testing VBA and Board appeals options will provide useful information to guide VA through the uncertainty often associated with process change. However, VA has reported it plans to fully implement the new disability appeals process in February 2019 even though it has yet to fully address our recommendations. While fully implementing our recommendations prior to February 2019 may not be feasible, doing so would better position VA to ensure successful implementation. Nevertheless, VA should still work to increase clarity around its plans prior to fully implementing reform. Moreover, many of the principles of sound planning practices that informed our recommendations remain relevant during process change. By continuing to improve its approach to performance measurement, scheduling, and risk management, even after implementation, VA could better ensure that the new process meets veterans’ needs. Chairman Roe, Ranking Member Walz, and Members of the Committee, this concludes my prepared statement. I would be pleased to respond to any questions you may have at this time. For further information about this testimony, please contact Elizabeth H. Curda at (202) 512-7215 or curdae@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 this testimony include James Whitcomb (Assistant Director), Juaná Collymore, Michele Grgich, Sara Pelton, and Rachel Pittenger. In addition, key support was provided by Susan Aschoff, Mark Bird, Alex Galuten, Jason Lee, Sheila R. McCoy, Almeta Spencer, and Walter Vance. For this testimony, we assessed the steps that the Department of Veterans Affairs (VA) has taken to address our March 2018 recommendations and what aspects remain unaddressed, including the extent to which VA is using sound practices for scheduling key projects. In summary, we identified several areas where VA’s most recent schedule falls short of sound practices. Further incorporating sound practices into future project planning could help VA improve its project scheduling capabilities. We reviewed VA’s integrated master schedule (IMS) for the appeals reform effort and underlying sub-schedules to assess them against 6 of the 10 best practices, which we determined most relevant to our March 2018 recommendation that VA augment its master schedule for VA’s appeals plan to reflect all activities—such as modifications to information technology systems—as well as assigned responsibilities, interdependencies, start and end dates for key activities for each workgroup, and resources, to establish accountability and reduce the overall risk of implementation failures. Specifically, we analyzed the following related scheduling best practices: (1) Capturing all activities, (2) Sequencing all activities, (3) Assigning resources to all activities, (4) Verifying that the schedule can be traced vertically and horizontally, (5) Updating the schedule using actual progress and logic and (6) Maintaining a baseline schedule. We assessed VA’s lower-level schedules against these 6 best practices by: Checking for specific problems that could hinder the schedule’s ability to respond to changes. For example, we: o Examined if there are any open-ended activities (i.e., activities with no predecessor and/or successors), o Searched for activities with poor logic: For example, Start to Start successor only or Finish to Finish predecessor only which represent dangling logic, or Logic on summary tasks rather than attached to detailed tasks (summary tasks are for organizing the schedule and should not drive the logic). o Looked for activities with constraints which keep the schedule rigid (e.g., start no earlier than, finish no later than, etc.), o Determined if activities were resource loaded—which helps to cost out the schedule—and examine whether resources are over- allocated or not available when needed, o Examined the schedule’s critical path to determine whether or not it was reliable and logical, o Examined schedule float and determined if it was reasonable, and o Examined whether the schedule was baselined, its status cycle, and what deviations there were from the original plan. We also determined if there were any actual start or finish dates recorded in the future and whether there was any broken logic between planned tasks. We also interviewed VA officials responsible for managing the schedule. We scored each scheduling leading practice on a five-point scale: “not met”, “minimally met”, “partially met”, “substantially met” and “fully met.” We determined the characteristic assessment rating by assigning each best practice rating a number and taking the average. Our resulting conclusions based on this assessment are as follows: VA’s project schedule minimally meets the best practice of capturing all activities. The schedule does not have well-defined start and finish milestones and there is not a project work breakdown structure (WBS) or corresponding WBS dictionary to define the work for each WBS element. We were not able to independently verify contractor work or major handoffs and deliverables in the schedule. In addition, there were activities with duplicate names, which could make communication difficult between VA teams, particularly between team members who are responsible for updating and integrating multiple schedules. VA’s project schedule minimally meets the best practice of sequencing activities. There are issues with missing dependencies, dangling activities, summary links, constraints and lags that affect the schedule meeting this best practice. Specifically, of the remaining activities, 55 percent have missing logic, over 12 percent are dangling, 42 percent have date constraints and 4 percent have leads assigned. When activities are not correctly linked, the program cannot use the integrated master schedule (IMS) to identify disconnects or hidden opportunities and cannot otherwise promote efficiency and accuracy or control the program by comparing actual to planned progress. When this happens, the schedule will not allow a sufficient understanding of the program as a whole, and users of the schedule may lack confidence in the dates and the critical path. VA’s project schedule minimally meets the best practice of assigning resources. While the schedule contains ‘Task Owner’ assignments, the Task Owner information has no effect on the durations or forecasted start and finish dates of detailed activities. Information on resource needs and availability in each work period assists the program office in forecasting the likelihood that activities will be completed as scheduled. If the current schedule does not allow insight into the current or projected allocation of resources, then the risk of the program’s slipping is significantly increased. VA’s project schedule minimally meets the best practice of verifying the schedule is traceable horizontally and vertically. There was no evidence in the schedule of hand-offs within the schedule—that is givers and receivers are easily identifiable in the schedule. We were unable to determine the relationship between lower-lever activities in the project schedule and higher-level activities and milestones in the management briefs provided to us. Specifically, we could not map the activities in the briefs to activities in the schedule. This inconsistency also prevented the verification of dates between the project schedule and higher-level management documents, even with documents that were provided from the same month as the October schedule. Products and outcomes were not easily traced through the sequencing of effort in the project schedule. In both cases the schedule did not respond appropriately to “shocks”; that is, greatly increasing the durations of some activities to increase the overall time required to complete the project did not affect the dates of key milestones. The duration increase of each activity did not affect the overall time line because the activity in question had a constraint that would not allow the project to appropriately extend. VA’s project schedule minimally meets the best practice of updating the schedule using progress and logic. Date anomalies, such as planned dates in the past or actual dates in the future, were found. The schedule was not current as of the date delivered to GAO. While officials report that they update the schedule regularly, a schedule narrative document does not accompany the schedule update that would detail changes to the current schedule and describe information such as the status of key milestone dates, changes in network logic, and a description of the current critical path(s). VA’s project schedule minimally meets the best practice of maintaining a baseline schedule. Officials said that the baseline schedule is the basis for performance measurement. But while baseline start and baseline finish dates were provided in the initial schedule, its activities were too high level, obfuscating the calculation of detail variances in subsequent schedules. There is also no evidence of a schedule basis document, which would include a general overview of the purpose of the schedule, other key basis information such as an overview of assumptions, rationale for durations specific to the CMR schedule, and required software settings. There is also no evidence of performance measuring. 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's disability compensation program pays cash benefits to veterans with disabilities connected to their military service. In recent years, veterans who appealed VA decisions on their claims have waited an average of 3 years. The subset of appeals resolved by the Board of Veterans Appeals—a separate VA agency that provides a higher level of appeals review—took on average 7 years to resolve. The Veterans Appeals Improvement and Modernization Act of 2017 makes changes to VA's current (legacy) process, giving veterans options to have their claims reviewed by VA or to appeal directly to the Board. The Act requires VA to submit to Congress and GAO a plan for implementing a new appeals process (which VA submitted in November 2017) and periodic progress reports (which VA submitted in February, May, August, and November 2018). The Act also includes a provision for GAO to assess VA's original plan. In March 2018, GAO found that VA could help ensure successful implementation of appeals reform by addressing gaps in planning and made four recommendations, with which VA agreed. This testimony focuses on the steps VA has taken to address GAO's recommendations, what aspects remain unaddressed, and risks these gaps pose for implementation. For this statement, GAO reviewed VA's updated plans, assessed VA's schedules against best practices, interviewed VA officials and reviewed information they provided about steps taken to implement GAO's recommendations. In a March 2018 report, GAO made four recommendations to address planning gaps in the Department of Veterans Affairs' (VA) November 2017 plan for changing its appeals process for disability compensation claims. Since then, VA has updated its appeals reform plan and taken steps to address aspects of these recommendations, but further steps could enhance its readiness for implementation: Address all legally required elements . VA's November 2017 plan did not address one and only partially addressed four of 22 elements required by the Veterans Appeals Improvement and Modernization Act of 2017 (Act); GAO recommended VA fully address all 22. As of November 2018, VA addressed one element related to projecting productivity and took steps to partially address the other four. VA is still missing information the agency needs to certify that it has the resources needed to successfully implement appeals reform. Articulate plans for performance monitoring and assessment . GAO recommended VA clearly articulate how it will monitor and assess the new appeals process relative to the legacy process, including, for example, specifying timeliness goals for the five new appeals options, and measures for decision accuracy in processing appeals. As of November 2018, VA officials stated their intention to use productivity, timeliness, accuracy, and veteran satisfaction metrics to assess the new versus the legacy appeals processes. However, VA has yet to specify a complete set of goals or measures for monitoring and assessing the relative efficacy of the new process or articulate detailed steps and timeframes for establishing them. Augment master schedule . GAO recommended VA augment its master schedule for appeals reform to reflect sound practices for guiding implementation of reform. Although VA's updated schedule reflected progress since VA's original 2017 plan, it still did not fully meet sound practices for project management. For example, the schedule does not appropriately define the work, activities, and resources necessary to accomplish appeals reform implementation. Without following sound practices, it is unclear whether the schedule poses risks to successful implementation of appeals reform. Address risk fully . GAO recommended that VA's plan more fully address risks in implementing a new appeals process by, for example, testing all appeals options prior to full implementation. As of November 2018, VA took many steps to address risks, although opportunities exist to better assess them. For example, although VA has used lessons learned from tests to update the implementation process, it has not fully tested all aspects nor has it developed mitigation strategies for all identified risks, such as veterans appealing to the Board at higher rates than expected. Until VA takes these remaining steps, it may not have sufficiently accounted for key risks in implementing the new process."
"The Temporary Assistance for Needy Families (TANF) block grant provides grants to states, the District of Columbia, territories, and tribes to help them finance a wide range of benefits and services that address economic disadvantage among children. It is best known as a source to help states finance public assistance benefits provided to needy families with children. However, a state may use its TANF funds ""in a ny manner that is reasonably calculated"" to help achieve TANF's statutory goals to assist families so that children may live in their own homes or with relatives; end dependence on government benefits for needy parents through work, job preparation, and marriage; reduce out-of-wedlock pregnancies; and promote the formation and maintenance of two-parent families. TANF was created by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA; P.L. 104-193 ). That law provided TANF program authority and funding through FY2002. Since that original expiration of funding, TANF has been funded through a series of extensions (one for five years, and others for shorter periods of time). Most current TANF policies date back to the 1996 law. The major TANF issues facing the 116 th Congress stem from questions about whether or not TANF's current policy framework allows states to de-emphasize addressing the original concerns that led to the creation of TANF, which centered on the terms and conditions under which needy families with children could receive public assistance benefits. Most families receiving public assistance in TANF's predecessor programs were headed by single mothers. TANF public assistance (for the remainder of this report, the term ""assistance"" will be used) takes the form of payments to families to help them meet ongoing basic needs, such as food, clothing, and shelter. The assistance is often paid in cash (a monthly check), but it might also be paid on behalf of families in the form of vouchers or payments to third parties. To be eligible for assistance, a family must have a minor child and be determined as ""needy"" according to the rules of the state. The amount of the assistance benefit is also determined by the state. In July 2017, the monthly TANF assistance benefit for a family of three ranged from $170 a month in Mississippi to $1,021 per month in New Hampshire. To provide context for a discussion of TANF issues in the 116 th Congress, this report describes the main issues discussed in the debates leading to the enactment of PRWORA in 1996; provides an overview of the TANF block grant and its funding; discusses current uses of TANF funds; describes how states are held accountable for achieving the federal goals of TANF and the ""work participation requirements""; and discusses the decline in the TANF caseload and the implications for how it affects child poverty. The report also describes legislation introduced in the 115 th and the 116 th Congress as it relates to the issues of TANF funding levels and distribution, the uses of funds, and the ""work participation"" requirements. This report does not address all potential issues related to TANF, particularly those related to issues of family structure (a discussion of responsible fatherhood issues, for example, can be found in CRS Report RL31025, Fatherhood Initiatives: Connecting Fathers to Their Children ). The modern form of assistance to needy families with children dates back to the mothers' pensions (sometimes called ""widows' pensions"") funded by state and local governments beginning in the early 20 th century. Federal funding for these programs was first provided in the Social Security Act of 1935, through grants to states in the Aid to Dependent Children (ADC) program, later renamed the Aid to Families with Dependent Children (AFDC) program. The purpose of these grants was to help states finance assistance to help mothers (mostly single mothers and widows or women married to a disabled father) stay at home and care for their children. The goal of keeping mothers out of the labor force to rear their children was met by resistance from some states and localities. Politically, any consensus regarding this policy goal eroded over time, as increasing numbers of women—particularly married white women—joined the labor force. Additionally, those receiving assistance were increasingly African American families where the father was alive but absent. Benefits and the terms and conditions under which benefits were provided varied considerably by state. A series of administrative and court decisions in the 1950s and 1960s made the terms under which AFDC was provided more uniform across the states, though income eligibility thresholds and benefit levels continued to vary considerably among states up to the end of AFDC and the enactment of TANF. In 1969, the Nixon Administration proposed ending AFDC and replacing it with a negative income tax. While the program would have provided an income guarantee, it also would have gradually phased out benefits as an incentive to work. This proposal passed the House twice but never passed the Senate. In 1972, the Senate Finance Committee proposed to guarantee jobs to AFDC recipients who had school-age children. This proposal was not adopted in the full Senate. President Carter proposed combining the negative income tax with a public service jobs proposal. This, too, was not enacted. In 1981, during the Reagan Administration, the focus of debates over assistance to needy families shifted to a greater emphasis on work requirements and devolution of responsibility to the states. In 1982, President Reagan proposed to shift all responsibility for AFDC to the states, while the federal government would assume all responsibility for Medicaid. This was not enacted. The 1980s also saw an increasing concern that single parents were becoming dependent on assistance. Research showed that while most individuals used AFDC for short periods of time, some received assistance for long periods. There was continuing concern that receipt of AFDC—assistance generally limited to single mothers—led to more children being raised in single parent families. The Family Support Act of 1988 established an education and training program and expanded participation requirements for AFDC recipients. Additionally, the federal government and states fielded numerous experiments that tested approaches to moving assistance recipients (mostly single mothers) into work. These experiments indicated that mandatory participation in a program providing employment services could increase employment and earnings and reduce receipt of assistance. The cash assistance caseload began to increase in 1988, rising to its historical peak in March of 1994. Amid that caseload increase, then-Presidential candidate Bill Clinton pledged to ""end welfare as we know it."" The subsequent plan created by the Clinton Administration was not adopted; instead, House Republicans crafted a plan following the 1994 midterm elections that became the basis of the legislation enacted in 1996. PRWORA created TANF and established a statutorily set amount of funding to states under the TANF basic block grant through FY2002; new rules for assistance recipients, such as a five-year time limit on federally funded benefits; and a broad-purpose block grant, giving states flexibility in how funds are used. The bulk of TANF funding is in the form of a basic block grant. Both the total amount of the basic block grant ($16.5 billion per year) and each state's share of the grant are based on the amount of federal and state expenditures in TANF's predecessor programs (AFDC and related programs) in the early to mid-1990s. States must also expend a minimum amount of their own funds on TANF or TANF-related programs under the maintenance of effort (MOE) requirement. That minimum totals $10.4 billion per year. The MOE is based on state expenditures in the predecessor programs in FY1994. PRWORA froze funding at both the national and state levels through FY2002. TANF has never been comprehensively reauthorized; rather, it has been extended through a series of short-term extensions and one five-year extension. Thus, a funding freeze that originally was to run through FY2002 has now extended through FY2019. There have been no adjustments for changes—such as inflation, the size of the cash assistance caseload, or changes in the poverty population—to the total funding level or each state's level of funding. While there were some federal rules for the AFDC program, states determined their own income eligibility levels and benefit amounts paid under it. There were wide variations among the states in benefit amounts, and some states varied benefit amounts by locality. In January 1997, the maximum AFDC benefit for a family of three was $120 per month in Mississippi (11% of the federal poverty level) and $703 per month in Suffolk County, NY (63% of the federal poverty level). The variation in AFDC benefit amounts created wide differences in TANF funding relative to each state's number of children in poverty because PRWORA ""locked in"" these historical variations in the funding levels among the states. The state disparities in TANF funding, measured as the TANF grant per poor child, have persisted. Figure 1 shows that, generally, Southeastern states have lower grants per child living in poverty than states in the Northeast, on the West Coast, or in the Great Lakes region. PRWORA included a separate fund, supplemental grants, that addressed the funding disparity among the states. From FY1998 to FY2011, supplemental grants were made to 17 states, all in the South and West, based on either low grant amounts per poor person or high rates of population growth. Supplemental grants were funded at $319 million (compared to the $16.5 billion in the basic TANF block grant), and hence had a limited effect on total TANF grant per poor child. Funding for these grants expired at the end of June 2011 and has not been reauthorized by Congress since. Over time, inflation has eroded the value (purchasing power) of the TANF block grant and the MOE spending level. While annual inflation has been relatively low since FY1997 (averaging 2.1% per year), the decline in TANF's purchasing power has compounded to a loss in value of 36% from FY1997 to FY2018. Under the Congressional Budget Office's (CBO's) January 2019 inflation projections, if TANF funding remains at its current (FY2019) level through FY2029, the value of the TANF block grant would degrade even further, falling to half of its value in FY1997. Figure 2 shows the decline in the value of the TANF grant from FY1997 through FY2018, and as projected under the CBO January 2019 economic forecast. PRWORA established a contingency fund (originally $2 billion) that would be available in states with high unemployment or increased food assistance caseloads. Its funding was depleted in the last recession (exhausted in FY2010). Beginning with FY2011, the fund has received appropriations of $608 million per year. The fund provides extra grants for states that have high and rising unemployment (a 6.5% unemployment rate that is also at least 110% of the rate in the prior two years) or Supplemental Nutrition Assistance Program (SNAP) caseloads that are at least 10% higher than they were in 1994 or 1995; and spend more from their own funds than they spent in FY1994. The law provides that a state may receive up to 20% of its basic block grant in contingency funds; however, the funds are paid on a first-come-first-served basis. If the appropriation is insufficient to pay the full amount of contingency funds, they are prorated to the qualifying states. Both population growth and the increase in the rate at which SNAP-eligible households receive benefits have resulted in most states continuing to meet the SNAP caseload trigger for contingency funds through FY2019. Thus, most states with sufficient state spending on TANF-related activities could continue to draw from the contingency fund. The fund generally spends all of its total each year, regardless of the health of the economy—and thus, it is not serving its original purpose to provide a source of counter-cyclical funding. The bills discussed in this report, with the exception of the RISE Out of Poverty Act ( H.R. 7010 , 115 th Congress), would maintain the overall TANF funding level and its distribution among the states, essentially extending the funding freeze that has prevailed since FY1997. A five-year reauthorization was proposed in the Jobs and Opportunity with Benefits and Services for Success Act, both as reported from the House Ways and Means Committee in the 115 th Congress ( H.R. 5861 ) and in its revised version in the 116 th Congress ( H.R. 1753 / S. 802 ). Both versions of the bill would eliminate the TANF contingency fund and use savings to offset an equal increase in mandatory child care spending. The Promoting Employment and Economic Mobility Act ( S. 3700 ; 115 th Congress) would have been a three-year reauthorization. H.R. 7010 would have indefinitely authorized funding for TANF. It would have provided for both an initial increase in TANF funding and ongoing annual increases. The initial increase for each state would have reflected both inflation and child population growth since 1997; future increases would have increased the block grant annually for those factors. While H.R. 7010 would not have redistributed funds among the states, the increases in funding would have been greater for those states that experienced faster child population growth than for those with slower growth, no growth, or population losses. In addition to the higher, capped funding amount of the basic block grant, H.R. 7010 would have provided open-ended (unlimited) matching funds for subsidized employment and to guarantee child care to certain populations. It would also have increased TANF contingency funds. Table 1 summarizes provisions related to TANF funding levels and the distribution of funds in selected legislation introduced in the 115 th and 116 th Congresses. Though most of the debates leading to PRWORA in 1996 and the creation of TANF focused on assistance to needy families with children, the law as written created a broad-purpose block grant. Thus, TANF is not a program. It is a funding stream that is used by states for a wide range of benefits and services. States have broad discretion on how they expend federal TANF grants. States may use TANF funds ""in any manner that is reasonably calculated""  to accomplish the block grant's statutory purposes, which involve TANF increasing the flexibility of states in operating programs designed to provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and encourage the formation and maintenance of two-parent families. There are no requirements on states to spend TANF funds for any particular benefit or activity. Current law does not have a statutory definition of ""core activities"" to guide states to prioritize spending among the wide range of benefits and services for which TANF funds may be used. States also determine what is meant by ""needy"" for activities related to the first two statutory goals of TANF. And states may use federal TANF funds for activities related to reducing out-of-wedlock pregnancies and promoting two-parent families without regard to need. In addition to expending federal funds on allowable TANF activities, federal law permits states to use a limited amount of these funds for other programs. A maximum of 30% of the TANF block grant may be used for the following transfers or expenditures: transfers to the Child Care and Development Block Grant (CCDBG); transfers to the Social Services Block Grant (SSBG) (the maximum transfer to the SSBG is set at 10% of the basic block grant); and a state match for reverse commuter grants, providing public transportation from inner cities to the suburbs. The range of expenditures on activities that states may count toward the maintenance of effort requirement is—like the authority to spend federal funds—quite broad. The expenditures need not be ""in TANF"" itself, but in any program that provides benefits and services to TANF-eligible families in cash assistance, child care assistance, education and job training, administrative costs, or any other activity designed to meet TANF's statutory goals. States may count expenditures made by local governments toward the MOE requirement. Additionally, there is a general rule of federal grants management that permits states to count as a state expenditure third-party (e.g., nongovernmental) in-kind donations, as long as they meet the requirements of providing benefits or services to TANF-eligible families and meet the requirements for the types of activities that states may count toward the MOE requirement. Most federal rules about state accountability apply only to expenditures on assistance and families receiving assistance. TANF has few federal rules for the other expenditure categories. Thus, the federal rules under the CCDBG (e.g., the CCDBG health and safety requirements) apply only to federal TANF dollars transferred to CCDBG. These rules do not apply to TANF funds spent on child care but not transferred to CCDBG. The same principle applies to spending in most other expenditure categories where federal programs exist (e.g., child welfare services and early childhood education, such as Head Start). There is also little in the way of accountability for TANF spending other than assistance spending. Expenditures on TANF assistance have shrunk as a share of total TANF spending. As shown in Figure 3 , total (federal and state) expenditures on assistance totaled $21.9 billion in FY1995 under AFDC. This accounted for more than 7 out of 10 dollars spent on AFDC and related programs. However, by FY2018 assistance accounted for 1 out of 5 TANF dollars. Figure 4 shows the national total of TANF federal and state dollars by activity in FY2018. Most states shifted spending toward areas such as refundable tax credits and child welfare, pre-kindergarten, and other services. Additionally, for child care and work education and training, the reported expenditures are the total expenditures made from TANF and MOE funds—not necessarily expenditures to support families receiving assistance. There is also considerable variation among the states in the share of spending devoted to each of these major categories of expenditures. Figure 5 shows expenditures by major category and state for FY2018. States are sorted by the share of their total expenditures devoted to assistance. The figure shows a wide range of expenditure patterns among the states. For example, the share of total expenditures devoted to assistance range from a low of 2.5% (Arkansas) to a high of 65.8% (Kentucky). Child care expenditures vary from zero in two states (Tennessee and Texas) to a high of 65.6% (Delaware). TANF's flexible funding permits states to use TANF funds in different and innovative ways. For example, states used TANF funds to develop nurse home visiting programs prior to the creation of the primary federal program (Maternal, Infant, and Early Childhood Home Visiting). States also used the flexibility inherent in TANF to develop subsidized jobs programs and different models of subsidizing jobs, including subsidizing private sector jobs. The Jobs and Opportunity with Benefits and Services for Success Act, both as reported from the House Ways and Means Committee in the 115 th Congress ( H.R. 5861 ) and its revised version in the 116 th Congress ( H.R. 1753 / S. 802 ), has provisions that would require at least 25% of TANF expenditures from federal funds and expenditures counted as MOE dollars to be spent on ""core"" activities. The bills would provide a statutory definition of ""core"" activities that includes assistance, work activities, work supports, case management, and nonrecurrent short-term benefits. They would prohibit direct spending on child care within TANF by requiring that TANF dollars be transferred to the CCDBG in order for states to use federal TANF funds for child care, and they would restrict TANF spending on child welfare services. They would also phase out the ability of states to count the value of donated, in-kind services toward their MOE spending requirement. Additionally, they would limit TANF funds to providing benefits and services only to families with incomes under 200% of the federal poverty level (FPL). The version in the 116 th Congress would prohibit direct spending on early childhood education with TANF federal dollars. The RISE Out of Poverty Act ( H.R. 7010 , 115 th Congress) would not have directly limited states' use of basic block grant funds, though it had some provisions related to standards for cash benefit amounts that could affect state spending on assistance versus other benefits and services. H.R. 7010 also had separate matching funds for subsidized employment and guaranteed child care. S. 3700 (115 th Congress) would not have restricted the use of TANF funds. Rather, it would have required additional reporting by states on TANF expenditures. It would have required separate reports on the amount of TANF spending on (1) families that received assistance, and (2) those below 200% of the federal poverty level. Table 2 summarizes provisions related to the use of TANF funds in legislation proposed in the 115 th and 116 th Congresses. A major focus of the debates that led to the enactment of PRWORA was how to move assistance recipients into employment. Under AFDC law, most adult recipients were reported as not