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{ "title": [ "Background", "Types of Non-VA Medical Care", "Preauthorization Process for Non-VA Medical Care", "Criteria for VA Coverage of Emergency Care from Non-VA Providers", "Process for Paying Non- VA Medical Care Claims", "Notifying Veterans and Non-VA Providers of Denials of Claims for Non- VA Medical Care", "VA Lacks Critical Data on Wait Times and Cost-Effectiveness of Non-VA Medical Care", "Selected VA Facilities Failed to Comply with Applicable Millennium Act Claims Processing Requirements, and Weaknesses Were Identified in VA’s Oversight of Claims Processing Activities", "Selected VA Facilities Frequently Did Not Comply with Claims Processing Requirements, Which Led to the Inappropriate Denial of Claims", "Weaknesses Found in VA’s Oversight of Non-VA Medical Care Claims Processing", "Veterans Lack Knowledge about Millennium Act Emergency Care Eligibility, and Selected Non-VA Providers Have Reported Communication Challenges with VA", "Veterans Lack Knowledge about Eligibility for Coverage of Millennium Act Emergency Care", "Non-VA Providers Reported Communication Problems with VA", "GAO Contact and Staff Acknowledgments" ], "paragraphs": [ "", "When veterans obtain care from non-VA providers, the non-VA providers submit claims to VA for payment. See table 1 for a description of the types of non-VA medical care claims processed by VA.", "Preauthorizing non-VA medical care involves a multistep process conducted by the VA facility that regularly serves a veteran. The preauthorization process is initiated by a VA provider who submits a request for non-VA medical care to the VA facility’s non-VA medical care unit, which is an administrative department within each VA facility that processes VA providers’ non-VA medical care requests and verifies that non-VA medical care is necessary. Once approved by the VA facility’s Chief of Staff or his or her designee, the veteran is notified of the approval and can choose any non-VA provider willing to accept VA payment at predetermined rates. (See fig. 1.)", "For claims that are emergent in nature and therefore would not have gone through the traditional VA preauthorization process, VA is authorized to pay claims for emergency care from non-VA providers under certain conditions, which vary depending on whether the care was related to the veteran’s service-connected disability.\nIf a non-VA emergency care claim is related to a veteran’s service- connected disability, the following criteria must be met in order for the services to be paid for by VA.\nFirst, the non-VA emergency care must have been rendered to treat one of the following: (a) a veteran’s service-connected disability; (b) a condition that is associated with and aggravating the veteran’s service-connected disability; (c) any condition for a veteran who has been rated by VA as permanently and totally disabled due to a service-connected disability; or (d) any condition for a veteran participating in a vocational rehabilitation program who needs care to participate in a course of training.\nSecond, the non-VA emergency care must also meet all of these the claim must be filed within 2 years of the date the care or services were rendered; the services were rendered in a medical emergency, as determined using the prudent layperson standard; a VA or other federal facility was not feasibly available to provide the needed care, and an attempt to use either would not have been considered reasonable; and the services were needed before the veteran was stable enough to be transferred to a VA or other federal facility and before the VA or other federal facility agreed to accept the transfer.\nIf a claim for non-VA emergency care is not related to a veteran’s service- connected disability, there are different criteria that must be met in order for the services to be paid for by VA. The Millennium Act, which was enacted in 1999, provides a safety net for veterans when they do not have other insurance and need emergency care that is not related to a service-connected disability. Specifically, all of the following criteria must be met for VA to cover Millennium Act claims:\nThe claim is not payable under the payment authority for emergency care related to service-connected disabilities.\nThe claim must be filed within 90 days of the latest of the following: the date of discharge, date of death, or date that the veteran exhausted, without success, action to obtain payment or reimbursement from a third party.\nThe veteran must be enrolled in the VA health care system and have received treatment from a VA clinician within 24 months of the emergency care episode.\nThe veteran must be financially liable to the non-VA provider of emergency care.\nThe veteran can have no entitlement to care under a health plan contract (such as Medicare or a private health insurance plan).\nThe veteran can have no other contractual or legal recourse against a third party that would in whole extinguish his or her liability to the non- VA provider.\nThe services must be rendered in a hospital emergency department or a similar facility providing emergency care to the public.\nThe services must be rendered in a medical emergency as determined using the prudent layperson standard.\nA VA or other federal facility was not feasibly available to provide the needed care, and an attempt to use either would not have been considered reasonable by a prudent layperson.\nThe services were rendered before the veteran was stable enough to be transferred to a VA or other federal facility and before the VA or other federal facility agreed to accept the transfer.", "Regardless of whether a veteran’s non-VA medical care was preauthorized or the result of an emergency, the steps for processing payments to non-VA providers are the same. Specifically, the non-VA provider submits a claim to either a Veterans Integrated Service Network (VISN) or a VA facility for payment following the veteran’s treatment. In some VISNs, claims processing activities are centralized in a VISN-level department that is responsible for reviewing claims from non-VA providers, obtaining copies of medical records for veterans’ non-VA medical care, and approving payment to non-VA providers. In other VISNs, these claims-processing activities are decentralized and are the responsibility of individual VA facilities. After VA facility or VISN officials review the claims for accuracy, non-VA providers are reimbursed by VA. (See fig. 2.)\nTo process all claims for non-VA medical care, VA facilities use software called the Fee Basis Claims System (FBCS). FBCS is primarily a system that helps VA facilities administer payments to non-VA providers, as opposed to a system that automatically applies relevant criteria and determines whether claims are eligible for payment. As a result, VA relies on staff in the VISNs and VA facilities that process claims, such as administrative clerks and clinicians (typically nurses), to make decisions about which payment authority applies to the claim and which claims meet the criteria for VA payment.", "If VA denies payment for a claim for non-VA medical care, the Department must provide written notice to the veteran and the claimant (usually, the non-VA provider) regarding the reason for the denial and inform them of their rights to request a reconsideration or to formally appeal the denial. If a veteran or non-VA provider has questions about a denied claim, claims should be reconsidered by a supervisor at the same VISN or VA facility that denied the claim. If the denial decision is upheld, the veteran or non-VA provider has the right to file an appeal through the Board of Veterans’ Appeals.", "Critical data limitations related to the wait times veterans face in obtaining care from non-VA providers and the cost-effectiveness of such services limit VA’s efforts to oversee the Non-VA Medical Care Program in an effective manner. Most notably, VA does not collect data on how long veterans must wait to be seen by non-VA providers. We previously reported that the amount of time veterans wait for appointments in VA facilities influenced VA’s utilization of non-VA medical care. For example, in our May 2013 report, VA officials from all six facilities we reviewed reported that they routinely referred veterans to non-VA providers to help ensure that veterans receive timely care and their facilities meet performance goals for wait times for VA facility-based care.from one of these VA facilities explained that veterans needing treatment in several specialties—including audiology, cardiology, and ophthalmology—were referred to non-VA providers for this reason.\nIn fiscal year 2012, VA performance goals for wait times for care in VA facilities called for veterans’ primary care appointments to be completed within 7 days of their desired appointment date and veterans’ specialty care appointments to be scheduled within 14 days of their desired appointment date. However, since VA did not track wait times for non-VA providers, little was known about how often veterans’ wait times for non- VA medical care appointments exceeded VA facility-based appointment wait time goals. Officials from one VA facility we reviewed explained that non-VA providers in their community also faced capacity limitations and may not be able to schedule appointments for veterans any sooner than the VA facility.\nLimitations in the way VA collects non-VA medical care data also did not allow the Department to analyze the cost-effectiveness of non-VA medical care provided to veterans. In our May 2013 report, we found that VA lacked a data system to group medical care delivered by non-VA providers by episode of care—a combined total of all care provided to a veteran during a single office visit or inpatient stay. For example, during an office visit to an orthopedic surgeon for a joint replacement evaluation, an X-ray for the affected joint may be ordered, the veteran may be given a blood test, and the veteran may receive a physical evaluation from the orthopedic surgeon. The non-VA provider would submit a claim to VA for the office visit, and separate claims would be submitted by the radiologist that X-rayed the affected joint and the lab that performed the veteran’s blood test. However, VA’s non-VA medical care data system was not able to link the charges for these three treatments together. We found that this left VA without data for comparing the total non-VA medical care costs for various types of services with the VA facility-based alternative.\nWithout cost-effectiveness data, VA is unable to efficiently compare VA and non-VA options for delivering care in areas with high utilization and spending for non-VA medical care. Two VA facilities we reviewed had undertaken such assessments, despite the limitations of current data. Officials at one facility reported that they expanded their operating room capacity to reduce their reliance on non-VA surgical services, saving an estimated $18 million annually in non-VA medical care costs. Similarly, officials from the second facility reported that they were able to reduce their reliance on non-VA medical care by hiring additional VA staff and purchasing additional equipment to perform pulmonary function tests, an effort that reduced related non-VA medical care costs by about $112,000 between fiscal years 2010 and 2012. The lack of non-VA medical care data available on an episode of care basis also prevents VA from efficiently assessing the appropriateness of non-VA provider reimbursement. Specifically, VA officials cannot conduct retrospective reviews of VA facilities’ claims to determine if the appropriate rate was applied for the care provided by non-VA providers.\nTo help VA address these concerns, we made two recommendations in our May 2013 report that directed VA to (1) analyze the amount of time veterans wait to see non-VA providers and apply the same wait time goals to non-VA medical care that have been used to assess VA facility- based wait times, and (2) establish a mechanism for analyzing the episode of care costs for non-VA medical care. VA concurred with these recommendations. In June 2014, we discussed VA’s progress in implementing these recommendations with VA officials. These officials indicated that the Department anticipated being able to track some wait time information for veterans seen by non-VA providers that VA contracts with under its new Patient Centered Community Care (PCCC) initiative in the near term. However, wait time information for all non-VA medical care will not be readily available until VA completes a redesign of its claims processing system, which is expected to occur in fiscal year 2016. With respect to establishing a mechanism to analyze the episode of care costs for non-VA medical care, VA officials explained that they are in the process of fully implementing this recommendation by (1) improving existing data systems to systematically audit claims that include billing codes typically included in bundled payments while the claims are in a pre-payment status and to require VA facilities to review these claims prior to payment, and by (2) making improvements to its Non-VA Medical Care Program data that would allow all non-VA medical care data to be analyzed on an episode of care basis. However, VA officials did not provide a time frame for when all non-VA medical care would be routinely analyzed by episode of care.", "In March 2014, we reported that four VA facilities we visited had patterns of noncompliance with VA claims processing requirements, which led to the inappropriate denial of some Millennium Act emergency care claims and the failure to notify some veterans that their claims had been denied. We also found that VA’s existing oversight mechanisms for non- VA medical care claims processing were not sufficiently focused on whether VA facilities were inappropriately approving or denying claims.", "For our March 2014 report, we examined a sample of 128 Millennium Act emergency care claims that the four VA facilities we visited had denied in fiscal year 2012 and found 66 instances of noncompliance with VA policy requirements. We determined that about 20 percent of the claims we examined had been denied inappropriately, and almost 65 percent of the claims we examined lacked documentation showing that the veteran was notified that their claim was denied. As a result of our review, these four VA facilities reconsidered and paid 25 claims that they had inappropriately denied.\nWe found that there are no automated processes for determining whether a claim for non-VA medical care meets criteria for payment or ensuring that veterans are notified when a claim is denied; instead these processes rely on the judgment of VA staff reviewing each claim and adherence to VA policies. There are a number of steps in the claims review process that were susceptible to errors that could lead to inappropriate denials of non-VA medical care claims. For example, we found nine instances where VA staff incorrectly determined that non-VA medical care was not preauthorized when, in fact, a VA clinician had referred the veteran to the non-VA provider.that VA must notify veterans in writing about denied claims and their appeal rights. However, we found that one facility we visited could not produce documentation of veteran notification for any of the 30 denied claims we reviewed. We concluded that when veterans are not informed that their claims for non-VA medical care have been denied, and VA has inappropriately denied the claims, then veterans could become financially liable for care that VA should have covered. Under such circumstances, veterans’ credit ratings may be negatively affected, and they may face personal financial hardships if they are unable to pay the bills they receive from non-VA providers.\nIn addition, VA policy states These findings from our March 2014 report raise concerns about compliance with claims processing requirements at other VA facilities nationwide. To help VA address these concerns, we made six recommendations aimed at improving VA’s processing of non-VA medical care claims, specifically Millennium Act emergency care claims. These recommendations directed the Department to establish or clarify its policies or take other actions to improve VA facilities’ compliance with existing policy requirements. VA concurred with these six recommendations. Based on discussions with VA officials in June 2014 to obtain information about the status of their planned actions for implementing these recommendations, we believe that VA is making progress on the implementation of three of the six recommendations. However, VA needs to take additional steps to revise its policies on claims processing roles and responsibilities in order to address our remaining three recommendations.", "One of VA’s primary methods for monitoring its facilities’ compliance with applicable requirements for processing non-VA medical care claims is field assistance visits. In fiscal year 2013, VA conducted these visits at 30 out of 140 VA facilities that processed non-VA medical care claims. These 30 facilities were selected for review by VA based on their claims processing timeliness. However, we reported in March 2014 that the criteria VA used to select facilities for review may not direct VA to the facilities most in need of a field assistance visit because VA does not take into account the accuracy of claims processing activity. Moreover, we found that the checklist VA uses for its field assistance visits does not examine all practices that could lead VA facilities to inappropriately deny claims. Further, VA does not hold facilities accountable for correcting deficiencies identified during these visits, and it does not validate facilities’ self-reported corrections to address field assistance visit deficiencies. According to VA officials, these visits are meant to be consultative in nature and assist facilities in improving their non-VA medical care claims processing. However, we found weaknesses in VA’s reliance on facilities’ self-reported actions when we reviewed the Department’s fiscal year 2012 and 2013 field assistance visit data and found unresolved problems in fiscal year 2013 that originated in fiscal year 2012.\nFurther, VA implemented automated processes for auditing approved non-VA medical care claims to ensure that VA facilities apply the correct payment rates and no duplicate versions of the claims were previously paid. However, VA has no systematic process for auditing claims to ensure that they were appropriately approved or denied. VA officials stated that they recommend, but do not require, that managers of non-VA medical care claims processing units at VA facilities audit samples of processed claims—including both approved and denied claims—to determine whether staff processed claims appropriately. However, we found that VA does not know how many facilities conduct such audits, and none of the four VA facilities we visited reported conducting such audits.\nIn our March 2014 report, we concluded that ensuring VA facilities correct deficiencies identified during field assistance visits and conduct systematic audits of the accuracy of claims processing decisions would provide necessary transparency and stability to the Non-VA Medical Care Program. To help VA address these issues, we made three recommendations aimed at revising the scope of the field assistance visits, ensuring deficiencies identified during these visits are corrected, and instituting systematic audits of the appropriateness of claims processing decisions. VA concurred with these recommendations and detailed its plans to address them. In June 2014, VA officials detailed the Department’s progress implementing these recommendations. However, we do not believe the Department’s actions have sufficiently addressed these recommendations. To fully implement these three recommendations, VA needs to ensure field assistance visits include a review of a sample of processed claims in order to determine whether staff are complying with applicable requirements for claims processing and needs to establish systematic audits of claims processing decisions, among other things.", "In March 2014, we found that despite VA’s communication efforts with veterans and non-VA providers, knowledge gaps exist for veterans about eligibility for Millennium Act emergency care, and communication weaknesses exist between VA and non-VA providers.", "In March 2014, we reported that veterans may still be unaware of the criteria that must be met in order for VA to pay claims for non-VA medical care; specifically, Millennium Act emergency care. VA primarily educates veterans about their eligibility for non-VA medical care through patient orientation sessions and written materials, such as the Veteran Health Benefits Handbook. However, VA patient benefits and enrollment officials at two of the four VA facilities we visited said that patient orientation sessions were generally not well-attended. Also, written materials we reviewed did not always provide a complete listing of all criteria that must be met for Millennium Act emergency care claims to be covered, which may create confusion about whether veterans should seek treatment from a VA facility or a non-VA provider in the event of an emergency. VA officials said that the primary intent of the written materials was to communicate the importance of promptly seeking care and to discourage veterans from delaying care by bypassing non-VA providers in the event of an emergency. However, some VA officials acknowledged that they were aware of specific recent cases where veterans delayed or avoided seeking treatment at non-VA providers to go to a VA facility instead. For example, one VA official explained that a veteran experiencing chest pains drove over 100 miles to a VA facility rather than going to the nearest emergency department; two VA officials said the wife of a veteran who had gunshot wounds drove him to a VA facility about 30 miles away, bypassing a number of non-VA emergency departments; and another VA official explained that a veteran experiencing chest pains died during a weekend as he waited to seek care until the local VA community-based outpatient clinic opened on Monday.\nAlternatively, we found that without knowledge of specific criteria for VA payment of non-VA medical care, specifically Millennium Act emergency care, veterans may seek treatment in situations where the Department cannot pay. For example, veterans may seek care at a non-VA provider for conditions they believe require immediate attention—such as one for which they have not been able to obtain timely treatment from a VA facility. However, VA staff reviewing the claim may decide that the condition does not meet the prudent layperson standard for emergency care and deny payment. Veterans that are admitted as inpatients to non- VA providers also may not be aware that they should be transferred to VA facilities once their conditions have stabilized and a VA facility has notified the non-VA provider that a bed is available for their care at the VA facility.\nTo help VA address concerns about veterans’ lack of knowledge of non- VA medical care—specifically, Millennium Act emergency care—we recommended in March 2014 that VA take steps to better understand gaps in veterans’ knowledge regarding eligibility for non-VA coverage by surveying them about their health care benefits knowledge and using information from those surveys to tailor the Department’s veteran education efforts. While VA concurred with this recommendation, in June 2014 VA officials indicated that the Department has decided not to pursue veteran surveys but instead will promote veteran education by appearing at conferences and town halls with veterans service organizations and updating the information on its public website. We remain concerned that, without surveying veterans directly, VA will not be able to identify specific veteran knowledge gaps regarding coverage of non-VA medical care or determine ways to better target VA’s veteran education efforts.", "For our March 2014 report, all four non-VA providers we visited cited problems in their non-VA medical care claims processing communication with VA regarding the following issues:\nPoints-of-contact not designated. Two of the four non-VA providers said they did not have a specific point-of-contact at their VA facilities who could answer concerns and issues about claims they had submitted, which led to problems resolving their issues in a timely manner.\nDelays in claims processing. Billing officials at one non-VA provider described lengthy delays in the processing of their claims, which in some cases went on for years.\nLack of responsiveness when trying to transfer veterans and failure to document discussions about potential transfers. Officials at one non-VA provider said they had experienced challenges connecting with the inpatient admissions staff at their local VA facility, making it difficult for them to transfer veterans to the VA facility after the veterans were stabilized. According to this provider, the VA facility did not consistently answer calls during business hours or weekends. Officials from a non-VA provider also described cases where they had attempted to transfer stable veterans to the VA facility, but the VA facility informed them that there were no beds available. Later, the VA facility denied these claims because VA could find no record of this contact with the non-VA provider or authorizations for continued care.\nVA officials said they have attempted to improve communications with non-VA providers. Specifically, they have established a website and electronic newsletter for non-VA providers in order to disseminate information about non-VA medical care requirements. In addition, VA mailed letters to all non-VA providers that had submitted claims during the previous 2 years to inform them of these online resources. However, none of the four non-VA providers included in our March 2014 review recalled receiving the letter that VA mailed. Two non-VA providers were familiar with the website, but one commented that it lacked some necessary information and was not useful. None of these four non-VA providers were aware of VA’s electronic newsletter, and VA officials acknowledged that a very small percentage of the non-VA providers who submit claims to VA had signed up for it. While these communications have not always reached their intended audience, VA is continuing its efforts to improve communications with non-VA providers. Specifically, VA has been conducting satisfaction surveys to continue monitoring its communications with non-VA providers and has been holding training sessions for VA staff on improving outreach with non-VA providers.\nChairman Miller, Ranking Member Michaud, and Members of the Committee, this completes my prepared statement. I would be pleased to respond to any questions that you may have.", "If you or your staffs have any questions about this statement, please contact me at (202) 512-7114 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. GAO staff who made key contributions to this statement include Marcia A. Mann, Assistant Director; Emily Beller; Cathleen Hamann; Katherine Nicole Laubacher; Alexis C. MacDonald; and Jennifer Whitworth.\nThis 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." ], "depth": [ 1, 2, 2, 2, 2, 2, 1, 1, 2, 2, 1, 2, 2, 1 ], "alignment": [ "h1_title", "", "", "h1_full", "", "", "h0_full", "h3_title h1_full", "h3_full h1_full", "h3_full", "h2_full h3_title", "h3_full h2_full", "h2_full", "" ] }

