RUS, an agency in USDA’s Rural Development mission area, oversees three programs for deploying broadband infrastructure in rural communities. The Telecommunications Infrastructure Loan and Loan Guarantee Program (Infrastructure Program) has funded traditional telephone networks but, since the mid-1990s, has been used primarily to fund broadband network infrastructure that can provide both voice and data services. The Rural Broadband Access Loan and Loan Guarantee program (Broadband Program) and the Community Connect Grant Program (Community Connect) are assistance programs that are specifically dedicated to financing broadband deployment. Differences among these programs include their definitions of rural areas and their eligibility rules for recipients and services. Infrastructure Program: The largest and oldest of the three programs, the Infrastructure Program was created as part of the Rural Electrification Act of 1936, as amended. The program provides loans and loan guarantees for the deployment of telecommunications systems, including broadband systems, to rural areas. The program is generally not available to any city, village, or borough having a population exceeding 5,000. Since fiscal year 2008, the authorized principal amount for the loans and loan guarantees (“lending authority”) has been $690 million. According to RUS, since 2004, individual loans have ranged from $81,600 to $90 million, depending on the size of the project. A loan recipient has 5 years to complete its infrastructure project. According to RUS, the terms of Infrastructure Program loans are typically around 20 years, depending on the nature of the facilities to be financed. This program often sees repeat borrowers as borrowers use the funds to either upgrade existing services in rural areas or expand their rural service area. Broadband Program: Authorized in 2002, this program provides loans and loan guarantees for the construction, improvement, and acquisition of facilities and equipment for broadband service in eligible rural communities. Recent amendments have revised the program including the definition of rural area, among others. The lending authority for this program has decreased from $602 million in fiscal year 2004 to $20.6 million in fiscal year 2016. According to RUS, the terms of the Broadband Program’s loans depend on the type of broadband system being deployed: generally around 20 years for fiber systems and around 12 years for wireless systems. According to RUS, since 2004, individual loans have ranged from $24,000 to $244 million, depending on the size of the project. Community Connect: This program started as a pilot program in fiscal year 2002, with $20 million in competitive grants. Noting the positive response it received, RUS made the Community Connect program an annual competitive grant program in fiscal year 2004. Annual appropriations for the program have ranged from $9 million to $18 million. As of December 2016, Community Connect grants have funded approximately 138 projects across the nation intended to improve broadband service. In the past few years, grant awards could not be greater than $3 million per project, with a 15-percent matching- fund requirement placed on the recipient. Further, projects must be in rural areas, as confirmed by the most recent decennial Census. A recipient has 3 years to complete construction of its broadband infrastructure project. Tables 1 and 2 show the annual lending authority for the loan programs and the annual appropriations for the grant program, respectively. As shown in figure 1, the dollar amount of loans approved by RUS varies by state, with Colorado, Kansas, and North Dakota receiving the largest loan amounts—each receiving over $500 million in loans from fiscal years 2004 through 2016. Conversely, Vermont, Maine, and New Hampshire received the lowest loan amounts—each receiving around $6 million or less during this time. While most states have obtained the majority of their funding from the Infrastructure Program, Colorado and Hawaii used mainly the Broadband Program. As shown in figure 2, the dollar amounts of Community Connect grants approved by RUS from fiscal years 2004 through 2016 varied, with Oklahoma receiving the largest amount of grant funds (about $22.5 million) and Pennsylvania receiving the lowest amount (around $290,000). Overall, RUS has procedures and activities addressing the leading practices we identified, including the key activities associated with these practices, as part of its management of the rural broadband programs. We found that RUS has procedures and activities consistent with the leading practices for reviewing applications, conducting external training, communicating with applicants and recipients, and coordinating with other federal agencies. RUS has procedures and activities that are partially consistent with leading practices for conducting program performance measurement, conducting risk assessments, mapping, monitoring loan and grant infrastructure projects, communicating internally, and providing written program documentation. RUS has procedures and activities that are partially consistent with the leading practice of program performance measurement because USDA has identified a goal and a performance measure at a high level. However, at the individual program level, RUS has not established a process that ensures program goals are identified, tracked, and fulfilled; has not developed performance measures linked to goals; and does not evaluate or document the results of program measurement activities. First, we