working (at least, not working in the formal labor market). In the 1980s and 1990s, both the federal government and the states conducted a series of demonstrations of different employment strategies for AFDC recipients, which concluded that mandatory work participation requirements—in combination with funded employment services—could, on average, increase employment and earnings and reduce assistance expenditures. These demonstrations also found that if such requirements and services were further combined with continued government support to supplement wages, family incomes could, on average, be increased. Mandatory participation requirements meant that if an individual did not comply with work requirements, they would be sanctioned through a reduction in their family's benefit. TANF implemented work requirements through a performance system that applies to the state , rather than implementing requirements on individuals; thus, the mandatory work participation requirements that apply to individual recipients are determined by the states rather than federal law. States have considerable flexibility in how they may implement their requirements. The performance standard states must meet, or risk being penalized, is a minimum work participation rate (WPR). The minimum WPR is a performance standard for the state; it does not apply directly to individual recipients. The TANF statute requires states to have 50% of their families receiving assistance who have a ""work-eligible individual"" meet standards of participation in work or activities—that is, a family member must be in specified activities for a minimum number of hours. There is a separate participation standard of 90% that applies to the two-parent families. A state that does not meet its minimum WPR is at risk of being penalized through a reduction in its block grant. The WPR represents the percentage of families with a work-eligible individual who are either working or participating in job preparation activities. Federal rules list those activities, and also require participation for a minimum number of hours per week (which vary by family type). Federal TANF law limits the extent to which states may count pre-employment activities such as job search and readiness or education and training. The complex rules of the WPR can be met through several different routes in addition to engaging unemployed recipients in job preparation activities: assistance paid to needy parents who are already working, caseload reduction, and state spending beyond what is required under TANF. States receive credit toward their minimum WPR for ""unsubsidized employment""—employment of a work-eligible individual in a regular, unsubsidized job. In the early years of TANF, states began to increase aid to families that obtained jobs while they received assistance. States changed the rules of their programs to allow families with an adult who went to work while on TANF to continue receiving assistance at higher earnings levels and for longer periods of time after becoming employed. This policy helped states meet their minimum WPR, as unsubsidized employment counts toward meeting that requirement. Additionally, such ""earnings supplements"" helped raise incomes of working recipients. In recent years, states have implemented new, separate programs that provide assistance to low-income working parents. For example, Virginia has a program that provides $50 per month for up to one year to former recipients who work and are no longer eligible for regular TANF assistance. Other states, such as California, provide small (e.g., $10 per month) TANF-funded supplements to working parents who receive Supplemental Nutrition Assistance Program (SNAP) benefits. Because these programs are TANF-funded and are assistance, they too help states meet the minimum WPR requirements. The statutory work participation targets (50% for all families, 90% for two-parent families) can be reduced by a ""caseload reduction credit."" This credit reduces the participation standard one percentage point for each percentage point decline in the number of families receiving assistance since FY2005. Additionally, under a regulatory provision, a state may get extra credit for caseload reduction if it spends more than is required under the TANF MOE. Because of the caseload reduction credit, the effective standards states face are often less than the 50% and 90% targets, and they vary by state and by year. Another practice states have engaged in to help meet their minimum WPR is aiding families in ""solely state-funded programs""—those funded with state dollars that do not count toward the TANF MOE. If a family is assisted with state monies not counted toward the TANF MOE, the state is not held accountable for that family by TANF's rules. Many states have moved two-parent families out of TANF and into solely state-funded programs, as these families carry a higher minimum work participation rate. In FY2018, 25 jurisdictions reported no two-parent families in their TANF assistance caseload, though all but two of these jurisdictions did aid two-parent families. Some states have excluded other families from TANF, particularly those less likely to be employed. For example, Illinois assists several categories of families in a non-TANF, solely state-funded program: parents with infants, refugees, pregnant women, unemployed work-eligible individuals not assigned to an activity, and individuals in their first month of TANF receipt. In FY2018, all states except Montana met their all-family (50%) minimum WPR standard. In that year, 18 states met their minimum all-family WPR through caseload reduction alone; and 4 additional states plus Puerto Rico met their minimum all-family WPR through a combination of caseload reduction and credit for state spending in excess of what is required under MOE rules. That is, 23 jurisdictions met their mandatory work participation standard without needing to engage a single recipient in work or job preparation activities. Note that these jurisdictions did report that some recipients in some of their families were working or engaged in job preparation activities, although they did not have to be in order to meet federal requirements. In terms of participation in work or job preparation activities in FY2018, states relied heavily on ""unsubsidized employment"" (i.e., families that receive TANF assistance while a work-eligible member is employed in a regular, unsubsidized job). As shown in Figure 6 , participation in unsubsidized employment was the most common activity, with a monthly average of 40.8% of TANF work-eligible individuals reporting unsubsidized employment during FY2018. In terms of funded employment services, the highest rate of participation among work-eligible individuals was 6.5% in job search and readiness in FY2018. In that year, 3.0% of work-eligible individuals participated in vocational educational training. Close to half of all work-eligible individuals reported no work or participation in activities during a typical month in FY2018. Work requirements mean that participation in work or a job activity is mandatory for certain recipients of assistance. Individuals who do not comply with a work requirement risk having their benefits reduced or ended; thus, such financial sanctions operate as an enforcement mechanism. TANF requires a state to sanction a family by reducing or ending its benefits for refusing to comply with work requirements; however, under current law TANF does not prescribe the sanction the state must use, and the amount of the sanction is determined by the state. Most states ultimately end benefits to families who do not comply with work requirements, though a lesser sanction is often used for first, and sometimes second, instances of noncompliance. States can define ""good cause"" and other exceptions for families refusing to comply, allowing them to avoid sanctions. Additionally, federal law and regulations provide protections against sanctioning certain recipients. States are prohibited from sanctioning single parents with a child under the age of six if the parent cannot obtain affordable child care. States can also provide a waiver of program rules (including work requirements) for victims of domestic violence. Data indicating that nearly half of all work-eligible individuals were not engaged in activities in a typical month and states' reliance on unsubsidized employment has raised concerns that states have not focused on moving unemployed recipients into work. The effectiveness of the minimum WPR standard—the primary federal provision to motivate states to try to engage unemployed recipients—has been questioned. As discussed above, the caseload reduction credit has lowered the minimum WPR required of states, sometimes to zero. States have engaged in various practices to help them meet the minimum WPR. Even with relatively low rates of participation in job preparation activities, most states have met their WPR, raising the question as to whether states are ""hitting the target, but missing the point."" The Jobs and Opportunity with Benefits and Services for Success Act, both as reported from the House Ways and Means Committee in the 115 th Congress ( H.R. 5861 ) and its revised version in the 116 th Congress ( H.R. 1753 / S. 802 ), would replace the minimum WPR with a new performance system based on employment outcomes. H.R. 5861 would have replaced the WPR with employment outcomes based on the measures used in the Workforce Innovation and Opportunity Act (WIOA) programs, measuring employment rates and earning levels among those who exit TANF assistance. Each state would have been required to negotiate performance levels with HHS. States that failed to meet those levels would have been at risk of being penalized. The proposal would also have required the development of a model to adjust the outcomes statistically for differences across states in the characteristics of their caseloads and economic conditions. H.R. 1753 / S. 802 introduced in the 116 th Congress would also end the minimum WPR, but replace it with a different outcome measure: the number of people who have left TANF assistance and are employed after six months divided by the total TANF caseload. Each state would negotiate a performance level with HHS on this measure, and risk being penalized through a reduction in its block grant if it fell short of that level. States would also be required to collect and report data on the WIOA measures that were contained in the 115 th Congress version of the bill, but these would be for informational purposes only. The other bills discussed in this report would have retained the WPR. However, S. 3700 (115 th Congress) would have required the collection of WIOA-like performance measure data and a study by HHS of the impact of moving from the WPR to a performance system based on outcome measures. Examining outcomes is often intuitively appealing. Outcomes such as job entry or leaving assistance with a job seem to measure more aptly whether TANF is achieving its goal of ending dependence of needy parents on government benefits through work. However, outcome measures can have their own unintended consequences in terms of influencing the design of state programs. The most commonly cited unintended consequence is ""cream skimming,"" improving performance outcomes through serving only those most likely to succeed and leaving behind the hardest-to-serve. The statistical adjustment models contained in these proposals attempt to mitigate the incentive to ""cream skim,"" but such models might not capture all relevant differences in caseload characteristics. In addition, it can be argued that outcomes do not directly measure the effectiveness of a program. Some families would leave the cash assistance rolls even without the intervention of a program. The effectiveness of a program can also be measured by whether the program made a difference: that is, did it result in more or speedier exits from the program and improve a participant's employment and earnings? That can only be measured by an evaluation of the impact of a program. There is research indicating that long-term impacts of labor force programs are not necessarily related to short-term outcome measures. Current law requires that each adult (or minor who is not in high school) be assessed in terms of their work readiness and skills. States have the option to develop an Individual Responsibility Plan (IRP) on the basis of that assessment, in consultation with the individual, within 90 days of the recipient becoming eligible for assistance. As of July 2017, 37 states and the District of Columbia had IRP plans for TANF assistance recipients. Under current law, the contents of the plan must include an assessment of the skills, prior work experience, and employability of the recipient. The IRP is also required to describe the services and supports that the state will provide so that the individual will be able to obtain and keep employment in the private sector. In 2002, the George W. Bush Administration proposed, as part of its TANF reauthorization, a ""universal engagement"" requirement. The legislation written to implement the Administration's reauthorization proposal would have required states to create a written individualized plan for each family. This universal engagement proposal passed the House three times between 2002 and 2005 and was included in bills reported from the Senate Finance Committee during that period, but it was never enacted. H.R. 5861 , the version of the Jobs and Opportunity with Benefits and Services for Success Act in the 115 th Congress, revived the notion of requiring a plan for each work-eligible individual. The plan, required within 60 days of an individual becoming eligible for benefits, would have incorporated a requirement that the individual participate in the same activities that currently count toward the WPR for the minimum number of hours that currently apply in the rules for WPR participation. The minimum hours vary by family type (e.g., 20 hours per week for single parents, 30 for other family types). States would have had the ability to determine the sanction for noncompliance. H.R. 1753 / S. 802 , the revised version of this bill in the 116 th Congress, directs states to require that all work-eligible individuals who have been assessed and have an individualized plan, except single parents caring for infants, engage in the listed activities for a minimum number of hours based on the individuals' family types. Further, it specifies a formula (hours of participation divided by required hours) for sanctioning families with individuals who refuse to comply with work requirements, instead of allowing states to determine the sanction. States with families who fail to meet these requirements would be at risk of being penalized through a reduction in their block grant. The requirement in H.R. 1753 / S. 802 that all work-eligible individuals participate or be subject to sanction may raise a number of issues: As discussed, current law and regulations afford protections against sanctioning single parents with children under six who cannot obtain affordable child care, and victims of domestic violence. It is unclear how these protections would interact with a new ""universal engagement"" proposal. The emphasis on an individual participation requirement—rather than a participation rate—may raise questions about whether other groups should be exempted or afforded special treatment. For example, should ill, disabled, aged parent, or caretaker recipients be exempt from requirements? Further, individuals with disabilities must be accommodated in the workplace, and reduced hours is one of the potential accommodations. Thus, if Congress were to consider requiring disabled individuals to work, it might consider special dispensations for them that included a reduced-hour requirement. Research suggests that mandatory participation requirements result in fairly large amounts of noncompliance. The bill specifies how that noncompliance would be dealt with—a proportional reduction in benefits—but evidence is lacking on the impacts of that specific sanction versus other forms of sanctioning. The pre-1996 research, while finding that sanctioning was important in enforcing mandatory requirements, which led to higher employment and lower assistance, did not produce evidence on whether any specific form of sanctioning was more effective than others. H.R. 7010 (115 th Congress) also included ""universal engagement"" provisions, but their general intent was to require that each family have a plan rather than to enforce work participation requirements. This bill also would have required states, before sanctioning noncomplying recipients, to notify the family of the noncompliance; provide the noncomplying individual with an opportunity for a face-to-face meeting; and consider whether the noncompliance resulted from mental or physical barriers to employment, limited English proficiency, or failure to receive or access services in the family's plan. Table 3 summarizes the work participation provisions of the selected TANF legislation in the 115 th and 116 th Congresses. The debate that led to the creation of TANF in 1996 focused on assistance to needy families with children—primarily those with one parent, usually a mother without employment in the formal labor market. As discussed earlier in this report, three provisions of law largely shaped the current TANF landscape: limited funding for TANF; TANF's broad authority for states to use funds on a wide range of activities, which has allowed states to use TANF funds for activities unrelated to assistance and the population receiving assistance; and the mandatory work participation rates, which provide states incentives to reduce the cash assistance caseload as well as expand aid to families with earnings. Figure 7 shows estimates that fewer eligible people actually received cash assistance for selected years over the period covered. The selected years include 1995, the year before the enactment of PRWORA; 2000 and 2007, which both represent peaks in the economic cycle; 2010, the year following the end of the most recent recession; and 2016, the most recent year for which data are available. The figure shows that the population eligible for assistance has varied with the economic cycle. However, except for a brief uptick in the caseload during the most recent recession, the number of people receiving assistance has generally declined. The TANF caseload decline resulted from both a decline in the population eligible for assistance (the population in need) and a decline in the share of the eligible population actually receiving benefits; however, much of it was the result of the decline in the share of the eligible population receiving benefits. In 1995, 81.6% of estimated AFDC-eligible individuals received benefits. In 2016, 26.6% of people estimated to be eligible for TANF cash assistance received benefits. How has the decline in the share of eligible individuals affected the child poverty rate? Figure 8 compares the national child poverty rate using income that does not include assistance and income with assistance (AFDC in 1995, TANF thereafter) included. In the selected years the figure covers, both AFDC and TANF reduced the child poverty rate by less than 1 percentage point. In 1995, AFDC income reduced the observed poverty rate by 0.9 percentage points. In 2016, TANF reduced the observed poverty rate by 0.2 percentage points. Though AFDC did relatively little to change the child poverty rate, it did reduce the severity of poverty for children. Figure 9 compares the child deep poverty rate (family incomes under 50% of the poverty threshold) using income that does not include assistance and income with assistance (AFDC in 1995, TANF thereafter) included. AFDC income reduced the deep child poverty rate from 11.2% to 6.6% in 1995. In contrast, TANF assistance decreased the child deep poverty rate from 7.7% to 7.1% in 2016. Another way to examine how the decline in the share of individuals eligible for TANF has diminished the role assistance has played in alleviating child poverty is to examine the pre- and post-assistance aggregate poverty gap. The poverty gap for a poor family is the difference between its poverty threshold and total money income. For example, if a family's poverty threshold is $25,000 and it has money income equal to $20,000, its poverty gap is $5,000. If another family with the same poverty threshold has money income equal to $10,000, its poverty gap is $15,000. The poverty gap for a nonpoor family is, by definition, $0. The aggregate poverty gap is the poverty gap for each poor family summed, and it therefore represents a measure of the depth of poverty (in dollars) for every family in the country combined. If the aggregate gap were somehow filled (i.e., if the family in the first example earned or received an extra $5,000, the family in the second earned or received an extra $15,000, and this same pattern repeated for all families in poverty) poverty would be eliminated. Table 4 shows the pre- and post-assistance poverty gaps for families with children for selected years from 1995 to 2016 in constant (inflation-adjusted) 2016 dollars. In 1995, AFDC reduced the poverty gap by over $24 billion (more than 27% of the pre-assistance poverty gap of approximately $90 billion). After 1996, the poverty gap varied with the economic cycle. However, the share of the gap that was reduced by TANF assistance declined throughout the period in both dollar and percentage terms. In 2016, TANF cash assistance reduced the poverty gap by approximately $4 billion, or 5.7%. The drop in the share of TANF-eligible individuals who receive benefits may raise the question of whether a goal of TANF should be caseload reduction per se, regardless of whether or not the size of the population in need is growing. Under TANF, the primary incentive for states to maintain or reduce the number of families receiving assistance is that states are provided a limited amount of TANF funds. States bear the financial risk of the costs of an increase in the number of families receiving assistance. Such an increase would mean a state would have fewer TANF funds to spend on activities other than assistance. The state might have to use more non-TANF dollars if it wanted to make up the shortfall. On the other hand, fewer families receiving assistance frees up funds to use for such activities. All the bills discussed in this report would maintain a limitation on TANF funds distributed to states to finance assistance, though the RISE Out of Poverty Act ( H.R. 7010 , 115 th Congress) would increase those funds for inflation and population growth. All the bills discussed in this report would either eliminate or limit the caseload reduction credit against the TANF work participation standards. This would eliminate or limit one incentive for states to reduce their assistance caseload. However, states would still have the incentive to reduce their caseload because of limited funding. The bills discussed in this report that would require a minimum percentage of TANF spending be on ""core"" activities do not directly address the question of whether the caseload decline has left a population unserved. They would constrain states in what they spend TANF dollars on, not who benefits from this spending. States would be able to meet the requirement by spending a sufficient amount on work activities, but those dollars could serve disadvantaged parents who do not receive assistance. H.R. 7010 would have required states to have procedures in place, such as pre-sanction reviews, and prohibit full-family sanctions for failure to meet program requirements. These provisions could have affected the share of the TANF-eligible population that receives assistance. All of the bills discussed in this report except S. 3700 (115 th Congress) would make child poverty reduction a goal of the TANF block grant. H.R. 7010 would have also required states to determine family budgets sufficient to meet needs and required them to ensure that the amount of assistance paid by the state meets those needs. This is not a requirement under current law. Under AFDC, states were required to determine a dollar standard of ""need,"" but were not required to pay assistance in the amount of ""need."" Table 5 summarizes provisions related to child poverty reduction and incentives for caseload reduction in selected TANF legislation proposed in the 115 th and 116 th Congress. The debates that led to the creation of TANF focused on the terms and conditions under which assistance for needy families with children had been provided. However, Congress created TANF as a broad-purpose block grant that funds a wide range of benefits and services related to childhood economic disadvantage. Since the mid-1990s, states have shifted spending from assistance to those other TANF-funded benefits and services. Spending on assistance fell as the number of families and individuals receiving assistance fell. Much of the decline in the assistance caseload resulted from a drop in the share of eligible people receiving benefits. A substantial number of children and their parents were eligible for TANF assistance but did not receive it; in 2016, an estimated total of 12.4 million individuals were eligible but did not receive TANF assistance, compared to 4.5 million individuals who received benefits at some point in that year. The result was a diminished impact of assistance on alleviating child poverty. Other means-tested programs have grown in terms of spending and recipients (e.g., the Earned Income Tax Credit (EITC), the child credit, the Supplemental Nutrition Assistance Program (SNAP), and Medicaid). However, these programs do not provide ongoing cash assistance to families to meet basic needs. SNAP provides food assistance, Medicaid provides medical assistance, and the refundable tax credits—the EITC and the refundable portion of the child credit—provide families with income only once a year at tax refund time. If policymakers conclude there is an unmet need for ongoing cash assistance to families to meet basic needs, they might consider changes to TANF or consider other alternatives outside of TANF. A common feature of most of the bills discussed in this report is an attempt to focus a greater share of TANF dollars on activities related to assistance and work, and revamp the way state programs are assessed on their performance in engaging assistance recipients in work or job preparation activities. The elimination of the caseload reduction credit would remove one of the incentives to reduce the number of families receiving assistance. However, there are proposals that would go beyond changes to TANF to address issues related to economic security for families with children. In 2019, a National Academy of Sciences panel on child poverty proposed converting the child tax credit, with a refundable portion that is currently paid once a year through tax refunds, into a monthly, almost universal child allowance. The NAS proposal would provide the child allowance to families both with and without earnings. The NAS stated: The principal rationale for a child allowance paid on a monthly basis is that it would provide a steady, predictable source of income to counteract the irregularity and unpredictability of market income…. Because the child allowance would be available to both low-income and middle-class families, it would carry little stigma and would not be subject to the varying rules and administrative discretion of a means-tested program, thereby promoting social inclusion. Other proposals would seek to guarantee jobs or subsidize jobs. For example, the ELEVATE Act ( H.R. 556 / S. 136 ), introduced by Representative Danny Davis and Senator Wyden, would provide matching grants to states (100% federally funded grants during recessions) to subsidize wage paying jobs for individuals. These proposals echo some of the proposals that were made during past debates. Guaranteed incomes—a child allowance is, in effect, a guaranteed income for families with children—and guaranteed or expanded jobs programs were both proposed in the past. Should Congress again consider such proposals, they may raise issues that have been recurring themes in the debates on policies for low-income individuals, such as whether benefits should be universal or targeted; whether intervention should be in the form of income, services, or employment; whether there should be behavioral conditions (e.g., a requirement to work) attached to aid; and whether policies should be determined nationally or at the state and local levels.","The Temporary Assistance for Needy Families (TANF) block grant was created by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA; P.L. 104-193 ). That law culminated four decades of debate about how to revise or replace the Aid to Families with Dependent Children (AFDC) program. Most AFDC assistance was provided to families headed by single mothers who reported no work in the labor market, and the debates focused on whether such aid led to dependency on assistance by discouraging work and the formation and maintenance of two-parent families. TANF provides a fixed block grant to states ($16.5 billion total per year) that has not been adjusted at either the national or state levels since 1996. The TANF block grant is based on expenditures in the AFDC program in the early to mid-1990s, and thus the distribution of funds among the states has been ""locked in"" since that time. The purchasing power of the block grant has also declined over time due to inflation. Since 1997, it has lost 36% of its initial value. The debates that led to the creation of TANF in 1996 focused on the terms and rules around public assistance to needy families with children. However, PRWORA created TANF as a broad-purpose block grant. States may use TANF funds ""in any manner that is reasonably calculated"" to achieve the block grant's statutory purposes, which involve TANF providing states flexibility to address the effects or the root causes of economic and social disadvantage of children. For pre-TANF programs, public assistance benefits provided to families comprised 70% of total spending. In FY2018, such public assistance comprised 21% of all TANF spending. States spend TANF funds on activities such as child care, education and employment services (not necessarily related to families receiving assistance), services for children ""at risk"" of foster care, and pre-kindergarten and early childhood education programs. There are few federal rules and little accountability for expenditures other than those made for assistance. Before the 1996 law, many states experimented with programs to require work or participation in job preparation activities for AFDC recipients. PRWORA established ""work participation requirements."" Most of these requirements relate to a performance system that applies to the state as a whole, and are not requirements that apply to individuals. The system requires states to meet a minimum work participation rate (WPR). The complex rules of the WPR can be met through several different routes in addition to engaging unemployed recipients in job preparation activities: caseload reduction, state spending beyond what is required under TANF, and assistance to needy parents who are already working. In FY2018, all but one state met the participation standard. A total of 18 states met their minimum WPR through caseload reduction alone. Spending on assistance and the number of individuals receiving assistance have both declined substantially since the mid-1990s. The reduction in the assistance caseload was caused more by a decline in the percentage of those who were eligible receiving benefits than a decline in the number of people who met TANF's state-defined definitions of financial need. Assistance under TANF alleviates less poverty than it did under AFDC. While there have been expansions in other low-income assistance programs since PRWORA was enacted, such as the refundable tax credits from the Earned Income Tax Credit (EITC) and the child tax credit, those programs do not provide ongoing assistance on a monthly basis. Some of the TANF reauthorization bills introduced in the 115 th and 116 th Congresses attempt to focus a greater share of TANF dollars on activities related to assistance and work. Additionally, these bills would revise the system by which state programs are assessed on their performance in engaging assistance recipients in work or job preparation activities."