{ "question": [ "What were GAO's findings on the Non-VA Medical Care Program?", "How does this lack of data impact VA?", "How does a lack of data impact VA's ability to assess the cost-effectiveness of its program?", "How is this inability to assess cost-effectiveness detrimental to VA?", "What were GAO's findings on the VA facilities visited?", "How did this noncompliance affect claims being processed?", "What proportion of claims were affected?", "Why does GAO believe that this noncompliance will continue?", "What is the purpose of the Millennium Act?", "How did VA react to GAO's review?", "What were GAO's findings on VA communication?", "How is veterans' lack of understanding of emergency care benefits potentially detrimental?", "What was the result of VA's efforts to improve communications?", "What is the purpose of this testimony?", "How did GAO gather information for the preceding reports?", "How did information gathering differ between the two reports?" ], "summary": [ "GAO's May 2013 report on the oversight and management of the Non-VA Medical Care Program found that the Department of Veterans Affairs (VA) does not collect data on wait times veterans face in obtaining care from non-VA providers.", "The lack of data on wait times limits VA's efforts to effectively oversee the Non-VA Medical Care Program because it is not possible for VA to determine if veterans who receive care from non-VA providers are receiving that care sooner than they would in VA facilities.", "In addition, GAO found that VA cannot assess the cost-effectiveness of non-VA medical care because it cannot analyze data on all services and charges for an episode of care, which is a combined total of all care provided to a veteran during a single office visit or inpatient stay.", "As a result, VA cannot determine whether delivering care through non-VA providers is more cost-effective than augmenting its own capacity in areas with high utilization of non-VA medical care.", "GAO's March 2014 report found patterns of noncompliance with applicable requirements for processing emergency care claims covered under the Veterans Millennium Health Care and Benefits Act (Millennium Act) at each of the four VA facilities visited.", "This led to the inappropriate denial of some claims and the failure to notify veterans that their claims had been denied at these facilities.", "Specifically, GAO determined that about 20 percent of the 128 claims it reviewed had been denied inappropriately, and almost 65 percent of the reviewed claims lacked documentation showing that the veterans were informed their claims were denied and explained their appeal rights.", "GAO also found that there is significant risk that these patterns of noncompliance will continue because VA's existing oversight mechanisms do not focus on whether VA facilities appropriately approve or deny non-VA medical care claims or fail to notify veterans that their claims have been denied.", "The Millennium Act authorizes VA to cover emergency care for conditions not related to veterans' service-connected disabilities when veterans who have no other health plan coverage receive care at non-VA providers and meet other specified criteria.", "As a result of GAO's review, the VA facilities reconsidered and paid 25 claims that they initially had inappropriately denied.", "GAO also reported in March 2014 that gaps exist in veterans' knowledge about eligibility criteria for Millennium Act emergency care, and communication weaknesses exist between VA and non-VA providers.", "Specifically, GAO found that veterans' lack of understanding about their emergency care benefits under the Millennium Act presents risks for potentially negative effects on veterans' health because they may forgo treatment at non-VA providers, and on veterans' finances because they may assume VA will pay for care in situations that do not meet VA criteria.", "Despite VA's efforts to improve communications, some non-VA providers reported instances in which VA facilities' claims processing staff were unresponsive to their questions about submitted claims.", "This testimony is based on two GAO reports and addresses the extent to which (1) VA collects reliable information on wait times and cost-effectiveness of the Non-VA Medical Care Program; (2) VA facilities comply with Millennium Act claims processing requirements and VA oversees claims processing activities; and (3) VA educates veterans about eligibility for Millennium Act emergency care and communicates with non-VA providers.", "For both reports, GAO reviewed relevant requirements and visited 10 VA facilities.", "For its report on the oversight and management of the Non-VA Medical Care Program, GAO reviewed non-VA medical care spending and utilization data from fiscal year 2008 through fiscal year 2012. For its report on the Millennium Act emergency care benefit, GAO reviewed 128 denied Millennium Act claims to determine the accuracy of processing decisions." ], "parent_pair_index": [ -1, 0, 1, 2, -1, 0, 1, 0, -1, -1, -1, 0, 0, -1, 0, 1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 5, 5, 5, 1, 1, 1 ] }

{ "title": [ "Background", "DOD’s Methods for Calculating Pre-BRAC Estimates of Excess Capacity Have Limitations", "DOD’s Method for Estimating Excess Capacity in 1998 and 2004", "The Methods DOD Used to Estimate Excess Capacity in 1998 and 2004 Have Limitations", "DOD’s Statements about Remaining Excess Capacity in 2012 and 2013 Relied on Two Earlier Calculations", "Agency Comments", "Appendix I: Comments from the Department of Defense", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "The first BRAC Commission was chartered by the Secretary of Defense in 1988, and operated in accordance with processes later established by the Defense Authorization Amendments and Base Closure and Realignment Act of 1988. Since that time, the BRAC process has changed in many ways, with a variety of requirements and procedures mandated by subsequent BRAC statutes or adopted by DOD. Among these is the requirement that the Secretary of Defense develop a current force structure plan. DOD’s force structure plan is designed to identify the number and type of forces that DOD needs to combat the anticipated threats to the security of the United States. As specified in DOD’s force structure plan in support of BRAC 2005, the President’s National Security Strategy and the Secretary of Defense’s National Defense Strategy provide the focus for the military forces. DOD then analyzes current and future threats, challenges, and opportunities to develop the force structure plan. DOD’s planning framework helps determine the capabilities required to respond to a range of scenarios. The Department then analyzes the force requirements for the most likely, the most dangerous, and the most demanding circumstances.\nOne of the objectives of the first BRAC Commission was to review the current and planned military base structure in light of force structure assumptions and, using the process and the criteria the Commission developed, to identify which bases should be realigned or closed. To accomplish this, the Commission used a two-phase approach. Phase I grouped bases into 22 overall categories, such as training bases and administrative headquarters, and then focused on determining the military value of bases within each category, each base’s capacity to absorb additional missions and forces, and the overall excess capacity within the category. The Commission then ranked the bases to identify those warranting review in phase II, which focused on assessing the cost and savings of base realignment and closure options.\nThe Defense Base Realignment and Closure Act of 1990 substantially revised the process for DOD base closure and realignment actions within the United States, establishing an independent Defense Base Closure and Realignment Commission and providing for BRAC rounds in 1991, 1993, and 1995. One of the key elements of the 1990 BRAC statute was the requirement that DOD submit a force structure plan and that closure and realignment decisions be based on that force structure plan and on the final selection criteria established for the BRAC round. As part of the BRAC process for 1991, 1993, and 1995, an important step in the military services’ approach for identifying bases to close or realign was determining whether excess capacity existed at their bases. The starting point for this step was comparing changes in the force structure plan to the base structure of the military services. After applying military value criteria and other specific BRAC criteria, each of the services developed their recommendations for closures and realignments for submission to the BRAC Commission.\nIn May 1997, the Secretary of Defense announced his intention to ask Congress to authorize two additional BRAC rounds. Later that year, Congress enacted section 2824 of the National Defense Authorization Act for Fiscal Year 1998, which required that the Secretary of Defense provide the congressional defense committees with a comprehensive report on a range of BRAC issues, including the need for any additional BRAC rounds and an estimate of the amount of DOD’s excess capacity. DOD submitted the required report in April 1998 and estimated that DOD had 23 percent excess capacity. In the report, DOD also stated that its method for estimating excess capacity determined the extent to which reductions in base structure had kept pace with reductions in force structure since 1989.\nThe National Defense Authorization Act for Fiscal Year 2002 amended the 1990 BRAC statute by authorizing a BRAC round for 2005, and required DOD to report to Congress on several BRAC-related issues in 2004 in order for the 2005 round to proceed. The statute directed, among other things, that the Secretary of Defense provide Congress with a 20- year force structure plan and a worldwide inventory of military installations and facilities as part of DOD’s fiscal year 2005 budget justification documents. In addition, as part of the force structure plan and inventory submission, the Secretary was to prepare (1) a description of the infrastructure necessary to support the force structure described in the force-structure plan, (2) a discussion of categories of excess infrastructure and infrastructure capacity, and (3) an economic analysis of the effect of the closure or realignment of military installations to reduce excess infrastructure. DOD provided the required report, which estimated that the department had 24 percent excess capacity, on March 23, 2004. In that report, the Secretary of Defense also certified that an additional round of BRAC was needed and that the round would result in savings by fiscal year 2011.\nSubsequently, an initial part of DOD’s BRAC recommendations development process for the 2005 round involved an overall capacity analysis of specific locations or functions and subfunctions at specific locations. The analysis relied on data calls to obtain certified data to assess such factors as maximum potential capacity, current capacity, current usage, excess capacity, and capacity needed to meet surge requirements. This capacity analysis—in conjunction with the department’s 20-year force structure plan, military value analysis, and transformational options; applicable guiding principles, objectives, or policy imperatives identified by individual military services or joint cross- service groups; and military judgment—was used to identify realignment and closure scenarios for further analysis, ultimately leading to finalized recommendations for base realignments and closures.", "Our review of DOD’s pre-BRAC estimates of excess capacity found that the methods DOD has used and the resulting estimates have limitations. DOD used similar methods in 1998 and 2004 to calculate its pre-BRAC estimates of excess capacity. However, our current review identified a number of additional limitations with DOD’s methods. For example, DOD’s approach assigns each installation to only one mission category, even though most installations support more than one mission. In addition, to arrive at the excess capacity estimate it provided to Congress in 2012 and repeated in 2013, DOD subtracted an estimate of excess capacity that it expected would be disposed of during the 2005 BRAC round from the amount of excess capacity estimated to exist immediately before that BRAC round to arrive at the current excess capacity estimate of about 20 percent. However, because DOD’s pre-BRAC excess capacity estimate, expressed as a percentage of bases, and plant replacement value, expressed in dollars, are not measured in the same units, they are not comparable measures.", "DOD based its 1998 and 2004 estimates of 23 percent and 24 percent excess capacity, respectively, on a method that compared measures of force structure projected to be in place at the end of the 5-year Future Years Defense Programs that were current at the time of each estimate, to associated indicators of capacity. DOD’s 1998 and 2004 technique consisted of three major steps: (1) categorizing bases according to their primary missions and defining indicators of capacity, (2) developing ratios of capacity-to-force structure for DOD’s baseline year of 1989, and (3) aggregating these various excess capacity indicators that were calculated at the installation level to the military service level and then department- wide.\nTo begin DOD’s analysis, each of the military services identified categories for their bases, identified bases that the services considered major installations, and categorized their bases according to their primary missions—such as depots, training, or administration—so that each installation was included in only one category. Figure 1 shows the installation categories used by each military service and the Defense Logistics Agency.\nFigure 1. Installation Categories for the Military Services and the Defense Logistics Agency.\nThe services then defined various indicators of capacity—such as maneuver base acres or facility square feet—for each installation category.\nNext, DOD divided each services’ indicators of capacity by a measure of force structure—such as the number of military and civilian personnel authorized, authorized end strength, or the size of the acquisition workforce—to develop ratios of capacity-to-projected force structure and compared them to ratios from 1989, which was used as a baseline. For its 1998 analysis DOD projected force structure through 2003, and for its 2004 analysis DOD projected force structure through 2009 because these dates marked the end of DOD’s Future Year’s Defense Program projections that were current at the time the analyses were performed.\nFor example, as illustrated in Figure 2, in its 1998 capacity analysis, DOD projected, that in 2003, there would be 6.575 million square feet of administrative space on Army administrative bases, and DOD projected that there would be 65,516 military and civilian personnel assigned to those bases, resulting in a capacity-to-force structure ratio of 100.4. Similarly, according to its 2004 capacity analysis, DOD projected that, in 2009, there would be 6.121 million square feet of administrative space on Army administrative bases, and DOD projected that there would be 64,598 military and civilian personnel assigned to those bases, resulting in a capacity-to-force structure ratio of 94.8.\nDOD then calculated the extent to which the ratio of capacity-to-force structure for each base category differed from the ratio in 1989, which was used as a baseline. To do this, DOD first calculated an estimate of capacity it would need for the year in question for each of its various indicators of capacity. For instance, to continue with the second example above, DOD calculated an estimate of administrative capacity the Army would need for 2009. As illustrated in Figure 3, DOD calculated its needed capacity indicators by multiplying the projected 2009 force structure measure (64,598 military and civilian personnel in this case) by the 1989 capacity-to-force ratio (81.3 for Army administrative bases), which in this case resulted in an estimated needed capacity of 5.25 million square feet of Army administrative space.\nTo calculate the projected excess capacity for 2009, DOD subtracted a base category’s estimated needed capacity from its projected 2009 capacity. In our Army administrative base example, DOD subtracted its estimated needed capacity for 2009 of 5.25 million square feet from its estimated existing capacity in 2009 of 6.12 million square feet, which resulted in DOD’s estimate of 0.87 million square feet of excess Army administrative space or 14 percent of the Army’s existing administrative space in 2009.\nAfter computing these indicators of excess capacity for each category of installation for each military service and the Defense Logistics Agency, DOD then aggregated these indicators departmentwide. Specifically, DOD first multiplied the number of bases in a category by the percentage of excess for that category, which resulted in DOD’s estimate of the number of excess bases in each category. Continuing our Army administrative capacity example above, as illustrated in Figure 4, the percentage of excess capacity (in this case, the Army’s estimated 14- percent excess of projected administrative space in 2009) would be multiplied by the number bases in the category (12 in the case of Army administrative bases), resulting in an estimated number of excess administrative bases (1.7 in this case).\nAs illustrated in Figure 5, to calculate an overall indication of excess capacity for each DOD component, DOD summed the estimated number of excess bases for each installation category within a component (22.3 in the case of the Army) and divided this by the sum of the number of all bases in all categories for that component (78 in the case of the Army), which resulted in a percentage of excess bases for the component. In our example, DOD estimated that 29 percent of the Army’s bases were in excess to its estimated needed capacity.\nFinally, the departmentwide excess was calculated by summing the estimated number of excess bases for each military service and the Defense Logistics Agency (65.2), summing the number of bases included in the analysis (276), then dividing the sum of the excess bases by the total number of bases in the analysis, resulting in estimated department- wide excess of 24 percent.", "DOD recognized some limitations within its method for estimating excess capacity, stating in both its 1998 and 2004 reports to Congress that the analysis it performed provided an indication of the type and amount of excess capacity within the department, but recognizing that the analyses lacked the precision to identify specific installations or functional configurations for realignment or closure. In addition, our current review of DOD’s method for estimating excess capacity outside of a congressionally-authorized BRAC process identified a number of limitations.\nFirst, DOD assigned each base to only one installation category, even though most bases support more than one mission. This approach effectively excluded significant portions of a base’s infrastructure from the analysis. For example, in the case of Army maneuver bases, using base acres as the indicator of capacity does not include about 204 million square feet of buildings located on the 12 Army maneuver bases in DOD’s analysis. Another limitation associated with DOD’s method is that the services measured capacity for some similar functions differently. For example, the Army and Air Force measured capacity for test and evaluation facilities in terms of physical total square feet of space, while the Navy measured its capacity for these facilities in terms of work years. These differences make it difficult for DOD to assess excess capacity across the department. A third limitation is that, in using 1989 as a baseline, DOD assumed that the bases and facilities as they existed in 1989 were appropriately sized to support missions, and DOD did not identify any excess capacity or capacity shortfall that may have existed at that time. This approach, in essence, transfers any excesses and shortfalls that existed in 1989 into DOD’s estimates of future capacity needs because, as illustrated in Figure 3 above, the capacity-to-force structure ratio from 1989 was used to calculate the needed capacity for 2009. It is therefore uncertain to what extent DOD’s estimates of excess capacity are overstated or understated. Finally, in both the 1998 and 2004 analyses, in instances where DOD’s analysis indicated that projected capacity was less than needed capacity—indicating a capacity shortage—within a specific installation category, DOD treated these cases as having zero or no excess capacity. Despite the data showing capacity shortages, DOD used this data to aggregate the results of its analysis across the department. If DOD had treated those installation categories as having capacity shortages, DOD’s estimates would have resulted in a lower number of excess bases and consequently a lower percentage of excess capacity across the department than DOD reported to Congress.", "DOD’s testimony in March 2012 and March 2013, that by its estimates DOD had about 20 percent excess capacity remaining after the end of BRAC 2005, relied on earlier calculations that the department made in 2004 and 2005. First, in 2004, using the method described above, the department estimated that it had 24 percent excess capacity. Then, in 2005, DOD’s report transmitting its recommendations to the BRAC Commission stated that, while it is difficult to measure the full extent of the improvements in effectiveness and efficiency of the BRAC 2005 recommendations, four statistics would illustrate the breadth and depth of the effect of its proposed actions. One of those statistics was the department’s projection that DOD’s plant-replacement value would be reduced by 5 percent. After the BRAC Commission reviewed DOD’s recommendations and made some changes, including reducing the number of closures at major installations, DOD revised its estimate of the expected percentage reduction in plant-replacement value and projected that it would likely be around 3 percent. In 2012, the Deputy Under Secretary of Defense (Installations and Environment) said that these estimates from 2004 and 2005 suggested that roughly 20 percent excess capacity remained. However, because DOD’s pre-BRAC excess capacity estimate, which is expressed as a percentage of bases, and plant replacement value, which is expressed in dollars, are not measured in the same units, they are not comparable measures.