have previously found that results-oriented organizations implement two key practices to lay a strong foundation for successful program management—setting performance goals to clearly define desired program outcomes and developing performance measures that are clearly linked to the performance goals. Through our review of USDA and RUS documentation, we identified a goal set by USDA at the Rural Development mission area level. Specifically, USDA’s Fiscal Year 2015 Annual Performance Report and Fiscal Year 2017 Annual Performance Plan describes the year-end progress of USDA toward achieving the department’s strategic goals, objectives, and performance measures. USDA sets forth a strategic goal “to assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically thriving.” Under this strategic goal, the annual performance report contains a performance measure for RUS: the annual number of borrowers or subscribers receiving new or improved telecommunications services. According to the report, the performance target for 2016 was 120,000 borrowers or subscribers receiving new or improved telecommunications services; the 2017 target is 100,000. Outside of this one high-level strategic goal and performance measure, RUS officials told us they do not have formal documented program performance goals and measures for the individual loan and grant programs. RUS officials told us that they believe their goals for each of the three programs are to ensure that facilities are constructed properly and that the service is actually provided. However, these goals are not documented, and there are no specific performance measures that link to these goals. Federal agencies can use the information gained from performance measurement to make various types of management decisions to improve programs and results. Both the Government Performance and Results Act (GPRA) and OMB’s Circular A-129 highlight the use of performance measures and goals as a means to evaluate program performance. For example, GPRA requires agencies to develop a performance plan covering each program activity set forth in the budget, including program goals that are objective, quantifiable, and measurable. Although such practices are only required at the federal department or agency level under GPRA, they can serve as leading practices for planning at lower levels within federal agencies, such as at an individual program or initiative level. In addition, OMB’s Circular A-129 stipulates that for credit programs, agencies shall periodically evaluate programs in terms of the policy goals of the program and the program’s effectiveness towards addressing those goals. Without specific, documented goals for each loan and grant program—and specific performance measures that are crafted around those goals—it is difficult to determine in an objective, quantifiable way if these programs are fulfilling USDA’s strategic goal of assisting rural communities, and it could be more difficult for RUS to manage the programs in a proactive, results- oriented manner. RUS has procedures and activities that are partially consistent with the leading practice of risk assessment because RUS conducts a variety of risk assessment activities at the application and the individual project level, as well as having procedures to guard against fraud; however, RUS has not established procedures to conduct risk assessment activities at the program level. The Green Book defines the standards for internal control in the federal government, noting that management should: define objectives clearly to enable the identification of risks and define identify, analyze, and respond to risks related to achieving the defined objectives; consider the potential for fraud when identifying, analyzing, and responding to risks; and identify, analyze, and respond to significant changes that could impact internal controls. OMB’s Circular A-129 provides that, for credit programs, agencies must have robust management and oversight frameworks for credit programs to monitor the program’s progress towards achieving policy goals within acceptable risk thresholds, reinforce these frameworks with appropriate internal controls, and take action where appropriate to increase efficiency and effectiveness. RUS’s risk assessment efforts have focused on the proposed and funded broadband projects and their financial risks, particularly for the loan programs, which have greater inherent risk to the federal government because borrowers are expected to repay loans with interest. The application review process for both of the loan programs includes a financial risk review to determine whether the borrower has a sufficient forward-looking return on investment. Borrowers are required to maintain a times interest earned ratio (TIER) between 1.0 and 1.5, based on the projected TIER determined by a feasibility study prepared for each loan. According to RUS, all borrowers receive the same treatment once their loans are approved, irrespective of the risk involved with the project. In other words, RUS does not vary interest rates based on risk or set a higher TIER requirement for riskier borrowers. However, because the loan programs target rural areas that, as previously mentioned, may not appeal to private broadband providers, the programs tend to attract some applicants that may present higher financial risks. Since 2004, the Broadband Program’s loans have had defaults on 22 of 108 loans. In analyzing the risk factors behind these defaults, RUS determined that the majority of the defaulting companies were startup firms.