"Economic conditions have deteriorated rapidly as the spread of Coronavirus Disease 2019 (COVID-19) has led policymakers to limit or close public institutions and business operations, increasing financial hardship for many Americans due to layoffs or time off work. Financial institutions, their regulators, and other government agencies have responded by working with consumers to allow those affected by COVID-19 to temporarily alleviate their financial obligations. As losses continue to mount on businesses from lower consumer demand and rising unemployment, Congress has stepped in with legislation aimed at mitigating the economic impact of COVID-19. On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; H.R. 748 ) into law as P.L. 116-136 . The CARES Act is a wide-ranging act to provide relief to consumers, small businesses, and certain industries amid the economic fallout of COVID-19. The law contains two divisions. Division A contains six titles aimed at making funds available to different entities through various programs, including rebate checks to taxpayers; loans to small businesses for payroll; protections for consumers with outstanding payments (e.g., mortgages, student loans, and rental and healthcare payments); loans and loan guarantees and other investments to help the financial industry and other selected industries; and other public funds for federal, state, local, and tribal government programs aimed at managing the disaster recovery from the national health crisis. Division B provides FY2020 supplemental appropriations for federal agencies to respond to COVID-19. (Hereinafter, title and section references in this report refer to Division A, unless otherwise specified.) Title IV of the CARES Act contains numerous provisions aimed broadly at stabilizing the economy and helping affected households and businesses. It has received considerable attention for containing funding for industry and financial services. Specifically, Section 4003 directs the Department of the Treasury (Treasury) and the Federal Reserve (Fed) to make up to $500 billion available to support various businesses in the aviation sector, as well as the financial system. Some have characterized this as a ""bailout"" of private industry; others assert it is necessary to avoid employment losses and maintain economic stability—the two views are not necessarily mutually exclusive. Title IV also permits federal guarantees for uninsured bank deposits and money market funds, which are beyond the scope of this report. In addition to the financial assistance provided in Title IV, the CARES Act provides financial assistance to small businesses in Title I (including the Payroll Protection Program) and assistance to states and municipalities in Title V. See CRS Report R46284, COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options , by Robert Jay Dilger, Bruce R. Lindsay, and Sean Lowry for information specifically about assistance targeting small businesses found in Title I of the CARES Act. This report provides an overview of Section 4003 and related provisions and explains the terms and conditions associated with the assistance. The report's Appendix compares these provisions to the 2008 Troubled Asset Relief Program (TARP). This report is about the Title IV provisions specifically designed to provide funding for eligible businesses, states, and municipalities, as defined by the act. In particular, Section 4027 appropriates $500 billion to the Exchange Stabilization Fund (ESF) for use by the Treasury Secretary, and Section 4003 allows Treasury to use the $500 billion to support eligible businesses, states, and municipalities that have suffered losses due to COVID-19. As discussed in the next section, Section 4003 allocates up to $46 billion for Treasury to directly provide loans and loan guarantees as follows: (1) not more than $25 billion for passenger air carriers (and certain related businesses), (2) not more than $4 billion for cargo air carriers, and (3) not more than $17 billion for businesses critical to maintaining national security. Treasury may make funds from the remaining $454 billion, plus any unpledged funding from the $46 billion, available to support Fed facilities to provide liquidity to the financial system through lending to eligible businesses, states, and municipalities (described in the "" Federal Reserve Emergency Facilities Backed by the CARES Act "" section, below). Section 4029 terminates this authority on December 31, 2020, and allows outstanding loans and guarantees to be modified, restructured, or otherwise amended, subject to a restriction: the duration of assistance to the passenger air industry cannot be extended beyond five years from the initial origination date. Section 4003 requires recipients to repay this assistance with interest, fees, and in some cases, compensation in the form of warrants, equity, or senior debt. Under the Federal Credit Reform Act (FCRA; P.L. 101-508 ), the Office of Management and Budget and the Congressional Budget Office are to estimate the subsidy associated with this assistance based on the difference between the present discounted value of both the assistance and income received by Treasury from principal and interest payments (along with other forms of compensation). The ultimate size of this subsidy will not be known until terms, such as interest rates and fees, have been decided and it becomes clear to what extent firms are able to repay. By contrast, Sections 4112, 4113, and 4120 provide up to $32 billion in grants to continue payment of employee wages, salaries, and benefits at airline-related industries. The Treasury Secretary has discretion whether to seek compensation for these grants. Treasury has broad discretion to decide how much of each part of the funding to make available to the specified industries or the Fed, in what form, and for what purpose. These funds are made available with certain terms and conditions, however (as discussed in the "" Terms and Conditions "" section, below). For example, Section 4004 sets executive compensation limits on certain companies receiving assistance; Section 4019 restricts eligible recipients of assistance to avoid conflicts of interest; Sections 4114 and 4116 limit recipient firms from taking certain actions; and Sections 4025 and 4115 prohibit conditioning assistance on entering into collective bargaining negotiations. Additionally, several provisions provide enhanced oversight for the Title IV funding programs. Sections 4018 and 4020 establish a Special Inspector General and a Congressional Oversight Commission to monitor activities made pursuant to provisions in Title IV, and Section 4026 requires reports from the key agencies—namely Treasury and the Fed—on their Title IV activities. The next two sections will focus on the financial assistance provisions granted to specified industries and for Fed programs. Congress chose to make direct Treasury support available to three specific industries (passenger and cargo airline industries, as well as certain national security businesses) that it deemed particularly in need of support. This assistance was unlikely to meet certain statutory requirements for a Fed program (i.e., that Fed assistance be broadly based and not for the purpose of avoiding bankruptcy), and it comes with more terms and conditions than assistance for recipients of Fed programs supported by the CARES Act. The Title IV support for these industries comes in three main forms: loans and loan guarantees, tax holidays for certain excise taxes, and payroll grants for air carrier workers. Section 4003 makes up to $46 billion available for federal loans and loan guarantees directly from Treasury to the aviation sector and to businesses critical to maintaining national security: not more than $25 billion for passenger air carriers, eligible businesses certified to perform inspection, repair, replace, or overhaul services, and ticket agents; not more than $4 billion for cargo air carriers; and not more than $17 billion for ""businesses critical to maintaining national security""—a term that the act does not further define. On April 10, 2020, the Treasury Secretary released information on which types of firms would be eligible under this definition. The Treasury Secretary is required under Section 4006 to coordinate with the Transportation Secretary to make these loans. Other terms and conditions applying to this assistance are discussed in "" Terms and Conditions ,"" below. Section 4007 institutes a tax holiday under which no excise taxes will be imposed for the transportation of persons, the transportation of property (cargo), and aviation fuel after the date of enactment through calendar year 2020. These include a variety of taxes on airline passenger ticket sales, segment fees, air cargo fees, and aviation fuel taxes paid by both commercial and general aviation aircraft. They have been the primary revenue sources for the federal Airport and Airways Trust Fund. Section 4120 appropriates $32 billion to assist aviation workers. From this amount, Section 4112 allows the Treasury Secretary to provide up to $25 billion for passenger air carriers, up to $4 billion for cargo air carriers, and up to $3 billion for contractors who provide ground services—such as catering services or on-airport functions—directly to air carriers. All such assistance must be used exclusively for continuing the payment of employee wages, salaries, and benefits. Section 4117 gives the Treasury Secretary discretion to determine what compensation to seek for this assistance. Treasury announced it would not seek compensation from recipients receiving less than a minimum amount under the program. The Treasury Secretary is required to coordinate with the Transportation Secretary in implementing the relief for aviation workers. Section 4113 indicates that eligible airlines or contractors would receive an amount equal to their 2019 second- and third-quarter (from April 1, 2019, through September 30, 2019) salaries and benefits. The law required the Treasury Secretary to publish streamlined and expedited procedures no later than 5 days from the enactment date and to make initial payments within 10 days from enactment to air carriers and contractors whose requests for such assistance are approved. If it were determined that the aggregate amount of eligible financial assistance exceeds the amount available, the Treasury Secretary would provide the available aid on a pro rata basis. On April 20, 2020, Treasury announced that airlines representing 95% of U.S. capacity were participating in the Payroll Support Program. On April 25, 2020, Treasury announced that 93 air carriers had received $12.4 billion to date. The Federal Reserve, as the nation's central bank, was created as a ""lender of last resort"" to the banking system when private sources of liquidity become unavailable. This role is minimal in normal conditions but has been important in periods of financial instability, such as the 2007-2009 financial crisis. Less frequently throughout its history, the Fed has also provided liquidity to firms that were not banks. In the financial crisis, the Fed created a series of temporary facilities to lend to or purchase securities of nonbank financial firms and markets under emergency authority found in Section 13(3) of the Federal Reserve Act (12 U.S.C. §343). It has begun to do so again in response to COVID-19, even before enactment of the CARES Act. Although the CARES Act does not preclude the Fed from independently responding to COVID-19 using its own funds, it is left to the Treasury Secretary to decide whether and how much of the CARES Act funds to provide to the Fed and on what general terms. After deducting assistance provided to the three specified industries, the remainder of the $500 billion—at least $454 billion—is available for Treasury to make loans, loan guarantees, or investments in programs or facilities established by the Fed to ""provid(e) liquidity to the financial system that supports lending to eligible businesses, states, or municipalities."" As noted in the "" Financial Assistance in Division A, Title IV "" section, eligible businesses and states are defined by the act. The Fed's facilities may make loans, purchase newly issued obligations (e.g., debt securities) directly from issuers in primary markets, or purchase seasoned obligations from investors in secondary markets. The act provides Treasury and the Fed broad discretion on how to structure these programs or facilities. (Terms and conditions applying to this assistance are discussed in the section titled "" Terms and Conditions ."") Theoretically, the transactions could be structured in many different ways. In practice, Treasury has used CARES Act funding to make equity investments in Fed facilities, presumably as a backstop to cover any future losses, as described below. Before enactment of P.L. 116-136 , Treasury had already made equity investments through the ESF in Fed emergency programs created in response to COVID-19. Because the CARES Act appropriated $500 billion to the ESF, these Fed programs are now, in effect, backed by CARES Act funding. The programs are the following: Commercial Paper Funding Facility (CPFF). The CPFF purchases newly-issued commercial paper from all types of U.S. issuers who cannot find private sector buyers. Commercial paper is short-term debt issued by financial firms (including banks), nonfinancial firms, and ""asset backed"" pass-through entities that purchase loans. Money Market Fund Liquidity Facility (MMLF ). The MMLF makes nonrecourse loans to financial institutions to purchase assets that money market funds are selling to meet redemptions. This reduces the probability of runs on money market funds caused by a fund's inability to liquidate assets. Primary Market Corporate Credit Facility (PMCCF ) and Secondary Market Corporate Credit Facility (SMCCF) . The Fed created two new facilities to support corporate bond markets—the PMCCF to purchase newly-issued corporate debt from issuers and the SMCCF to purchase existing corporate debt or corporate debt exchange-traded funds on secondary markets. The issuer must have material operations in the United States and cannot receive direct federal financial assistance related to COVID-19. Term Asset-Backed Securities Loan Facility (TALF). The TALF makes nonrecourse, three-year loans to private investors to purchase newly-issued, highly-rated asset-backed securities (ABS) backed by various nonmortgage loans. Eligible ABS include those backed by certain auto loans, student loans, credit card receivables, equipment loans, floorplan loans, insurance premium finance loans, small business loans guaranteed by the Small Business Administration (SBA), or servicing advance receivables. Main Street Lending Program (MSLP). The MSLP buys loans from depository institutions that are four-year loans to businesses with up to 10,000 employees or up to $2.5 billion in revenues. The loans to businesses would defer principal and interest repayment for one year, and the businesses would have to make a ""reasonable effort"" to retain employees. This program may be particularly attractive to businesses too large to qualify for SBA assistance. Municipal Liquidity Facility (MLF). The MLF purchases shorter-term state and municipal debt in response to higher yields and reduced liquidity in that market. The facility purchases only debt of states, larger counties (with at least 500,000 residents), and larger cities (with at least 250,000 residents). Some programs were announced with an overall size limit (see Table 1 ). During the 2008 financial crisis, however, actual activity typically did not match the announced size. These facilities extend the Fed's traditional ""lender of last resort"" role for banks to be the ""buyer of last resort"" for broad segments of financial markets that have become illiquid due to COVID-19 and ""lender of last resort"" for nonfinancial firms. To extend its traditional role, the Fed has used its Section 13(3) emergency lending authority. The Fed also used this authority to assist nonbank financial firms and markets in the 2008 financial crisis. The 2020 facilities go beyond the scope of the 2008 facilities by purchasing loans of nonfinancial businesses and debt of states and municipalities. In some programs, the Fed purchases securities in affected markets directly. In other programs, the Fed makes loans to financial institutions or investors to intervene in affected markets; these loans are typically made on attractive terms to incentivize activity, including by shifting the credit risk to the Fed. By law, the Fed must structure these facilities to avoid expected losses, and the facilities charge users interest and/or fees as compensation. To that end, Treasury has pledged ESF funds for each of these facilities to protect the Fed from future losses—although these losses would still be borne by the federal government. The Treasury Secretary approved each facility. The loans and asset purchases of the facilities are funded by the Fed using its resources but are backed by the ESF in the event of losses. The MSLP and the MLF were created after the CARES Act's enactment; the other facilities predate the CARES Act. When the CARES Act directed $500 billion to the ESF, all of these programs, in effect, became backed by the CARES Act. Table 1 summarizes how much CARES Act funding has been pledged to each facility. In total, $215 billion has been pledged to date. There has been talk of how the Fed can ""leverage"" the CARES Act funding of $454 billion (or more) into greater amounts of assistance by combining it with the Fed's funds. Although the use of this term is more colloquial than technical from a financial perspective, Table 1 illustrates how this is accomplished. For example, the MLF is planned to purchase up to $500 billion of assets using $35 billion of CARES Act funding. As required by law, the Fed has issued reports to Congress describing the purpose and details of each facility. Total loans or asset purchases through the facilities are published weekly as part of the Fed's balance sheet. The Fed also announced that it would publicly report on transactions under CARES Act 13(3) facilities at least every 30 days. Details of the report are to include, ""names and details of participants in each facility; amounts borrowed and interest rate charged; and overall costs, revenues, and fees for each facility."" In the past, the Fed has provided details on emergency facilities' activities in quarterly reports. The act envisions the Fed using CARES Act funding to help two broad groups that had not been the targets of Fed emergency lending programs up to that point: (1) states (as defined by the act) and municipalities; and (2) medium-sized businesses , defined as those with between 500-10,000 employees, including nonfinancial businesses. The Fed has not lent to or purchased the securities of nonfinancial businesses and states and municipalities since the 1930s. ""Medium-sized"" businesses may be too small to issue publicly-traded debt securities that the Fed is purchasing through the PMCCF and SMCCF and too large to qualify for SBA assistance provided by the CARES Act. The act encourages, but does not require, the Fed to work with the Treasury Secretary to create programs assisting these two groups and does not limit Fed assistance to these two groups only. In particular, Section 4003 presents a detailed proposal for assisting businesses with 500-10,000 employees. This proposal is not required by the act, but the Treasury Secretary ""shall endeavor to seek the implementation of"" a Fed facility that provides financing to banks and other lenders to make direct loans to U.S. ""eligible businesses"" (as defined) and nonprofits at an interest rate not higher than 2% and with no principal or interest due for six months to retain their workforces. There are a series of restrictions on the borrower. The intended recipient (businesses with up to 10,000 employees) and purpose (to maintain employment) of the proposed facility are similar to the Fed's MSLP (described above), which was formally announced on April 9, 2020, but was publicly discussed before enactment of the CARES Act. However, the terms differ. Section 4003 states that the medium-sized business proposal outlined does not preclude the Fed establishing the MSLP. Section 4003 sets forth a number of terms and conditions for the assistance provided. Some of these provisions apply broadly to both assistance extended to the Fed and the specified industries, and others apply only to specified industries. Table 2 compares and contrasts the various terms and conditions for each of these programs. In addition, there are oversight and reporting requirements associated with the assistance, which are detailed in the section titled "" Oversight Provisions ."" In an effort to ensure assistance is used to maintain employment levels and the ongoing viability of the recipient, Section 4003 loans and loan guarantees must satisfy several terms and conditions. To approve the loans, the Treasury Secretary must determine that other credit is not reasonably available to the applicant at the time of the transaction. The intended obligation must be prudently incurred by the borrower, and the loan must be sufficiently secured or made at a rate that reflects the risk of the loan or loan guarantee—to the extent practicable—and not less than an interest rate based on market conditions for comparable obligations prevalent prior to the outbreak of COVID-19. The duration of the loan must be as short as practicable—not to exceed five years. Further, Treasury may not issue a loan or loan guarantee unless it receives warrants, senior debt, or equity in the borrower. Additional terms and conditions apply to the loan or loan guarantee recipient. The agreement must provide that neither the borrower nor any affiliate may engage in stock buybacks, unless contractually obligated to do so, or pay dividends until 12 months after the date the loan is no longer outstanding. Until September 30, 2020, the borrower must maintain its employment levels as of March 24, 2020, to the extent practicable, and may not reduce its employment levels by more than 10% from the levels on that date. The borrower must certify that it is a U.S.-domiciled business with significant operations in and a majority of its employees based in the United States. The borrower must have incurred or must expect to incur covered losses such that the continued operations of the business are or would be jeopardized, as determined by the Treasury Secretary. Section 4004 states that Treasury may enter into an agreement to make a loan only if the borrower agrees to specified limitations on the compensation and severance pay of executives and employees whose total compensation exceeded $425,000 in calendar year 2019. Total compensation, as defined in the act, is capped at the individual's 2019 compensation level, or if compensation exceeds $3 million, it is also capped at $3 million plus 50% of the 2019 compensation level above $3 million. Further, severance pay for those individuals is capped at twice the individual's 2019 compensation level. Section 4005 establishes an air carrier's service obligation. It requires an air carrier receiving financial assistance under the act to maintain scheduled air transportation service, as the Transportation Secretary deems necessary, to ensure services to any point served by that air carrier before March 1, 2020, taking into consideration the air transportation needs of small and remote communities and the needs of healthcare and pharmaceutical supply chains. Such authority and any requirements issued shall terminate on March 1, 2022. Section 4019 establishes that certain entities are ineligible to participate in Section 4003 transactions. An ineligible entity is a covered individual who owns a controlling interest in that entity (defined as ""not less than 20 percent, by vote or value, of the outstanding amount of any class of equity interest in an entity""). Covered individuals are the President, the Vice President, an executive department head, a Member of Congress, or the spouse, child, or spouse of a child of any of those individuals. Section 4115 protects collective bargaining agreements for a period lasting from the time financial assistance is issued and ending on September 30, 2020. Terms and Conditions for Air Carrier Worker Support To be eligible for grants to cover employee salaries under Section 4113, an air carrier or contractor must agree to refrain from conducting involuntary furloughs or reducing pay rates and benefits until September 30, 2020; refrain from stock buybacks and dividends through September 30, 2021; comply with CARES Act provisions to protect collective bargaining agreements regarding pay or other terms of employment for a period lasting from the time financial assistance is issued and ending on September 30, 2020; and comply with limits on compensation of highly-paid employees, similar to those described above for airline loans, for a two-year period from March 24, 2020, to March 24, 2022. Additionally, the Transportation Secretary is authorized to require, to the extent practicable, that an air carrier receiving this support continue services to any point served by that carrier before March 1, 2020, considering factors similar to those described above for airline loans under Section 4005. To compensate the government for this assistance, Section 4117 provides that the Treasury Secretary may receive warrants, options, stock, and other financial instruments from recipients, as determined appropriate by the Secretary. (See the "" Air Carrier Worker Support "" section for more on Treasury's determination for receiving compensation.) Some, but fewer, of the terms and conditions and restrictions placed on the industry assistance also apply to the Fed. Fed assistance may go only to U.S. businesses (as defined), and the conflict of interest and reporting requirements also apply to the Fed. Restrictions on executive compensation and capital distributions (stock buybacks and dividends) do not apply to Fed programs unless the Fed is providing direct loans to recipients; in the case of the Fed programs, the Treasury Secretary may waive these requirements ""to protect the interests of the Federal Government."" Likewise, requirements to provide the government with warrants or other forms of compensation do not apply to the Fed programs. As shown in Table 2 , fewer restrictions may have been placed on Fed programs than on the assistance to the three specified industries. Fewer restrictions may have been placed on Fed programs because of the Fed's independence from Congress and the Administration, and because most of the Fed programs are not intended to prevent recipients' imminent failure. In addition to the conditions and restrictions in the CARES Act, the Fed typically has extended assistance to nonbank entities under its emergency authority found in Section 13(3) of the Federal Reserve Act. This authority places a number of restrictions on the Fed's activities, many of which were added or augmented by the Dodd-Frank Act ( P.L. 111-203 ). For example, actions taken under Section 13(3) must be broadly based and ""for the purpose of providing liquidity to the financial system, and not to aid a failing financial company."" Actions must also provide security (e.g., collateral) that is sufficient to protect the taxpayer and is based on sound risk management practices. Unlike financial firms, some entities impacted by COVID-19 may not have securities that can be posted as collateral. The CARES Act only states that ""any applicable requirements under section 13(3) ... shall apply"" to Fed programs created under the act. Nevertheless, after the enactment of the CARES Act, the Fed created the MSLP and MLF under Section 13(3). To provide oversight of Title IV, the CARES Act created a special inspector general, Congressional Oversight Commission, and various reporting requirements. Section 4018 establishes a Special Inspector General for Pandemic Recovery (SIGPR) within Treasury. The SIGPR is nominated by the President with the advice and consent of the Senate and may be removed from office in the manner prescribed in Section 3(b) of the Inspector General Act of 1978. The SIGPR is tasked with conducting audits and investigations of Treasury's activities pursuant to the CARES Act, including collecting and summarizing the following information regarding loans provided by Treasury: ""A description of the categories of the loans guarantees, and other investments made by the Secretary""; ""A listing of eligible businesses receiving loan, loan guarantees, and other investments"" by category; An explanation and justification for each loan or loan guarantee; Biographical information about each person hired to manage or service the loans, loan guarantees, and other investments; and Financial information, including the total amount of each loan, loan guarantee, and other investment and the repayment status and any gains or losses. The SIGPR is empowered to hire staff, enter into contracts, and broadly exercise the same authority and status as inspectors general under the Inspector General Act of 1978. The SIGPR is required to report to the appropriate committees of Congress within 60 days of Senate confirmation, and quarterly thereafter, on the activities of the office over the preceding three months, including detailed information on Treasury loan programs. The SIGPR position terminates five years after the enactment of the CARES Act (i.e., March 27, 2025). From the $500 billion appropriated in Title IV, Section 4018 directs that $25 million shall be made available to the SIGPR as a nonexpiring appropriation. Section 4020 establishes a five-member Congressional Oversight Commission in the legislative branch. The commission is directed to oversee implementation of Subtitle A of Title IV by the federal government and to issue regular reports to Congress. The commission is directed to report to Congress ""not later than 30 days after the first exercise by the Secretary and the Board of Governors of the Federal Reserve System of the authority under this subtitle and every 30 days thereafter."" Such reports must include (i) The use by the Secretary and the Board of Governors of the Federal Reserve System of authority under this subtitle, including with respect to the use of contracting authority and administration of the provisions of this subtitle. (ii) The impact of loans, loan guarantees, and investments made under this subtitle on the financial well-being of the people of the United States and the United States economy, financial markets, and financial institutions. (iii) The extent to which the information made available on transactions under this subtitle has contributed to market transparency. (iv) The effectiveness of loans, loan guarantees, and investments made under this subtitle of minimizing long-term costs to the taxpayers and maximizing the benefits for taxpayers. The commission is authorized to hold hearings and gather evidence, obtain data and other information from federal agencies upon request, hire staff, obtain the services of outside experts and consultants, request the detail of federal employees, and enter into contracts to discharge its duties. Members of the commission are to be appointed by the Speaker of the House, the Senate majority leader, the House minority leader, and the Senate minority leader. Appointed commissioners who are not federal employees are to be paid ""at a rate equal to the daily equivalent of the annual rate of basic pay for level I of the Executive Schedule for each day (including travel time) during which such member is engaged in the actual performance of duties vested in the Oversight Commission"" and reimbursed for travel expenses. For FY2020, Level I of the Executive Schedule is $219,200 annually. Funding for the commission's expenses is to be derived in equal amounts from the contingency fund of the Senate and an ""applicable"" account of the House. The Treasury Secretary and the Federal Reserve Board of Governors are instructed to ""promptly"" transfer funds to such accounts for the reimbursement of commission expenses. In addition to the establishment of the SIGPR and the Congressional Oversight Commission, Title IV requires the Treasury Secretary and the Fed Chair to issue reports, make disclosures, and provide testimony before congressional committees for a number of specified purposes. Collectively, these provisions require disclosure to Congress and the public of financial and other details on each transaction under Section 4003(b). These requirements are detailed in Table 3 . Over a decade ago, in the financial crisis and recession of 2007-2009, businesses and individuals in the United States and across the globe faced financial uncertainty unparalleled for a generation. Although the cause of the financial uncertainty differed greatly between the current circumstances as a consequence of Coronavirus Disease 2019 (COVID-19) and the financial crisis of 2007-2009, in each instance Congress has chosen to proactively assist in economic recovery. As the financial crisis reached near panic proportions in fall 2008, Congress created the $700 billion Troubled Asset Relief Program (TARP) through the enactment in October 2008 of the Emergency Economic Stabilization Act (EESA; P.L. 110-343 ). Subsequently, Congress passed the $787 billion American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ), which provided relief to certain parts of the economy. The CARES Act combines elements of both aforementioned acts. Title IV of the CARES Act, with its assistance for firms and support of Federal Reserve financial sector facilities, more closely resembles TARP; a summary of aspects of TARP that parallel Title IV will be the focus of this appendix. For a broader overview of the financial sector and industry assistance during the 2007-2009 financial crisis, please see CRS Report R43413, Costs of Government Interventions in Response to the Financial Crisis: A Retrospective , by Baird Webel and Marc Labonte. For a comparison of TARP and Title IV of the CARES Act, see Table A-1 . Implementation The EESA authorized the Treasury Secretary to either purchase or insure up to $700 billion in troubled assets owned by financial firms. The general concept was that by removing such assets from the financial system, confidence in counterparties would be restored, and the system could resume functioning. This authority granted in the EESA was broad. In particular, the definitions of both troubled assets and financial institutions allowed the Secretary wide latitude in deciding what assets might be purchased or guaranteed and what might qualify as a financial institution. In practice, most TARP funding was not used to purchase troubled assets, instead being dedicated to capital injections for financial institutions, loans to the auto industry, and assistance for homeowners at risk of foreclosure. In a limited number of cases, TARP and Federal Reserve funds were used together. The EESA was later amended to reduce the authorized amount to $475 billion, when it became clear that the amount used would not exceed this amount. Equity Compensation for Treasury Equity warrants in return for government assistance were specifically provided for in the TARP statute. The warrants were expected to provide a positive financial upside to the taxpayer if the private companies' fortunes improved as a result of the government assistance. Although resulting in positive returns for the government, the amount recouped through warrants ($9.58 billion) was less than through interest and dividends ($24.38 billion). The act did not specifically call for the government to receive large holdings of common stock. In several cases, however, the government ended up with large, sometimes controlling, equity positions in private companies. The government generally exercised little of the ownership control inherent in these large stakes. Common equity in companies was typically accepted in return for TARP assistance in order to strengthen the companies' capital positions. Such equity also provided a financial upside to the taxpayers when firms recovered, but it also had a potential downside when firms did not recover strongly. Termination Date The EESA granted the purchase authority for a maximum of two years from the date of enactment, meaning it expired on October 3, 2010. Commitments made under this authorization, however, could continue after this date, with no limit on how long assets purchased under TARP could be held by the government. At present, there continues to be funding disbursed under the housing assistance program and a small amount ($0.04 billion) of bank capital assistance outstanding. Limits on Compensation and Labor Reduction The EESA included limits on executive bonuses and golden parachutes and provided for possible compensation clawbacks. The EESA was later amended by ARRA to expand these limits and add additional corporate governance reforms, thus placing additional restrictions on participating banks in existing Capital Purchase Program contracts. The act amending the EESA also allowed for early repayment and withdrawal from the program without financial penalty. With the advent of more stringent requirements for TARP recipients, many banks began to repay, or attempt to repay, TARP funds. There was no employee retention requirement with TARP. Congressional Oversight The EESA included a number of oversight mechanisms and reporting requirements. Similar to the CARES Act, it created a TARP