\nIn March 2013, the Acting Deputy Under Secretary of Defense (Installations and Environment) testified that the method upon which DOD’s current estimate of 20 percent excess capacity is based is helpful in making a broad assessment in determining whether an additional BRAC round is justified, but it cannot identify specific installations or functional configurations for realignment or closure. The Acting Deputy Under Secretary further stated that the specific capacity analysis that is an integral part of the BRAC process is preferable to aggregate metrics used in DOD’s pre-BRAC estimates. He further stated that only through the BRAC process is the Department able to determine excess capacity by installation and by mission or function in a process that is thorough and fair.", "We provided a draft of this report to DOD for comment. In its written comments, which are reproduced in appendix I, DOD stated that we properly highlighted the limitations of its approach used to estimate excess capacity. In addition, DOD stated that our report provides proper context for its methodology by contrasting it with the extensive and detailed data collection and analysis that DOD has used to develop BRAC recommendations. DOD concluded that only through the BRAC process is it able to determine excess capacity by installation and mission or function in a fair and thorough way. DOD also provided a technical comment which we incorporated into our report.\nWe are sending copies of this report to appropriate congressional committees and the Secretary of Defense; the Secretaries of the Army, Navy, and Air Force; the Commandant of the Marine Corps; and the Director, Office of Management and Budget. This report is also available at no charge on our Web site at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-4523 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix II.", "", "", "Brian J. Lepore, (202) 512-4523 or [email protected].", "In addition to the contact named above, Harold Reich (Assistant Director), Ronald Bergman, Timothy Burke, Susan Ditto, Gregory Marchand, Carol Petersen, Amie Steele, Laura Talbott, John Van Schaik, and John Wren made significant contributions to the report.", "Military Bases: Opportunities Exist to Improve Future Base Realignment and Closure Rounds. GAO-13-149. Washington, D.C.: March 7, 2013.\nGAO’s 2013 High Risk Series: An Update. GAO-13-283. Washington, D.C.: February 2013.\nDOD Joint Bases: Management Improvements Needed to Achieve Greater Efficiencies. GAO-13-134. Washington, D.C.: November 15, 2012.\nMilitary Base Realignments and Closures: The National Geospatial- Intelligence Agency’s Technology Center Construction Project. GAO-12-770R. Washington, D.C.: June 29, 2012.\nMilitary Base Realignments and Closures: Updated Costs and Savings Estimates from BRAC 2005. GAO-12-709R. Washington, D.C.: June 29, 2012.\nMilitary Base Realignments and Closures: Key Factors Contributing to BRAC 2005 Results. GAO-12-513T. Washington, D.C.: March 8, 2012.\nExcess Facilities: DOD Needs More Complete Information and a Strategy to Guide Its Future Disposal Efforts. GAO-11-814. Washington, D.C.: September 19, 2011.\nMilitary Base Realignments and Closures: Review of the Iowa and Milan Army Ammunition Plants. GAO-11-488R. Washington, D.C.: April 1, 2011.\nGAO’s 2011 High-Risk Series: An Update. GAO-11-394T. Washington, D.C.: February 17, 2011.\nDefense Infrastructure: High-Level Federal Interagency Coordination Is Warranted to Address Transportation Needs beyond the Scope of the Defense Access Roads Program. GAO-11-165. Washington, D.C.: January 26, 2011.\nMilitary Base Realignments and Closures: DOD Is Taking Steps to Mitigate Challenges but Is Not Fully Reporting Some Additional Costs. GAO-10-725R. Washington, D.C.: July 21, 2010.\nDefense Infrastructure: Army Needs to Improve Its Facility Planning Systems to Better Support Installations Experiencing Significant Growth. GAO-10-602. Washington, D.C.: June 24, 2010.\nMilitary Base Realignments and Closures: Estimated Costs Have Increased While Savings Estimates Have Decreased Since Fiscal Year 2009. GAO-10-98R. Washington, D.C.: November 13, 2009.\nMilitary Base Realignments and Closures: Transportation Impact of Personnel Increases Will Be Significant, but Long-Term Costs Are Uncertain and Direct Federal Support Is Limited. GAO-09-750. Washington, D.C.: September 9, 2009.\nMilitary Base Realignments and Closures: DOD Needs to Update Savings Estimates and Continue to Address Challenges in Consolidating Supply- Related Functions at Depot Maintenance Locations. GAO-09-703. Washington, D.C.: July 9, 2009.\nDefense Infrastructure: DOD Needs to Periodically Review Support Standards and Costs at Joint Bases and Better Inform Congress of Facility Sustainment Funding Uses. GAO-09-336. Washington, D.C.: March 30, 2009.\nMilitary Base Realignments and Closures: DOD Faces Challenges in Implementing Recommendations on Time and Is Not Consistently Updating Savings Estimates. GAO-09-217. Washington, D.C.: January 30, 2009.\nMilitary Base Realignments and Closures: Army Is Developing Plans to Transfer Functions from Fort Monmouth, New Jersey, to Aberdeen Proving Ground, Maryland, but Challenges Remain. GAO-08-1010R. Washington, D.C.: August 13, 2008.\nDefense Infrastructure: High-Level Leadership Needed to Help Communities Address Challenges Caused by DOD-Related Growth. GAO-08-665. Washington, D.C.: June 17, 2008.\nDefense Infrastructure: DOD Funding for Infrastructure and Road Improvements Surrounding Growth Installations. GAO-08-602R. Washington, D.C.: April 1, 2008.\nMilitary Base Realignments and Closures: Higher Costs and Lower Savings Projected for Implementing Two Key Supply-Related BRAC Recommendations. GAO-08-315. Washington, D.C.: March 5, 2008.\nDefense Infrastructure: Realignment of Air Force Special Operations Command Units to Cannon Air Force Base, New Mexico. GAO-08-244R. Washington, D.C.: January 18, 2008.\nMilitary Base Realignments and Closures: Estimated Costs Have Increased and Estimated Savings Have Decreased. GAO-08-341T. Washington, D.C.: December 12, 2007.\nMilitary Base Realignments and Closures: Cost Estimates Have Increased and Are Likely to Continue to Evolve. GAO-08-159. Washington, D.C.: December 11, 2007.\nMilitary Base Realignments and Closures: Impact of Terminating, Relocating, or Outsourcing the Services of the Armed Forces Institute of Pathology. GAO-08-20. Washington, D.C.: November 9, 2007.\nMilitary Base Realignments and Closures: Transfer of Supply, Storage, and Distribution Functions from Military Services to Defense Logistics Agency. GAO-08-121R. Washington, D.C.: October 26, 2007.\nDefense Infrastructure: Challenges Increase Risks for Providing Timely Infrastructure Support for Army Installations Expecting Substantial Personnel Growth. GAO-07-1007. Washington, D.C.: September 13, 2007.\nMilitary Base Realignments and Closures: Plan Needed to Monitor Challenges for Completing More Than 100 Armed Forces Reserve Centers. GAO-07-1040. Washington, D.C.: September 13, 2007.\nMilitary Base Realignments and Closures: Observations Related to the 2005 Round. GAO-07-1203R. Washington, D.C.: September 6, 2007.\nMilitary Base Closures: Projected Savings from Fleet Readiness Centers Likely Overstated and Actions Needed to Track Actual Savings and Overcome Certain Challenges. GAO-07-304. Washington, D.C.: June 29, 2007.\nMilitary Base Closures: Management Strategy Needed to Mitigate Challenges and Improve Communication to Help Ensure Timely Implementation of Air National Guard Recommendations. GAO-07-641. Washington, D.C.: May 16, 2007.\nMilitary Base Closures: Opportunities Exist to Improve Environmental Cleanup Cost Reporting and to Expedite Transfer of Unneeded Property. GAO-07-166. Washington, D.C.: January 30, 2007.\nMilitary Bases: Observations on DOD’s 2005 Base Realignment and Closure Selection Process and Recommendations. GAO-05-905. Washington, D.C.: July 18, 2005.\nMilitary Bases: Analysis of DOD’s 2005 Selection Process and Recommendations for Base Closures and Realignments. GAO-05-785. Washington, D.C.: July 1, 2005.\nMilitary Base Closures: Observations on Prior and Current BRAC Rounds. GAO-05-614. Washington, D.C.: May 3, 2005.\nMilitary Base Closures: Assessment of DOD’s 2004 Report on the Need for a Base Realignment and Closure Round. GAO-04-760. Washington, D.C.: May 17, 2004.\nMilitary Bases: Review of DOD’s 1998 Report on Base Realignment and Closure. GAO/NSIAD-99-17. Washington, D.C.: November 13, 1998." ], "depth": [ 1, 1, 2, 2, 2, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h3_full", "h1_full h0_title h2_full h4_title h3_title", "h0_full h3_full", "h0_full h4_full h1_full", "h3_full h2_full", "", "", "", "", "", "h3_full h4_full" ] }

{ "question": [ "What DOD methods have limitations?", "How was this similar to DOD's excess capacity analyses from 1998 to 2004?", "How is this process organized?", "What did the DOD recognize in both its 1998 and 2004 reports?", "What limitation's did DOD's report recognize?", "How would calculations have differed if DOD had treated those installation categories as having capacity shortages?", "What did ODD's 2012 and 2013 testimonies reveal?", "How were these estimates reached?", "How might these estimates be inaccurate?", "How did the Acting Deputy Under Secretary of Defense act to amend this?", "Why is DOD's Support Infrastructure Management on GAO's High Risk List?", "How has DOD attempted to reduce excess infrastructure and capacity?", "What did Congress require of the DOD in 1998 and 2004?", "What was the state of DOD capacity in 2012?", "What was special about the methods used to develop this estimate?", "What was GAO asked to review?", "What is the objective of this report?", "How did GAO collect data for this report?" ], "summary": [ "The Department of Defense's (DOD) methods for estimating excess capacity outside of a congressionally-authorized Base Realignment and Closure (BRAC) process have limitations.", "DOD used similar processes in its excess capacity analyses conducted in 1998 and 2004.", "This process included three major steps: (1) categorizing bases according to their primary missions and defining indicators of capacity; (2) developing ratios of capacity-to-force structure for DOD's baseline year of 1989; and (3) aggregating the analysis from the installation level across the military services and department-wide.", "In both its 1998 and 2004 reports, DOD recognized some limitations with its methods for estimating excess capacity and stated that its analyses lacked the precision necessary to identify specific installations or functional configurations for realignment or closure. In addition, GAO's review of DOD's methods for estimating excess capacity outside of a congressionally-authorized BRAC process identified a number of limitations.", "First, DOD's approach assigns each installation to only one mission category, even though most installations support more than one mission. This approach effectively excluded significant portions of some bases' infrastructure from the analysis. Second, the services measured capacity for some similar functions differently such as test and evaluation facilities, which makes it difficult for DOD to evaluate excess capacity across the department. Third, DOD did not attempt to identify any excess capacity or capacity shortfall that existed in 1989; hence it is uncertain to what extent DOD's estimates of excess capacity may be overstated or understated. Finally, in instances where DOD's analysis indicated that projected capacity was less than needed capacity--indicating a capacity shortage--within an installation category, DOD treated these cases as having zero or no excess capacity when aggregating the results of its analysis.", "If DOD had treated those installation categories as having a capacity shortages, DOD's method would have calculated a lower number of bases and consequently a lower percentage of excess capacity across the department than DOD reported to Congress.", "DOD's testimony in March 2012 and again in March 2013, that it had about 20 percent excess capacity remaining after the end of BRAC 2005, relied on earlier calculations that the department made in 2004 and 2005.", "Specifically, these estimates were reached by subtracting DOD's estimate of the amount of capacity that would be eliminated by the approved recommendations from BRAC 2005--3 to 5 percent of plant replacement value--from DOD's 2004 estimate that it had 24 percent excess capacity.", "However, pre-BRAC estimates of the percentage of bases that may be excess to needed capacity, which is expressed as a percentage of bases, and plant replacement value, which is measured in dollars, are not comparable measures.", "In March 2013, the Acting Deputy Under Secretary of Defense (Installations and Environment) testified that the method upon which DOD's current estimate is based is helpful in determining whether an additional BRAC round is justified, but only through the BRAC process is the Department able to determine specifically which installations or facilities are excess.", "Due in part to challenges DOD faces in reducing excess infrastructure, DOD's Support Infrastructure Management is on GAO's High Risk List of program areas vulnerable to fraud, waste, abuse, and mismanagement, or are most in need of transformation.", "Since 1988, DOD has relied on the BRAC process as a primary means of reducing excess infrastructure or capacity and realigning bases to meet changes in the size and structure of its forces.", "In 1998 and 2004, Congress required DOD to submit reports that, among other things, estimated the amount of DOD's excess capacity at that time.", "Also, in March 2012, DOD testified that it had about 20 percent excess capacity.", "The methods used to develop such preliminary excess capacity estimates differ from the data-intensive process--supplemented by military judgment--that DOD has used to formulate specific base closure and realignment recommendations.", "A Senate Armed Services Committee report directed GAO to review how DOD identifies bases or facilities excess to needs.", "The objective of this report is to discuss how DOD has estimated its excess capacity, outside of the BRAC process.", "To do so, GAO reviewed excess capacity estimates from 1998, 2004, and 2012; analyzed DOD's data; reviewed supporting documentation; assessed assumptions and limitations of DOD's analysis; and interviewed DOD officials." ], "parent_pair_index": [ -1, 0, 1, -1, 0, 1, -1, 0, 0, 2, -1, -1, -1, -1, 3, -1, -1, 1 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 5, 5, 5, 5, 0, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "History of Restoration Activities", "Organization of GLRI Projects, Reports, and Data", "$1.68 Billion Was Made Available for the GLRI in Fiscal Years 2010 through 2014, with $1.15 Billion Expended on 2,123 Projects as of January 2015", "EPA Has Allocated Almost All of the $1.68 Billion Made Available for the GLRI in Fiscal Years 2010 through 2014, and Task Force Agencies Have Expended $1.15 Billion", "Five Task Force Agencies Funded 1,696 GLRI Projects, with Work Conducted by Agency Staff and a Variety of GLRI Funding Recipients", "Task Force Process for Identifying GLRI Work and Funding Has Evolved to Emphasize Interagency Discussion", "Selected Task Force Agencies Identified GLRI Work and Funding Using Four General Steps", "Process for Identifying Each Agency’s GLRI Work and Share of GLRI Funding Has Evolved to Emphasize Interagency Discussion by Task Force Subgroups", "Focus on Priority Issues Led to Some Accelerated Restoration Results in Targeted Areas", "Information on GLRI Projects Activities and Results Is Available from Individual Agencies, while Project Information in GLAS Was Limited by Some Inaccurate Data", "Information on GLRI Project Activities and Results Is Available from Individual Task Force Agencies", "Some GLAS Data Were Inaccurate", "Conclusions", "Recommendation for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Agencies’ Selection Process for 19 Great Lakes Restoration Initiative Projects", "Corps", "Appendix III: Activities and Results of 19 Great Lakes Restoration Initiative Projects", "Appendix IV: Examples of Internal Controls Used By Selected Great Lakes Interagency Task Force Agencies", "Corps", "Appendix V: Indirect Costs for 19 Great Lakes Restoration Initiative Projects", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The Great Lakes Basin covers approximately 300,000 square miles, encompassing Michigan and parts of Illinois, Indiana, Minnesota, New York, Ohio, Pennsylvania, Wisconsin, and the Canadian province of Ontario (see fig. 1), as well as lands that are home to more than 40 Native American tribes. It includes the five Great Lakes and a large land area that extends beyond the Great Lakes, including their watersheds, tributaries, and connecting channels. The Great Lakes contain nearly 90 percent of the surface freshwater in North America and 20 percent of the surface freshwater in the world. The Great Lakes provide drinking water; recreation opportunities, such as swimming, fishing, and boating; and economic benefits, including tourism, agriculture, and shipping, for an estimated 40 million people. In addition, nearly 7 percent of U.S. agricultural production comes from the basin, according to EPA.", "Numerous environmental stresses threaten the health of the Great Lakes and adjacent land within the Great Lakes Basin. The Great Lakes has long been an area that attracted development, population, industry, and commerce, starting with the canals that joined the lakes to the eastern seaboard and allowed goods to be trafficked and traded between the Midwest and eastern states. Various environmental quality issues, particularly water quality pollution and contaminated sediments, have resulted from mining, timber harvest, steel production, chemical production, and other industrial activities that developed around the Great Lakes. Currently, all of the Great Lakes and the majority of the water bodies in the region are under fish consumption advisories, issued by state and provincial health agencies, due to mercury pollution primarily from coal-fired power plants. In addition, the fertile soil in the surrounding states makes them highly productive agricultural areas, and this has resulted in large amounts of nutrients such as phosphorus and nitrogen— as well as sediment, pesticides, and other chemicals—running off into the Great Lakes. Moreover, large population centers on both sides of the U.S. and Canadian border use the Great Lakes to discharge wastewater from treatment plants, which also introduces nutrients into the Great Lakes. Even with progress in reducing the amount of phosphorus in the lakes through mitigation techniques used in the 1970s, harmful algal blooms are once again threatening the Great Lakes Basin. These are a result of increases in phosphorus and nitrogen entering the lakes from nonpoint sources of runoff from urban and rural areas.\nThe United States has long recognized the threats facing the Great Lakes and has developed agreements and programs to fund and support restoration actions, including the following: In 1972, the United States and Canada agreed to take action by signing the Great Lakes Water Quality Agreement to restore, protect, and enhance the water quality of the Great Lakes to promote the ecological health of the Great Lakes Basin. The countries signed another Great Lakes Water Quality Agreement in 1978, which was amended several times. For example, most recently, in 2012, the nations added provisions to the agreement to address the effects of climate change, among other things.\nIn 1987, an amendment to the Great Lakes Water Quality Agreement resulted in the United States and Canada formally identifying a total of 43 severely degraded locations in the Great Lakes Basin as specific Areas of Concern, 31 of which are located entirely or partially in the United States. These areas are defined as “geographic areas where a change in the chemical, physical, or biological integrity of the area is sufficient to cause restrictions on fish and wildlife or drinking water consumption, or the loss of fish and wildlife habitat, among other conditions, or impair the area’s ability to support aquatic life.” The 1987 amendment also required the nations to develop and implement remedial action plans for the Areas of Concern.\nIn 2002, the Great Lakes Legacy Act authorized EPA to carry out sediment remediation projects in the 31 Areas of Concern located entirely or partially in the United States, among other things. For fiscal years 2004 through 2009, EPA’s budget authority totaled $162 million for work under this act, according to an OMB report.\nOf the 12 Areas of Concern located entirely in Canada, 3 have been delisted.\nAreas of Concern had been completed, as of October 2014, but formal delisting had not yet occurred, according to EPA.\nThe United States also recognized the growing pressures on the fish and wildlife resources of the Great Lakes Basin and developed plans to address these. For example, federal and state agencies became aware of the growing threat of invasive species, such as the sea lamprey, which is a parasite that can each kill up to 40 pounds of fish in its lifetime and was a major cause of the collapse of lake trout, whitefish, and chub populations in the Great Lakes during the 1940s and 1950s. Again, the United States took a series of actions as follows:\nThe Great Lakes Fish and Wildlife Restoration Act of 1990 directed the Fish and Wildlife Service to conduct a comprehensive study of the status of, and the assessment, management, and restoration needs of, the Great Lakes Basin’s fishery resources and to develop proposals for implementing the study’s recommendations.\nThe Nonindigenous Aquatic Nuisance Prevention and Control Act of 1990 established the Aquatic Nuisance Species Task Force and required it to develop and implement a program for waters of the United States to prevent introduction and dispersal of aquatic nuisance species; to monitor, control, and study such species; and to disseminate related information. The act also directed the Great Lakes Commission to establish the Great Lakes Panel on Aquatic Nuisance Species and directed the panel to identify Great Lakes aquatic nuisance species priorities and coordinate, where possible, aquatic invasive species program activities in the region that are not conducted under the act, among other things. Members of the panel, which meets twice a year, include U.S. and Canadian federal agencies, the eight Great Lakes states and the provinces of Ontario and Québec, local communities, and tribal authorities.\nIn 2009, the President created the Asian Carp Regional Coordinating Committee to coordinate efforts, including local, state, federal, and international efforts, to prevent Asian carp from spreading and becoming established. The term Asian carp refers collectively to four species of carp—including bighead and silver carp—that are native to Asia and were first introduced into the United States in 1963. Their rapid expansion and population increase can decrease populations of native aquatic species, in part by consuming vast areas of aquatic plants that are important as food and spawning and nursery habitats. Efforts to prevent Asian carp from entering the Great Lakes include the capture and removal of these fish from nearby waterways (see fig. 2). Since 2010, the committee has issued an annual Asian Carp Control Strategy Framework that outlines efforts to support activities that will directly prevent the introduction and establishment of Asian carp populations in the Great Lakes.most recent framework, for 2014, in June 2014.", "GLRI is implemented through a number of projects, large and small, carried out by the Task Force agencies or recipients of GLRI funds. One way that the Task Force agencies conduct GLRI work is to use financial agreements with nonfederal entities, such as grants and cooperative agreements, that provide funds to conduct specific projects. Grants and cooperative agreements are to be used when the principal purpose of a transaction is to accomplish a public purpose or action authorized by federal statute.using agency employees to carry out projects—which we refer to as Another way that the agencies conduct GLRI work is by agency-conducted work—or contracting with nonfederal entities to carry out projects. Contracts are to be used when the principal purpose is to purchase property or services for the direct benefit or use of the federal government. OMB is responsible for developing governmentwide guidance for the management of grants and cooperative agreements. Until December 2013, OMB provided guidance in the form of circulars for specific grants management areas to different types of grantees. In December 2013, OMB consolidated its grants management circulars into a single uniform guidance document. Requirements for contracts are found in the Federal Acquisition Regulation (FAR). Among other things, OMB’s circulars direct federal agencies to require progress and financial reports from academic institutions, nonprofit organizations, and state, local, and tribal entities that receive grants or are parties to cooperative agreements. For contracts, agencies can require such reports from contractors.\nWe provided a draft of this report to EPA in May 2015. In response, EPA officials informed us that the agency had replaced GLAS with the Environmental Accomplishments in the Great Lakes (EAGL) information system. Because EPA did not alert us to this new system until June 2015, we could not include a review of EAGL in this report. fields and instructions on how to enter project data into GLAS. GLAS was not a financial management system, and the Task Force agencies used their own financial management systems to track funding.\nIn our September 2013 report, we conducted a survey of nonfederal recipients of GLRI funding and found that several factors outside the scope of the Action Plan can limit GLRI progress. These factors include inadequate infrastructure for wastewater or storm water treatment and the effects of climate change. We also found that EPA and the Task Force agencies had not fully established a plan to guide an adaptive management process for the GLRI that could allow them to assess the We effectiveness of GLRI actions and, if needed, adjust their efforts.recommended, among other things, that the EPA Administrator, in coordination with the Task Force, address how factors outside the scope of the Action Plan that may limit progress, such as the effects of climate change, may affect GLRI efforts to restore the Great Lakes, and establish an adaptive management plan. EPA generally agreed with our conclusions and recommendations. In September 2014, EPA and the Task Force issued the 2015-2019 Action Plan, which includes ensuring climate resiliency of GLRI-funded projects as an objective in one of its focus areas. As of March 2015, EPA and the Task Force were in the process of revising a draft of an adaptive management framework for the 2015-2019 Action Plan.", "In fiscal years 2010 through 2014, $1.68 billion of federal funds was made available for the GLRI, and as of January 2015, EPA had allocated nearly all of the $1.68 billion, and the Task Force agencies had expended $1.15 billion on 2,123 GLRI projects. The five agencies we reviewed in greater detail had expended $993 million of the $1.43 billion allocated to them in fiscal years 2010 through 2014 on 1,696 GLRI projects, as of January 2015, and conducted those projects through a combination of work done by agency staff and a variety of GLRI funding recipients.", "Of the $1.68 billion made available for the GLRI in fiscal years 2010 through 2014, EPA had allocated $1.66 billion as of January 2015. EPA conducts and funds GLRI work itself and allocates GLRI funds to the other Task Force agencies responsible for carrying out GLRI work. As of January 2015, the Task Force agencies had obligated $1.61 billion and expended $1.15 billion, or about 68 percent of the funds made available for the GLRI in fiscal years 2010 through 2014, on 2,123 projects. Figure 3 shows the funds made available for the GLRI in fiscal years 2010 through 2014 and the extent to which they had been allocated, obligated, and expended by all Task Force agencies as of January 2015.\nThe Task Force agencies have not expended all of the funds made available for the GLRI for several reasons, chief among them being that many projects take several years to complete. Also, GLRI funds are available for obligation for the fiscal year the appropriation was made, and the successive fiscal year. After these 2 fiscal years of availability, GLRI funds can be used for 7 additional years to liquidate and adjust those obligations. In addition, final payments are made from the agencies to recipients after projects are completed. Furthermore, as we found in September 2013, weather events, among other things, caused some GLRI projects to be completed later than planned.\nIn addition to the GLRI, federal agencies have expended other funds on Great Lakes restoration activities, such as reducing atmospheric deposition and controlling the generation, transportation, storage, and disposal of hazardous wastes. GLRI funds allocated, obligated, and expended, data on other funds received, obligated, and expended by federal agencies for Great Lakes restoration activities are not easily available for comparison. Specifically, OMB’s budget crosscut reports have not identified federal agencies’ obligations and expenditures for Great Lakes restoration activities, as required by several appropriations laws since fiscal year 2008. Most recently, the Consolidated Appropriations Act for Fiscal Year 2014 required OMB to identify, among other things, (1) all funds received and obligated by all federal agencies for Great Lakes restoration activities during the current and previous fiscal years and (2) all federal government expenditures in each of the 5 prior fiscal years for these activities. Instead, the reports presented information on each agency’s budget authority for these activities. According to OMB staff, the budget crosscut reports did not report these obligations and expenditures because providing that information is labor-intensive and time-consuming. These staff also said that the information would be outdated and of little value by the time it would be released.\nAtmospheric deposition is a process that transfers pollutants from the air to the earth’s surface and can significantly impair water quality in the nation’s rivers, lakes, bays, and estuaries, and harm human health and aquatic ecosystems. Hazardous waste is most often a by-product of manufacturing and can threaten human and ecosystem health when released into the air, water, or land. congressional decision makers. Without this information in OMB’s budget crosscut reports, which is required to be included by law, it is not possible for decision makers to view GLRI funding in the context of the funding of overall Great Lakes restoration activities, because information on such activities would only be available from each agency, making less information readily available for congressional oversight.", "Of the $1.66 billion EPA allocated to all Task Force agencies, as of January 2015, the five Task Force agencies we reviewed were allocated $1.43 billion. These agencies had obligated $1.38 billion and expended $993 million, or about 69 percent of their allocations (see fig. 4), on 1,696 GLRI projects.\nUsing information from EPA’s GLAS database as of July 2014 for GLRI funds made available in fiscal years 2010 through 2013, we found that the five Task Force agencies we reviewed funded a total of 1,558 GLRI projects using GLRI funds as of July 2014. As shown in table 2, EPA and the Fish and Wildlife Service funded the most projects as of July 2014.\nTo use GLRI funds on restoration activities, the Task Force agencies conduct the work themselves or enter into financial agreements with other entities to conduct the work, primarily through grants, cooperative agreements, or contracts. The different types of financial agreements have different purposes. For example, EPA officials noted that the distinguishing factor between a grant and a cooperative agreement is the degree of federal involvement in project activities. A single GLRI project in GLAS can involve agency-conducted work, one or more of the types of financial agreements, or a combination of these. Using data we obtained from the five agencies reviewed, we found that the extent to which the agencies used each type of financial agreement in obligating their GLRI funds made available in fiscal years 2010 through 2013 varies by agency (see fig. 5). For example, the Corps primarily used contracts, and NOAA primarily used grants and cooperative agreements. NRCS used financial assistance contracts with agricultural producers to carry out conservation practices on their land.\nGLRI projects in GLAS can have multiple recipients that received GLRI funds directly from the Task Force agencies. These recipients include federal entities; state, local, or tribal entities; nongovernmental organizations; academic institutions; and others, such as agricultural producers and private landowners. In addition, a recipient may award a portion of its funds to subrecipients, such as universities, to help carry out the work, which means that a single GLRI project may also have multiple subrecipients. Figure 6 shows an example of the distribution of funds for a 2011 GLRI project with multiple funding recipients and subrecipients.\nTable 3 shows the number of GLRI projects funded with GLRI funds made available in fiscal years 2010 through 2013 by the five agencies by type of recipient as of July 2014. The type of GLRI recipients vary depending on the agency and financial agreements involved. For example, NOAA has entered into agreements with all of these recipient types, with the exception of private landowners and agricultural producers, and the Corps has conducted all of its work itself or through contracts.", "The Task Force process for identifying GLRI work and funding generally includes four steps and has evolved from an agency-by-agency process to one that emphasizes interagency discussion. This evolution began in fiscal year 2012 when the Task Force created subgroups to identify and fund work to address three priority issues: (1) cleaning up and delisting Areas of Concern, (2) preventing and controlling invasive species, and (3) reducing phosphorus runoff that contributes to harmful algal blooms. For fiscal year 2015, the Task Force created additional subgroups to discuss and agree on work for other areas. EPA officials told us that funding work for the three priority issues has led to some accelerated restoration results.", "EPA officials described four steps that Task Force agencies generally followed to identify GLRI work and funding, and the five agencies we reviewed followed these steps. The steps are: (1) agency identification of GLRI work; (2) Task Force agreement on scope and funding for agencies’ work; (3) solicitation of proposals for projects designed to carry out agencies’ GLRI work, if the work was to be conducted by entities other than the agencies; and (4) selection of projects.\nEPA officials told us that the first step generally occurred 2 years before the fiscal year in which the work was to be carried out, in order to coincide with the federal budget cycle. During that step, the officials told us that the agencies each did an internal analysis to identify GLRI work that they wanted to conduct in that fiscal year. For example, FWS officials told us that the agency’s regional officials coordinated to identify new work that the agency planned to do in order to achieve its goals and then compared this work with 2010-2014 Action Plan goals to identify those projects that The Corps’ approach to this step was different; also met the goals.according to Corps officials, they selected projects that were already planned and ready to be conducted, and that were compatible with the 2010-2014 Action Plan. At this point, agency officials also identified the type of financial agreements they were likely to use to conduct the work or whether the agency would conduct the work itself.\nFor the second step, the five agencies we reviewed held discussions with the Task Force and agreed on the work that would be done in a given fiscal year, as well as the amount of GLRI funds that would be needed to conduct that work. In general, once the agencies made a final determination of the work they would do in a fiscal year, and the GLRI funds that would be made available, each agency entered into an interagency agreement with EPA to transfer GLRI funds from EPA to the appropriate agency. The interagency agreements we reviewed included the following two parts: a form that identified the amount to be transferred from EPA to the agency that was responsible for the work, signed by both agencies;and a scope-of-work organized into discrete topics called templates that typically included a description of the work, the GLRI Action Plan goals, objectives, or measures of progress that the work would achieve, and the amount of GLRI funds to be used.\nEPA officials told us that the Task Force agencies were expected to spend their funds as detailed in their interagency agreement, but they could amend it with EPA approval to, for example, increase the amount of funds to be transferred to an agency or revise the scope of work.\nGLRI Templates Great Lakes Restoration Initiative (GLRI) templates address Action Plan focus areas, and can describe work that would be conducted through multiple projects, or through a specific, individual project. An example of a template that describes work that would be conducted through multiple projects is a Natural Resources Conservation Service (NRCS) template that addresses the nearshore health and nonpoint source pollution focus area. According to the template, NRCS would provide agricultural producers with GLRI funds and technical assistance to implement conservation practices to contribute to the 2010-2014 Action Plan goal of significantly reducing soil erosion and sediment, nutrients, and pollutants flowing into tributaries. An example of a project-specific template is a U.S. Army Corps of Engineers template to complete the design, and initiate construction, of a facility to manage dredged sediments in Green Bay Harbor, Wisconsin. The project is intended to hold 2.35 million cubic yards of sediments, and restore a chain of islands and more than 1,200 acres of coastal wetland habitat. applications would use to rank applications and select projects.officials told us that applicants may be asked to provide funds to the project.\nThe fourth step in identifying GLRI work and funding was the selection of specific projects. Generally, officials from the selected agencies described similar processes for evaluating project proposals that were submitted in response to requests for applications. Specifically, they said that agency officials with the appropriate expertise reviewed and ranked the submitted proposals against information in the request for applications and selected the best scoring projects for funding. At the Corps and NOAA, officials said they evaluated contract bids or proposals, and awarded the contract to the vendor with a bid or proposal representing the best value to the government.\nOf the 19 projects we reviewed for which funds were made available for the GLRI in fiscal years 2010 through 2012 and that addressed each of the five focus areas in the 2010-2014 Action Plan, 11 were executed through grants, 2 were executed through cooperative agreements, 3 were executed by a Task Force agency, 2 were conducted through contracts, and 1 was executed through a financial assistance contract. One project addressed the toxic substances and Areas of Concern focus area; 5 addressed the invasive species focus area; 3 addressed the nearshore health and nonpoint source pollution focus area; 5 addressed the habitat and wildlife protection and restoration focus area; and 5 addressed the accountability, education, monitoring, evaluation, communication, and partnerships focus area. In addition, the recipients conducting the 19 projects included 8 federal entities; 4 state, local, or tribal entities; 4 academic institutions; and 3 nongovernmental organizations. We found that the solicitations for 11 of the 19 projects reflected the descriptions of work in the related templates. The 8 remaining projects were not solicited because 4 were conducted by the agency, 2 were not competitively awarded, 1 project had been ongoing since before the GLRI, and the recipient was identified in the interagency agreement, and 1 project was conducted by a recipient that had been selected prior to the GLRI as one of a few with the specific skills required for the project. Appendix II shows the relevant templates and solicitations for each of the 19 projects, as well as information from agency officials about why each of the projects was selected.", "The process for identifying each agency’s GLRI work and share of GLRI funding has evolved over the life of the GLRI. According to EPA officials, for fiscal years 2010 and 2011, the Task Force determined the work an agency would do on an agency-by-agency basis. Beginning with fiscal year 2012, the process began emphasizing interagency discussion as the Task Force created three subgroups with federal agency members, one for each of three priority issues. The three priority issues, which aligned with three of the five focus areas in the 2010-2014 Action Plan, were (1) cleaning up and delisting Areas of Concern located entirely or partially in the United States, (2) preventing and controlling invasive species, and (3) For reducing phosphorus runoff that contributes to harmful algal blooms.fiscal year 2015, EPA officials said that the Task Force agencies had begun creating additional subgroups to discuss and agree on scope and funding for agencies’ GLRI work.\nFor fiscal years 2010 and 2011, the Task Force and the five agencies agreed on work that each agency would do on an agency-by-agency basis. Officials from the agencies said that they identified work from their existing plans and interacted with the Task Force to determine the work the agencies would do and the funds the agencies’ should receive. Because the program began in fiscal year 2010, this process did not take place 2 years in advance, as it would in subsequent years. EPA officials told us that in 2010 the agencies also began agreeing on work for fiscal year 2011. After Congress made funds available for the GLRI for fiscal year 2010, and again after fiscal year 2011, the Task Force revisited the initial agreements made with each agency to finalize the funding amounts.\nIn agreeing on GLRI work and funding for fiscal years 2012 through 2014, the Task Force created a subgroup for each of the three priority issues and set aside a total of about $180 million to pay for work to address these issues. The Task Force created subgroups staffed by officials from relevant Task Force agencies to discuss and agree on the scope and funding for agencies’ work to address the three priority issues. Specifically, officials from EPA, FWS, NOAA, the Corps, and the U.S. Geological Survey participated in the cleaning up and delisting of Areas of Concern and the invasive species prevention subgroups. Officials from EPA, NRCS, NOAA, the Corps, and the U.S. Geological Survey participated in the phosphorous reduction priority issue subgroup.\nOn Concern to be targeted for accelerated cleanup in fiscal year 2012: the Ashtabula River Area of Concern in Ohio, the River Raisin Area of Concern in Michigan, the Sheboygan River Area of Concern in Wisconsin, and the White Lake Area of Concern in Michigan. At the same time, the subgroup identified additional Areas of Concern to be The subgroup addressed in future years using the same approach.determined that nearly $22 million should be set aside for this priority issue in fiscal year 2012 and increased that amount to about $31 million for fiscal years 2013 and 2014.\nInvasive species prevention subgroup: Building on work done by the Asian Carp Regional Coordinating Committee that began around the same time as the GLRI, the subgroup originally focused most of its efforts on identifying projects to prevent Asian carp from getting into and becoming established in the Great Lakes. These projects included developing early detection and monitoring, and tools and technology to discover whether Asian carp were already present in the Great Lakes Basin. The subgroup agreed to adopt the amount of funds, $19.5 million, in fiscal year 2012, based on estimates made by the Asian Carp Regional Coordinating Committee. In fiscal year 2013, the Coordinating Committee reduced the amount it estimated was needed for invasive species work in the Great Lakes Basin to $16 million. The subgroup agreed to continue funding this priority issue at $19.5 million in fiscal years 2013 and 2014, but it divided the funds into $16 million for Asian carp work and $3.5 million for other invasive species, such as phragmites and feral hogs. The subgroup used the Asian Carp Control Strategy Framework to guide the amount of GLRI funds that should be provided to each of the Task Force agencies with responsibility for conducting work to address this priority issue.\nPhragmites australis, or common reed, is a perennial grass now common in North American wetlands. Invasive phragmites create tall, dense stands that degrade wetlands and coastal areas by crowding out native plants and animals, blocking shoreline views, and reducing access for swimming, fishing, and hunting. Feral hogs are domestic hogs that have either escaped or been released, and they can be found in 39 states including the Great Lakes region. They cause damage to crops and habitat and can cause erosion by digging for food. They also carry diseases that threaten humans and animals. In 2014, the U.S. Department of Agriculture estimated that feral hogs caused $1.5 billion in annual damage and control costs.\nPhosphorous reduction subgroup: Using available models and data to identify geographic areas that were contributing more nutrients to the Great Lakes than others, the subgroup determined that priority work should be focused on three watersheds where algal blooms had occurred. The three watersheds were the Lower Fox River in Wisconsin; the Maumee River watershed in Ohio, Michigan, and Indiana; and the Saginaw River in Michigan. The subgroup agreed that $11 million should be set aside for this priority issue for fiscal year 2012, and to increase that amount to $13.1 million for fiscal year 2013, and to $14.4 million for fiscal year 2014. EPA provided the majority of funds for this priority issue to NRCS because it is the federal agency that works with agricultural producers to implement conservation practices to reduce nutrients in runoff, and Task Force agency officials determined NRCS was best suited to address nutrient reduction. EPA provided the remaining funds to the U.S. Geological Survey for monitoring projects because of its experience in monitoring water supply and water quality.\nTo agree on GLRI work to be conducted in fiscal year 2015 and future fiscal years, EPA officials told us that the Task Force began creating additional subgroups through which Task Force agency officials would work together to identify each agency’s GLRI work and share of GLRI funding in all five of the focus areas in the 2015-2019 Action Plan, not just the three priority issues. According to EPA officials, the use of subgroups to meet and agree on work and funding created a process for conducting GLRI work that all Task Force agencies agreed needed to be done, rather than each agency identifying its own GLRI work. According to EPA officials, for fiscal year 2015, the new subgroups developed strategies for dealing with issues and then identified the work proposed by agencies that helped to achieve the overall strategies. For future fiscal years, EPA officials said that the subgroups would use the 2015-2019 Action Plan.", "According to EPA officials, the focus on priority issues for fiscal years 2012 through 2014 has accelerated restoration results for one of three issues. Specifically, two of the Areas of Concern targeted for accelerated cleanup by the relevant subgroup were delisted in 2014. EPA announced in October 2014 that the White Lake and Deer Lake Areas of Concern had been delisted—both had been identified by the Areas of Concern subgroup for accelerated cleanup with priority issue funds—and EPA officials told us that they expect cleanup work to be completed at four other Areas of Concern in fiscal year 2015 as a result of receiving priority issues funds. Cleanup work included removing contaminated sediment and diverting water from an underground mine. In the 25 years before the three priority issues were identified, only one Area of Concern located entirely in the United States had been delisted.\nEPA officials said that identifying and funding the three priority issues for fiscal years 2012 through 2014 has also allowed for continued success in invasive species prevention and resulted in some progress in reducing phosphorus runoff that contributes to harmful algal blooms. However, restoration results in those priority issues are less clear than in the Areas of Concern priority issue, in large part because the factors contributing to those priority issues persist and are likely to continue into the future. For example, dams, canals, and other structures that were created to support navigation and power production in the Great Lakes Basin also created channels that connect the Great Lakes and Mississippi River Basins. These channels are of serious concern as a potential means for Asian carp or other invasive species to enter the Great Lakes.\nEPA funded work on priority issues from the amounts made available for the GLRI in fiscal years 2012 through 2014, shifting funds from other GLRI work to the priority issues. EPA officials described the funds set aside for the priority issues as a realignment of GLRI funds; that is, the funds used for the priority issues were taken from the existing funds that had been made available for the GLRI. Overall, the Task Force set aside a total of $180 million for the priority issues for this period: $52.2 million of the available GLRI amounts for all priority issues in fiscal year 2012, $63.4 million in fiscal year 2013, and $64.7 million in fiscal year 2014. EPA officials told us that money designated for one priority issue would not be spent on a different priority issue or on other GLRI projects.