Congressional Oversight Panel. The TARP Oversight Panel was a five-member, independent entity established in the legislative branch, appointed by congressional leadership, and directed to submit regular reports to Congress. In exercising its duties, the TARP Congressional Oversight Panel issued 30 reports and held 26 hearings between December 2008 and March 2011, according to its final report. The panel employed a total of 46 staff, utilized 3 detailees, and expended approximately $10.7 million through April 3, 2011. The five-member panel was appointed by the House and Senate leadership. The EESA also required the Treasury Secretary to provide periodic updates to Congress, with both monthly overall reports and individual reports detailing ""all transactions"" made under TARP. The Comptroller General was specifically tasked with oversight responsibilities and regular audits, with the Secretary directed to provide appropriate facilities, funding, and access to records to facilitate this oversight. Special Inspector General The EESA created the Special Inspector General for TARP (SIGTARP) position with an initial $50 million in funding, which has been continued in annual appropriations since. The SIGTARP was provided similar powers and authorities as other inspectors general to conduct audits and investigations of TARP and issue quarterly reports until all assets held or insured by Treasury under TARP were disposed of. The SIGTARP issued its first report in 2010, with its latest report covering the last quarter of 2019. Congress appropriated $22 million in the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) for the SIGTARP position in FY2020. Conflicts of Interest The EESA required the Secretary to issue regulations or guidelines to ""address, manage or prohibit"" conflicts of interest arising in TARP, including the purchase and management of assets and the selection of asset managers and post-employment restrictions. Minimizing Costs to Taxpayers The EESA directed the Secretary to minimize the negative impact on taxpayers, including both direct and long-term costs and benefits. Market mechanism and private sector participation in operating the program were encouraged. The terms and conditions of Treasury asset purchases were to be designed to provide recompense to the taxpayer, including participation in the equity appreciation of a firm following Treasury asset purchases.","The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; H.R. 748 ) was signed into law as P.L. 116-136 on March 27, 2020, to assist those affected by the economic impact of Coronavirus Disease 2019 (COVID-19). This assistance is targeted to consumers, businesses, and the financial services sector. A key part of this assistance is provided to eligible businesses, states, and municipalities in Division A, Title IV of the CARES Act. Title IV allocates $500 billion to the Treasury Department (through the Exchange Stabilization Fund) to make loans and guarantees for three specified industries—passenger airlines, cargo airlines, and businesses critical to national security—and to support Federal Reserve lending facilities. Some have characterized this as a ""bailout"" of private industry; others assert it is necessary to avoid employment losses and maintain economic stability. Of the $500 billion, Treasury can make up to $25 billion available to passenger airlines, up to $4 billion to cargo airlines, and up to $17 billion to businesses critical to maintaining national security. Treasury can make the remainder—up to $454 billion, plus whatever is not used to assist the specified industries—available to the Federal Reserve. The authority to enter into new transactions terminates on December 31, 2020. Recipients are legally required to repay assistance with interest, although the ultimate subsidy involved will not be known until terms, such as interest rates and fees, have been decided and it becomes clear to what extent firms are able to repay. Title IV also provides up to $32 billion to continue payment of employee wages, salaries, and benefits at airline-related industries. The Treasury Secretary has discretion to determine what compensation to seek for this assistance and has reportedly chosen not to seek compensation from smaller recipients. According to Treasury, 93 air carriers had received $12.4 billion under the Payroll Support Program as of April 25, 2020. Most funding under Title IV has been used to backstop a series of Federal Reserve emergency programs created in response to COVID-19. These programs assist affected businesses or markets by making loans or purchasing assets. To date, the Fed has created programs to support markets for commercial paper, corporate bonds, municipal bonds, and asset-backed securities, as well as a loan program to help businesses with under 10,000 employees or under $2.5 billion in revenues maintain employment. To date, $215 billion of CARES Act funding has been made available by the Treasury to reimburse the Federal Reserve for potential losses on any transactions in these programs. This assistance carries a number of terms and conditions. All funding faces certain conditions, such as limiting eligibility to U.S. businesses, as defined by the act, and following rules to avoid conflicts of interest. Firms receiving loans, loan guarantees, or grants directly from Treasury must maintain at least 90% of March 24, 2020, employment levels; face controls placed on share buybacks, dividends, and executive salaries; and must provide Treasury specific compensation (e.g., warrants or equity). In addition, Title IV establishes a special inspector general and a Congressional Oversight Commission to oversee the operations carried out under the title. Finally, the key agencies involved in providing this assistance (i.e., the Federal Reserve and Treasury) and the Government Accountability Office must make available to the public and Congress a series of reports on operations under Title IV of the act."
"For roughly the first 100 years of the electric power industry, electricity generation occurred mostly in large, c entralized power plants. Partly in response to the energy crisis of the 1970s, Congress established policies to promote, among other things, alternatives to centralized power plants, including generation capacity located on customer property. Customer-sited generation is a type of distributed generation (DG) and can be located on commercial, industrial, or residential properties. One policy intended to promote DG is net metering. In the Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ) Congress encouraged states to adopt net metering, defined in the law as service to an electric consumer under which electric energy generated by that electric consumer from an eligible on-site generating facility and delivered to the local distribution facilities may be used to offset electric energy provided by the electric utility to the electric consumer during the applicable billing period. State net metering policies may be relevant to congressional discussions about the role of renewable energy sources, like solar, in the nation's electricity system. Solar photovoltaic (PV) is the most commonly deployed energy type participating in net metering, comprising 97% of net metering capacity in 2018. Other federal and state policies (e.g., tax incentives, renewable portfolio standards, carbon pricing) may interact with net metering policies to determine the deployment pace of distributed solar energy sources and other types of DG. Also, some Members of Congress may be interested in how some states have modified their net metering policies in recent years, including the effect of those modifications on stakeholders. Some recent state policy changes are expected to expand solar energy development, while others are expected to slow it. Among other options, Congress could choose to restrict, encourage, or require certain kinds of state policy modifications, or take no action on state net metering policies, depending on congressional priorities. This report provides background information and discusses current issues related to net metering policy. Net metering policies determine how electricity customers with distributed generation are compensated for electricity they deliver to the grid. Net metering is frequently used to mean a policy of net energy metering (NEM), which specifies that electricity delivered to the grid from a net metering customer is compensated on a one-to-one basis for electricity purchased from the grid. Every unit of electricity generated by the customer (typically expressed in kilowatt-hours, kWh) is subtracted from the amount of electricity they consume, for billing purposes. This is frequently described as ""the meter running backward."" Other analyses and discussions sometimes distinguish different policy options, including: buy-all, sell-all , under which a utility buys all electricity generated by the net metering customer at one (usually, lower) rate and sells all the electricity consumed by the customer at a different rate (usually the same retail rate charged to any other customer); and net billing , under which electricity delivered to the grid is compensated at a pre-determined value, which might be measured as a rate or a fixed amount. This report will generally use the term net metering to refer to any of these policies since they are closely related to each other, in that they provide financial support for DG. As of April 2019, 45 states had net metering policies in place that require utilities to offer net metering to customers. Some of these policies include alternatives to net energy metering. Further, some of these policies predate EPACT05. In the states that do not require utilities to offer net metering, some utilities voluntarily offer net metering service to customers. According to the U.S. Energy Information Administration (EIA), almost 2 million customers participated in net metering programs in the United States in 2018, compared to over 153 million electricity customers overall. In other words, about 1% of U.S. electricity customers in 2018 participated in net metering. The number of net metering customers increased from 2013 to 2018 as shown in Figure 1 . Data before 2013 also show growth in net metering participation, but EIA changed the way it reported net metering data beginning in 2013, so these data are not shown below, in the interest of consistency. Net metering participation can be measured in other ways, such as total net metering capacity or the amount of electricity delivered to the grid from net metering generators. According to the EIA data, these measures have seen average annual increases similar to customer count. Levels of net metering participation vary by state, as shown in Figure 2 . In many states, less than 0.1% of electricity customers participate in net metering. Hawaii has the highest participation rate, with over 15% of customers participating in the state's net metering programs. Some potentially relevant factors for the differences among states include design of state net metering policies, presence of other state policies such as renewable portfolio standards (which may incentivize renewable DG), average electricity prices, and solar resource quality. A full analysis of the factors behind different state participation rates is beyond the scope of this report. This section provides an overview of how electricity rates are set in general, in order to clarify major areas of debate for state net metering policies. Electricity ratemaking is the process of allocating to customers the total costs that utilities incur when producing and delivering electricity. Many complexities and local factors influence ratemaking. A full discussion is beyond the scope of this report. As an illustrative example, this section discusses typical ratemaking considerations for vertically-integrated investor-owned utilities. In its service territory, this type of utility owns and operates all parts of the electricity system, from electricity generation to transmission and distribution to customers. State regulators conduct the ratemaking process and approve rates that the utility can charge its customers. Regulators design rates so that utilities can recover their costs through customers' bill payments. These costs generally include: the costs of building and operating power plants, including fuel costs and compliance with any applicable regulations (e.g., environmental, safety, reliability); the costs of building and maintaining transmission and distribution systems (i.e., the grid); regular utility operating costs, such as ensuring reliable grid operation (i.e., grid services) or collecting meter data for billing; any programmatic costs, such as bill relief for low-income consumers or implementation of other public policies; and a return on the utility investments (i.e., return on equity or ROE). A common method for setting rates is to establish volumetric rates (sometimes called flat rates). All customers within a given type, or customer class, will pay the same rate expressed in cents per kilowatt-hour (cents/kWh). The more electricity a customer uses, the higher a bill they will have. Customers' bills will vary each month based on the amount of electricity they consume. Regulators estimate a value for the volumetric rate that will allow the utility to recover its total costs, based on projections of total sales for all customer classes. In this way, the costs for electricity generation, transmission, distribution, and other utility expenses are shared among all customers. Costs associated with customer service (e.g., billing, connections) sometimes are separated from the electricity rate and recovered in a separate customer charge. This charge would appear as a fixed value on the customer's bill and would not change from month to month. Customer charges are additional to rates. In other words, a customer's bill would have volumetric charges (rate times kWh consumed) plus a fixed customer charge. Some customer classes, such as large industrial facilities or institutions, consume so much electricity that utilities might make special system modifications for them. In some cases, utilities recover these costs in a demand charge that is only paid by those high-consuming customers. Like customer charges, demand charges are generally additional to volumetric charges and do not typically change from month to month. EPACT05 encouraged states to adopt net metering, but the law did not specify how customers should be compensated. States with net metering have taken different approaches in implementing their policies, and many states have revised their compensation approaches in recent years. These decisions may affect DG markets. As one study from the National Renewable Energy Laboratory observed, ""compensation mechanisms impact DG deployment because they strongly influence the value proposition of a DG investment for individual customers."" This section describes some elements of states' approaches to implementing net metering. A common approach to net metering is to compensate net metering customers at the utility's approved retail rate of electricity. This is frequently described as a net energy metering (NEM) policy, or simply net metering. A 2019 review of state net metering policy revisions describes how state policymakers initially viewed the retail rate as a ""close-enough proxy"" for rate setting, as follows: Initially, NEM was largely understood to be an administratively simple, rough-justice approach that was acceptable at a time when markets for solar PV and other DG were uneconomic. In many of the initial decisions about NEM, policy makers assumed that the retail rate was a close-enough proxy for the value of solar or value of DG, and the total numbers of participating customers and kilowatt hours being credited at the retail price were relatively small ... the small number of participating customers multiplied by the small quantity of energy each would deliver to the grid, meant that any error associated with under- or over-estimating the true value would be small. Retail rates provide relatively high compensation for net metering generation (see Figure 3 ). As described above (under ""Overview of Electricity Ratemaking""), this is because the retail rate for any electric utility customer reflects the total costs the utility incurs for delivering electricity, including generating electricity and maintaining the grid. Retail rates may encourage net metering participation to a greater extent than other compensation approaches because customers can recover the upfront costs of a DG system more quickly. Some stakeholders have noted the possibility that compensating net metering customers at the retail rate may result in increased costs for non-net metering customers. This possibility, known as a cost shift or cross-subsidy, arises from the fact that the ratemaking process allocates total utility costs among all customers. Net metering customers generate electricity for their own consumption, which reduces the amount of utility-provided electricity they need (and, consequentially, the utility's costs to produce electricity). However, self-generation does not necessarily reduce the amount of other utility-provided services a customer uses (or, generally, the utility's costs to provide those services, such as maintaining the grid). For example, solar net metering customers might consume electricity from the grid at night and derive reliability benefits from the grid even when the sun is shining. Over time, rates for non-net metering customers could increase so the utility could recover the costs of maintaining the grid that are not recovered from net metering customers. Some stakeholders also have noted that residential net metering customers have tended to have higher incomes than non-net metering customers, raising potential equity concerns over cross-subsidies. Studies disagree on the extent to which non-net metering customers may be cross-subsidizing net metering customers. Studies have used different methodologies in estimating cross-subsidies, including which costs and benefits are included and over what timeframe the costs and benefits are considered. These methodological differences may help explain the lack of a consensus view on the magnitude of cross-subsidies. Also, any observed cross-subsidies may be affected by local factors, such as DG penetration and electricity demand growth, which may change over time. As a result, an estimate conducted in one state in one year cannot necessarily be extrapolated to all states in all future years. One synthesis of estimates conducted in or around 2015 found that net metering cost shifts range from $444 to $1,752 per net metering customer per year. Observers may disagree on how much of a cross-subsidy is large enough to warrant policy action. Net metering, and any associated cross-subsidies, is only one factor affecting electricity rates. A 2017 study assessed the potential rate effects of a variety of factors, including net metering, energy efficiency, natural gas prices, state renewable portfolio standards, the federal Clean Power Plan (which was never implemented), and utility capital expenditures. That study found that the rate effects of DG would likely be increases between 0.03 cents/kWh and 0.2 cents/kWh, compared to increases up to 3.6 cents/kWh caused by other factors. The possible presence of a cost shift does not necessarily mean that non-net metering customers are transferring money to net metering customers. The extent to which this might occur would depend, among other things, on net metering participation rates and ratemaking decisions made by regulators. There could be a delay in addressing cost shifts through normal ratemaking processes because those processes have inherent time lags. Further, cost shifts are not unique to DG. As noted in a guide for state regulators, ""cost shifting, or subsidies, is unavoidable in practical rate design but regulators endeavor to mitigate these effects in the larger context of the many, often conflicting, rate design principles."" Some states are seeking to move from the ""close-enough proxy"" of the retail rate to more precise allocations of system costs and benefits to net metering customers. Often state policy debates focus on addressing concerns about potential cross-subsidies from retail rate compensation. Conceptually, states are exploring two options: adding fixed charges (e.g., customer charge, demand charge) to net metering customers' bills or changing the compensation rate. In practice, states are considering variations of these options, and some states have implemented one of these options or both at the same time. Adding fixed charges to net metering customers' bills is meant to allow utilities to recover costs for grid maintenance and operation. At the same time, this approach might preserve some perceived advantages for compensating net metering customers at the retail rate (e.g., administrative simplicity, ease of understanding). Proponents of this approach typically include utilities and some advocates for low-income customers. They often assert that adding fixed charges (or other revisions like alternative compensation rates) reduces cost shifting and increases fairness. Opponents typically include the solar industry and environmental advocates. They often contend that net metering promotes competition in the electricity industry and that fixed charges (or other revisions that would discourage DG) ignore societal benefits that DG (especially solar energy) can provide. In addition, while the concept of adding fixed charges may be straightforward, determining a value for fixed charges that accurately reflects net metering customers' use of the grid has been complex and controversial in practice. Some states have adopted an alternative compensation rate that attempts to represent the energy costs the utility avoids when net metering customers supply some of their own energy (see Figure 3 ). This approach, referred to in this report as an avoided cost rate, is sometimes called an energy rate, a wholesale rate, a supply rate, or variations of these terms. While the retail rate reflects all costs associated with producing energy, operating and maintaining the grid, and other utility expenses, an avoided cost rate primarily reflects costs associated with producing energy. Some states also might consider network upgrades required to reliably integrate DG, especially solar PV. Depending on circumstances, the avoided cost rate might be estimated by a regulator using an independent methodology or by referral to wholesale electricity markets. Avoided cost rates are usually lower than retail rates. Another alternative compensation rate applies to net metering customers with installed solar PV. Under this method, net metering customers are compensated according to a value of solar (VOS) rate. As illustrated in Figure 3 , this approach reflects many of the same considerations as an avoided cost rate and, additionally, reflects estimated societal benefits associated with distributed solar PV (e.g., reduced air emissions). Solar advocates generally favor inclusion of societal benefits in all aspects of net metering policy and rate design. Some states (and stakeholders) may consider reduced greenhouse gas emissions a benefit of distributed solar PV as well. VOS is often calculated to be larger than avoided cost rates but smaller than retail rates, though states could potentially determine a VOS rate greater than the retail rate, depending on the perceived benefits of solar included in the analysis. A related compensation rate applies to any distributed energy resource (DER), not just distributed solar generation, and reflects estimated grid and societal benefits of DERs. New York is one state taking this approach. Regardless of which rate is set (i.e., avoided cost or VOS) and how it is calculated, it could be applied in either a buy-all, sell-all net metering arrangement or a net billing arrangement (see definitions in the section "" What Is Net Metering? ""). Points of debate about alternative compensation approaches have included which costs and benefits to consider, and how to quantify them. One challenge around quantification is that costs and benefits of DG can be time- and location-specific. Another challenge is that costs and benefits might change as the level of DG penetration changes. States vary in their approach to evaluating net metering, as evidenced by a 2018 analysis conducted for the U.S. Department of Energy (DOE). That analysis, which reviewed 15 state studies of net metering costs and benefits released between 2014 and 2017, noted that states used various assumptions, and that ""the set of value categories included, and whether these categories represent costs or benefits, have a significant impact on the overall results of a given study."" In addition to differing in net metering compensation, state net metering policies differ in a variety of other aspects. Some differences pertain to provisions on program caps, source eligibility, credit retention, and system ownership. Provisions in these areas can affect deployment of DG. Program caps, sometimes called aggregate capacity limits, set limits on the number of customers or amount of generation capacity that may participate. Program caps can be expressed in units of power (e.g., megawatts; MW), a percentage of electricity demand over some period of time, or other measures as determined by a state. The choice of whether to have program caps and, if so, how to define them can affect the amount of DG that a state's net metering policy might promote. Program caps may be established to reduce risks to the electricity system, such as potential reliability risks from DG, or reduce the likelihood that cross-subsidies would occur. Caps also might reduce the potential for sales losses or other negative financial impacts for utilities. On the other hand, program caps might create a barrier to achieving other policy goals, for example the renewable energy goals that some states have. States specify which generation sources can participate in net metering, often based on capacity limits (i.e., generator size) and technology type. Solar energy is the dominant energy source for net metering capacity, but some states allow other energy types to participate as well. Whether a non-solar project will participate is usually due to cost factors, but other factors such as customer type (e.g., residential, commercial, or industrial) and location (e.g., urban, rural) may be influential as well. For example, combined heat and power facilities might be attractive mostly to large commercial and industrial customers that use steam. Distributed wind projects might be attractive mostly to farms or other customers with relatively large acreage. Net metering customers often have periods when their electricity consumption exceeds their generation and periods when the opposite is true. When net metering generation exceeds consumption, net metering customers can deliver this surplus generation to the grid. Many state net metering policies compensate net metering customers in some way for the total amount of electricity they generate, but some states only compensate the surplus generation (i.e., the amount delivered to the grid). Typically, if a net metering customer has a surplus over an entire billing period, the customer receives a credit on the next bill. States have different provisions for how long credits can carry over. Credit retention policies can determine the extent to which customers might reduce their total electricity costs to $0. Many net metering customers have a single generator located behind a single electricity meter. A single-family home with a rooftop solar installation is one example. Other arrangements are possible though, and some states allow these. Aggregate net metering applies to single customers with multiple electricity meters on their property, for example farms, municipalities, or school districts. Shared net metering applies to multiple customers associated with the same net metering generation capacity, for example participants in community solar projects (sometimes called solar gardens). A version of shared net metering called virtual net metering applies when the shared project is located onsite, for example multi-family dwellings. A related policy is whether third party participation is allowed. In third party participation arrangements, such as solar leasing and power purchase agreements, the solar system is owned by an entity other than the electricity consumer on whose property the system is installed. Some Members of Congress have introduced legislation addressing aspects of states' net metering policies. Some proposals would influence state policies directly. For example, S.Amdt. 3120 in the 114 th Congress would have limited the ability of state regulators to move net metering customers to lower compensation rates or to add fixed charges to their bills. S.Amdt. 3053 , also in the 114 th Congress, would have required state regulators to consider the extent to which their net metering policies created cross-subsidies. H.R. 4175 in the 116 th Congress would require states to consider adopting net billing policies for community solar. Other legislation would require studies to better understand the costs and benefits of net metering. For example, in a committee report on an FY2017 appropriations bill, Congress requested a DOE study on ""the costs and benefits of net-metering and distributed solar generation to the electrical grid, utilities and ratepayers."" DOE transmitted the report to Congress in 2019. In the 116 th Congress, S. 346 and H.R. 1009 would require the National Academies of Sciences, Engineering, and Medicine to study various aspects of net metering such as alternative incentives for DG, net metering planning and operating techniques, and consumer and industry incentives for net metering. ","Net metering is a policy that allows electricity customers with their own generation capacity to be financially compensated for the energy they produce. Net metering is widely regarded as having an important role in deployment of distributed generation (DG), especially solar energy. State and local governments have authority to establish net metering policies, and some have done so for many years. Congress took action to encourage net metering in the Energy Policy Act of 2005 (EPACT05), and the policy now exists, in some form, in 45 states. Recent state net metering policy modifications, and potential effects on solar energy deployment, may be relevant to congressional discussions regarding the role of renewable energy sources in the nation's electricity system. Solar photovoltaic panels (e.g., rooftop solar) accounted for 97% of the generation capacity participating in net metering programs in 2018. Net metering participation roughly quadrupled from 2013 to 2018, according to data from the U.S. Energy Information Administration. Hawaii has the highest participation rate of any state, with 15% of electricity customers participating in net metering in 2018. In a majority of states, however, net metering customers account for less than 1% of total electricity customers. States differ in the way net metering customers are compensated. A common method is the retail rate, under which energy from net metering capacity offsets energy consumed from the grid in a one-to-one fashion. This method is often described as the ""meter running backward."" Retail rate compensation was initially adopted, in large part, for its administrative simplicity. Some stakeholders continue to prefer it for the relatively high payments it gives to net metering customers. Other stakeholders criticize retail rate compensation as overcompensating net metering customers for the electricity they produce. Part of this criticism comes from the fact that electricity retail rates reflect not just costs associated with generating electricity, but also costs associated with building, maintaining, and operating the transmission and distribution systems (""the grid""). Electricity rates are typically designed so that utilities can recover their total costs associated with providing electricity. If a sufficiently large number of customers participate in net metering, costs might increase for non-net metering customers in order to pay for the grid benefits. This possibility is known as a cross-subsidy, or sometimes a cost shift. In addition to these concerns about fairness, some critics of retail rate compensation raise concerns about equity, because historically most net metering customers have had above-average incomes. Empirical evidence of the cost increases for non-net metering customers is mixed, partly because studies make different assumptions about costs and benefits associated with DG. Some projections in different states have quantified a potential cross-subsidy, but projections in other states have concluded that the value of cross-subsidies are approximately zero. States have considered, and in some cases adopted, alternative compensation approaches to address concerns over cross-subsidies. One type of approach adds a fixed charge to net metering customers' bills to reflect the costs of maintaining the grid. Another type of approach provides an alternative compensation rate (i.e., not the retail rate) that net metering customers receive for the energy they deliver to the grid. Options for alternative compensation rates are avoided cost rates, which reflect primarily the utility's cost of producing electricity, and value of solar (VOS) rates, which additionally consider societal benefits such as reduced air emissions. Generally, rates that consider more benefits (and avoided costs) associated with DG have a higher monetary value and might promote greater levels of DG penetration. States have included different costs and benefits in analyses conducted to estimate alternative compensation rates, resulting in different monetary values for alternative rates. Even if states opted to include the same types of costs and benefits, they might derive different values for rates, since the relative costs and benefits of DG can vary based on local circumstances. Relevant local circumstances include overall penetration of DG, average and marginal electricity costs, congestion in transmission and distribution systems, and potentially other factors. Other state net metering policy provisions can affect deployment of DG. They relate to whether to adopt program caps, thereby limiting the number of participants; which technology type and what size generator are eligible; how long customers can ""carry over"" credits associated with surplus electricity generation; and what types of system ownership arrangements may participate in net metering. A related consideration is whether third parties, such as solar leasing firms, may develop DG in the state. Some Members of Congress have expressed interest in various aspects of net metering policy since passage of EPACT05. Legislation has sought to limit revisions that states can make to net metering policies; expand access to net metering for different types of electricity generation; and estimate costs and benefits associated with net metering, among other topics."