\nEPA officials told us that the Task Force did not set aside all of the funds made available for the GLRI in fiscal years 2012 through 2014 for the priority issues for two key reasons. First, they said there is a limit to the amount of work that can be conducted for some restoration efforts. For example, GLRI funds for reducing agricultural runoff can only be given to recipients in the Great Lakes Basin. These recipients are typically landowners, and there is a finite number of landowners in the Great Lakes Basin interested in conducting GLRI work who also have suitable land and ready projects. In addition, EPA officials told us that NRCS is the only Task Force agency equipped to oversee phosphorous reduction work targeted in agricultural areas, and the agency has a fixed number of personnel that it can use to oversee GLRI work. Second, according to these officials, Great Lakes restoration needs to involve topics addressed by the 2010-2014 Action Plan that are not part of the three priority issues, as well as addressing the overall health of the Great Lakes ecosystem.", "The Task Force has made some information about GLRI projects, including project activities and results, available to Congress and the public in three accomplishment reports and the GLRI website. Specifically, the GLRI accomplishment reports contain information on activities and results for some projects. In addition, the individual Task Force agencies collect information on activities and results from recipients, although this information is not collected and reported by EPA. We obtained information on activities and results for the sample of 19 projects we reviewed. While EPA collected project information in GLAS from 2010 through May 2015, some GLAS data were inaccurate, in part because recipients entered information inconsistently due to issues such as inconsistent interpretation of guidance, unclear guidance, or data entry errors.", "As part of oversight of the GLRI, the Task Force makes some information on projects available for Congress and the public in two ways, annual accomplishment reports and the GLRI website. EPA and the Task Force published two accomplishment reports in 2013 and one in 2014 that provided overviews of progress under the GLRI for fiscal years 2010 through 2012. These reports included summary accomplishment statements for each of the five focus areas from the 2010-2014 Action Plan, as well as specific performance information for many of the 28 measures of progress in the 2010-2014 Action Plan.\nThe accomplishment reports included some information about project activities and results. Specifically, our analysis found that GLRI accomplishment report for progress in fiscal year 2011 identified 10 GLRI projects, 2 for each of the five focus areas in the 2010-2014 Action Plan, and it included some information about project activities and results for each project. For example, it noted that the “Milwaukee River (Wisconsin)—restoring fish passage” project removed a dam, opening 14 miles of the river and 13.5 miles of tributaries to allow fish to move more freely, and reconnected the lower reach of the river with 8,300 acres of wetlands, improving water quality. The accomplishment report provided similar information about nine additional projects. The accomplishment reports about GLRI progress in fiscal years 2010 and 2012 also included information about project activities and results, although most were not associated with individual projects.\nEPA also made some of the GLRI project information that recipients reported in GLAS available on the GLRI website, including a project’s funding agency, title, funding amount and year, recipient identification, focus area, and description. Project information available on the website does not include GLRI project activities and results, although it is not designed to do so. EPA updated the GLRI project information on the website twice a year by asking the other Task Force agencies to update and verify GLAS information about their projects. To compile project information for the website, EPA provided each Task Force agency with a spreadsheet containing certain GLAS data for each of that agency’s projects so that the agency could update and verify that information before it was posted on the website. The information on the website about projects is limited to basic information for the public, according to an EPA official, and does not contain certain information on projects such as activities and results.\nEach of the five Task Force agencies we reviewed collected information on its projects, including project activities and results, and we reviewed the sample of 19 GLRI projects from the five Task Force agencies to identify information on project activities and results for each of the projects. We found that each of the five Task Force agencies collected this and other project information by establishing reporting requirements in grants, cooperative agreements, and contracts for recipients. Specifically, in most cases, EPA, FWS, NOAA, and NRCS required their grant recipients to submit quarterly, semiannual, or annual progress reports, and quarterly or annual financial reports, consistent with the OMB circulars in effect at the time of the agreements. In addition, the Task Force agencies that used contracts—the Corps and NOAA—required their contractors to submit progress reports. The Corps required the contractor to submit daily activity reports, and NOAA required the contractor to provide monthly progress reports. EPA officials told us that this information on project activities and results was not required to be reported in GLAS. In addition, the officials said that GLAS was not designed to collect specific information on project activities and results and was adapted from a system they used to collect information on a different restoration program. Appendix III contains a summary of the detailed information we collected on activities and results for the 19 projects.\nOverall, recipients reported a variety of project activities, including applying herbicide, conducting training and workshops, and collecting data. In addition, we found that recipients reported a range of results. For example, recipients from eight projects reported results that can be directly linked to restoration, such as increasing lake trout production, removing acres of invasive plant species, and protecting acres of marshland. For one of these projects, the Buffalo Audubon Society reported results needed to restore critical bird habitat, such as planting 3,204 plants and removing invasive species, among other results. For another project, the Great Lakes Fishery Commission reported results in the form of improved methods for capturing sea lamprey. According to a Great Lakes Fishery Commission official, the results from this project will help to further suppress sea lamprey production in the Great Lakes thereby reducing the damage they cause to native and desirable species.\nFor example, a single lamprey can kill up to about 40 pounds of fish in its lifetime.\nRecipients for the 11 remaining projects reported results that can be indirectly linked to restoration; that is, the results may contribute to restoration over time. These included results such as simulations and data for helping decision makers make better restoration decisions in light of climate change, and education and outreach tools to increase awareness of invasive species. In addition, a University of Wisconsin- Madison representative told us that the University’s project to improve applied environmental literacy, outreach, and action in Great Lakes schools and communities, has already contributed to restoration. Some of the University’s progress reports noted that the project has already resulted in more than 110 school teams that guided students in restoration, service-learning, inquiry, and citizen science monitoring during the 2013-2014 school year, among other things. The representative told us that this contributed to restoration because participating students have built rain gardens and implemented other conservation practices. Similarly, the Corps used GLRI funds to complete a feasibility study in Highland Park, Illinois, and the study led to a restoration project that is expected to restore and enhance 4 acres of coastal habitat along the Lake Michigan shoreline, among other things. Figure 7 is a photograph of the Corps restoration project to restore and enhance coastal habitat that began with the feasibility study. See appendix III for examples of activities and results from each of the 19 projects we reviewed.", "EPA collected some project information in GLAS, which the agency created to collect information to monitor and report on GLRI progress in response to the conference report accompanying the fiscal year 2010 appropriation act that made funds available for the GLRI. However, our review found that some of the data collected in GLAS were inaccurate and therefore may not be sufficiently reliable to monitor and report project progress. For example, GLAS collected project information in more than 20 data fields, including the project’s title, funding amount, funding year, funding agency, recipient, focus area, state, end date, status, and related Area of Concern and watershed. We selected six data fields that could contribute to our understanding of projects and assessed their reliability. Specifically, we reviewed the GLAS data fields for funding year, funding agency, recipient, status, end date, and funding amount. For each of the six fields, we reviewed field definitions and data entry procedures, and we manually checked data entries. We found that the funding year and funding agency data fields were sufficiently reliable, that is, accurate and complete, for the purposes of monitoring and reporting on the progress of GLRI projects. However, we found that the other four data fields were not sufficiently reliable for that purpose. The results of our analysis are as follows:\nRecipients. GLAS data on project funding recipients, which EPA’s GLAS User Guide defined as the organizations that actually conducted the work, were inconsistent. For the 1,558 projects funded by the five agencies we reviewed, we compared the recipients that were identified in GLAS with data obtained from the agencies on recipients that had received GLRI funds for these projects directly from the agencies. We found that GLAS users did not identify recipients in GLAS consistently. Specifically, three of the agencies sometimes or always identified only the agency as the recipient in GLAS, even if the agency awarded the funds for that project to other entities that conducted the work. For example, one agency identified itself as the funding recipient for 118 projects in GLAS, but data we obtained from the agency identified other entities as the recipients for most, or 95, of those projects. Similarly, another agency identified itself as the funding recipient for 311 projects in GLAS, but data we obtained from the agency identified other entities as the recipients for almost half, or 151, of those projects. In addition, a third agency identified itself as the recipient for all 26 of the agency’s GLRI projects in GLAS. While it is the case that some of the agency’s recipients are private citizens, whose identities the agency does not want to release, the agency awarded funds to recipients other than private citizens for 18 of its projects.\nProject status. GLAS users did not define status the same way and therefore may have entered the status of their projects inconsistently. To report a project’s status, GLAS users selected from a drop-down list of options, including started, percentage completed, and completed. We asked officials at four of the five agencies we reviewed how they defined “completed” and found that the agencies did not mean the same thing when selecting completed. For example, one agency official told us that for projects involving construction, completed means that the bulk of the contractor’s effort was completed and that the ecological benefits of the project were at least partially realized, even if additional project activities and final payments may have not been completed. Officials from another agency told us that completed means that all of the funds for the project were obligated and expended, or all contracts were completed, cancelled, or terminated. EPA officials told us that many recipients did not report projects as completed until the grant itself was closed out, which can take as long as a year from the completion of fieldwork. With agencies using different definitions, it is not clear what the GLAS data represented for those projects identified as completed. For example, GLAS users could have selected completed for their projects when the project work was finished, when all the funds had been expended, or when the financial agreement was closed out. As a result, GLAS data cannot be used to reliably determine how many GLRI projects have been completed.\nProject end date. Although not a required data field in GLAS, most projects (more than 75 percent) in GLAS had an end date listed. However, some GLAS data on the project end dates were inconsistent with project status reported in GLAS. We analyzed the end dates in GLAS for 1,890 projects as of July 2014 by checking for errors and by comparing the end dates with the projects’ status.Through this analysis, we found that of the 799 projects identified in GLAS as completed, 14 percent (112) had end dates that had not yet been reached. In addition, 698 projects had end dates that had already passed, but 28 percent of those (194) had not been identified in GLAS as completed. As a result, GLAS data on the end dates of projects are unreliable and cannot be used to determine the number of projects that were completed or are expected to be completed by a certain date.\nGLRI funding amounts. Some GLAS data on the GLRI funding amounts for projects were inaccurate. Specifically, after reviewing the GLAS data we provided on funding amounts for 1,558 projects, four of the five agencies identified inaccuracies in the GLRI funding amounts that the agencies or their recipients had reported in GLAS. For example, the funding amount for one project in GLAS was $8.3 million less than the actual funding amount, which agency officials attributed to a data entry error. Similarly, officials from a second agency identified a project for which the funding amount in GLAS was about $219,000 more than the actual funding amount and told us that the reason for the error was unknown. Officials from a third agency also identified projects for which they said the agency had entered incorrect funding amounts, including 11 projects for which the GLAS data overreported the funding by $523,000. And, officials from a fourth agency identified 19 projects for which the funding amounts the agency had reported in GLAS were incorrect in part because of data entry errors, but they did not identify the dollar amount of the errors. Although we cannot extrapolate these examples of errors in GLAS on project funding to the 11 other Task Force agencies, the amount of these errors raises concerns about the accuracy of GLAS data on GLRI funds.\nSome of the errors we found in GLAS data may have been the result of agencies’ different interpretations of guidance or unclear guidance. Specifically, EPA’s GLAS User Guide was the formal guidance document that defined GLAS data fields, such as recipients, project status, and end dates, but EPA left it up to the Task Force agencies to decide how to enter the data. For example, according to an EPA official, the GLAS data identifying recipients used the lead organizations entered by GLAS users. The GLAS User Guide defined lead organization as the organization that actually conducted the project. However, in practice, the Task Force agencies varied regarding which entity they identified as the recipient, the funding agency or the organization conducting the project. In addition, the GLAS User Guide did not provide clear guidance. For example, EPA required that GLAS users report project status in GLAS, but the GLAS User Guide did not specify how users should choose a project’s status from the drop-down menu and did not define available options. Under the federal standards for internal control, agencies are to clearly document internal controls, and the documentation is to appear in management directives, administrative policies, or operating manuals.\nSimilarly, although it was not required, the guide did not specify how users should determine what the end date is when they did enter it. Without specifying this, GLAS users may have entered information in the end date field inconsistently. For example, we found that some projects had a completed status but had not reached their reported end dates, and others had end dates that had already passed but did not have a completed status. Specifying in the guide how to determine the end date would have been consistent with federal standards for internal control that call for clearly documenting internal controls. According to EPA officials, the GLAS User Guide did not specify how GLAS users should determine a project’s end date because the officials thought this data field was intuitive. Because the GLAS User guide did not require GLAS users to enter end dates for all projects, however, EPA may not have complete information on GLRI projects in GLAS. According to our February 2009 guide on assessing the reliability of computer-processed data,reliable when they are accurate and complete.\nIn May 2015, when EPA stopped using GLAS and began using the Environmental Accomplishments in the Great Lakes (EAGL) information system to collect GLRI project information, the agency issued initial guidance that included definitions of the data fields in the system. For example, the guidance defines recipient name as the organization actually doing the work, and project end date as the date that the project ended or is planned to end; the data field lead organization is no longer included. We reviewed the guidance and determined that the definitions provided were clear and could be used to enter data consistently. In addition, we found that the guidance clearly identifies those data fields that are required, including project end date. However, while the guidance specifies that users should select one project status option from the drop down list in the system, it does not identify or define the available options.\nOther errors that agencies identified in their GLAS data, such as in the GLRI funding amounts data, arose from data entry errors or lags in data updates, according to officials from some of the Task Force agencies we reviewed. Some of these inaccuracies could have been caught through data quality controls or other edit checks, but our analysis found that EPA did not have controls for GLAS to prevent such errors. Under the federal standards for internal control, agencies are to implement control activities, such as verifications and reconciliations, which can be computerized or manual, and document internal controls, such as documenting procedures on how such verifications are to be implemented (e.g., who is to conduct periodic reviews of the completeness and accuracy—that is, reliability—of data). Of the five agencies we reviewed, EPA officials told us that they reviewed their own agency data and relied on the four other Task Force agencies to use their own processes to ensure that the data they or their recipients entered in GLAS are reliable. Of the four other agencies, three did not identify processes they used to ensure the reliability of data that they or their recipients entered in GLAS. Officials from the fourth agency told us that their agency reviewed its GLAS entries annually by comparing a spreadsheet of GLAS data provided by EPA with its own programmatic reports and reports from its financial system. Even with its review process, in January 2015, that agency identified errors in its GLAS data for nearly 20 percent of its fiscal year 2010 through fiscal year 2012 GLRI projects. Most were errors in the funding amounts entered by the agency, which agency officials attributed to data entry errors and changes that had not been updated in GLAS. Similarly, officials from one of the other agencies noted that, even when they found errors, certain data fields, including GLRI funding amounts, could not be edited by the agencies and that the agencies had to contact EPA to make corrections.\nWithout control activities, such as some form of verification, data errors are likely to continue, making the data collected into the system used to collect GLRI project information insufficiently reliable to ensure monitoring and reporting on GLRI progress as directed in the conference report. In commenting on a draft of this report, EPA stated that it plans to establish data control activities, such as verifications and documented procedures, for ensuring the reliability of the EAGL information system. In discussing these comments, EPA officials told us that the most important difference between GLAS and EAGL is that EAGL limits data entry to Task Force agency officials. The officials did not have a time frame for establishing data control activities, and told us that they wanted the Task Force agencies to become comfortable using the new system first. Until EPA and the Task Force agencies make a decision about the data system and the agency fully implements the actions needed to address the reliability of GLRI project data, EPA and the Task Force agencies cannot have confidence that EAGL can provide consistent, accurate, and complete information. Thus, we urge EPA to implement these actions as quickly as possible.\nEPA officials told us that, in 2012, they began to review GLAS and to consider whether to upgrade GLAS to improve it or develop a new system. This review included identifying potential improvements and considering whether GLAS is the right tool for monitoring and reporting on the GLRI. The Task Force also convened a subgroup of Task Force agency officials to determine what the next version of GLAS should be. One concern EPA officials expressed about this decision was the cost to create a new system to collect detailed data, and they noted that they are hesitant to make that investment in the face of uncertainty over whether the GLRI will continue to be funded from year to year. EPA officials told us that the agency created EAGL in February 2015 and, after consulting with the Task Force agencies, conducted pilot tests of the system for a few months, while we were completing our work. After this testing, in May 2015, EPA officials decided to use EAGL to collect information to monitor and report on GLRI progress, and they made the system available to Task Force agencies for an initial period of data entry. Specifically, EPA officials transferred key project information from GLAS into EAGL and asked the Task Force agencies to enter new project information and update existing information. According to EPA officials, EAGL will improve the consistency and completeness of information about GLRI projects. EPA officials told us that the agency plans to use this initial period of data entry to get feedback from the Task Force agencies and to make changes to EAGL and the draft data entry guidance to address any problems and refine definitions. The EPA officials said their goal is to have EAGL ready for data entry at the beginning of fiscal year 2016.", "The United States has committed enormous resources to help restore the health of the Great Lakes ecosystem, a region that is vital to the United States both economically and socially, with some progress. Nonetheless, Great Lakes restoration remains an ongoing, long-term effort. To gauge progress toward restoration, EPA and the Task Force agencies have established measures of progress for the GLRI and collected information in GLAS to report on progress. EPA and the Task Force agencies have proceeded carefully over the last 2 years as they have evaluated how best to collect and report GLRI data. In May 2015, while we were completing our work, EPA replaced GLAS with a new system to collect GLRI project information and issued guidance that included definitions of data fields and identified which data fields are required. This is a good first step to resolving the data inconsistencies that we identified in GLAS, which resulted, in part, because of unclear or undocumented definitions, data requirements, and guidance about entering important data. However, EPA has not yet established data control activities or other edit checks, although in commenting on a draft of this report, EPA stated that it plans to establish data control activities, such as verifications and documented procedures, for ensuring the reliability of the EAGL information system. Fully implementing the actions needed to address the reliability of GLRI project data should ensure that EPA and the Task Force agencies can have confidence that EAGL can provide complete and accurate information.\nFederal agencies have expended funds for Great Lakes restoration activities other than what has been made available for the GLRI. However, OMB has not reported on all federal obligations and expenditures for these activities as required by law. Without this information, the information available for congressional oversight and decisions on future funding levels has been limited to funds made available.", "To better ensure that complete information is available to Congress and the public about federal funding and spending for Great Lakes restoration over time, we recommend that the Director of OMB ensure that OMB includes all federal expenditures for Great Lakes restoration activities for each of the 5 prior fiscal years and obligations during the current and previous fiscal years in its budget crosscut reports, as required by Pub. L. No. 113-76 (2014).", "We provided a draft of this report to EPA, the Departments of Agriculture, Commerce, Defense, and the Interior, and OMB for review and comment. In written comments from the EPA Region 5 Administrator, which are reproduced in appendix VI, EPA generally agreed with the recommendations in our draft report and noted that the agency had already taken action consistent with the recommendations. In particular, for a recommendation in our draft report that EPA determine whether the agency should continue using GLAS or acquire a different system to collect information to monitor and report on GLRI progress, EPA stated in its written comments that GLAS is no longer in use and has been replaced by EAGL. We interviewed EPA officials about EAGL and its status, as well as plans for implementing it, and determined that the agency has made a final decision and taken appropriate actions to adopt it. As a result, we removed the recommendation from the report. We also added information about EAGL in the report.