"This report describes selected health care-related provisions that are scheduled to expire during the second session of the 116 th Congress (i.e., during calendar year [CY] 2020). For purposes of this report, expiring provisions are defined as portions of law that are time-limited and will lapse once a statutory deadline is reached, absent further legislative action. The expiring provisions included in this report are those related to Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and private health insurance programs and activities. The report also includes health care-related provisions enacted in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) or extended under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ). This report describes health care-related provisions within the same scope that expired during the first session of the 116 th Congress (i.e., during CY2019). Although the Congressional Research Service (CRS) has attempted to be comprehensive, it cannot guarantee that every relevant provision is included here. The two types of provisions discussed in this report generally are enacted in the context of authorization laws and thus are typically within the purview of congressional authorizing committees. The duration that a provision is in effect usually is regarded as creating a timeline for legislative decisionmaking. In choosing this timeline, Congress navigates tradeoffs between the frequency of congressional review and the stability of funding or other legal requirements that pertain to the program. The first type of provision in this report provides or controls mandatory spending, meaning it provides temporary funding, temporary increases or decreases in funding (e.g., Medicare provider bonus payments), or temporary special protections that may result in changes in funding levels (e.g., Medicare funding provisions that establish a floor). The second type of provision defines the authority of government agencies or other entities to act, usually by authorizing a policy, project, or activity. Such provisions also may temporarily delay the implementation of a regulation, requirement, or deadline, or establish a moratorium on a particular activity. Expiring health care provisions that are predominantly associated with discretionary spending activities—such as discretionary authorizations of appropriations and authorities for discretionary user fees—are excluded from this report. Certain types of provisions with expiration dates that otherwise would meet the criteria set forth above are also excluded from this report. Some of these provisions are excluded, because they are transitional or routine in nature or have been superseded by congressional action that otherwise modifies the intent of the expiring provision. For example, statutorily required Medicare payment rate reductions and payment rate re-basings that are implemented over a specified period are not considered to require legislative attention and are excluded. The report is organized as follows: Table 1 lists the relevant provisions that are scheduled to expire in 2020. Table 2 lists the relevant provisions that expired during 2019. The provisions in each table are organized by expiration date and applicable health care-related program. The report then describes each listed provision, including a legislative history. The summaries are grouped by provisions scheduled to expire in 2020 followed by those that expired in 2019. Appendix A lists demonstration projects and pilot programs that are scheduled to expire in 2020 or that expired in 2019 and are related to Medicare, Medicaid, CHIP, and private health insurance programs and activities or other health care-related provisions that were enacted in the ACA or last extended under the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). Appendix B lists the status of provisions included in CRS Report R45781, Health Care-Related Expiring Provisions of the 116th Congress, First Session , that did not apply within the scope of this report. Appendix C lists all laws that created, modified, or extended the health care-related expiring provisions described in this report. Appendix D lists abbreviations used in the report. The Title V Sexual Risk Avoidance Education (SRAE) program, formerly known as the Abstinence Education Grants program, provides funding for education to adolescents aged 10 to 20 exclusively on abstaining from sexual activity outside of marriage. The Department of Health and Human Services (HHS) administers the program, and funding is provided primarily via formula grants. The 50 states, District of Columbia, and the territories are eligible to apply for funds. Jurisdictions request Title V SRAE funds as part of their request for Maternal and Child Health Block Grant funds authorized in SSA Section 501. Funds are allocated to jurisdictions based on their relative shares of low-income children. Funding is also available for eligible entities (not defined in statute) in jurisdictions that do not apply for funding. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( PRWORA; P.L. 104-193 ), Section 912 , established the Abstinence Education Grants program and provided $50 million for each of FY1998 through FY2002. The Welfare Reform Extension Act of 2003 (WREA 2003; P.L. 108-40 ), Section 6, provided $50 million for FY2003. An Act to Extend the Temporary Assistance for Needy Families Block Grant Program, and Certain Tax and Trade Programs, and For Other Purposes ( P.L. 108-89 ), Section 101 , provided funding through March 31, 2014 in the manner authorized for FY2002 (i.e., $50 million, but proportionally provided for the first two quarters of FY2004). The Welfare Reform Extension Act of 2004 (WREA 2004 ; P.L. 108-210 ), Section 2 , provided funding through June 30, 2004 in the manner authorized for FY2002. TANF and Related Programs Continuation Act of 2004 ( P.L. 108-262 ) , Section 2 , provided funding through September 30, 2004 in the manner authorized for FY2002. Welfare Reform Extension Act, Part VIII ( P.L. 108-308 ) , Section 2 , provided funding through March 31, 2005 in the manner authorized for FY2004. The Welfare Reform Extension Act of 2005 (WREA 2005 ; P.L. 109-4 ), Section 2, provided funding through June 30, 2005 in the manner authorized for FY2004. TANF Extension Act of 2005 ( P.L. 109-19 ) , Section 2 , provided funding through September 30, 2005 in the manner authorized for FY2004. QI, TMA, and Abstinence Programs Extension and Hurricane Katrina Unemployment Relief Act of 2005 ( P.L. 109-91 ) , Section 102 , provided funding through December 31, 2005 in the manner authorized for FY2005. The Tax Relief and Health Care Act of 2006 (TRHCA; P.L. 109-432 ), Section 401 , provided funding through June 30, 2007 in the manner authorized for FY2006. An Act to Provide for the Extension of Transitional Medical Assistance, and Other Provisions ( P.L. 110-48 ) , Section 1 , provided funding through September 30, 2007 in the manner authorized for FY2006. TMA, Abstinence Education, and QI Programs Extension Act of 2007 ( P.L. 110-90 ) , Section 2 , provided funding through December 31, 2007 in the manner authorized for FY2007. The Medicare, Medicaid, and SCHIP Extension Act of 2007 ( MMSEA; P.L. 110-173 ), Section 202 , provided funding through June 30, 2008 in the manner authorized for FY2007. The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA ; P.L. 110-275 ), Se ction 201 , provided funding through June 30, 2009 in the manner authorized for FY2007. ACA, Section 2954, provided $50 million for each of FY2010 through FY2014. Protecting Access to Medicare Act of 2014 ( PAMA ; P.L. 113-93 ), Section 205 , provided $50 million for FY2015. Medicare Access and CHIP Reauthorization Act of 2015 ( MACRA ; P.L. 114-10 ), Section 214 , provided $75 million for each of FY2016 and FY2017. BBA 2018, Section 50502 , renamed the program and provided $75 million for each of FY2018 and FY2019. Continuing App ropriations Act, 2020, and Health Extenders Act of 2019 ( P.L. 116-59 ), Section 12 01 , provided $10,684,931 for the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriation s Act, 2020, and Further Health Extenders Act of 2019 ( P.L. 116-69 ), Section 120 1 , provided $16,643,836 for the period of October 1, 2019 through December 20, 2019. Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) Division N, Section 303, provided $48,287,671 for the period of October 1, 2019 through May 22, 2020. Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ), S ection 3821 provided $75 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, funding was provided for a specified portion of FY2021 (October 1, 2020 through November 30, 2020) at the same proportional share of amounts provided during that same period in FY2020. Funding authorized under the CARES Act for the Title V SRAE program expires after November 30, 2020. The Personal Responsibility Education Program (PREP) is a broad approach to teen pregnancy prevention that seeks to educate adolescents ages 10 through 19 and pregnant and parenting youth under age 21 on both abstinence and contraceptives to prevent pregnancy and sexually transmitted infections (STIs). Education services can address abstinence and/or contraceptives to prevent pregnancy and STIs. PREP includes four types of grants, which are administered by HHS: (1) State PREP grants, (2) Competitive PREP grants, (3) Tribal PREP, and (4) PREP–Innovative Strategies (PREIS). A majority of PREP funding is allocated to states and territories via the State PREP grant. The 50 states, District of Columbia, and the territories are eligible for funding. Funds are allocated by formula based on the proportion of youth aged 10 to 20 in each jurisdiction relative to other jurisdictions. ACA, Section 2953 , established PREP and provided $75 million annually from FY2010 through FY2014. PAMA, Section 206 provided $75 million for FY2015. MACRA, Section 215 , provided $75 million for each of FY2016 and FY2017. BBA 2018, Section 50503 , provided $75 million for each of FY2018 and FY2019. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019, Section 1202, provided $10,684,931 for the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Section 1202, provided $16,643,836 for the period of October 1, 2019 through December 20, 2019. Further Consolidated Appropriations Act, 2020, Division N, Section 304, provided $48,287,671 for the period of October 1, 2019 through May 22, 2020. CARES Act , Section 382 2 provided $75 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, funding was provided for a specified portion of FY2021 (October 1, 2020 through November 30, 2020) at the same proportional share of amounts provided during that same period in FY2020. Funding authorized under the CARES Act for PREP expires after November 30, 2020. SSA Section 1890A requires the HHS Secretary to establish a pre-rulemaking process to select quality measures for use in the Medicare program. As part of this process, the Secretary makes available to the public measures under consideration for use in Medicare quality programs and broadly disseminates the quality measures that are selected to be used, while the consensus-based entity with a contract (National Quality Form, or NQF) gathers multi-stakeholder input and annually transmits that input to the Secretary. NQF fulfills this requirement through its Measure Applications Partnership (MAP), an entity that convenes multi-stakeholder groups to provide input into the selection of quality measures for use in Medicare and other federal programs. MAP publishes annual reports with recommendations for selection of quality measures in February of each year, with the first report published in February 2012. ACA, Section 3014(c) , transferred a total of $20 million from the Medicare Hospital Insurance (HI) and Supplementary Medical Insurance (SMI) Trust Funds for each of FY2010 through FY2014 to carry out SSA Section 1890A(a)-(d) (and the amendments made to SSA Section 1890(b) by ACA Section 3014(a)). PAMA, Section 109 , transferred $5 million for the remainder of FY2014 (from April 1, 2014, to September 30, 2014) and $15 million for the first six months of FY2015 (from October 1, 2014, to March 31, 2015) to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d); funds were required to remain available until expended. MACRA, Section 207 , transferred $30 million for each of FY2015 through FY2017 to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d). The funding provided under MACRA for FY2015 replaced the funding provided under PAMA for that year; therefore, the total funding for FY2015 was $30 million. BBA 2018, Section 50206 , transferred $7.5 million for each of FY2018 and FY2019 to carry out both Section 1890 and SSA Section 1890A(a)-(d). The section also added new HHS reporting requirements and modified existing NQF reporting requirements to specify use of funding, among other things. Amounts transferred for each of FY2018 and FY2019 are in addition to any unobligated balances that remained from prior years' transfers. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 , Section 1401, transferred $1,069,000 for the period beginning October 1, 2019, and ending November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Section 1401, transferred $1,665,000 for the period beginning October 1, 2019, and ending December 20, 2019. Further Consolidated Appropriations Act, 2020 , Division N, Section 102, transferred $4,830,000 for the period beginning October 1, 2019, and ending May 22, 2020. CARES Act, Section 3802 , provided $20 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, funding was provided for a specified portion of FY2021 (October 1, 2020 through November 30, 2020) at the same proportional share of amounts provided during that same period in FY2020. Funding authorized under the CARES Act to carry out the measure selection activities under SSA Section 1890A(a)-(d) expires after November 30, 2020. Under SSA Section 1890, the HHS Secretary is required to have a contract with a consensus-based entity (e.g., NQF) to carry out specified duties related to performance improvement and measurement. These duties include, among others, priority setting, measure endorsement, measure maintenance, and annual reporting to Congress. MIPPA, Section 183 , transferred, from the Medicare HI and SMI Trust Funds, a total of $10 million for each of FY2009 through FY2012 to carry out the activities under SSA Section 1890. American Taxpayer Relief Act of 2012 ( ATRA ; P.L. 112-240 ) , Section 609(a) , transferred $10 million for FY2013 and modified the duties of the consensus-based entity. Pathway for SGR Reform Act of 2013 ( PSRA ; P.L. 113-67 ) , Section 1109 , required that transferred funding remain available until expended. PAMA, Section 109 , transferred $5 million for the remainder of FY2014 (from April 1, 2014, to September 30, 2014) and $15 million for the first six months of FY2015 (from October 1, 2014, to March 31, 2015) to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d); funds were required to remain available until expended. MACRA, Section 207 , transferred $30 million for each of FY2015 through FY2017 to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d). The funding provided under MACRA for FY2015 effectively replaced the funding provided under PAMA for that year; therefore, the total funding for FY2015 was $30 million. Funds were required to remain available until expended. BBA 2018, Section 50206 , transferred $7.5 million from the Medicare HI and SMI Trust Funds for each of FY2018 and FY2019 to carry out both Section 1890 and SSA Section 1890A(a)-(d). The section also added new HHS reporting requirements and modified existing NQF reporting requirements to specify use of funding, among other things. Amounts transferred for each of FY2018 and FY2019 are in addition to any unobligated balances that remained from prior years' transfers. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 , Section 1401, transferred $1,069,000 for the period beginning October 1, 2019, and ending November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Section 1401, transferred $1,665,000 for the period beginning October 1, 2019, and ending December 20, 2019. Further Consolidated Appropriations Act, 2020, Division N, Section 102, transferred $4,830,000 for the period beginning October 1, 2019, and ending May 22, 2020. CARES Act, Section 3802 , provided $20 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, funding was provided for a specified portion of FY2021 (October 1, 2020 through November 30, 2020) at the same proportional share of amounts provided during that same period in FY2020. Funding authorized under the CARES Act to support the contract with the consensus-based entity under SSA Section 1890 expires after November 30, 2020. MACRA made several fundamental changes to how Medicare pays for physician and practitioner services by (1) changing the methodology for determining the annual updates to the conversion factor, (2) establishing new methods for paying for professional services under Medicare Part B, including a merit-based incentive payment system (MIPS) to consolidate and replace several existing incentive programs and to apply value and quality adjustments to the Medicare physician fee schedule (MPFS), and (3) establishing the development of, and participation in, alternative payment models (APMs). To provide technical assistance to small practices and practices in health professional shortage areas, MACRA required the HHS Secretary to enter into contracts or agreements with appropriate entities (such as quality-improvement organizations, regional extension centers, or regional health collaboratives) to offer guidance and assistance to MIPS-eligible professionals in practices of 15 or fewer professionals. Under the technical assistance program, priority is required to be given to professionals located in rural areas, health professional shortage areas, or practices with low composite scores under the new payment system. The guidance and assistance is provided with respect to the MIPS performance categories or with respect to how to transition to the implementation of and participation in an APM. For purposes of implementing the technical assistance program, $20 million from the SMI Trust Fund was made available to the Centers for Medicare & Medicaid Services (CMS) for each of FY2016-FY2020. These amounts are available until expended. MACRA, Section 101, provided for the transfer of $20 million, for each of FY2016 through FY2020, from the Medicare SMI Trust Fund. No funds to support the technical assistance program have been authorized beyond FY2020. Payments under the Medicare MPFS are adjusted geographically for three factors to reflect differences in the cost of resources needed to produce physician services: physician work, practice expense, and medical malpractice insurance. The geographic adjustments are indices—known as Geographic Practice Cost Indices (GPCIs)—that reflect how each area compares to the national average in a ""market basket"" of goods. A value of 1.00 represents the average across all areas. These indices are used in the calculation of the payment rate under the MPFS. Several laws have established a minimum value of 1.00 (floor) for the physician work GPCI for localities where the work GPCI was less than 1.00. MMA , Section 412, provided for an increase in the work geographic index to 1.0 (floor) for any locality for which the work geographic index was less than 1.0 for services furnished from January 1, 2004, through December 31, 2006. TRHCA , Section 102 , extended the floor through December 31, 2007. MMSEA , Section 103, extended the floor through June 30, 2008. MIPPA , Section 134, extended the floor through December 31, 2009. In addition, beginning January 1, 2009, MIPAA set the work geographic index for Alaska to 1.5 if the index otherwise would be less than 1.5; no expiration was set for this modification. ACA , Section 3102, extended the floor through December 31, 2010. Medicare and Medicaid Extenders Act of 2010 (MMEA; P.L. 111-309 ) , Section 103, extended the floor through December 31, 2011. Temporary Payroll Tax Cut Continuation Act of 2011 ( TPTCCA, P.L. 112-78 ) , Section 303, extended the floor through February 29, 2012. Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, P.L. 112-96 ) , Section 3004, extended the floor through December 31, 2012, and required the Medicare Payment Advisory Commission (MedPAC) to report on whether any work geographic adjustment to the MPFS is appropriate, what that level of adjustment should be (if appropriate), and where the adjustment should be applied. The report also was required to assess the impact of such an adjustment, including how it would affect access to care. ATRA , Section 602, extended the floor through December 31, 2013. PAMA , Section 102, extended the floor through March 31, 2015. MACRA , Section 201, extended the floor through December 31, 2017. BBA 2018 , Section 50201, extended the floor through December 31, 2019. Further Consolidated Appropriations Act, 2020, Division N, Section 101 , extended the floor through March 22, 2020. CARES Act, Section 3801, extended the floor through November 30, 2020. The authority for the MPFS GPCI floor expires after November 30, 2020. Federally certified home health (HH) agencies receive increased payments under the HH prospective payment system (PPS) for Medicare home health care episodes furnished to beneficiaries in rural areas. Before BBA 2018, when provided by legislation, the HH  rural add-on  was a fixed percent age  increase to the HH PPS that was applied uniformly to   Medicare home health episodes of care provided in rural counties.  Under BBA 2018, the add-on was applied unvaryingly for the first year the legislation extended the increase d  payment, providing a 3% rural add-on payment to Medicare home health episodes furnished in any rural county that began in CY2018. After CY2018, BBA 2018 provided home health agencies a 3%, 2%, and 1% HH PPS add-on payment for services furnished in rural counties beginning during CY2019-CY2021, respectively, unless the Medicare home health services were, or are, furnished in a rural county with one of the two  below-described  designations, in which case alternative add-on payments were /are  provided: For home health episodes furnished to beneficiaries who reside in  low population density  counties, which are defined as rural counties that have a population density of six or fewer individuals per square mile, BBA 2019 provided 4%, 3%, 2%, and 1% HH PPS add-on payments for services beginning during CY2019-CY2022, respectively , and For home health episodes provided to beneficiaries who reside in  high utilization  counties, which are defined as rural counties in the top quartile of all counties rendering home health services (by the number of HH episodes furnished per 100 Medicare eligibles), BBA 2018 provided 1.5% and 0.5% HH PPS add-on payments for home health episodes beginning in CY2019-CY2020, respectively. BBA 2018 provided no add-on payment for episodes furnished in high utilization rural counties that begin in CY2021 or CY2022. Under BBA 2018, rural counties were to be categorized only once and such determination applies to payment home health episodes through CY2022. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA 2000; P.L. 106-554 ), Section 508,  established a 10% add-on to Medicare's HH PPS rates for home health episodes provided to beneficiaries in rural areas beginning April 1, 2001, through March 31, 2003. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ( MMA ; P.L. 108-173 ), Section 421,  provided a 5% add-on for services beginning April 1, 2004, through March 31, 2005. Deficit Reduction Act of 2005 ( DRA ; P.L. 109-171 ) , Section 5201,  provided a 5% add-on for services beginning January 1, 2006, through December 31, 2006. ACA Section, 3131,  provided a 3% add-on for services beginning April 1, 2010, through December 31, 2015. MACRA, Section 210,  provided a 3% add-on for services beginning January 1, 2016 through December 31, 2017. BBA 2018, Section 50208,  provided a 3% add-on for services beginning in CY2018. BBA 2018 provided a 3%, 2%, and 1% add-on for services beginning in years CY2019-CY2021, respectively, unless the services were provided in a low population density or high utilization rural county. For services provided in low population density rural counties, BBA 2018 provided an add-on at 4%, 3%, 2%, and 1% for services beginning in years CY2019-CY2022, respectively. For services furnished in high utilization rural counties, a 1.5% and 0.5% add-on was provided for services beginning in years CY2019-CY2020, respectively.  After December 31, 2020, home health agencies are no longer set to receive an add-on payment for services provided in rural counties designated as high utilization counties.  The Administration for Community Living (ACL) administers federal grant programs that fund outreach and assistance to older adults, individuals with disabilities, and their caregivers in accessing various health and social services. Funding for these programs is provided through discretionary budget authority in annual appropriations to the following entities: State Health Insurance Assistance Programs (SHIPs): programs that provide outreach, counseling, and information assistance to Medicare beneficiaries and their families and caregivers on Medicare and other health insurance issues. Area Agencies on Aging (AAA): state-designated public or private nonprofit agencies that address the needs and concerns of older adults at the regional or local levels. AAAs plan, develop, coordinate, and deliver a wide range of home and community-based services. Most AAAs are direct providers of information and referral assistance programs. Aging and Disability Resource Centers (ADRCs): programs in local communities that assist older adults, individuals with disabilities, and caregivers in accessing the full range of long-term services and supports options, including available public programs and private payment options. The National Center for Benefits and Outreach Enrollment assists organizations to enroll older adults and individuals with disabilities into benefit programs that they may be eligible for, such as Medicare, Medicaid, the Supplemental Security Income (SSI) program, and the Supplemental Nutrition Assistance Program (SNAP), among others. In addition to discretionary funding for these programs, beginning in FY2009, MIPPA provided funding for specific outreach and assistance activities to Medicare beneficiaries. This mandatory funding was extended multiple times, most recently in the CARES Act through November 30, 2020, and provided for outreach and assistance to low-income Medicare beneficiaries including those who may be eligible for the Low-Income Subsidy program, Medicare Savings Program (MSP), and the Medicare Part D Prescription Drug Program. The HHS Secretary is required to transfer specified amounts for MIPPA program activities from the Medicare Trust Funds. MIPPA , Section 119, authorized and provided a total of $25 million for FY2009 to fund low-income Medicare beneficiary outreach and education activities through SHIPs, AAAs, ADRCs, and coordination efforts to inform older Americans about benefits available under federal and state programs. ACA , Section 3306, extended authority for these programs and provided a total of $45 million for FY2010 through FY2012 in the following amounts: SHIPs, $15 million; AAAs, $15 million; ADRCs, $10 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5 million. ATRA , Section 610, extended authority for these programs through FY2013 and provided a total of $25 million in the following amounts: SHIPs, $7.5 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5 million. PSRA , Section 1110, extended authority for these programs through the second quarter of FY2014 and provided funds at FY2013 levels ($25 million) for the first two quarters of FY2014 (through March 31, 2014). PAMA , Section 110, extended authority for these programs through the second quarter of FY2015 (through March 31, 2015). For FY2014, PAMA provided a total of $25 million at the following FY2013 funding levels: SHIPs, $7.5 million; AAAs, $7.5 million; ADRCs, $5.0 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5.0 million. In addition, PAMA provided funds at FY2014 levels for the first two quarters of FY2015 (through March 31, 2015). MACRA , Section 208, extended authority for these programs through September 30, 2017. For FY2015, MACRA provided funding at the previous year's level of $25 million in the following amounts: SHIPs, $7.5 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5 million. For FY2016 and FY2017, MACRA provided $37.5 million annually, a $12.5 million per year increase from FY2015 funding levels, in the following amounts: SHIPs, $13 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $12 million. BBA 2018, Section 50207, extended authority for these programs through September 30, 2019. For FY2018 and FY2019, BBA 2018 provides funding at the FY2017 funding level of $37.5 million annually in the following amounts: SHIPs, $13 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $12 million. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019, Section 1402, extended authority for these programs through November 21, 2019. For October 1, 2019 to November 21, 2019, they provided a total of $5.343 million in the following amounts: SHIPs, $1.852 million; AAAs $1.069 million; ADRCs, $712,000; and the contract with the National Center for Benefits Outreach and Enrollment, $1.710 million. F urther Continuing Appropriations Act, 2020 , and F urther H ealth Extenders Act of 2019 , Section 1402, extended authority for these programs through December 20, 2019. For November 22, 2019 to December 20, 2019, they provided a total of $2.98 million in the following amounts: SHIPs, $1.033 million; AAAs $597,000; ADRCs, $397,000; and the contract with the National Center for Benefits Outreach and Enrollment, $953,000. Further Consolidated Appropriations Act, 2020, Division N, Section 103, extended authority for these programs through May 22, 2020. For December 21, 2019 to May 22, 2020, it provided a total of $15.823 million in the following amounts: SHIPs, $5.485 million; AAAs $3.165 million; ADRCs, $2.110 million; and the contract with the National Center for Benefits Outreach and Enrollment, $5.063 million. CARES Act, Section 3803, extended authority for these programs through November 30, 2020. For FY2020, it provided a total of $37.5 million in the following amounts (which supersedes the funding previously provided by law for all periods of FY2020): SHIPs, $13 million; AAAs $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits Outreach and Enrollment, $12 million. Additionally, funding was provided for these programs for a specified portion of FY2021 (October 1, 2020 through November 30, 2020) at the same proportional share of amounts provided for FY2020. Funding authorized under the CARES Act for low-income outreach and assistance programs will expire after November 30, 2020. However, funds appropriated will be available for obligation until expended. When determining financial eligibility for Medicaid-covered long-term services and supports (LTSS), there are specific rules under SSA Section 1924 for the treatment of a married couple's assets when one spouse needs long-term care provided in an institution, such as a nursing home. Commonly referred to as ""spousal impoverishment rules,"" these rules attempt to equitably allocate income and assets to each spouse when determining Medicaid financial eligibility and are intended to prevent the impoverishment of the non-Medicaid spouse. For example, spousal impoverishment rules require state Medicaid programs to exempt all of a non-Medicaid spouse's income in his or her name from being considered available to the Medicaid spouse. Joint income of the couple is divided in half between the spouses, and the Medicaid spouse can transfer income to bring the non-Medicaid spouse up to certain income thresholds. Assets of the couple, regardless whose name they are in, are combined and then split in half. The non-Medicaid spouse can retain assets up to an asset threshold determined by the state within certain statutory parameters. Prior to enactment of the ACA, spousal impoverishment rules applied only in situations where the Medicaid participant was receiving LTSS in an institution. States had the option to extend these protections to certain home and community-based services (HCBS) participants under a Section 1915(c) waiver program. Beginning January 1, 2014, ACA Section 2404 temporarily substituted the definition of ""institutionalized spouse"" under SSA Section 1924(h)(1) to include application of these spousal impoverishment protections to all married individuals who are eligible for HCBS authorized under certain specified authorities. Thus, beginning January 1, 2014, for a five-year time period, the ACA required states to apply the spousal impoverishment rules to all married individuals who are eligible for HCBS under these specified authorities, not just those receiving institutional care. This modified definition expired on December 31, 2018. The 116 th Congress extended the authority for these protections and included a provision regarding state flexibility in the application of income or asset disregards for married individuals receiving certain HCBS. ACA, Section 2404, required states to extend spousal impoverishment rules to certain beneficiaries receiving HCBS for a five-year period beginning on January 1, 2014. The Medicaid Extenders Act of 2019 ( P.L. 116-3 ), Section 3 , extended this provision through March 31, 2019. The Medicai d Services Investment and Accountability Act of 2019 ( P.L. 116-16 ), Section 2, extended this provision through September 30, 2019. The Sustaining Excellence in Medicaid Act of 2019 ( P.L. 116-39 ), Section 3, extended this provision through December 31, 2019. Further Consolidated Appropriations Act, 2020 , Section 204, extended this provision through May 22, 2020. CARES Act, Section 3812, further extended this provision through November 30, 2020. The authority for the extension of spousal impoverishment protections for certain Medicaid HCBS recipients will expire after November 30, 2020. The federal government's share of CHIP expenditures (including both services and administration) is determined by the enhanced federal medical assistance percentage (E-FMAP) rate. The E-FMAP rate is based on the federal medical assistance percentage (FMAP) rate, which is the federal matching rate for the Medicaid program. The FMAP formula compares each state's average per capita income with average U.S. per capita income. FMAP rates have a statutory minimum of 50% and a statutory maximum of 83%. The E-FMAP rate is calculated by reducing the state share under the regular FMAP rate by 30%. Statutorily, the E-FMAP (or federal matching rate) can range from 65% to 85%. For some CHIP expenditures, the federal matching rate is different from the E-FMAP rate. For instance, the matching rate for translation and interpretation services is the higher of 75% or states' E-FMAP rate plus 5 percentage points. Also, for services provided to children with family incomes exceeding 300% of the federal poverty level (FPL) with an exception for certain states, the matching rate is the lower regular FMAP rate. ACA, Section 2101 , included a provision to increase the E-FMAP rate by 23 percentage points (not to exceed 100%) for most CHIP expenditures from FY2016 through FY2019. Making further continuing appropriations for the fiscal year ending September 30, 2018, and for other purposes ( P.L. 115-120 ), Section 3005, extended the increase to the E-FMAP rate for one year through FY2020. However, for FY2020 the increase to the E-FMAP is 11.5 percentage points instead of 23 percentage points. The increase to the E-FMAP expires after September 30, 2020. The Community Health Center Fund (CHCF) provided mandatory funding for federal health centers authorized in PHSA Section 330. These centers are located in medically underserved areas and provide primary care, dental care, and other health and supportive services to individuals regardless of their ability to pay. The mandatory CHCF appropriations are provided in addition to discretionary funding for the program; however, the CHCF comprised more than 70% of health center programs' appropriations in FY2019, the last year where final appropriations data are available. ACA, Section 10503, established the CHCF and provided a total of $9.5 billion to the fund annually from FY2011 through FY2015, as follows: $1 billion for FY2011, $1.2 billion for FY2012, $1.5 billion for FY2013, $2.2 billion for FY2014, and $3.6 billion for FY2015. The ACA also provided $1.5 billion for health center construction and renovation for the period FY2011 through FY2015. MACRA, Section 221, provided $3.6 billion for each of FY2016 and FY2017 to the CHCF. An Act to amend the Homeland Security Act of 2002 to require the Secretary of Homeland Security to issue Department of Homeland Security-wide guidance and develop training programs as part of the Department of Homeland Security Blue Campaign, and for other purposes ( P.L. 115-96 ), Section 3101(a), provided $550 million for the first and second quarters of FY2018 to the CHCF. BBA 2018, Section 50901, made a number of changes to the health center program replaced language that had provided two quarters of funding and provided $3.8 billion to the CHCF in FY2018 and $4 billion in FY2019. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 , Division B, Section 1101 , provided $569,863,014 for the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Division B, Section 1101 , struck the amount that had been provided in P.L. 116-59 and provided $887,671,223 for the period of October 1, 2019 through December 20, 2019. Further Consolidated Ap propriations Act, 2020, Division N, Section 401, struck the amount that had been provided in P.L. 116-69 , and provided $2,575,342,466 for the period of October 1, 2019 through May 22, 2020. CARES Act , Section 3831, provided $4 billion for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, $668,493,151 was provided for the period of October 1, 2020 through November 30, 2020. Funding authorized under the CARES Act for CHCF expires after November 30, 2020. Any unused portion of grants awarded for a given fiscal year prior to November 30, 2020, will remain available until expended. The Special Diabetes Program for Type I Diabetes (PHSA Section 330B) provides funding for the National Institutes of Health to award grants for research into the prevention and cure of Type I diabetes. The Special Diabetes Program for Indians (PHSA Section 330C) provides funding for the Indian Health Service (IHS) to award grants for services related to the prevention and treatment of diabetes for American Indians and Alaska Natives who receive services at IHS-funded facilities. The Balanced Budget Act of 1997 (BBA 97; P.L. 105-33 ), Sections 4921 and 4922, established the two special diabetes programs and transferred $30 million annually from CHIP funds to each program from FY1998 through FY2002. BIPA 2000, Section 931, increased each program's annual appropriations to $70 million for FY2001 through FY2002 and provided $100 million for FY2003. An Act to Amend the Public Health Service Act with Respect to Special Diabetes Programs for Type 1 Diabetes and Indians ( P.L. 107-360 ) , Section 1, increased each program's annual appropriations to $150 million and provided funds from FY2004 through FY2008. MMSEA, Section 302, provided $150 million for each program through FY2009. MIPPA, Section 303, provided $150 million each program through FY2011. MMEA, Section 112, provided $150 million each program through FY2013. ATRA, Section 625, provided $150 million each program through FY2014. PAMA, Section 204, provided of $150 million each program through FY2015. MACRA, Section 213, provided $150 million each program through FY2017. Disaster Tax Relief and Airport and Airway Extension Act of 2017 ( P.L. 115-63 ), Section 301(b), provided $37.5 million for first quarter of FY2018 for the Special Diabetes Program for Indians (Note: it did not provide funding for the Special Diabetes Program for Type I Diabetes.) An Act to amend the Homeland Security Act of 2002 to require the Secretary of Homeland Security to issue Department of Homeland Security-wide guidance and develop training programs as part of the Department of Homeland Security Blue Campaign, and for other purposes, Section 3102, provided $37.5 million for the second quarter for the Special Diabetes Program for Indians and provided $37.5 million for the first and second quarters of FY2018 for the Special Diabetes Program for Type I Diabetes. BBA 2018, Section 50902, replaced language that had provided funding for the first and second quarters of FY2018 to provide $150 million for each program in FY2018 and FY2019. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 , Division B, Section 1102 , provided $ 21,369,863 for each program for the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Division B, Section 1102 , struck the amount that had been provided in P.L. 116-59 and provided $ 33,287,671 for each program for the period of October 1, 2019 through December 20, 2019. Further Consolidated Appropriations Act, 2020, Division N, Section 402, struck the amount that had been provided in P.L. 116-69 , and provided $96,575,342 for each program for the period of October 1, 2019 through May 22, 2020. CARES Act, Section 3832, provided $150 million for FY2020 for each program, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, $ 25,068,493 was provided for each program for the period of October 1, 2020 through November 30, 2020. Funding authorized under the CARES Act for the two special diabetes programs expires after November 30, 2020. Any unused portion of grants awarded for a given fiscal year prior to November 30, 2020, will remain available until expended. The National Health Service Corps (NHSC) provides scholarships and loan repayments to certain health professionals in exchange for providing care in a health professional shortage area for a period of time that varies based on the length of the scholarship or the number of years of loan repayment received. The NHSC receives mandatory funding from the CHCF through PHSA Title III. The NHSC also received discretionary appropriations in FY2011. Between FY2012 and FY2017, the program did not receive discretionary appropriations. Beginning in FY2018 and continuing in FY2019, the program received discretionary appropriations, primarily to expand the number and type of substance abuse providers participating in the NHSC. The mandatory funding from the CHCF represents more nearly three-quarters of the program's funding in both FY2018 and FY2019, the last years where final appropriations data are available. ACA, Section 10503, funded $1.5 billion to support the NHSC annually from FY2011 through FY2015, as follows: $290 million for FY2011, $295 million for FY2012, $300 million for FY2013, $305 million for FY2014, and $310 million for FY2015. Funds are to remain available until expended. MACRA, Section 221, funded $310 million for each of FY2016 and FY2017 for the NHSC. An Act to amend the Homeland Security Act of 2002 to require the Secretary of Homeland Security to issue Department of Homeland Security-wide guidance and develop training programs as part of the Department of Homeland Security Blue Campaign, and for other purposes Section 3101 , funded $65 million for the first and second quarters of FY2018 for the NHSC. BBA 2018, Sec tion 50901 , replaced language that had provided two-quarters of funding and funded $310 million for each of FY2018 and FY2019 for the NHSC. Continuing Appropriations Act, 2020, and Health Extend ers Act of 2019, Division B, Section 1101 , provided $18,021,918 for the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Division B, Section 1101 , struck the amount that had been provided in P.L. 116-59 and provided $28,072,603 for the period of October 1, 2019 through December 20, 2019. Further Consolidated Appropriations Act, 2020, Division N, Section 401, struck the amount that had been provided in P.L. 116-69 , and provided $81,445,205 for the period of October 1, 2019 through May 22, 2020. CARES Act, Section 3831, provided $310 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, $51,808,219 was provided for the period of October 1, 2020 through November 30, 2020. Funding authorized under the CARES Act for the CHCF component of the NHSC expires after November 30, 2020. Any unused portion of grants awarded for a given fiscal year prior to November 30, 2020, will remain available until expended. The Teaching Health Center program provides direct and indirect graduate medical education (GME) payments to support medical and dental residents training at qualified teaching health centers (i.e., outpatient health care facilities that provide care to underserved patients). ACA, Section 5508 , established the Teaching Health Center program and provided $230 million for direct and indirect GME payments for the period of FY2011 through FY2015. MACRA, Section 221, provided $60 million for each of FY2016 and FY2017 for direct and indirect GME payments for teaching health centers. Disaster Tax Relief and Airport and Airway Exten sion Act of 2017, Section 301 , provided $15 million for the first quarter of FY2018 for direct and indirect GME payments for teaching health centers. An Act to amend the Homeland Security Act of 2002 to require the Secretary of Homeland Security to issue Department of Homeland Security-wide guidance and develop training programs as part of the Department of Homeland Security Blue Campaign, and for other purposes, Section 3101 , struck the first quarter of funding and provided $30 million for the first and second quarters of FY2018 for direct and indirect GME payments for teaching health centers. It also limited the amount of funding that could be used for administrative purposes. B BA 2018, Section 50901 , made a number of changes to the Teaching Health Center program and replaced language that had provided two-quarters of funding and provided $126.5 million for each of FY2018 and FY2019 for direct and indirect GME payments for teaching health centers. Continuing Appropriations Act, 2020, and Health Extenders Act of 2 019 , Division B , Section 1101 , provided $44,164,384 or the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Division B, Section 1101 , struck the amount that had been provided in P.L. 116-59 and provided $68,794,521 for the period of October 1, 2019 through December 20, 2019. Further Consolidated Appropriations Act, 2020 , Division N , Section 401, struck the amount that had been provided in P.L. 116-69 , and provided $ 199,589,041 for the period of October 1, 2019 through May 22, 2020. CARES Act, Section 3831, provided $126.5 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, $21,141,096 was provided for the period of October 1, 2020 through November 30, 2020. Funding authorized under the CARES Act for Teaching Health Center GME payments expires after November 30, 2020, but unused funds remain available until expended. The Health Coverage Tax Credit (HCTC) subsidizes 72.5% of the cost of qualified health insurance for eligible taxpayers and their family members. Potential eligibility for the HCTC is limited to two groups of taxpayers. One group is composed of individuals eligible for Trade Adjustment Assistance (TAA) allowances because they experienced qualifying job losses. The other group consists of individuals whose defined-benefit pension plans were taken over by the Pension Benefit Guaranty Corporation because of financial difficulties. HCTC-eligible individuals are allowed to receive the tax credit only if they either cannot enroll in certain other health coverage (e.g., Medicaid) or are not eligible for other specified coverage (e.g., Medicare Part A). To claim the HCTC, eligible taxpayers must have qualified health insurance (specific categories of coverage, as specified in statute). The credit is financed through a permanent appropriation under 31 U.S.C. §1324(b)(2); therefore, the financing of the HCTC is not subject to the annual appropriations process. The T rade Act of 2002 ( P.L. 107-210 ), Sections 2 01-203, authorized the Health Coverage Tax Credit, specified the eligibility criteria for claiming the credit, and made conforming amendment to the U.S.C. for purposes of financing the credit. The American Recovery and Reinvestment Act of 2009 ( ARRA, P.L. 111-5 ), Part VI: TAA Health Coverage Improvement Act of 2009 , expanded eligibility for and subsidy of the HCTC including retroactive amendments, and provided $80 million for FY2009 and FY2010 to implement the enacted changes to the HCTC. The Trade Adjustment Assistance Extension Act of 2011 ( P.L. 112-40 ), Section 241 , established a sunset date of before January 1, 2014. The T rade Preferences Extension Act of 2015 ( P.L. 114-27 ), Section 407 , retroactively reauthorized the HCTC and established a new sunset date of before January 1, 2020. Further Consolidated Appropriations Act, 2020, Section 146 , established a new sunset date of before January 1, 2021. Authorization for the HCTC is scheduled to expire after December 31, 2020. The Pregnancy Assistance Fund (PAF) program focuses on meeting the educational, social service, and health needs of vulnerable expectant and parenting individuals and their families during pregnancy and the postnatal period. The program identifies eligible populations as expectant and parenting teens, college students, and women of any age who experience domestic violence, sexual violence, sexual assault, or stalking. HHS administers the PAF program, and funding is awarded competitively to the 50 states, DC, U.S. territories, and tribal entities (hereinafter, grantees) that apply successfully. Grantees may use funds (1) to establish, operate, or maintain pregnancy or parenting services at institutions of higher education (IHEs), high schools, or community service providers; (2) to provide, in partnership with the state attorney general's office, certain legal and supportive services for women who experience domestic violence, sexual violence, sexual assault, or stalking while they are pregnant or parenting an infant; and (3) to support, either directly or through a subgrantee, public awareness about PAF services for the expectant and parenting population that is eligible for the program. ACA, Section 10212 , established PAF and provided $25 million annually from FY2010 through FY2019. Funding authorized under the ACA expired after September 30, 2019. Section 101 of MACRA made fundamental changes to the way Medicare payments to physicians are determined and how they are updated. To implement the payment modifications in Section 101 of MACRA, the law authorized the transfer of $80 million from the SMI Trust Fund for each fiscal year beginning with FY2015 and ending with FY2019. The amounts transferred are to be available until expended. MACRA , Section 101 , provided for the transfer of $80 million, for each of FY2015 through FY2019, from the Medicare SMI Trust Fund. Appropriated funds to support the activities under this subsection have not been enacted for FY2020 or subsequent fiscal years. SSA Section 1848(s) required the HHS Secretary to develop a plan for the development of quality measures for use in the MIPS program, which is to be updated as needed. The subsection also requires the Secretary to enter into contracts or other arrangements to develop, improve, update, or expand quality measures, in accordance with the plan. In entering into contracts, the Secretary must give priority to developing measures of outcomes, patient experience of care, and care coordination, among other things. The HHS Secretary, through CMS, annually reports on the progress made in developing quality measures under this subsection. MACRA, Section 102 , provided for the transfer of $15 million, for each of FY2015 through FY2019, from the Medicare SMI Trust Fund. Appropriated funds to support the activities under this subsection have not been enacted for FY2020 or subsequent fiscal years. However, funds appropriated prior to FY2020 are available for obligation through the end of FY2022. Medicare pays LTCHs for certain inpatient hospital care under the LTCH prospective payment system (LTCH PPS), which is typically higher than payments for inpatient hospital care under the inpatient prospective payment system (IPPS). PSRA amended the law so that the LTCH PPS payment is no longer available for all LTCH discharges but instead is available only for those LTCH discharges that met specific clinical criteria. Specifically, LTCHs are paid under the LTCH PPS if a Medicare beneficiary either (1) had a prior three-day intensive-care-unit stay at a hospital paid under the IPPS immediately preceding the LTCH stay or (2) is assigned to an LTCH PPS case-mix group that is based on the receipt of ventilator services for at least 96 hours and had a prior hospital stay at a hospital paid under the IPPS immediately preceding the LTCH stay. Discharges involving patients who have a principal diagnosis relating to a psychiatric diagnosis or rehabilitation do not qualify for the LTCH PPS rate. Subsequent legislation provided for other criteria to temporarily receive payment under the LTCH PPS. See section "" Temporary Exception for Certain Spinal Cord Conditions from Application of the Medicare LTCH Site Neutral Payment for Certain LTCHs (SSA §1886(m)(6)(F); 42 U.S.C. §1395ww(m)(6)(F)) ."" For LTCH discharges that did not qualify for the LTCH PPS based on these clinical criteria, a ""site neutral payment rate"" similar to the PPS for inpatient acute care hospitals (IPPS) was to be phased-in. The site neutral rate is defined as the lower of an ""IPPS-comparable"" per diem amount, as defined in regulations, or the estimated cost of the services involved. PSRA, Section 1206(a), established patient criteria for payment under the LTCH PPS and a site neutral payment rate for LTCH patients who do not meet these criteria. During a phase-in period for discharges in cost-reporting periods beginning in FY2016 and FY2017, LTCHs received a blended payment amount based on 50% of what the LTCH would have been reimbursed under the LTCH PPS rate and 50% of the site neutral payment rate. For cost-reporting periods beginning in FY2018 and subsequent years, the LTCH was to receive the site neutral payment rate. BBA 2018, Section 51005 , extended the transition period to site neutral Medicare payments for LTCH patients who do not meet the patient criteria for an additional two years, to include discharges in cost-reporting periods beginning during FY2018 and FY2019. During this period, LTCHs continue to receive the 50/50 blended payment for discharges that do not meet certain LTCH PPS criteria. The extended transition period to site neutral payments during which LTCHs receive a blended payment for discharges that do not meet the patient criteria expired for discharges occurring in cost-reporting periods beginning during FY2020 and subsequent years. Medicare pays LTCHs for inpatient hospital care under the LTCH PPS, which is typically higher than payments for inpatient hospital care under the IPPS. Effective for cost-reporting periods beginning in FY2016, LTCHS are paid the LTCH PPS rate for patients that meet one of the following two criteria: (1) had a prior three-day intensive-care-unit stay at a hospital paid under the IPPS immediately preceding the LTCH stay or (2) is assigned to an LTCH PPS case-mix group that is based on the receipt of ventilator services for at least 96 hours and had a prior hospital stay at a hospital paid under the IPPS immediately preceding the LTCH stay. Discharges involving patients who have a principal diagnosis relating to a psychiatric diagnosis or rehabilitation do not qualify for the LTCH PPS rate. For LTCH discharges that did not qualify for the LTCH PPS based on these criteria, a site neutral payment rate is being phased-in for cost-reporting periods beginning FY2016 through FY2019. Subsequent legislation provided for other criteria to temporarily receive payment under the LTCH PPS. See section "" Temporary Extension of Long-Term Care Hospital (LTCH) Site Neutral Payment Policy Transition Period (SSA §1886(m)(6)(B)(i); 42 U.S.C. §1395ww(m)(6)(B)(i)) "" for details related to site neutral payment. The 21 st Century Cures Act (Cures Act; P.L. 114-255 ), Division C, Section 15009 , established an additional temporary criterion for payment under the LTCH PPS related to certain spinal cord conditions for discharges occurring in cost-reporting periods FY2018 and FY2019. Specifically, the LTCH PPS rate would apply to an LTCH discharge if all of the following are met: (1) the LTCH was a not-for-profit on June 1, 2014; (2) at least 50% of the LTCH's CY2013 LTCH PPS-paid discharges were classified under LTCH diagnosis related groups (DRGs) associated with catastrophic spinal cord injuries, acquired brain injury, or other paralyzing neuromuscular conditions; and (3) the LTCH during FY2014 discharged patients (including Medicare beneficiaries and others) who had been admitted from at least 20 of the 50 states, as determined by the HHS Secretary based on a patient's state of residency. The authority for the temporary criterion related to certain spinal cord conditions to receive payment under the LTCH PPS expired for discharges occurring in cost reporting periods during FY2020 and for subsequent years. Currently, Medicare payments for services of physicians and certain non-physician practitioners, including radiation therapy services, are made on the basis of a fee schedule. To set payment rates under the MPFS, relative values units (RVUs) are assigned to each of more than 7,000 service codes that reflect physician work (i.e., the time, skill, and intensity it takes to provide the service), practice expenses, and malpractice costs. The relative value for a service compares the relative work and other inputs involved in performing one service with the inputs involved in providing other physicians' services. The relative values are adjusted for geographic variation in input costs. The adjusted relative values are then converted into a dollar payment amount by a conversion factor. CMS, which is responsible for maintaining and updating the fee schedule, continually modifies and refines the methodology for estimating RVUs. CMS is required to review the RVUs no less than every five years; the ACA added the requirement that the HHS Secretary periodically identify physician services as being potentially misvalued, and make appropriate adjustments to the relative values of such services under the Medicare physician fee schedule. In determining adjustments to RVUs used as the basis for calculating Medicare physician reimbursement under the fee schedule, the HHS Secretary has authority, under previously existing law and as augmented by the ACA, to adjust the number of RVUs for any service code to take into account changes in medical practice, coding changes, new data on relative value components, or the addition of new procedures. Under the potentially misvalued codes authority, certain radiation therapy codes were identified as being potentially misvalued in 2015. However, because of concerns that the existing code set did not accurately reflect the radiation therapy treatments identified, CMS created several new codes during the transition toward an episodic alternative payment model. Patient Access and Medicare Protection Act (PAMPA; P.L. 114-115 ), required CMS to apply the same code definitions, work RVUs, and direct inputs for the practice expense RVUs in CY2017 and CY2018 as applied in 2016 for these transition codes, effectively keeping the payments for these services unchanged, subject to the annual update factor. PAMPA exempted these radiation therapy and related imaging services from being considered as potentially misvalued services under CMS's misvalued codes initiative for CY2017 and CY2018. PAMPA also instructed the HHS Secretary to report to Congress on the development of an episodic alternative payment model under the Medicare program for radiation therapy services furnished in non-facility settings. BBA 2018 Section 51009, extended the restrictions through CY2019. The payment restrictions expired after December 31, 2019. Appendix A. Demonstration Projects and Pilot Programs This appendix lists selected health care-related demonstration projects and pilot programs that are scheduled to expire during the second session of the 116 th Congress (i.e., during calendar year [CY] 2020). The expiring demonstration projects and pilot programs listed below have portions of law that are time-limited and will lapse once a statutory deadline is reached, absent further legislative action. The expiring demonstration projects and pilot programs included here are those related to Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and private health insurance programs and activities. This appendix also includes health care-related demonstration projects and pilot programs that were enacted in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) or extended in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ). No relevant demonstration projects and pilot programs within the same scope expired during the first session of the 116 th Congress (i.e., during CY2019). Although CRS has attempted to be comprehensive, it cannot guarantee that every relevant demonstration project and pilot program is included here. Table A-1 lists the relevant demonstration projects and pilot programs that are scheduled to expire in 2020. Appendix B. Provisions Included in the Previous CRS Health Care-Related Expiring Provisions Report This appendix provides information on the provisions that were included in the previous CRS report on health care-related expiring provisions (CRS Report R45781, Health Care-Related Expiring Provisions of the 116th Congress, First Session ) henceforth referred to as ""R45781,"" but were not detailed in the body of this report. As does the current report, R45781 included expiring provisions (of the same two types discussed herein) related to Medicare, Medicaid, State Children's Health Insurance Program (CHIP), and private health insurance programs and activities as well as selected other health care-related provisions. R45781 included health care-related provisions that were enacted in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) or, at the time of publication, had been extended under the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). R45781 also described health care-related provisions that, at the time of publication, were set to expire during the first session of the 116 th Congress (i.e., during calendar year [CY] 2019) or had expired during the 115 th Congress (i.e., during CY2017 or CY2018). Some of the provisions detailed in R45781 fell within the scope of this report. Such provisions expired in CY2019 or were extended and are set to expire in CY2020. Table B-1 includes the provisions detailed in R45781 that remain expired or were extended to dates beyond the 116 th Congress (i.e., after CY2020). The third column in Table B-1 provides each provision's expiration date as it was in R45781. The fourth column reflects updated information, indicating whether the expiration date remains ""unchanged"" by law or providing the current expiration date for provisions extended pursuant to congressional modification. Two private health insurance provisions were included in R45781 that did not meet the report criteria but were set to expire in 2019. These provisions modified fees and taxes established by the ACA to help fund ACA activities, including those related to private health insurance. As reflected in Table B-1, those fee and tax provisions were permanently repealed in the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). Unlike the other provisions that were included in R45781 and were extended past CY2020, the extension for the Patient-Centered Outcomes Research Trust Fund (PCORTF) was legislatively undertaken in a manner that resulted in significant revisions to the program and/or funding mechanisms detailed in R45781. Because of this, this appendix includes an updated provision summary below Table B-1. See, ""Patient-Centered Outcomes Research Trust Fund (IRC §9511 and §§4375-4377, SSA §1183; 26 U.S.C. §9511; 26 U.S.C. §§4375-4377; 42 U.S.C. §1320e-2)."" For more detailed background information on the other provisions included in Table B-1, see CRS Report R45781, Health Care-Related Expiring Provisions of the 116th Congress, First Session . Table B-1 does not include demonstration projects or pilot programs. The only project or program in Appendix A of R45781 that was not included in this report is the Demonstration Program to Increase Access to Dental Health Care Service. The demonstration program expired after March 23, 2017. Patient-Centered Outcomes Research Trust Fund (IRC §9511 and §§4375-4377, SSA §1183; 26 U.S.C. §9511; 26 U.S.C. §§4375-4377; 42 U.S.C. §1320e-2) Background SSA Section 1181 establishes the Patient-Centered Outcomes Research Institute (PCORI), which is responsible for coordinating and supporting comparative clinical effectiveness research. PCORI has entered into contracts with federal agencies, as well as with academic and private sector research entities for both the management of funding and conduct of research. PHSA Section 937 requires the Agency for Healthcare Research and Quality (AHRQ) to broadly disseminate research findings that are published by PCORI and other government-funded comparative effectiveness research entities. IRC Section 9511 establishes the Patient-Centered Outcomes Research Trust Fund to support the activities of PCORI and to fund activities under PHSA Section 937. It provides annual funding to the PCORTF over the period FY2010-FY2019 from the following three sources: (1) annual appropriations, (2) fees on health insurance policies and self-insured plans, and (3) transfers from the Medicare HI and SMI Trust Funds. SSA Section 1183 provides for the transfer of the required funds from the Medicare Trust Funds. Transfers to PCORTF from the Medicare HI and SMI Trust Funds are calculated based on the number of individuals entitled to benefits under Medicare Part A or enrolled in Medicare Part B. IRC Sections 4375-4377 impose the referenced fees on applicable health insurance policies and self-insured health plans and describe the method for their calculation. For each of FY2011 through FY2019, IRC Section 9511 requires 80% of the PCORTF funds to be made available to PCORI, and the remaining 20% of funds to be transferred to the HHS Secretary for carrying out PHSA Section 937. Of the total amount transferred to HHS, 80% is to be distributed to AHRQ, with the remainder going to the Office of the Secretary (OS)/HHS. Relevant Legislation ACA, Section 6301 , provided the following amounts to the PCORTF: (1) $10 million for FY2010, (2) $50 million for FY2011, and (3) $150 million for each of FY2012 through FY2019. In addition, for each of FY2013 through FY2019, the section provided an amount equivalent to the net revenues from a new fee that the law imposed on health insurance policies and self-insured plans. For policy/plan years ending during FY2013, the fee equals $1 multiplied by the average number of covered lives. For policy/plan years ending during each subsequent fiscal year through FY2019, the fee equals $2 multiplied by the average number of covered lives. Finally, the section (in addition to ACA Section 6301(d)) provided for transfers to PCORTF from the Medicare Part A and Part B trust funds; these are generally calculated by multiplying the average number of individuals entitled to benefits under Medicare Part A, or enrolled in Medicare Part B, by $1 (for FY2013) or by $2 (for each of FY2014 through FY2019). Under this provision, PCORTF was to terminate on September 30, 2019. Continu ing Appropriations Act, 2020, and Health Extenders Act of 2019 ( P.L. 116-59 ), Section 1403 , extended the termination date of PCORTF through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019 ( P.L. 116-69 ), Section 1403 , further extended the termination date of PCORTF through December 20, 2019. Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), Division N, Section 104 , extends funding for PCORTF through FY2029 by appropriating both the amount equivalent to the net revenues received from the fees on health insurance policies and self-insured plans and providing a direct appropriation in a specified amount (the ""applicable amount"") for each of fiscal years 2020 through 2029. The transfers from the Medicare HI and SMI Trust Funds were not extended. The section extends the termination date of PCTORF through FY2029; extends the termination dates of the fees on health insurance policies and self-insured plans through FY2029; and extends the requirement that 20% of PCORTF funds be transferred to the HHS Secretary for carrying out PHSA Section 937 for each fiscal year through FY2029. The section also makes modifications to the authorizing language for PCORI relating to the composition of its Board; appointments to its Methodology Committee; and the identification of research priorities, among others. Current Status Appropriated funds to PCORTF expire after September 30, 2029. Funds transferred to the HHS Secretary under IRC Section 9511 remain available until expended. No amounts shall be available for expenditure from the PCORTF after September 30, 2029, and any amounts in the Trust Fund after such date shall be transferred to the general fund of the Treasury. Appendix C. Laws That Created, Modified, or Extended Current Health Care-Related Expiring Provisions Appendix D. List of Abbreviations AAA: Area Agencies on Aging ACA: Patient Protection and Affordable Care Act ( P.L. 111-148 , as amended) ACL: Administration for Community Living ADRC: Aging and Disability Resource Center AHRQ: Agency for Healthcare Research and Quality APM: Alternative payment model ARRA: American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) ASC: Ambulatory Surgery Center ATRA: American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) BBA 97: Balanced Budget Act of 1997 ( P.L. 105-33 ) BBA 2018 : Bipartisan Budget Act of 2018 ( P.L. 115-123 ) BIPA 2000 : Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 ( P.L. 106-554 ) CARES Act: Coronavirus Aid, Relief, and Economic Security Act ( P.L. 116-136 ) CHCF: Community Health Center Fund CHIP: State Children's Health Insurance Program CMS: Centers for Medicare & Medicaid Services CRS: Congressional Research Service CY: Calendar year DRA: Deficit Reduction Act of 2005 ( P.L. 109-171 ) DRG: Diagnosis related group E-FMAP: Enhanced federal medical assistance percentage FFCRA: Families First Coronavirus Response Act ( P.L. 116-127 ) FMAP: Federal medical assistance percentage FPL: Federal poverty level FY: Fiscal year GME: Graduate medical education GPCI: Geographic Practice Cost Index HCBS: Home and community-based services HCTC: Health Coverage Tax Credit HH: Home health HHS: Department of Health and Human Services HI: Hospital Insurance IHE : Institution of higher education IHS: Indian Health Service IPPS: Medicare Inpatient Prospective Payment System IVIG: Intravenous immune globulin LTCH: Long-term care hospital LTCH PPS: Long-term care hospital prospective payment system LTSS: Long-term services and supports MA: Medicare Advantage MACRA: Medicare Access and CHIP Reauthorization Act of 2015 ( P.L. 114-10 ) MAP: Measure Applications Partnership MCTRJCA: Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ) MedPAC: Medicare Payment Advisory Commission MIPPA: Medicare Improvements for Patients and Providers Act of 2008 ( P.L. 110-275 ) MIPS: Merit-based incentive payment system MMA: Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ( P.L. 108-173 ) MMEA: Medicare and Medicaid Extenders Act of 2010 ( P.L. 111-309 ) MMSEA: Medicare, Medicaid and SCHIP Extension Act of 2007 ( P.L. 110-173 ) MPFS: Medicare physician fee schedule MSP: Medicare Savings Program NHSC: National Health Service Corps NQF: National Quality Forum PAF: Pregnancy Assistance Fund PAMA: Protecting Access to Medicare Act of 2014 ( P.L. 113-93 ) PAMPA: Patient Access and Medicare Protection Act ( P.L. 114-115 ) PCORI: Patient-Centered Outcomes Research Institute PCORTF: Patient-Centered Outcomes Research Trust Fund PETI: Post-eligibility treatment of income PHSA: Public Health Service Act PPS: Prospective payment system PREIS: Personal Responsibility Education Program Innovative Strategies PREP: Personal Responsibility Education Program PRWORA: Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 ) PSRA: Pathway for SGR Reform Act of 2013 ( P.L. 113-67 , Division B) RVU: Relative value unit SHIP: State Health Insurance Assistance Program SMI: Supplementary Medical Insurance SNAP: Supplemental Nutrition Assistance Program SRAE: Sexual Risk Avoidance Education SSA: Social Security Act SSI: Supplemental Security Income TAA: Trade Adjustment Assistance TANF: State Temporary Assistance for Needy Families TPTCCA: Temporary Payroll Tax Cut Continuation Act of 2011( P.L. 112-78 ) TRHCA: Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ) U.S.C.: U.S. Code WREA 2003: Welfare Reform Extension Act of 2003 ( P.L. 108-40 ) WREA 2004: Welfare Reform Extension Act of 2004 ( P.L. 108-210 ) WREA 2005: Welfare Reform Extension Act of 2005 ( P.L. 109-4 )","This report describes selected health care-related provisions that are scheduled to expire during the second session of the 116 th Congress (i.e., during calendar year [CY] 2020). For purposes of this report, expiring provisions are defined as portions of law that are time-limited and will lapse once a statutory deadline is reached, absent further legislative action. The expiring provisions included in this report are those related to Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and private health insurance programs and activities. The report also includes health care-related provisions enacted in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) or extended under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ). In addition, this report describes health care-related provisions within the same scope that expired during the first session of the 116 th Congress (i.e., during CY2019). Although the Congressional Research Service (CRS) has attempted to be comprehensive, it cannot guarantee that every relevant provision is included here. This report focuses on two types of health care-related provisions within the scope discussed above. The first, and most common, type of provision provides or controls mandatory spending, meaning it provides temporary funding, temporary increases or decreases in funding (e.g., Medicare provider bonus payments), or temporary special protections that may result in changes in funding levels (e.g., Medicare funding provisions that establish a floor). The second type of provision defines the authority of government agencies or other entities to act, usually by authorizing a policy, project, or activity. Such provisions also may temporarily delay the implementation of a regulation, requirement, or deadline or establish a moratorium on a particular activity. Expiring health care provisions that are predominantly associated with discretionary spending activities—such as discretionary authorizations of appropriations and authorities for discretionary user fees—are excluded from this report. Certain types of provisions with expiration dates that otherwise would meet the criteria set forth above are excluded from this report. Some of these provisions are excluded because they are transitional or routine in nature or have been superseded by congressional action that otherwise modifies the intent of the expiring provision. For example, statutorily required Medicare payment rate reductions and payment rate re-basings that are implemented over a specified period are not considered to require legislative attention and are excluded. The report provides tables listing the relevant provisions that are scheduled to expire in 2020 and that expired in 2019. The report then describes each listed provision, including a legislative history. An appendix lists relevant demonstration projects and pilot programs that are scheduled to expire in 2020 or that expired in 2019."
"Reducing transportation-related fatalities and serious injuries has consistently been DOT’s top priority. Traffic fatalities and serious injuries may result from unsafe driver behaviors, such as speeding and alcohol- or drug-impaired driving, or from the design or condition of the road and its accompanying infrastructure. Within DOT, both NHTSA and FHWA are charged with reducing fatalities and serious injuries on the nation’s highways and, respectively, provide grant funding to states to mitigate the behavioral and infrastructure-related causes of vehicular crashes. NHTSA provided over $600 million in fiscal year 2018 to state highway safety offices through the Highway Safety Grants Program for activities designed to improve traffic safety by modifying driver behavior. For example, states may use NHTSA grant funding for efforts to increase seatbelt use, or to reduce impaired driving. FHWA provided about $2.6 billion in fiscal year 2018 to state departments of transportation through the Highway Safety Improvement Program (HSIP) for projects to improve safety on all public roads. HSIP funds can be used for infrastructure projects, such as rumble strips, and other projects such as road safety audits, safety planning, and improving safety data. States are allowed to transfer up to 50 percent of their HSIP safety apportionment made available each fiscal year to the other core FHWA highway programs. For example, from 2013 through 2018, 24 states transferred HSIP safety funding totaling over $1 billion to other core programs and three states transferred approximately $600 million into their HSIP safety program from other core programs. Over the last decade, the federal government has taken steps to move toward a performance-based framework for traffic safety funding. Historically, most federal surface transportation funds were distributed through formulas that often had no relationship to outcomes or grantees’ performance. In 2008, we recommended that Congress consider integrating performance-based principles into surface transportation programs such as NHTSA’s Highway Safety Grants Program and FHWA’s HSIP to improve performance and accountability in states’ use of federal funds. In particular, we noted that tracking specific outcomes that are clearly linked to program goals can provide a strong foundation for holding grant recipients responsible for achieving federal objectives and measuring overall program performance. The Moving Ahead for Progress in the 21st Century Act, enacted in 2012, formally required the Secretary of the Department of Transportation to, among other things, establish performance measures for states to use to assess fatalities and serious injuries to ensure further accountability for federal traffic safety funding provided to states. See table 1 for a complete list of mandatory performance measures. States are also required to establish targets annually for each of the performance measures and measure progress toward these targets. NHTSA first required states to develop targets for their performance measures as part of their planning for fiscal year 2014, and FHWA first required states to establish targets for their performance measures set in 2017 for calendar year 2018. Starting with these targets, state highway safety offices and departments of transportation were required by both NHTSA and FHWA to set identical targets for the three common performance measures in both frameworks. Both NHTSA’s and FHWA’s frameworks provide flexibility to states in how they may establish targets and emphasize using data to develop realistic and achievable targets rather than aspirational ones that reflect a long-term vision for future performance. Because the frameworks do not require a specific reduction in fatalities or serious injuries, states may set targets that are higher or lower than their historical averages depending on state-specific factors, such as population increases or economic conditions. As a result, targets may reflect either an anticipated increase or decrease in fatalities or serious injuries. NHTSA and FHWA require states to submit annual plans and reports to establish targets and describe their use of federal funds to improve safety and the results they have achieved relative to their targets. (See table 2.) NHTSA requires that states submit an annual Highway Safety Plan to, among other things, set targets, identify projects they will implement in the upcoming fiscal year, and describe how they will use funds from the Highway Safety Grants Program. States are also required to submit an Annual Report to NHTSA that includes an assessment of the state’s progress in achieving safety performance targets in the previous fiscal year. States are required to submit an HSIP report to FHWA that describes, among other things, how they have used federal HSIP funding for highway safety improvement projects during the prior reporting period as well as performance targets for the upcoming calendar year. In addition to the annual requirements, FHWA requires a Strategic Highway Safety Plan from states every 5 years that identifies a state’s key safety needs and long-term goals, and guides investment decisions to reduce fatalities and serious injuries. NHTSA and FHWA rely on states and localities to collect and report fatality and serious injury data used in the performance framework. In addition to providing information through annual plans and reports, states report traffic fatalities to NHTSA’s FARS database, which tracks all fatal traffic crashes nationwide. When a fatal crash occurs, a state or local police officer completes a crash report form unique to each state. These forms can include a variety of data fields, such as the time of the crash, weather conditions, and the number of killed or injured persons. FARS analysts—state employees who are trained by NHTSA’s data validation and training contractors—use the data in crash report forms to compile a record of the fatal crash. However, NHTSA’s collection and validation of these data may take up to 24 months following the end of a calendar year before it is finalized. FARS also contains serious injury data associated with fatal crashes, though neither NHTSA nor FHWA maintain a database of all serious injuries. Rather, the agencies rely on states and localities to collect and store records of serious injuries resulting from traffic crashes and report this information to them each year. Based on data the states and localities provide, NHTSA estimates the number of total injuries resulting from crashes to track overall national trends. From 2014 through 2017, states did not achieve about two-thirds of the targets they set for the required fatality performance measures, according to our analysis of state-reported NHTSA data. In addition, for a majority of the fatality performance measures required by NHTSA, these data show that the number of targets states achieved generally decreased from 2014 through 2017. (See table 3.) Over this same time, fatalities increased nationwide by 13 percent from about 33,000 in 2014 to over 37,000 in 2017. NHTSA officials said that fewer states achieved their targets over this time because fatalities increased nationwide over the same period due to increases in vehicle miles traveled and corresponding exposure to driving-related risks. Officials from the 10 states we selected said that achieving targets often depends on factors outside of their control, such as demographic and economic factors, as well as changes to state laws. Demographic factors. Officials from eight of the 10 selected states said that demographic factors such as increases or decreases in population affect traffic safety. For example, officials from one state said that when companies expanded in the state, the population increased rapidly and the economy improved and led to more driving. Officials from another state noted that the increasing population in the state’s urban areas has increased the number of pedestrian fatalities. Economic factors. Officials from seven of the 10 selected states noted that economic factors such as low unemployment can affect traffic safety. For example, officials in one state said that fatalities decreased during the 2009 recession, but when the economy began to improve and more people were employed, fatalities increased. These officials noted that the number of people driving is also affected by gas prices because when prices increase, people drive less. Changes to state laws. Officials from eight of the 10 selected states said that changes in state laws can affect whether a state meets its targets. For example, officials from one state said fatalities increased beginning in 2012 when the state legislature passed a law allowing the operation of a motorcycle without a helmet, and continued to increase through 2017 when the state legislature increased the speed limit on some roads from 70 to 75 miles per hour. These officials also noted that they expect fatalities in their state to further increase as a result of the recent legalization of the recreational use of marijuana. However, the extent to which states achieve targets does not necessarily reflect whether the number of fatalities has increased or decreased over time. First, states that achieved fatality targets did not necessarily experience reduced traffic fatalities. For example, for the 2017 targets, state-reported NHTSA data shows that 10 of 52 states achieved their target for the pedestrian fatalities performance measure, but five of these 10 states also experienced an increase in pedestrian fatalities compared to their 2012 through 2016 historical average. These data also show that the remaining 42 states did not achieve their total fatality target. Second, some states have experienced a decrease in traffic fatalities while not achieving their targets. For example, state-reported NHTSA data shows that 31 states did not achieve their targets for the speeding-related fatalities performance measure. However, these same data show that 11 of these 31 states decreased the total of number of these fatalities over their 2017 target period compared to their 2012 to 2016 average. Further, states that established targets that represented an increase in fatalities from historical averages (increasing targets) were more likely to achieve them than states that established targets that represented a decrease or no change in fatalities compared to their historical averages (decreasing targets), according to state-reported NHTSA data. Specifically, in 2017, for all of the required fatality performance measures, these data show that states that set increasing fatality targets relative to their historical 2012 to 2016 average achieved them at a higher rate than states that set targets that represented a decrease or no change to the number of fatalities (See fig.1.) For example, for the total fatality performance measure, eight states set increasing targets relative to their historical 2012 to 2016 average, while 44 states set decreasing or unchanged targets relative to their averages. However, these data show that six of the eight states with increasing targets for the total fatalities performance measure achieved them, while only three of the 44 states with decreasing or unchanged targets achieved theirs. In response to statute, NHTSA requires states to assess and report progress in achieving targets in the following year’s Highway Safety Plan and the NHTSA Annual Reports each year. Such an approach is consistent with federal standards for internal control, which state that agencies should communicate quality information, including about activities and achievements. According to NHTSA officials, state evaluations of their progress in these plans and reports are designed to be an interim assessment of a state’s progress. For example, because fatality data can take up to 2 years to be recorded by states in FARS and validated by NHTSA, final FARS data are not available when states are required to report on the achievement of the prior fiscal year’s targets in their Highway Safety Plans. Therefore, NHTSA encourages states to use state data to conduct this assessment or provide a qualitative analysis of the progress made in achieving these targets when FARS data are not available. Upon review of these reports, NHTSA publishes them on its website. While NHTSA has established requirements for states to provide assessments of their progress on achieving the prior year targets in their Highway Safety Plans and Annual Reports, we found that many states have not done so. For example, in the 2019 Highway Safety Plans submitted to NHTSA in July 2018, a third of states (19 of 52) did not provide an assessment of the progress they had made in achieving the fatality targets established in their 2018 Highway Safety Plans. Similarly, in the 2018 Annual Reports, submitted to NHTSA in December 2018, half of states (26 of 52) did not provide an assessment of whether they had made progress toward achieving the fatality targets established in their 2018 Highway Safety Plans. Instead, many of these states assessed progress for an earlier year or performance period. NHTSA officials acknowledged that some states are not clear on which target years to assess in their Highway Safety Plans and Annual Reports. NHTSA officials stated that they work closely with states to review the contents of the Highway Safety Plans and Annual Reports. To do so, NHTSA has developed guides to help its staff review Highway Plans and the Annual Reports to ensure states meet requirements to provide assessments of their progress. NHTSA officials stated they expect most states to comply with the requirements to assess progress in future Annual Reports and Highway Safety Plans because states will be more familiar with the reporting requirements. However, NHTSA has had similar requirements for states to provide in-progress assessments in these documents for a number of years. For example, the requirement to report on progress achieving highway safety performance measure targets identified in the Highway Safety Plans in the Annual Report was introduced in 2013. Similarly, NHTSA’s regulations have also required states to include an assessment of their progress in meeting state performance targets in their Highway Safety Plans since 2013. Without additional clarification from NHTSA to states on which target years to assess in their Highway Safety Plans and Annual Reports, NHTSA and other stakeholders may lack a timely understanding of the progress states have made in achieving their targets. NHSTA could provide such clarification through outreach to states, or by providing guidance on NHTSA’s website. Beyond the required interim state assessments of progress contained in the Annual Reports and Highway Safety Plans, NHTSA does not communicate to the public and other stakeholders about whether states eventually achieve their fatality targets. Federal standards for internal control state that agencies should communicate quality information, including about activities and achievements, so that external parties–such as Congress and other stakeholders–can help realize agency goals and objectives. NHTSA officials said that they have reported on states’ achievement of fatality targets in the past. For example, NHTSA previously reported to Congress in 2017 on states’ achievement of the fatality targets established in the 2014 and 2015 Highway Safety Plans in response to a statutory requirement. However, NHTSA did not provide this report to other stakeholders, and it has not subsequently reported to Congress or the general public on whether states achieved targets. NHTSA officials told us they did not have any plans to develop a similar report in the future because the requirement to report to Congress was repealed in January 2019. NHTSA was directed by statute in January 2019 to provide information on its website on state performance relative to the targets in the Highway Safety Plan. The statute broadly directs NHTSA to report on state performance and does not specifically direct NHTSA to communicate whether states eventually achieve their performance targets. NHTSA officials told us that this effort was in its initial stages and NHTSA is still in the process of determining how to meet the statutory requirement. By improving external communication of states’ achievement of fatality targets, NHTSA could give stakeholders better insight into the results states and NHTSA have achieved in their efforts to reduce fatalities and hold states more accountable for their use of federal safety funds. NHTSA could provide such information to all stakeholders through its planned website or by developing an alternative mechanism to convey this information. We were not able to determine the extent to which states achieved NHTSA serious injury targets from 2014 through 2017 because states’ definitions of “serious injury” have changed over time. As a result, state serious injury data used to set targets and analyze results may not be comparable year to year over this time period. NHTSA officials noted that changes to serious injury definitions can affect the total number of serious injuries recorded by the states. Similarly, officials from the Association of Transportation Safety Information Professionals told us that based on their experience, when there is a change to how serious injury data are defined or collected by states, total serious injury numbers in that state may change by up to 15 percent the following year. In some cases, changes to serious injury totals may be more extensive. For example, in 2016, one state changed its definition as part of implementing a new database to store crash records. After this change, the number of serious injuries nearly doubled from the previous year. NHTSA and FHWA have taken steps to standardize how states define and report serious injury data. In 2016, both FHWA and NHTSA set out requirements for all states to use a specific definition of serious injury by April 15, 2019, establishing a single national standard definition that will be used under both NHTSA’s and FHWA’s performance management framework. This standard includes requirements for states to integrate this definition into their practices for collecting and recording serious injury data. According to NHTSA and FHWA, this standard will ensure consistent, coordinated, and comparable data at the state and national levels and will assist stakeholders in addressing highway safety challenges. Moreover, according to officials from the Association of Transportation Safety Information Professionals, adoption of this standard will be an improvement upon the previous approaches used by states to define serious injuries. However, it will take time for states to adopt this standard and collect consistent data under the new national standard for serious injuries to use in the NHTSA’s and FHWA’s performance management frameworks. First, NHTSA’s and FHWA’s regulations require that states establish 5-year averages for serious injury targets; however, according to states’ most recent reporting, many states have only recently adopted NHTSA and FHWA’s national standard for defining serious injuries. Specifically, based on our review of information submitted by states in their 2018 HSIP reports, we found that 18 states had reported that they were fully compliant with the national standard as of the end of August 2018. FHWA officials told us that, based on their review of the information in the 2018 HSIP reports, they estimated that an additional 22 states planned to fully align their serious injury definition with requirements in the national standard by April 2019, and that the remaining 12 states had not indicated if they would be compliant with the national standard by that time. FHWA officials said they would conduct a compliance assessment in fall 2019 to determine whether states fully adopted the national standard. Second, data collected under previous, differing definitions cannot be retroactively converted to equivalent data under the definition established by the national standard, and thus it will take time to develop a consistently defined set of serious injury data. Specifically, for those states that have adopted the new standard in the last year, it may be 4 to 5 years until a 5-year average of serious injury data under the new standard can be reported, while the transition period may be longer for those states that have yet to adopt the standard. For example, the American Association of State Highway and Transportation Officials noted that if a state was not currently using the national standard, it would take a lengthy and resource-intensive effort to adopt the standard, including changing reporting processes, guidance, and training. State officials we interviewed also said the costs of updating software and paper forms to collect and store serious injury information, and of training state officials to collect serious injury data using the national standard, could further delay implementation. NHTSA and FHWA have taken steps to assist states with the transition to the new national standard for serious injuries. For example, in preparation for issuing the regulations, NHTSA and FHWA published state-specific guidance to help states adopt an interim standard before the national standard took effect in 2019. According to NHTSA and FHWA officials, this guidance, which aligned states’ existing definitions with a scale for injury severity, helped states provide more consistent serious injury statistics prior to implementing the new national standard in the FHWA rulemaking. While this interim standard helps improve consistency of the definition of serious injury within a state, it does not standardize the specific definition across all states as does the new national standard. In addition, NHTSA and FHWA developed an outreach program and training to help states adapt to the new requirement prior to implementation in 2019. While the transition occurs and until states have collected 5 years of data under the new national standard for serious injuries, NHTSA and FHWA plan to take different approaches to assessing states’ progress toward serious injury targets and communicating the results of their assessments. NHTSA officials told us that they would wait to assess progress until the states had adopted a consistent set of data under the national standard for serious injuries. NHTSA officials also noted that they did not assess whether states achieved their serious injury targets in NHTSA’s 2015 and 2017 reports to Congress, because of limitations with the data that the new standard seeks to mitigate. However, once the transition to the new national standard for serious injuries is complete, similar to state fatality targets, NHTSA does not have a formal mechanism for communicating whether states eventually achieve their serious injury targets. Communication of states’ achievement of both fatality and serious injury targets could help NHTSA hold states more accountable for their use of federal funds. In contrast, as directed by statute and regulations, FHWA plans to evaluate whether each state has met or made “significant progress” toward meeting both the fatality and serious injury-related targets by improving upon the state’s historical 5-year baseline for four of the five required performance measures. As directed by statute and FHWA’s regulations, states that FHWA determines either have not met their 2018 targets or not made significant progress are required to develop an implementation plan to describe how they will achieve targets in future years. Further, these states must use a portion of these states’ fiscal year 2021 HSIP funding exclusively for HSIP projects and may not transfer this portion of their HSIP funding to other core highway programs. Once FHWA’s evaluation of state progress is complete, it plans to communicate the extent to which states achieve these targets on its website, which contains information on the 5-year averages that make up the baseline, targets, and results, and tracks this information over time. FHWA officials said that, as states transition to the new national standard for serious injuries, the use of data collected under multiple definitions in a state may occur in future assessments of significant progress as states collect 5 years of data under the national standard. However, FHWA officials said that states will be able to take the limitations in the data into consideration and adjust targets each year as needed to minimize the risk that states’ results will vary significantly from their targets. An official from the Association of Transportation Safety Information Professionals said that he expects states may recalculate targets to account for changes in the data over the transition to the national standard for serious injuries, but that states have not expressed concerns about doing so. More broadly, FHWA officials also stated that modifying its approach for the transition period would require additional rulemakings by both FHWA and NHTSA, which could be a lengthy process and thus may not be completed before most states collect 5 years of data under the new standard. Officials from a majority of the states we surveyed reported that the performance measures and targets in the NHTSA framework influenced which projects they selected to fund to improve traffic safety and reduce fatalities and serious injuries. (See fig. 2.) For example, officials from two states we surveyed reported that the performance measures helped them identify emerging traffic safety trends, such as higher rates of speeding; as a result, the states directed more funding to projects addressing those issues. Officials from another state noted that the performance measures have led them to develop new projects to reduce cyclist and pedestrian fatalities, in addition to their traditional projects targeting impaired driving or seat belt use. In addition, other state officials responded that setting targets influenced their project selection by requiring staff to identify and fund projects that would have a positive effect on the targets established. When NHTSA developed the performance measures for states, it noted that, in addition to helping states monitor and evaluate their progress, performance measures can be used to allocate resources towards the most pressing safety issues. Officials from 19 states we surveyed said that the performance measures in the NHTSA framework did not influence their project selection. Similarly, officials from 23 states said the targets did not influence their project selection. Officials we surveyed cited a variety of reasons for why they did not use this performance information to select projects. For example, officials from three of these states said their states already had a data-driven or performance-based approach to project selection. Officials from one state explained that the NHTSA performance measures provide them with a general overview of safety trends in the state, but that they rely on more detailed data analysis of safety trends in different localities to select projects. Officials from another state said they do not use the specific targets to select projects, because they look for ways to decrease fatalities, not to achieve a specific number of fatalities in a given year. Officials from another state explained that they receive limited safety funding and therefore select projects to make sure they are eligible to qualify for NHTSA grants. NHTSA officials acknowledged that the performance management framework can pose challenges for some states, but noted that they provide technical assistance and guidance to help states make the best use of their performance information. State officials reported other safety benefits from NHTSA’s performance framework in addition to improved project selection. Specifically, officials from almost three-quarters of states we surveyed said the NHTSA framework helped them to improve highway safety in their state. For example, officials from five states we surveyed reported that the framework has improved how they identify highway safety problems, such as by formalizing a data-driven approach to highway safety in their state. Officials we surveyed also noted that by requiring states to reach agreement on some NHTSA and FHWA targets, the framework helped them to increase collaboration with other highway safety stakeholders in the state. For example, officials from one state reported that the collaboration between the state department of transportation and highway safety office has increased their awareness of how physical road