\nIn addition to replacing GLAS with EAGL, EPA noted that the agency has taken action to address three recommendations we made about ensuring data reliability in our draft report. First, for a recommendation that EPA should ensure that GLAS or another system requires important data to be entered, according to EPA, EAGL will require important information, including project end date, to be entered by the Task Force agencies. Second, for a recommendation that GLAS or another system documents definitions and guidance for entering data into the system, the agency in its written comments stated that it has developed an initial guidance document for data entry that it is revising based on the initial round of data entry into EAGL. We reviewed the initial guidance and determined that it clearly identifies those data fields that are required and that the definitions provided were clear and could be used to enter data consistently. As a result, we removed these recommendations from our report. Third, for a recommendation that EPA should ensure that GLAS or another system establishes data quality control activities, such as verifications and documented procedures for ensuring system reliability, EPA stated that it will establish data quality control activities such as verifications and documented procedures for ensuring the reliability of the EAGL information system. Although EPA officials did not have a timeframe for establishing data quality control activities, the agency has limited data entry to Task Force agency officials, and we believe the actions already taken constitute important steps toward enhancing GLRI oversight. As a result, we removed the recommendation from the report. We look forward to seeing the agency take this final action. However, until it is fully implemented, the agency cannot have confidence that the data produced by EAGL will address the inconsistencies that we identified in GLAS or that they are complete and accurate. Thus, we urge EPA to finish implementing these actions as quickly as possible.\nIn oral comments, OMB staff disagreed with the recommendation that OMB include all federal expenditures for Great Lakes restoration activities for each of the 5 prior fiscal years and obligations during the current and previous fiscal years in its budget crosscut reports, as required by Pub. L. No. 113-76 (2014). OMB staff restated the position that including the required expenditures and obligations information in the budget crosscut reports would not yield sufficient information to justify the cost of including that information. They added that there is no evidence that this information would be used for congressional oversight. Nevertheless, the law requires OMB to identify, among other things, all funds received and obligated by all federal agencies for Great Lakes restoration activities during the current and previous fiscal years and all federal government expenditures in each of the 5 prior fiscal years for these activities, and OMB should comply with the law.\nThe Departments of Defense and the Interior responded that they did not have comments on the draft report. In addition to these written and oral comments, EPA, NOAA, and NRCS provided technical comments that we incorporated as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 9 days from the report date. At that time, we will send copies to the appropriate congressional committees, the Director of OMB; the Administrator of EPA; the Secretaries of Agriculture, Commerce, Defense, and the Interior; and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or [email protected]. 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 appendix provides information on the objectives, scope, and methodology for the report. We examined the (1) amount of federal funds made available for the Great Lakes Restoration Initiative (GLRI) and expended for projects; (2) process the Great Lakes Interagency Task Force (Task Force) used to identify GLRI work and funding; and (3) information available about GLRI project activities and results.\nTo examine the amount of federal funds made available and expended for GLRI projects, we analyzed the Environmental Protection Agency’s (EPA) January 2015 GLRI financial management update reports for GLRI funds made available in fiscal years 2010 through 2014. We reviewed relevant EPA documents and interviewed EPA officials about the data input and review for the GLRI financial management update and, based on this work, determined that it was reliable for our purposes. In addition, to provide context for how funds for GLRI projects compared with funds made available for other federal Great Lakes restoration activities, we analyzed the Office of Management and Budget’s (OMB) Great Lakes Restoration Crosscut Reports to Congress for 2008 through 2012 and 2014 and the applicable appropriations laws requiring OMB to produce these reports. We also interviewed OMB staff to obtain information about the crosscut reports.\nWe then selected five Task Force agencies to review in greater detail because they had received the majority (about 85 percent) of GLRI funds The five agencies we made available in fiscal years 2010 through 2014.selected were: EPA, U.S. Army Corps of Engineers (Corps), Fish and Wildlife Service (FWS), Natural Resources Conservation Service (NRCS), and National Oceanic and Atmospheric Administration (NOAA). We obtained data from EPA’s Great Lakes Accountability System (GLAS) as of July 2014 to identify the projects funded by the five Task Force agencies with amounts made available for the GLRI in fiscal years 2010 through 2013. We did not include fiscal year 2014 projects because most of the amount made available in that year had not been obligated as of July 2014. We assessed the reliability of the GLAS data on funding agency and funding year by asking the agencies to verify their projects in the system, and we believe that the data are sufficiently reliable for identifying a list and total number of projects funded by the five agencies.\nGLAS data included recipient but, as described below under objective 3, we do not find that this or certain other GLAS data fields are reliable for other purposes of reporting. Therefore, to identify the recipients of GLAS funding, we obtained a list of the recipients from each of the five agencies, for each of the projects in the GLAS data we obtained. We used information we obtained from the recipients, their websites, or the funding agencies to categorize each of the recipients by recipient type, using the definitions in table 4, and summarized that information.\nIn addition, we obtained data from each of the five agencies about the types of financial agreements they used—grants, cooperative agreements, and contracts—to determine the percentage of obligations per financial agreement of amounts made available for the GLRI in fiscal years 2010 through 2013. We obtained an updated version of GLAS data, from January 2015, to identify the total number of projects reported by all Task Force agencies in GLAS.\nTo examine the process the Task Force used to identify GLRI work and funding, we first interviewed officials from the five Task Force agencies. We used this information, in addition to our previous work on grants management, to describe the four steps that the Task Force and agencies generally use to identify GLRI work and funding. We then analyzed relevant documents to corroborate and obtain information about each of these steps. Specifically, we analyzed interagency agreements between EPA and the other Task Force agencies, including the associated scopes of work; requests for applications; project selection summaries; and agencies’ policies and guidance on managing grants, cooperative agreements, and contracts. We also reviewed EPA data on the amount of GLRI funds in fiscal years 2012 through 2014 that the agency set aside for issues identified by the Task Force as GLRI priorities to understand how the Task Force process has evolved. We then interviewed EPA officials about the process for identifying priority issue work and funding for fiscal year 2012 through fiscal year 2015. We reviewed a sample of 19 GLRI projects to understand how the process was applied to specific cases. For each project, we analyzed documents from the funding agencies and funding recipients to determine the origin of each project and why it was selected. The documents we reviewed included project solicitations, such as announcements of funding opportunities, requests for applications, or other solicitations; project proposals and applications; agency documents on why projects were selected for funding; and project financial agreements such as grant and cooperative agreement documents.\nWe took the following steps to select the sample of 19 GLRI projects. First, we identified all projects funded by the five Task Force agencies we reviewed. To do this, we used data from GLAS to create a list of GLRI projects funded by each of the five agencies we reviewed with amounts made available for the GLRI in fiscal years 2010 through 2012. We did not review projects funded with funds made available for the GLRI in fiscal year 2013 or 2014 because those projects were likely to be in the early stages of implementation, or not yet started, at the time we began our review. Second, we categorized these projects by recipient type, using the process described above. Third, we ranked projects by agency, recipient type, and funding amount. Finally, we selected the median project for each agency and recipient type (see table 5 for those projects selected). We did this to ensure that we include projects that illustrate typical GLRI funding amounts. We selected at least one project from each of the following recipient types: federal entities; state, local, or tribal entities; nongovernmental organizations; and academic institutions.\nFourth, we also selected the project with the largest amount of GLRI funds for each agency (see table 6). In the instances where the project with the largest funding amount was associated with a recipient that we had already selected, we moved to the project with the next largest funding amount with a recipient that had not already been selected. This sample of 19 projects is not representative of all GLRI projects; however, it captures both projects with typical and large funding amounts from a range of recipients.\nTo examine the information available about GLRI project activities and results, we first analyzed the three accomplishment reports the Task Force issued to provide an overview of progress under the GLRI in each of fiscal years 2010 through 2012. We also reviewed information on projects available at the GLRI website, http://glri.us, and discussed its purpose and design with EPA officials. In addition, we obtained information on the 19 projects we selected for review to identify information available on project activities and results. We used agency documents to identify the purpose of the projects and project activities and results. Specifically, we analyzed project progress reports, and interviewed, or obtained written responses from, relevant agency officials and recipient representatives. We also interviewed recipient representatives about how the projects will contribute to the restoration of the health of the Great Lakes ecosystem, and we visited the recipients or locations for 3 of the 19 projects. We visited (1) the “Sheboygan River Area of Concern: pathway to delisting beneficial use impairments” project; (2) the “Great Lakes earth partnership” project; and (3) the “Rosewood Park, IL” project and interviewed the relevant funding agency officials and funding recipient representatives. We selected these three projects in order to observe work conducted by different recipient types that were within driving distance of the EPA Region 5 office in Chicago where the EPA officials that oversee the GLRI are located.\nIn addition, we examined project information available for projects identified in EPA’s database, GLAS, as of July 2014. We selected 6 data fields that we could use to describe projects and that we wanted to summarize and include in our report: funding year, funding agency, status, end date, recipient, and GLRI funding amount. We selected these 6 fields out of the more than 20 data fields in GLAS because they provided basic information about how GLRI funds have been used for projects (funding agency, year, GLRI funding amount, and recipient) and information on the progress of those projects (status and end date). For example, these data fields can be used to determine first how much funding an agency provided to a recipient in a fiscal year for a project, and then the extent to which the project was completed (status) and when the project would be completed (end date). We assessed the reliability of these data using three sources of information: EPA’s GLAS User Guide to identify data field definitions and guidance for entering data; information we obtained from the five agencies to identify inaccuracies in the data, such as funding amounts, for their projects in GLAS; and the agencies’ responses to our questions about GLAS data, including their procedures for ensuring the reliability of the data and the known or potential reasons for data errors they identified. In addition, we conducted electronic testing of the GLAS data to identify missing end dates and obvious end date errors, such as a date of 1900; compared projects’ end dates to their status; and compared the recipients identified in GLAS with the recipient data we obtained from the agencies. On the basis of this work we determined that the GLAS data on status, end date, recipient, and GLRI funding amounts were not sufficiently reliable for reporting on the progress of GLRI projects. In response to EPA’s written comments on a draft of this report, we interviewed EPA officials about the Environmental Accomplishments in the Great Lakes (EAGL) information system and reviewed EAGL guidance.\nAs part of our review of GLRI projects, we assessed how the five agencies we reviewed oversaw projects and ensured accountability for GLRI funds. First, we identified key internal controls by reviewing the Standards for Internal Control in the Federal Government (the federal standards for internal control), relevant OMB circulars in effect during the first 4 years of the GLRI, and the Federal Acquisition Regulation (FAR). We then used the following controls to analyze the agencies’ management of GLRI projects: (1) methods to assess the risks of entities applying for GLRI funds; (2) training required of officials responsible for managing financial agreements such as grants, cooperative agreements, and contracts; (3) policies governing site visits; (4) and requirements for GLRI recipients to submit financial and progress reports. Specifically, we analyzed the agencies’ policies and guidance for managing grants, cooperative agreements, and contracts, and project progress and financial reports. We also interviewed, or obtained written responses from, relevant officials for the 19 selected projects, such as agency officials or recipient representatives. In addition, we analyzed the financial reports or other information for the 19 selected projects to determine how much GLRI funds the recipients received to pay for indirect costs.\nWe conducted this performance audit from January 2014 to July 2015 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 analyzed the interagency agreements and project solicitations (such as requests for applications or proposals) for each of the 19 Great Lakes Restoration Initiative (GLRI) projects we reviewed, and we interviewed relevant Great Lakes Interagency Task Force (Task Force) agency officials to determine the origin of each project and why it was selected. The following tables reflect this analysis for the 19 projects we reviewed that were funded by five Task Force agencies: the Environmental Protection Agency (EPA; see table 7), Fish and Wildlife Service (FWS; see table 8), National Oceanic and Atmospheric Administration (NOAA; see table 9), Natural Resources Conservation Service (NRCS; see table 10), and U.S. Army Corps of Engineers (Corps; see table 11).\nEPA officials told us that reviewers consider and score the applicants’ approach on the basis of how they will achieve the desired outputs and outcomes identified in the request for application. Reviewers evaluate reasonableness, necessity, and allowability of costs when they score the budget for each application. Table 7 shows information on EPA’s selection of five GLRI projects.\nFWS officials told us that they assess project proposals against the request for application, which is tied to specific GLRI priorities and objectives. Table 8 shows information on FWS’s selection of five GLRI projects.\nFor grants and cooperative agreements, NOAA assesses proposed projects through the agency’s standard merit review process. The agency’s technical and scientific merit criteria assess whether the proposed approach is technically sound or innovative, among other things. NOAA conducts a review by panel, and NOAA officials said that the agency may also conduct a secondary review through an interagency panel. Officials from the Grants Management Division told us that they work with the program offices to ensure that proposed costs are allowable, reasonable, and necessary.\nFor contracts, NOAA uses a team of evaluators that are to assign proposals one of five ratings that consider the combined technical merits and risk of the proposal, according to the agency’s acquisition guidance. The team also evaluates the proposal’s cost or price to the government to determine if it is fair and reasonable but does not assign a rating. Table 9 shows information on NOAA’s selection of five GLRI projects.\nFor cooperative agreements, NRCS officials said that the agency does not issue requests for applications for GLRI funding.the cooperative agreements the agency funds are typically joint efforts between NRCS and the recipient, and the technical aspects of the agreement are worked out between NRCS and the applicant prior to awarding funds. Engineers in the agency’s state offices review the technical and financial aspects of applications for funding, according to NRCS officials.\nFor financial assistance contracts, NRCS assesses projects through its conservation planning process. Upon eligibility, a conservation planner works with individuals to identify their resource concerns and develop a conservation plan. Applications from producers for GLRI funding are then scored and ranked using what agency officials said is the same process that NRCS uses for all programs. GLRI has specific ranking questions, which the officials said are used by each state in the GLRI. According to NRCS officials, only GLRI–approved core conservation practices and supporting practices can be funded by GLRI. Table 10 shows information on NRCS’s selection of two GLRI projects.", "The technical features of the projects were planned and designed by the Corps. The contract for construction was awarded using plans and specifications developed by the Corps. The Rosewood Park project is under a program to develop projects meeting the objectives of existing strategic plans within the GLRI Action Plan.", "We examined 19 projects paid for with Great Lakes Restoration Initiative (GLRI) funds and carried out by government agencies, nongovernmental organizations, and academic institutions to identify the activities GLRI funds were spent on and the results that were achieved. To do this, we analyzed project agreements and proposals to identify the purpose of the project, progress reports to determine the activities conducted and results achieved, and financial reports and interviews to determine the amount expended for each project. We also interviewed representatives of the recipient organizations to obtain their views on how the projects will contribute to the restoration of the Great Lakes ecosystem. Table 12 reflects these topics, along with whether the project is completed or ongoing. We also included the amount of funding expended on the project, as well as the funding year to identify the specific fiscal year in which the project’s funding was made available because some projects received GLRI funding in multiple years.", "We examined key internal controls used by five Great Lakes Interagency Task Force (Task Force) agencies to oversee 19 projects that were conducted using Great Lakes Restoration Initiative (GLRI) funds to better understand how the agencies ensure accountability for the funds. Specifically, we reviewed relevant documents and interviewed agency officials to determine the methods the agencies used to assess the risks of organizations applying to receive GLRI funds; the training the agencies’ required of officials responsible for managing financial agreements such as grants, cooperative agreements, or contracts; the policies governing agency site visits and the number of site visits for the 19 projects; and the types of reports each agency required the funding recipients to submit. In addition, we collected at least one of each type of the required reports, when possible, to confirm that recipients had submitted these documents. The Task Force agencies we reviewed are the Environmental Protection Agency (EPA; see table 13), the Fish and Wildlife Service (FWS; see table 14), the National Oceanic and Atmospheric Administration (NOAA; see table 15), the Natural Resources Conservation Service (NRCS; see table 16), and the U.S. Army Corps of Engineers (Corps; see table 17).\nBased on our analysis of agency documents and interviews with agency officials, we found that, to assess applicant risk, EPA required each applicant to certify it has the legal authority to apply for federal assistance and the institutional, managerial, and financial capability (including funds to pay the nonfederal share of the project cost) to ensure proper planning, management, and completion of the project described in the relevant application. EPA officials also told us that the agency searched the names of applicants in the System for Award Management to identify any applicant debarments or suspension, performed a credit check on all applicants applying for funds, and checked for Single Audit Act findings.\nSingle audits focus on recipients’ internal controls over financial reporting and compliance with laws and regulations governing U.S. federal awardees. They also provide key information about the federal grantee’s financial management and reporting. EPA required project officers to complete grant training to be eligible to manage an EPA grant and to take a refresher course every 3 years. For its site visits, EPA targeted a minimum of 10 percent of GLRI funding recipients for advanced monitoring—an in-depth review of the recipient’s project—which officials told us is the same percentage for all EPA grants and not just GLRI. EPA required each of its recipients to submit very similar types of reports (see table 13).\nBased on our analysis of agency documents and interviews with agency officials, we found that, to assess applicant risk, FWS officials interviewed organizations with which they are less familiar to understand their financial viability and management processes. FWS officials also searched the names of all applicants in the System for Award Management to identify any applicant debarments or suspension. FWS required 24 hours of training for those staff with authority to approve awards, but it required no training for project officers overseeing awards, or reviewing and ranking applications, according to FWS officials. FWS does not have a requirement for a certain number of site visits. However, agency officials told us that site visits are conducted more often for complex and expensive projects. FWS officials also told us that the agency has an on-the-ground presence through 34 field offices that is more extensive than any other Task Force agency. FWS reporting requirements varied by project (see table 14).