improvements and behavioral projects can work together to improve safety in the state. Officials from the 14 states who reported that the framework has not helped them improve safety cited various reasons, including that they used data-driven approaches prior to NHTSA’s framework and that the framework has increased their administrative burden. NHTSA officials agreed that the framework imposed some administrative burdens on states, but stated that the benefits of using a performance-based approach to manage state highway safety programs outweighed any costs for states. To ensure that the framework helps states to improve traffic safety, NHTSA regulations require states to include at least one performance measure (and associated target) for each program area contained in their Highway Safety Plans. These requirements are consistent with federal standards for internal control that agencies should establish and operate activities to monitor the internal control system. Such monitoring activities should be built into the agency’s operation. We found 49 states included performance measures with all the program areas in their 2019 Highway Safety Plans. For example, one state uses the number of motorcyclist fatalities and unhelmeted motorcyclist fatalities as performance measures for its motorcycle safety program area. The remaining three states included performance measures for at least 80 percent of their program areas. By requiring states to establish performance measures for their program areas, NHTSA can help ensure states have appropriate performance measures in place to evaluate whether they are achieving the objectives of their highway safety programs. NHTSA’s regulations also require states to describe the linkage between the countermeasure strategies—the safety initiatives a state plans to fund to address highway safety problems—and the performance targets in their Highway Safety Plans. Requiring states to link their funding decisions with their targets aligns with a leading practice for performance management we have previously identified: that agencies should use performance information to allocate resources. We examined the sections of 2019 Highway Safety Plans where states are prompted to provide this linkage, and found, however, that less than a third of states (12 of 52) described all the linkages between their performance targets and the countermeasure strategies in those sections. NHTSA officials noted that states are directed to submit similar information in other locations throughout the plans, and that NHTSA’s review of the 2019 plans credited states with making these linkages by considering information in other sections of the plan. NHTSA has taken steps this year to improve states’ reporting and its own review of the 2020 Highway Safety Plans. For example, NHTSA officials told us that they have held in-person meetings with state highway safety officials to emphasize the need to provide linkages between their targets and countermeasures in their 2020 Highway Safety Plans. NHTSA officials said they have also held training in 2019 for staff who review these plans to ensure states adhere to reporting requirements. Specifically, during the training, NHTSA officials said they provided guidance to staff on reviewing Highway Safety Plans; this guidance prompts reviewers to check whether states link their countermeasure strategies with targets, and to provide feedback to states that have not provided these linkages. As a result of these actions, NHTSA anticipates that states will more clearly identify linkages in their 2020 plans. While states recently began setting performance measure targets under FHWA’s framework in 2017, officials from about a third of states we surveyed reported that performance measures in FHWA’s framework influenced their decisions about which infrastructure-based safety projects to fund. (See fig. 3.) Slightly fewer respondents said the targets they set influenced their project selection. These states reported that this performance information influenced their decision making in different ways. For example, officials from one state reported funding more pedestrian and bicycle safety projects as a result of the trends indicated by the performance measures. Officials from another state said they have shifted to selecting projects that can be constructed quickly in order to reach their annual safety targets. Officials from about two-thirds of states we surveyed said the performance measures and performance targets did not influence their HSIP project selection. Instead, many of these state officials reported that the FHWA performance framework has not changed their project selection methodology, and that they used alternative data-driven approaches to select highway projects. For example, officials from four states reported that they used their 5-year Strategic Highway Safety Plans, which highlight traffic safety issues to guide project selection. In other cases, state officials reported that they continued to use a data- driven approach, such as cost-benefit analysis or crash data analysis, to maximize safety benefits and select the most cost-effective highway safety projects. This approach is consistent with a recent FHWA survey of state departments of transportation, which reported that most states used their 5-year Strategic Highway Safety Plans and cost to prioritize projects. Federal guidelines, including those at FHWA, encourage the use of cost- benefit analysis for selecting infrastructure projects. We have also previously reported that such analysis can lead to better-informed transportation decisions. According to FHWA officials, performance management is not intended to supplant the use of other data-driven project selection methods, but to complement and be integrated into existing methods. To help further this synthesis, FHWA officials told us that they are developing a guide to better explain how states can incorporate the use of performance measures into existing methods, such as cost-benefit analysis, to select projects and achieve their safety targets. FHWA officials expect to issue this guide by January 2020. Overall, a slight majority of states we surveyed (27 of 52) reported that FHWA’s performance framework assisted them in improving safety. Officials cited safety benefits beyond improved project selection, such as increased awareness of highway safety issues for state leaders and the public; and increased collaboration with other highway safety agencies within the state. State officials who did not find the framework helpful cited various reasons. For example, some state officials we surveyed said they were already using performance measures prior to FHWA’s framework. Other officials surveyed said FHWA’s performance framework was not helpful because they have a “Vision Zero” or a “Toward Zero Deaths” policy in their state. According to these officials, under such a policy, the state’s goal is to achieve zero traffic fatalities. Officials from a state with such a policy explained that setting a target to achieve any fatalities was not acceptable to the public or the state because it suggests that not every life is important. FHWA officials said that setting annual targets, however, can ensure states are on track to reach their long-term goals, such as to reduce fatalities to zero. To encourage states to integrate the performance framework into their other safety plans, FHWA regulations require states to link their performance measure targets to the long-term goals in their 5-year Strategic Highway Safety Plans. States must provide a description in their HSIP reports of how each target supports these goals. FHWA has developed and issued a template for the HSIP report that prompts states to describe the link between their targets and their Strategic Highway Safety Plans’ goals. However, about half of the states did not describe how all of their targets support their Strategic Highway Safety Plans’ goals in their 2018 HSIP report, and thirteen of these states did not describe these linkages for any of their targets. In response to our analysis, FHWA officials have taken additional actions to improve states’ HSIP reporting. Specifically, FHWA officials provided training to staff and state officials that referenced our analysis that states did not describe the linkages between targets and long-term goals in their HSIP reports. During the training, FHWA officials emphasized the importance of including such information as states prepare their 2019 HSIP reports. Additionally, FHWA officials said they are updating the guide its staff uses to review HSIP reports to ensure states are describing how the targets they set support their Strategic Highway Safety Plan’s goals. In light of the large number of fatalities that occur each year on the nation’s highways and the billions of federal dollars DOT provides annually to states to improve traffic safety, the ability to assess the outcomes of federal surface transportation safety programs and hold grant recipients accountable for results is critical. NHTSA and FHWA have made great strides over the last decade in moving to a performance-based approach for traffic safety funding to improve accountability for federal funds. The results, however, that states have achieved under these frameworks are not always clear. For example, NHTSA has required states to report on their interim progress achieving targets, but states have not had clear direction on what results to assess. In addition, NHTSA lacks a formal mechanism to communicate whether states have been achieving the targets set under their framework. Without improved communication of progress, Congress will be limited in its ability to hold NHTSA and states accountable for their use of federal funds. Moreover, improved reporting of states’ achievements under NHTSA’s framework could help provide insight into the effectiveness of the overall federal traffic safety program. We are making two recommendations to NHTSA: The NHTSA Administrator should provide direction and clarification to states to ensure compliance with requirements to assess and report progress made in achieving fatality targets. (Recommendation 1) The NHTSA Administrator should develop and implement a mechanism that communicates to Congress and other stakeholders whether states achieve their fatality and serious injury targets. (Recommendation 2) We provided a draft of this report to DOT for comment. In its comments, reproduced in appendix III, DOT stated that it concurred with our recommendations. DOT also provided technical comments, which we incorporated as appropriate. We are sending copies of this report to the appropriate congressional committees, the Secretary of Transportation, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact Susan Fleming at (202) 512-2834 or flemings@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 report are listed in appendix IV. The questions we asked in our survey of state Highway Safety Offices and the aggregate results of the responses to the closed-ended questions are shown below. Our survey was comprised of closed- and open-ended questions. We do not provide results for the open-ended questions. We sent surveys to 52 state highway safety offices about the National Highway and Traffic Safety Administration’s (NHTSA) performance framework from the 50 states, Puerto Rico and the District of Columbia. We received responses from 50 state highway safety offices, for a 96 percent response rate. For more information on our survey methodology, see page 4 of this report. Q1a. NHTSA has implemented a performance management framework that requires states to set targets for highway safety performance measures and to track their progress towards meeting those targets. Generally speaking, has NHTSA’s highway safety performance framework assisted you in improving highway safety in your state? Q1b. Why has NHTSA’s highway safety performance framework assisted or not assisted you in improving highway safety in your state? (Written responses not included.) Q2a. Each year, states use Highway Safety Plan (HSP) funding and select projects to address identified highway safety problems. How much, if at all, has NHTSA’s highway safety performance framework changed your state’s current approach to selecting HSP projects? Q2b. In what ways, if any, has NHTSA’s highway safety performance framework changed your state’s current approach to selecting HSP projects? (Written responses not included.) Q3a. Thinking about your state’s current HSP program, how much, if at all, did NHTSA’s required highway safety performance measures influence which projects your state selected? Q3b. In what ways, if any, have NHTSA’s required performance measures influenced which HSP projects your state selected? (Written responses not included.) Q4a. Thinking again about your state’s current HSP program, how much, if at all, did the specific targets your state set for NHTSA’s required performance measures influence which projects your state selected? Q4b. In what ways, if any, have the specific targets your state set for NHTSA’s required performance measures influenced which HSP projects your state selected? (Written responses not included.) The questions we asked in our survey of state departments of transportation and the aggregate results of the responses to the closed- ended questions are shown below. Our survey was comprised of closed- and open-ended questions. We do not provide results for the open-ended questions. We surveyed 52 state departments of transportation about the Federal Highway Administration’s (FHWA) performance framework from the 50 states, Puerto Rico and the District of Columbia. We received responses from all 52 state departments of transportation, for a 100 percent response rate. For more information on our survey methodology, see page 4 of this report. Q1a. FHWA has implemented a performance management framework that requires states to set targets for highway safety performance measures and to track their progress towards meeting those targets. Generally speaking, has FHWA’s highway safety performance framework assisted you in improving highway safety in your state? Q1b. Why has FHWA’s highway safety performance framework assisted or not assisted you in improving highway safety in your state? (Written responses not included.) Q2a. Each year, states use Highway Safety Improvement Program (HSIP) funding and select projects to address identified highway safety problems. How much, if at all, has FHWA’s highway safety performance framework changed your state’s current approach to selecting HSIP projects? Q2b. In what ways, if any, has FHWA’s highway safety performance framework changed your state’s current approach to selecting HSIP projects? (Written responses not included.) Q3a. Thinking about your state’s current HSIP program, how much, if at all, did FHWA’s required highway safety performance measures influence which projects your state selected? Q3b. In what ways, if any, have FHWA’s required performance measures influenced which HSIP projects your state selected? (Written responses not included.) Q4a. Thinking again about your state’s current HSIP program, how much, if at all, did the specific targets your state set for FHWA’s required performance measures influence which projects your state selected? Q4b. In what ways, if any, have the specific targets your state set for FHWA’s required performance measures influenced which HSIP projects your state selected? (Written responses not included.) In addition to the contact named above, Sara Vermillion (Assistant Director); Matt Voit (Analyst-in-Charge); Carl Barden; Caitlin Cusati; Timothy Guinane; Geoffrey Hamilton; Georgeann Higgins; Catrin Jones; Jesse Mitchell; Joshua Ormond; Kelly Rubin; and Laurel Voloder made key contributions to this report.","Over 37,000 people were killed in traffic crashes on the nation's highways in 2017. Within the U.S. Department of Transportation (DOT), two agencies—NHTSA for behavioral factors and FHWA for highway infrastructure—provide about $3 billion annually to states for programs to improve traffic safety. To ensure that states are held accountable for these funds, NHTSA and FHWA developed performance management frameworks that require states to use performance measures and targets in tracking traffic fatalities and serious injuries. GAO was asked to review NHTSA's and FHWA's traffic safety performance management frameworks. This report examines the extent to which: (1) states have met fatality and serious injury targets, and NHTSA's and FHWA's approaches to assessing states' achievements, and (2) states have used performance measures and targets to make traffic safety funding decisions. GAO analyzed state-reported targets and NHTSA data from 2014 through 2017—the most recent data available—for all 50 states, the District of Columbia, and Puerto Rico; surveyed these states on the use of performance measures and targets; reviewed requirements in NHTSA's and FHWA's frameworks; and interviewed officials from NHTSA, FHWA, and 10 states, selected to obtain a mix of population sizes, geographic locations, and other factors. From 2014 through 2017, states did not achieve most of the fatality-related targets they set under the National Highway Traffic Safety Administration's (NHTSA) performance management framework (see table), and the number of serious injury targets states achieved during this period is unclear. GAO did not assess whether states achieved targets they set under the Federal Highway Administration's (FHWA) framework because the data were not yet available. State officials we interviewed said that achieving fatality targets may depend on factors outside their control, such as demographic, economic, and legislative changes. GAO's analysis of states' reports showed that nearly half of states did not provide the required assessment of progress to NHTSA on their most recent set of fatality targets. While NHTSA has taken steps to improve its review of these reports, officials acknowledged states are not clear on which target years to assess. Further, NHTSA lacks a mechanism to report whether states eventually achieve these targets. As a result, NHTSA and other stakeholders have limited insight into the results states have achieved from their use of federal safety funds. The extent to which states achieved serious injury targets is unclear because states have changed their definitions of serious injury over time. To ensure the consistency of these data, NHTSA and FHWA established a standard definition for reporting serious injuries, which states are in the process of adopting. In a survey that GAO administered, officials from a majority of states said that performance measures informed how they selected projects under NHTSA's framework. GAO found, however, that in the 2019 plans submitted by states to NHTSA, less than a third of states reported how performance targets and funded projects were linked. Since the submission of those plans, NHTSA has provided training and guidance to its staff to ensure future plans will more clearly identify these links. Under FHWA's framework, about one-third of states reported in GAO's survey that performance measures influenced their project selection; the remaining two-thirds reported using an alternative data-driven approach, such as cost-benefit analysis. FHWA officials said they are developing guidance to help states integrate performance measures and targets into methods that states are currently using to select highway safety projects. GAO recommends that NHTSA (1) provide additional direction and clarification to ensure states assess and report progress in meeting fatality targets, and (2) report on states' final achievement of targets. DOT concurred with the recommendations."
"SEC is a federal agency responsible for protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation. Among its efforts, SEC requires public companies to disclose meaningful financial and other information to the public, examines firms it regulates, and identifies and investigates potential violations of federal securities laws. Each year, SEC brings hundreds of enforcement actions—including judicial enforcement actions and administrative proceedings—against individuals and companies as a result of its investigations. Examples of actions taken in fiscal year 2018 include charges against a company that allegedly defrauded investors in a Ponzi scheme and charges against a bank for misconduct in its sales practices for certain financial products offered to retail investors. SEC’s responsibilities are divided among five divisions and 24 offices. The Division of Enforcement conducts investigations of potential violations of federal securities laws. Enforcement recommends, when appropriate, that SEC bring enforcement actions, litigates these actions, negotiates settlements on behalf of SEC, and works with other law enforcement agencies to bring criminal cases when warranted. Enforcement is currently led by two co-directors who report to the Chairman. Enforcement staff operate from headquarters in Washington, D.C., and in 11 regional offices. Enforcement maintains a database that tracks enforcement-related activities, including all cases from investigation through litigation, and is the source of statistics used in public reporting (see fig. 1). For tracking purposes, “case” encompasses all stages of a possible enforcement action, beginning either as a matter under inquiry or as an investigation. Some cases advance and become an enforcement action. Enforcement’s database includes all key case data other than data on financial penalties and disgorgements, which SEC’s Office of Financial Management stores and manages. Enforcement’s CMS are responsible for recording key data into the database and conducting quality checks on the data throughout the investigative and litigation processes of a case. There are two groups of CMS: local CMS and national CMS, both of which can be located in SEC regional offices or at SEC headquarters. Local CMS in regional offices report to their regional managers but coordinate with the Enforcement Case Management and Systems Reporting Group. National CMS and local CMS at SEC headquarters report to the Case Management Systems and Reporting Group. National CMS have the responsibility of reviewing and verifying case data input by local CMS. Enforcement has documented procedures for recording and verifying enforcement-related data in its central database. More specifically, the Enforcement database user guide has step-by-step procedures for recording case data and clear descriptions of each data entry field. For example, the guide includes brief descriptions of primary classifications— or categories—used to describe the nature of the enforcement action (such as insider trading or delinquent filing). According to the database user guide and other SEC documentation, local CMS have the primary responsibility for recording most case data used in Enforcement metrics. Local CMS may assist with data recording in the opening of a case as a matter under inquiry or, if it is known the case will advance to the next stage, as an investigation. The user guide also states that local CMS are responsible for recording the advancement of a case from an investigation to an enforcement action. According to the user guide, CMS use information (generally, case documentation) received from the courts or SEC staff responsible for the case to create the action entry in the central database, including the primary classification for the action. CMS also facilitate closing completed cases in the database. Enforcement procedures call for Enforcement staff to perform multiple data reviews for all information in the Enforcement database, according to Enforcement staff and the user guide. According to the user guide, local CMS review the accuracy of key case-related data recorded in the system at certain stages as a case proceeds (see fig. 2). The local CMS add case information by checking any new documentation, such as court filings. In addition to the review by the local CMS, national CMS also are to review newly opened cases, as well as cases that have advanced to an investigation, changed from an investigation to an action, or closed. To do this, national CMS compare information recorded in the system against any primary documents related to the case, such as court documentation. Finally, Enforcement staff told us that they have an informal process whereby a group of attorneys in the Case Management and Systems Reporting Group review all primary classifications for enforcement actions. Enforcement lacks written procedures for generating the Enforcement Annual Report, including for compiling and ensuring the accuracy of the statistics published within. Enforcement staff explained that they follow an informal process to generate the annual report, which includes steps to help ensure reliable reporting and detect and prevent errors (see fig. 3). However, Enforcement was unable to provide documentation of this process or of the implementation of the steps to help ensure accuracy. According to staff, the process for generating the annual report includes selecting what statistics to include and what activities and accomplishments to describe in the report narrative. Specifically, Enforcement staff said that the division’s co-directors hold regular weekly meetings with their staff to discuss management of the division. Staff said program metrics and other measures may be discussed at these meetings, including the types of information and statistics that might be used in the Enforcement Annual Report. According to the staff, at the end of the fiscal year the co-directors determine what information and statistics the division will include in reports. Once decisions have been made about the annual report’s content, Enforcement staff told us a contractor uses software queries of the database to compile statistics for the report based on data parameters defined by Enforcement staff. An Enforcement staff member familiar with the data reviews the queries’ output to verify accuracy, according to Enforcement staff. Staff then add the compiled statistics to the draft annual report. According to staff, the draft report is then sent to the Office of Public Affairs for formatting and publication. Enforcement staff stated that staff familiar with the data perform an additional check to ensure that no data values were mistyped or otherwise edited in the formatting process. Finally, the co-directors of Enforcement are to review the draft report. After they give a final approval, the annual report is published. Control activities such as written procedures help ensure that operational processes are effective and actions are taken to address risks. In particular, federal internal control standards identify documentation— including documentation that demonstrates procedures are being implemented—as a necessary part of an effective internal control system and as a means to help detect and prevent errors. Enforcement staff stated that the division does not have written procedures for generating its annual report or documenting the implementation of review processes because the report is not required by law and is discretionary. The staff said they were confident about the reliability of report data because staff were familiar with enforcement data and the informal processes they currently use to verify accuracy. In contrast, Enforcement uses documented SEC guidelines for reviewing and verifying the data used to support performance metrics in the agency- wide SEC Annual Performance Report. Documenting written procedures for generating both Enforcement’s annual report and the processes it uses to verify published statistics— including documentation that procedures were implemented—would provide Enforcement with greater assurance that staff follow necessary steps to help ensure the reliability and accuracy of reported information. Reliability and accuracy of information are important to maintaining the division’s credibility and public confidence in its efforts. In addition, developing written procedures would better position Enforcement to manage risk associated with staff turnover and help ensure continuity of operations in its public reporting. Since 2009, SEC has made changes to how it reports and presents enforcement or enforcement-related statistics, which are included in a number of reports (see table 1). As previously discussed, we reviewed reports from 2009 through 2018 that included enforcement statistics. More specifically, SEC made the following changes to its public reporting of enforcement statistics, which include the creation of a stand-alone Enforcement Annual Report in 2017. Prior to 2017, Enforcement reported similar statistics in the annual Select SEC and Market Data Report. Definition of enforcement actions. Enforcement staff told us that before 2013, the Select SEC and Market Data Reports changed little from year to year, with the previous year’s report used as a template to create the next one. SEC adjusted its definition of enforcement actions in the 2013 report, and included notes explaining the change and providing what the number of enforcement actions would have been under the previous definition. Presentation of enforcement statistics. Enforcement staff said the Office of the Chief Operating Officer determined changes in presentation (such as the order of enforcement action classifications) in the Select SEC and Market Data Report. In 2015, Enforcement changed how the report presented summary data for enforcement actions. Previously, Enforcement counted enforcement actions as civil actions or administrative proceedings, but the fiscal year 2015 report separately identified and counted the proceedings as stand-alone (initial) or follow-on (after initial action). Enforcement staff said these changes were made possible by better software that allowed for enhanced and expanded presentation of the data. Enforcement Annual Report. As previously mentioned, the Select SEC and Market Data Report was discontinued after the fiscal year 2017 report and the Enforcement Annual Report was first published in November 2017. The annual report included additional data tables of enforcement statistics not previously reported (some comparing statistics to the previous year) and narratives about enforcement priorities and cases. Enforcement staff told us the annual report was created to increase transparency and provide more information and deeper context than previous reporting had. The SEC Division of Enforcement voluntarily issues an annual report that includes statistics and highlights significant enforcement actions and initiatives of the previous fiscal year. Enforcement has documented procedures and has designated staff to input and review enforcement- related data in its case-tracking system. However, the division does not have written procedures for generating its public reporting (currently, the annual report), including for compiling and verifying the report’s statistics, or documenting that procedures were implemented as intended. Written procedures would help Enforcement ensure the reliability and accuracy of reported information, manage risk associated with staff turnover, and promote continuity of operations in its public reporting. The Securities and Exchange Commission’s Co-Directors of Enforcement should develop written procedures for generating Enforcement’s public reports, including procedures for compiling and verifying statistics used in the reports and documenting their implementation. (Recommendation 1) We provided a draft of this report to SEC for review and comment. In written comments (reproduced in appendix I), SEC generally agreed with our findings and concurred with our recommendation. In addition, SEC provided technical comments, which we incorporated as appropriate. As agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Chairman of the Securities and Exchange Commission, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-8678 or clementsm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II. In addition to the contact named above Kevin Averyt, John Forrester, (Assistant Directors), Jordan Anderson (Analyst in Charge), Tim Bober, Ryan Braun, Marc Molino, Kirsten Noethen, Barbara Roesmann, and Farrah Stone made key contributions to this report.","Enforcement supports SEC's mission by bringing civil and administrative actions against individuals and entities for fraud, financial and accounting irregularities and misstatements, and other misconduct. According to SEC, these enforcement actions serve as a deterrent against future wrongdoing. Since 2017, Enforcement has published an annual report that provides statistics on its enforcement activities and highlights its priorities for the coming year. GAO was asked to examine SEC reporting of enforcement statistics. This report examines (1) the ways that enforcement statistics reporting changed over the last 10 years, and (2) policies and procedures for recording, reviewing, and reporting enforcement statistics. GAO reviewed SEC's internal policies, procedures, and manuals for recording, verifying, and reporting data. GAO also interviewed SEC officials and reviewed past SEC reports containing enforcement statistics. Since 2009, the Division of Enforcement (Enforcement) in the Securites and Exchange Commision (SEC) has made modifications to its reporting of enforcement statistics, including by releasing a stand-alone annual report beginning in fiscal year 2017. The Enforcement Annual Report included additional data on enforcement statistics not previously reported and narratives about enforcement priorities and cases. Enforcement staff told us the annual report was created to increase transparency and provide more information and deeper context than previous reporting had provided. Enforcement has written procedures for recording and verifying enforcement-related data (including on investigations and enforcement actions) in its central database. However, Enforcement does not have written procedures for generating its public reports (currently, the annual report), including for compiling and verifying the enforcement statistics used in the report. To produce the report, Enforcement staff told GAO that staff and officials hold meetings in which they determine which areas and accomplishments to highlight (see figure). Enforcement was not able to provide documentation demonstrating that the process it currently uses to prepare and review the report was implemented as intended. Developing written procedures for generating Enforcement's public reports and documenting their implementation would provide greater assurance that reported information is reliable and accurate, which is important to maintaining the division's credibility and public confidence in its efforts. GAO recommends that SEC's Co-Directors of Enforcement develop written procedures for generating Enforcement's public reports, including procedures for compiling and verifying statistics used in the reports, and documenting their implementation. SEC agreed with the recommendation."