\nBased on our analysis of agency documents and interviews with agency officials, we found that NOAA used different oversight processes depending on the type of financial agreement involved; i.e., grants, cooperative agreements, or contracts. To assess applicant risk for grants and cooperative agreements, NOAA officials said that they perform a credit check for organizations applying for funds, check the System for Award Management for exclusions from procurement or nonprocurement activities for those applicants, check the agency’s “do not pay” list for delinquent debts, and they also check for Single Audit Act findings. In addition, NOAA reviews applicants’ past performance. If an organization is deemed high risk, NOAA will impose a special award condition, such as requiring the recipient to submit financial or progress reports more frequently, according to agency officials. The imposed special award condition remains on the award until the recipient demonstrates compliance. For awards that are made competitively, NOAA evaluates applications using criteria set forth in the applicable program regulations and announcement of federal funding opportunity. According to NOAA officials, training for officials who managed grants and cooperative agreements was specific to each of NOAA’s program offices. Within the National Ocean Service, which has responsibility for the five NOAA GLRI projects we reviewed, program officers and grant coordinators were required to complete a certification program, which required completion of a 3-day course on grants and cooperative agreements and annual training on grants. The National Ocean Service also required training on NOAA’s Grants Online system. NOAA did not require site visits for all projects funded through grants and cooperative agreements. According to NOAA officials, the decision to conduct a site visit is based on need and the availability of funds, and high-risk recipients are a priority. Officials noted that, as a matter of standard practice, agency staff conduct site visits and work closely with cooperative agreement recipients for all habitat restoration projects in Areas of Concern.\nTo assess contractor risk, a NOAA team evaluates proposals and assigns a rating, using criteria outlined in the request for proposals for the relevant project. The team considers the past performance of the entities offering proposals and assigns them each one of five possible ratings for past performance. NOAA’s contract management staff are to be certified through the Federal Acquisition Certification Contracting Officer Representative Certification Program, which requires a minimum of 40 hours of training and includes additional training requirements for staff managing contracts valued at more than $150,000. Site visits are not required for NOAA contracts, according to NOAA officials. NOAA program offices may determine the need for site visits based on the type of work funded. NOAA reporting requirements varied by project (see table 15).\nBased on our analysis of agency documents and interviews with agency officials, we found that NRCS provided most of its GLRI funds through financial assistance contracts to agricultural producers who carry out different conservation practices on their land using NRCS GLRI funding.According to NRCS officials, the agency does not assess applicants’ risk because it cannot deny program funds to a producer based on perceived financial or performance capabilities. Instead, the agency informally assesses applicants’ performance capabilities as part of the conservation planning process and provides technical assistance to producers. NRCS officials told us that the agency conducts training in contract management, usually annually, but did not provide us with documentation of this training. Agency officials said that NRCS conducts site visits several times a year for financial assistance contracts.\nNRCS also provided GLRI funding through cooperative agreements. According to agency officials, the majority of the agreements are with entities that have previously partnered with the agency, such as state programs or local conservation districts. For new applicants, NRCS officials said that they conduct assessments using Single Audit Act findings, among other things. The officials told us that there is no formal process for reviewing applicants that have worked with the agency before. An NRCS official told us that the agency required annual program management training of its program managers, but did not provide us with documentation of this training. NRCS officials also told us that the agency did not have specific requirements for conducting site visits to projects funded through cooperative agreements, which they said NRCS generally used for capacity building and not for site-specific projects. NRCS reporting requirements varied by project (see table 16).", "Based on our analysis of agency documents and interviews with agency officials, we found that the Corps primarily used contracts to accomplish its GLRI work. In addition, Corps officials told us that the technical features of their projects were planned and designed by Corps staff, and contracts for projects were awarded using plans and specifications developed by the agency. To assess contractor risk, according to Corps officials, the contractor must provide proof of financial capability to do the work prior to receiving the award. Corps officials told us that contracting officers must undergo training including, but not limited to, 40-hour blocks of quality assurance/quality control classes. The Corps did not perform site visits because Corps officials worked at each project site, and other Corps officials visited the sites on a regular basis (see table 17).", "We analyzed indirect cost information for the 19 Great Lakes Restoration Initiative (GLRI) projects that we reviewed and compared the amount of GLRI funds expended on indirect costs for each project with the overall amount of GLRI funds that had been expended on the project. To do this, we reviewed the Federal Financial Reports or other information provided by the recipients of GLRI funds that conducted the 19 projects we Indirect costs are those that cannot be identified with a reviewed.program objective. That is, they represent the expenses of doing business that are not readily identified with a particular grant or contract, but are necessary for the general operation of the organization. These include, for example, building utilities and administrative staff salaries. In comparison, direct costs can include salaries, equipment, and travel, among other things, that can be specifically identified with the objective of a particular grant or contract. Table 18 shows the GLRI funds expended on indirect costs by the recipients for the 19 projects we reviewed.", "", "", "In addition to the individual named above, Susan Iott (Assistant Director), Krista Breen Anderson, Cheryl Arvidson, Mark Braza, Peter Del Toro, Armetha Liles, Kimberly McGatlin, Sonia Saini, Jerry Sandau, Jeanette Soares, Kiki Theodoropoulos, and Michelle K. Treistman made significant contributions to this report." ], "depth": [ 1, 2, 2, 1, 2, 2, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 2, 1, 1, 2, 1, 1, 2, 2 ], "alignment": [ "h2_title", "", "h2_full", "h0_full", "h0_full", "", "h1_full", "", "h1_full", "", "h2_full", "", "h2_full", "", "", "h4_full h2_full", "h3_full", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What was the status of federal funds made available for the GLRI for 2010 through 2014?", "How were these funds spent?", "What can agencies do after funds are no longer available for obligation?", "How has the Task Force's funding identification process evolved?", "How was this demonstrated in 2012?", "What did the EPA tell GAO about the Task Force's actions?", "What information has the Task Force made available?", "What other information has the Task Force collected?", "What did the conference report accompanying the Department of Interior Appropriations Act direct EPA to do?", "What did EPA do to amend this?", "How might implementing this benefit the EPA?", "What was GAO asked to do?", "What does this report examine?", "How did GAO collect data for this report?", "What did GAO recommend in its draft report?", "What did GAO do to address these recommendations?", "How did GAO respond to these improvements?" ], "summary": [ "Nearly all of the $1.68 billion of federal funds made available for the Great Lakes Restoration Initiative (GLRI) for fiscal years 2010 through 2014 had been allocated as of January 2015.", "Of the $1.66 billion allocated, the Environmental Protection Agency (EPA) and the other Task Force agencies expended $1.15 billion for 2,123 projects (see fig.).", "Agencies can liquidate and adjust obligations for 7 years after funds are no longer available for obligation.", "The Task Force's process to identify each agency's GLRI work and funding has evolved to emphasize interagency discussion.", "In fiscal year 2012, the Task Force created subgroups to discuss and identify work on three issues, setting aside about $180 million for these issues over 3 years. This included cleaning up severely degraded locations called Areas of Concern, such as the White Lake Area of Concern in Michigan that involved sediment cleanup; preventing invasive species; and reducing nutrient runoff.", "EPA officials told GAO that the Task Force created additional subgroups to identify all GLRI work and funding beginning in 2015.", "The Task Force has made some information about GLRI project activities and results available to Congress and the public in three accomplishment reports.", "In addition, the individual Task Force agencies collect information on activities and results, although this information is not collected and reported by EPA.", "The conference report accompanying the Department of the Interior Appropriations Act for fiscal year 2010 directed EPA to establish a process to ensure monitoring and reporting on the progress of the GLRI. EPA created the Great Lakes Accountability System (GLAS) to monitor and report on GLRI progress, but some GLAS data are inaccurate, in part, because EPA did not provide clear guidance on entering certain information and GLAS did not have data quality controls.", "According to EPA officials, the agency replaced GLAS and, in May 2015, began an initial period of data entry into the new system. EPA also provided guidance on entering information into the new system and plans to establish data control activities for ensuring the reliability of the new system.", "Fully implementing these control activities should ensure that EPA can have confidence that the system can produce data that are accurate and complete.", "GAO was asked to review how GLRI funds have been used.", "This report examines the (1) amount of federal funds made available for the GLRI and expended for projects; (2) process the Task Force used to identify GLRI work and funding; and (3) information available about GLRI project activities and results.", "GAO analyzed funding data for the GLRI and five agencies that received the majority of GLRI funds; GLAS data; accomplishment reports; and 19 GLRI projects selected by funding amounts and agencies to illustrate projects with typical funding amounts. This sample is not generalizable to all projects.", "Among other things, GAO recommended in its draft report that EPA determine if it should continue using GLAS or acquire a different system and ensure that the agency develops guidance for entering data and establishes data quality control activities.", "Among other things, GAO recommended in its draft report that EPA determine if it should continue using GLAS or acquire a different system and ensure that the agency develops guidance for entering data and establishes data quality control activities.", "GAO reviewed the actions taken and determined that the recommendations had been addressed. As a result, GAO removed the recommendations." ], "parent_pair_index": [ -1, 0, -1, -1, 0, -1, -1, 0, -1, 2, 3, -1, -1, 1, -1, 0, 1 ], "summary_paragraph_index": [ 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 4, 1, 1, 1, 5, 5, 5 ] }

{ "title": [ "Background", "The Corps Allocates Funds for Operations and Maintenance Based on Economic Benefits and Risk but Lacks a Method of Tracking Deferred Maintenance for Inland Waterways", "The Corps Allocates Funds for Operations and Maintenance Projects Based on Economic Benefit and Risk", "Lack of a Deferred Maintenance Measure for Inland Waterways Limits the Corps’ Ability to Identify and Communicate Estimated Maintenance Costs", "Incremental-Funding Approach for Inland- Waterway Construction Projects Contributes to Cost Overruns and Schedule Delays", "Inland-Waterways Construction Projects Are Individually Funded according to Various Priorities", "Incremental Funding of Inland-Waterways Construction Projects Contributes to Cost Overruns and Schedule Delays", "Timing and Distribution of Funding Could Reduce Cost Increases and Schedule Delays for Inland-Waterways Construction Projects", "Stakeholders Identified Limitations and Trade-offs Associated with Proposed Options for Increasing Available Funding for Inland- Waterways Construction", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Inland and Intracoastal Fuel- Taxed Waterways of the United States", "Appendix II: Inland Waterways Stakeholders GAO Interviewed", "Stakeholder Type", "Appendix III: Technical Appendix for GAO’s Funding Simulation for Inland-Waterways Construction Projects", "Appendix IV: Objectives, Scope, and Methodology", "Appendix V: Comments from the Department of Defense", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Although less visible than other transportation modes and not as vast as they are, inland waterways allow shippers to transport goods, particularly bulk commodities, in a relatively cost-effective and environmentally friendly method between ports all along the waterways, and to coastal ports for transportation to international markets. For example, in a report prepared for the National Waterways Foundation, the Texas A&M Transportation Institute found that, for every gallon of fuel burned, 647 tons of cargo can be carried 1 mile by barge, but only 477 tons by train or 145 tons by truck. Additionally, if cargo transported on inland waterways each year were to be moved by truck, it would take an additional tens of millions of truck trips to carry that cargo—more than doubling the number of trucks per day, per lane on a typical rural interstate. Most of the goods moved on the inland and intracoastal waterways are bulk commodities, including coal; petroleum products; chemicals; aggregate construction materials such as sand, gravel and stone; as well as grain, soybeans, and other agricultural products.\nApproximately 12,000 miles of inland and intracoastal waterways and channels in the United States are commercially navigable and approximately 11,000 miles make up the fuel-taxed portion of the system, shown in figure 1. The remaining approximately 1,000 miles of inland and intracoastal waterways and channels are not part of the taxable waterways and contain very few significant lock and dam structures. Some commercial waterways users, especially those on the Upper Mississippi and Ohio Rivers, may never leave the taxable portion of the system, but other vessel operators may navigate through taxable and non-taxable waterways, including connecting deep draft waterways.\nNavigation on inland waterways is made possible by locks and dams, navigation structures and aids (such as buoys), as well as channel maintenance and dredging where necessary to maintain a minimum channel depth of 9 feet to support commercial barge traffic. Dams form the foundation of the inland waterways system and create “pools” for navigation during periods of low and medium river flow. Locks at dam sites allow river traffic to move up or down from one pool to another much like a stairway of water. See figure 2 below.\nAs part of its Civil Works Program, the Corps operates and maintains the fuel-taxed inland waterways for the purpose of facilitating navigation. The Corps is responsible for balancing its navigation mission with other civil works missions, including hydropower generation, flood risk management, emergency response, environmental stewardship, and recreation (see fig. 3). For example, the Corps may consider the migration of fish when designing locks and dams that facilitate navigation.\nCongress appropriates funding for the Corps’ Civil Works Program. For inland waterways, the Corps uses funding for two main purposes: (1) inland waterways operations and maintenance and (2) inland waterways construction. From fiscal years 2006–2017 (the years for which data were available), the Corps obligated an average of $690 million annually for operations and maintenance of the fuel-taxed inland waterways. Funding for operations and maintenance is appropriated entirely from general revenues. Figure 4 shows annual obligations for inland waterways operations and maintenance for fiscal years 2006 through 2017.\nFor construction projects, Congress appropriates funding from the Inland Waterways Trust Fund (Trust Fund) in addition to funds from general revenues. Since the Inland Waterways Revenue Act of 1978 (1978 Act), commercial waterway users have paid taxes on fuel used by commercial towboats and other vessels that typically move barges, revenues from which are deposited in the Trust Fund. The Water Resources Development Act of 1986 (1986 Act) increased the initial fuel-tax rate per gallon and established a cost-sharing process for inland waterways expenditures. Together, the 1978 Act and the 1986 Act established a means for the inland waterways industry to provide economic support for infrastructure development. These users currently pay a $0.29 per gallon tax on diesel fuel used on the fuel-taxed portion of the inland waterways, revenue from which is then deposited into the Trust Fund. Traditionally, 50 percent of a project’s funding is appropriated from general revenues and 50 percent is appropriated from the Trust Fund, though Congress reduced the Trust Fund’s cost share for the ongoing new construction of the Olmsted Locks and Dam project to 25 percent for fiscal year 2014 and to 15 percent for subsequent fiscal years. In fiscal year 2018, commercial waterway users contributed about 35 percent of the $399 million allocated to various construction projects (see fig. 5). On average, from fiscal years 1997 through 2018, the Corps has allocated about $240 million annually for construction to repair or improve existing inland- waterways navigation infrastructure.\nIn its 2017 annual financial report, the Corps notes that the number of instances of lock closures on inland waterways (including the fuel taxed inland waterways) due to preventable mechanical breakdowns and failures lasting longer than one day and lasting longer than one week have decreased since fiscal year 2010, but that the lock closures that do occur can result in substantial delays to shippers, carriers, and users, and are a factor in the cost of shipping commodities on waterways. According to the Inland Waterways Users Board (Board)—an advisory committee made up of industry stakeholders—U.S. inland waterways infrastructure is in need of modernization. The Corps currently manages construction projects aimed at replacing, expanding, and modernizing existing locks and dams. For fiscal year 2018, the Corps has allocated about $399 million from money Congress appropriated for civil works construction for a total of five inland waterways construction projects: four ongoing projects and one new project (see fig. 6). According to the Board, as of December 2017, 14 new lock and dam construction projects have been authorized by Congress but have not yet received construction funding.\nIn addition to the Corps and the Board, several entities have roles related to the inland waterways:\nThe Assistant Secretary of the Army for Civil Works (ASA-CW): the ASA-CW establishes policy direction and provides supervision of the Department of the Army functions relating to all aspects of the Corps’ Civil Works program.\nMaritime Administration: within the Department of Transportation, the Maritime Administration promotes the use of waterborne transportation and its integration with other segments of the transportation system. It is also charged with maintaining the health of the merchant marine, since commercial mariners, vessels, and intermodal facilities are vital for supporting national security.\nThe U.S. Coast Guard (Coast Guard): within the Department of Homeland Security, the Coast Guard is responsible for, among other things, facilitating the safe and efficient flow of commerce on the navigable waterways of the United States. For example, the Coast Guard regulates and enforces safety standards for inland waterways vessels and operator licensing, conducts icebreaking to facilitate the flow of commerce and relieve flooding from ice dams, and installs and monitors aids to navigation that mark the navigable channel (such as buoys, beacons, and lights) to facilitate the safe movement of vessels. The Coast Guard coordinates with the Corps to ensure aids-to- navigation are properly installed and makes adjustments as channel conditions may dictate.\nOffice of Management and Budget (OMB): Within the Executive Office of the President, OMB oversees the implementation of the President’s policy, budget, management, and regulatory objectives. Related to inland waterways, OMB works with the Corps and the ASA-CW to formulate the annual President’s budget request and issues policies related to the budget’s implementation, project study, and prioritization.", "", "As part of its management of the inland waterways, the Corps budgets for the costs of operations and maintenance (which are funded from one appropriation account) and construction (funded from a separate appropriation account) and develops an annual budget request to submit to OMB. The Corps develops this budget request for all its civil works activities, including locks and dams on the fuel-taxed inland waterways system; this request is reviewed and finalized by the ASA-CW and OMB before being submitted to Congress as part of the annual President’s budget request.\nTo prepare its annual budget request, the Corps identifies potential operations activities and maintenance projects and submits estimates of the costs to complete those activities, but not all identified maintenance projects are included in the budget request. According to Corps officials, as part of the budget request development process, the Corps provides OMB and the ASA-CW with a variety of funding proposals that would enable different levels of service for all of its civil works assets, including inland waterways. However, according to Corps officials, the President’s budget request for civil works—including funding for inland-waterways maintenance projects—is based on broader administration priorities and does not request funding to complete all identified maintenance projects. The Corps then receives annual appropriations for its Civil Works Program, from which it allocates funding to each of its missions, including inland waterways navigation. Figure 7 illustrates the Corps’ budget formulation and execution process.\nIn 2008, the Corps began implementing an asset management process to guide its management of the Civil Works Program, including inland waterways. Under this process, the Corps determines the hours of operation for each lock, which maintenance activities to perform, and which construction projects to prioritize based on the economic value these activities will provide. The Corps ranks maintenance projects identified during the budget formulation process based on the value or level of service the project is expected to provide as well as how critical they are and funds as many of the priority projects as possible given available funding and the rest are deferred. The Corps assesses the value of inland waterways assets (such as waterways, locks, and dams) based primarily on the economic benefits derived from improved commercial navigation—that is, the benefits achieved by allowing shippers to transport commodities to both domestic and foreign markets more cost effectively than they would using other modes of transportation (such as truck and rail). Economic benefits are generally determined using measures of commercial use, and assets are categorized as high, moderate, and low commercial use. The Corps’ approach to operations and maintenance is as follows:\nOperations: The Corps allocates funding for operations based on service priorities. The Corps operates locks at varying levels of service (i.e., hours of operation) based primarily on past commercial traffic volume, but also considering the volume of recreational traffic and available resources. The Corps operates high-use locks continuously (24/7), while operating those with less commercial traffic and fewer economic benefits less frequently, sometimes by appointment only.\nMaintenance: The Corps allocates funding for maintenance projects based on the risk of not performing maintenance; this risk is determined by considering both the condition of an asset as well as the economic impact of a reduction in service should the asset fail (that is, the traffic that would be affected if a lock or dam were to become unusable).", "According to Corps and ASA-CW officials, the Corps does not know how much deferred maintenance exists for inland waterways, because there is no agreed upon definition for deferred maintenance. Corps and ASA- CW officials identified several challenges related to developing a useful definition with which to measure deferred maintenance:\nUsing the total cost to conduct all maintenance identified during the budget formulation process may not be useful as a budget tool because the Corps would not have the capacity to conduct all identified maintenance in one fiscal year.\nA single measure may not be useful to gauge the condition of the system, because not all deferred maintenance projects have the same effect on system reliability, for example:\nSome identified maintenance, such as preventive maintenance conducted less frequently than preferred (like painting lock components to prevent future corrosion), may not affect reliability or function in the short term.\nDeferring the replacement or rehabilitation of broken or malfunctioning components—such as a lock gate arm—on low use waterways may result in closures on those waterways or delays related to the condition of the lock, but would affect a relatively small amount of cargo and vessels and have a smaller economic impact than closures on high-use waterways.\nDeferring the replacement or rehabilitation of broken or malfunctioning components on high-use waterways may result in closures that prevent traffic to large sections of the inland waterways system and affect a large portion of cargo transported via waterways.\nSome deferred maintenance projects may never be undertaken, while others are planned for the near future. Corps officials told us that, depending on the risk associated with not completing a particular maintenance project, the Corps may choose to never complete the project, such as mowing the grass at a low-use lock and dam facility. Conversely, some incomplete projects represent later phases of projects that are already under way and are planned for completion in the near term.\nThe lack of a definition and measure of deferred maintenance for inland waterways projects is inconsistent with federal internal-control standards, which call for agencies to identify information requirements needed to achieve objectives and address identified risks (such as reliability of the waterways) and to process relevant data to develop that information. Further, internal control standards call for agencies to communicate information externally—such as to Congress and OMB—to achieve agencies’ objectives. Corps and ASA-CW officials acknowledged that there is a lack of information on deferred maintenance provided to Congress. One Corps official suggested that the Corps may need more than one measure of deferred maintenance to capture differences in the type and consequences of various projects. Additionally, ASA-CW officials noted that once a meaningful definition or metric for deferred maintenance is identified, the Corps lacks a way to track this information. Without a measure—or measures—of deferred maintenance for inland waterways (1) that the Corps can use to budget for and manage the inland waterways, (2) that reflects its priorities, and (3) that accurately conveys a consistent and well-defined measure of deferred maintenance that can be communicated to outside stakeholders, the Corps is limited in its ability to identify preventive maintenance that could forestall more costly maintenance or rehabilitation in the future and communicate its estimated maintenance costs to OMB and the Congress. In turn, the lack of a measure could limit the ability of Congress to make informed funding decisions pertaining to the Corps.\nBoth the stakeholders we interviewed and the Corps have identified effects on the reliability of the inland waterways related to current funding levels for operations and maintenance. For instance, many stakeholders we spoke to said the funding the Corps receives for operations and maintenance on inland waterways has not been sufficient to maintain the stakeholders’ desired level of reliability. Some stated that the Corps is currently operating using a “fix as fails” approach: that is, requesting enough funding to be able to respond to crises but not to conduct preventive maintenance. Further, many stakeholders said there is potential for some waterway users to switch to other modes of transportation based on unreliability. For instance, two stakeholders stated that businesses may be “chased away” because the inland waterways system continues to be unreliable due to unscheduled closures for maintenance. For example, during the course of our review, one lock on the Ohio River experienced repeated unscheduled closures. One such closure lasted from September 6, 2017, through September 14, 2017, during which time no vessels were able to travel through the lock. According to a June 2017 Corps report on the causes of mechanical breakdowns leading to unscheduled lock closures, routine maintenance occurs less frequently than in the past due to a lack of funding, and that delayed maintenance increases the risk of operational or catastrophic failure that results in lock closures. Figure 8 illustrates the condition of both deteriorating and recently rehabilitated inland waterways’ navigation facilities. Identifying and communicating about deferred maintenance could help Congress and OMB understand the extent of any problems with reliability that could affect the inland waterways system.", "", "The Corps manages inland-waterways construction projects—the modernization and rehabilitation of existing locks and dams (called major rehabilitation), or the construction of new structures—to ensure the facilities continue to function and meet future requirements, and prioritizes these projects based on expected costs and benefits. As shown in figure 9, construction projects are developed in response to an identified problem. Congress then authorizes inland-waterways construction projects for study and construction and provides funding through the annual appropriations process, although some authorized projects may not receive funding. Since 1996, Congress has appropriated construction funding that the Corps has allocated toward 20 projects, of which 15 have been completed.\nThe Corps assesses the net economic benefits of inland-waterways construction-project alternatives by comparing estimated direct costs (e.g., construction costs to build a new lock chamber) to estimated reductions in the waterway transportation costs (e.g., reduced travel costs related to a reduction in the time it might take for a barge to pass through a larger lock chamber). For the Corps to recommend construction, the project must have a benefit-cost ratio—that is, the ratio of estimated benefits to estimated costs—greater than 1 to 1 using a statutorily defined discount rate that varies from year to year. The project must then be authorized for construction by Congress through legislation to be eligible for funding, which typically occurs in a Water Resources Development Act.\nThe Corps—with advice from the Inland Waterways Users Board (Board)—prioritizes authorized inland-waterways construction projects according to estimated net economic benefits and an assessment of the economic and safety consequences of not doing the project. In collaboration with Corps headquarters, division, and district offices, the ASA-CW determines which civil works construction projects will be prioritized to include in the budget request to OMB. OMB considers the recommendations of the ASA-CW and the Corps in deciding which projects to include in the President’s budget request. While Corps projects with a benefit-cost ratio of at least 1 to 1 at the statutorily defined discount rate are eligible to seek funding, OMB assesses projects against a different threshold in determining which projects are included in the President’s budget request. In line with OMB practice since the mid- 2000s (and, according to OMB officials, consistent with their evaluation of most federal programs per their guidance set in 1992), generally only inland-waterways construction projects with a benefit-cost ratio of at least 2.5 to 1 using a 7 percent discount rate are included in the annual President’s budget request. In recent years, only one of the Corps’ ongoing construction projects—the Olmsted Locks and Dam project—has met this threshold.\nCongress appropriates funds to the Corps’ Civil Works construction account, and the Corps allocates some of that funding to inland- waterways construction projects. In recent years, Congress has appropriated funds for projects included in the President’s budget request and has directed the Corps to allocate appropriated amounts that exceed the amount requested in the President’s budget request to other projects as depicted in step 8 in figure 9. For example, in fiscal year 2018, the Administration requested $175 million for the Olmsted Locks and Dam project, but five projects were funded that year. In the Joint Explanatory Statement accompanying the appropriations, Congress directed the Corps to allocate funds to inland-waterways construction projects prioritized by economic effect in such a way that the Corps uses all estimated Trust Fund revenues. In accordance with this direction, the Corps allocated $399 million to inland-waterways construction projects, with more than half—$224 million— going toward the other three ongoing inland-waterways projects and a new major rehabilitation project (see fig. 10).\nStakeholders we spoke to stated that the process for determining which construction projects receive funding can be challenging. Some stated that the use of different discount rates and benefit-cost ratio thresholds for authorization and budgeting purposes can create confusion as to whether projects will be funded. Also, some stakeholders stated that because the 7 percent discount rate used by OMB to calculate the benefit-cost ratio is higher than the statutory rate used in recent years, use of the OMB discount rate can result in projects being excluded from the President’s budget request, an exclusion that can reduce the likelihood of the project receiving funding. According to the Board, as of December 2017, 14 construction projects have been authorized for construction but have not been allocated construction funding, and an additional 7 major rehabilitation projects are also candidates for construction over the next 20 years. However, Corps officials stated that, once the Olmsted Locks and Dam project is completed, none of the currently authorized projects will meet OMB’s threshold for inclusion in the President’s budget request. Further, some stakeholders told us that the Corps’ policy—developed to provide additional information to OMB during budget development—to recalculate a project’s benefit-cost ratio every few years, including while the project is under construction, can create challenges. For one, ongoing projects included in the President’s budget request have subsequently been excluded in later years due to a lower updated benefit-cost ratio, which might reduce the likelihood of the project’s being allocated funding. For example, the Lower Monongahela Locks and Dams project had a benefit-cost ratio of 6.7 to 1 at a 7.75 percent discount rate when construction funds were first expended in fiscal year 1995 (based on benefits and costs as estimated when the project was authorized in fiscal year 1992) and has been allocated funding every year since. However, this project was not included in either the fiscal year 2017 or 2018 President’s budget requests due in part to its updated benefit-cost ratio having fallen below the 2.5 to 1 threshold because of increased costs and changes to the expected benefits. Although it was not included in the President’s budget request, the Corps ultimately allocated funding for the project in fiscal years 2017 and 2018 based on congressional direction.", "Since at least 1995, all inland-waterways construction projects have been funded incrementally, meaning that annual appropriations have covered a portion of the project’s estimated costs. There are several reasons that the Administration may request and Congress may appropriate funding for inland-waterways construction projects incrementally—as they both have done in recent years—in lieu of full upfront funding.\nAvailable annual funding is generally less than the amount required to cover the full cost of one new construction project. In addition, the Corps (like other federal agencies) cannot enter a contract that exceeds available funding unless authorized by law. For example, based on average annual Trust Fund revenues since 2015 of about $107 million, a 50-50 cost share would provide about $214 million in construction funding annually, whereas the four ongoing construction projects were each originally estimated to cost more than that amount. Further, of the 10 new construction projects prioritized to be completed next in the Corps’ capital investment strategy, as of 2016, 7 of them are estimated to cost at least $350 million.\nAdditionally, these projects—even once begun—must compete annually with other funding priorities across the federal government. We have previously reported that full upfront funding of capital assets can be challenging to obtain in an era of resource constraints; incremental funding can make it easier for agencies to meet mission capital demands within the constraints of their appropriation.\nFurther, while the Corps could carry over appropriations until they accrue sufficient funds to fully fund a project upfront (because their construction appropriations historically have not expired), Corps officials we spoke to had concerns about this practice. They stated that carryover funds may be seen as available and reprogrammed to other civil works efforts (such as rebuilding infrastructure in the wake of a natural disaster) and that Congress and the Board both expect the Corps to obligate appropriated funds. In addition, some stakeholders had concerns that delaying the start of construction until full upfront funding was appropriated could result in further deterioration or increased maintenance costs for those facilities.\nFinally, according to some stakeholders we spoke to, the current incremental funding approach has allowed construction projects on multiple waterways to occur at once—a way of spreading benefits across the system and providing some indication to local users and beneficiaries that their local facility will be repaired or replaced.\nNonetheless, incremental funding for inland waterways projects—among other factors such as engineering design changes—has contributed to increased costs and schedule delays because it results in inefficient contracting practices. Corps reports and academic studies have found that incremental funding has resulted in inefficient contracting for construction projects, in part because funding is not guaranteed beyond the current year and contractors must stop working once funds are exhausted. Because the Corps receives annual appropriations for a portion of the total estimated cost of a project, the Corps awards contracts for separable elements that can be constructed and left for a period of time with minimal damage and safety risks if further funding is unavailable (such as a contract to build part of a lock wall). According to Corps district officials, this practice has resulted in the Corps entering into many more contracts for each project than they would if they had full upfront funding. For example, Corps officials told us that due to incremental funding, the Lower Monongahela Locks and Dams project is currently on its 14th construction contract even though it was originally planned to be completed using only two contracts. Corps officials told us that this contracting practice is inefficient and can lead to cost overruns due to, for example: contractor mobilization and demobilization, such as moving heavy equipment on and off the construction site, at the beginning and end of each contract; prolonged construction due to multiple contractors unable to work at the same worksite during the same time; extra administrative expenses associated with letting multiple increased cost of fuel and construction materials (e.g., steel and cement) from year to year; higher costs of buying construction materials in smaller quantities; inflation due to prolonged construction.\nFurther, according to Corps officials and stakeholders, additional challenges related to the timing and amount of funding allocated in a given fiscal year can exacerbate inefficiency related to incremental funding. For example, while under a continuing resolution, the Corps does not allocate funding to projects that were not included in the President’s budget, per OMB policy, which can delay funding for projects until Congress provides appropriations for the remainder of the fiscal year. Thus, in fiscal year 2018, funding was delayed for the three ongoing projects that were not included in the President’s budget request. Although project work can continue if the Corps has some carryover funds, Corps officials told us that, if they exhaust their funds, a continuing resolution could mean they won’t be able to exercise the next option on a construction contract. As a result, the contractor would have to stop work and shut down the construction site, and the Corps would need to close the existing contract, repackage the remaining work, and re- advertise the contract—all tasks that can increase the full cost of a project. Additionally, according to Corps officials, when projects receive smaller portions of funding than estimated for the upcoming fiscal year, the amount may not be enough to allow a contractor to continue on the most efficient construction schedule for that contract or contract option which can have the effect of increasing costs. Moreover, according to Corps district officials, the benefit-cost ratios for some ongoing projects have decreased in recent years in part because the projects have experienced increased costs (relative to expected benefits) due to a number of factors, including inefficient contracting stemming from incremental funding, which may affect the project’s priority status and inclusion in the President’s budget request.\nAll four of the Corps’ ongoing construction projects have experienced cost overruns and, as shown in figure 11, schedule delays. According to Corps officials, some of these cost increases and delays were due to inefficient contracting stemming from incremental funding. For example, Corps officials currently expect that the Kentucky Lock Addition project will require at least $229 million more (about 19 percent above the original estimated cost) as a direct result of inefficient contracting and be completed 17 years later than planned. Similarly, the Corps estimates that the Chickamauga Lock project will need at least $170 million more (about 24 percent above the original estimated cost) due to inefficient contracting and be completed at least 13 years later than planned. The amount of estimated cost overruns for just these two projects could potentially fund an entire additional project.", "In the absence of full funding, our funding simulation demonstrates that contracting efficiency for inland-waterways construction projects could be increased by funding fewer projects at a time. We developed a simulation for a set of four hypothetical new construction projects under different funding approaches to explore the effects of different funding patterns and timing on total project costs and timeframes. We assumed that all four hypothetical projects could be completed for $2 billion ($500 million each, with expected funding of $100 million per year) within 5 years of construction. For our simulation, we assumed that $200 million would be available to allocate each year across the four projects—an amount roughly similar to recent funding levels for actual inland waterways projects. We developed five funding approaches that varied in the pattern and timing of funding allocated toward each project. Given these patterns of funding, we also incorporated cost effects that we hypothesized would occur. For example, for each year that a project did not receive full funding—that is, the entire remaining costs of the project were not provided—we assumed the remaining funding required to complete the project would increase to account for contracting inefficiencies that were likely to occur due to incremental funding, such as increased contractor mobilization and demobilization. Also, for any year that a project received funding in smaller amounts than expected, we assumed that funding required to complete the project would rise due to exacerbated contract inefficiencies due to such factors as having to buy materials in smaller quantities or break work into smaller separable elements. In addition, we incorporated inflation into projects’ remaining costs when funding for those projects was delayed. See appendix III for more detailed information regarding our methodology for this simulation.\nWhile fully funding projects up front would help to avoid cost increases or delays due to inefficient contracting, we found that, even with incremental funding, varying the timing and amount of funding can reduce inefficiency (see fig. 12). For example, we found that compared to other approaches, an incremental funding approach that concentrates all available funding to one of the four projects at a time—as in Approach A, shown in figure 12— results in lower cost overruns and faster construction than an approach that funds more projects simultaneously with smaller amounts of funding, as in Approach B (see app. III for results for all five approaches). In addition, concentrating funding toward one project could lead to greater years of benefits—as measured by the Corps as the number of years a facility has been constructed and available for use by vessels. However, according to Corps officials and stakeholders we spoke to, there may be risks associated with concentrating funding on one project at a time due to concerns with delaying the start of other high priority projects. For example, during the time in which a project is waiting for funding, the infrastructure may experience further deterioration, and vessels using the facility may experience increased delays. Corps officials we spoke to about this simulation generally agreed that the Corps’ current funding approach most closely resembles Approach B, with most funding going to the Olmsted Locks and Dam project while the remaining three ongoing projects receive smaller amounts (see also fig. 6).\nOMB and GAO have advocated for full upfront funding of capital projects as a way to recognize full budgetary commitments, but, as discussed, fiscal pressures on both the Corps and Congress may make it difficult to request and appropriate full funding. OMB’s Capital Programming Guide states that full funding can help ensure that all costs and benefits are taken into account at the time decisions are made to provide resources, increase the opportunity to use more competitive contracts, and allow for more efficient work planning.\nFurther, we have previously reported that full funding is an important tool for maintaining government-wide fiscal control, because failure to recognize the full costs of proposed commitments during budget decisions could lead to distortions in the allocation of resources. We have also reported that incremental funding of capital projects can reduce available funding for future projects and erodes future program flexibility because funding is dedicated to projects begun in previous years. Though providing full upfront funding would likely reduce the overall costs of inland waterways construction over the long term, it may require a significant increase in annual appropriations in the short term, which Corps officials consider to be highly unlikely.\nBoth OMB and GAO have acknowledged the challenges associated with “spikes” in appropriations that would be required for full funding and have suggested that innovative funding mechanisms could be used to mitigate this challenge. In 2010, we recommended that the Corps work with Congress to develop a more stable project-funding approach for Civil Works projects that provides more efficient use of funds, but the Department of Defense only partially concurred with the recommendation, stating that it will support budget decisions made by the administration. However, without some change in the way inland-waterways construction projects are funded to either provide full funding or reduce the effects of incremental funding by concentrating on fewer projects at one time, current cost increases and schedule delays resulting from inefficient contracting are likely to continue. For example, according to the Corps’ 2016 capital investment strategy, under a scenario in which construction funding is limited only by available Trust Fund revenues, in the next 20 years the Corps could complete 16 of the 22 major rehabilitation and new construction projects identified as priority projects for approximately $7 billion; however, because these estimates do not account for cost overruns due to the current incremental funding approach, the Corps is unlikely to meet this goal.", "In addition to adjusting the timing and distribution of funding, according to some of the stakeholders we interviewed, increasing available funding for construction would provide more upfront funding to enable more efficient contracting. Stakeholders said that with additional funding, the Corps may be able to complete ongoing inland waterways projects more quickly and begin other construction projects. We asked stakeholders representing 55 national and regional entities and researchers about options to increase available funding for inland waterways construction that have been proposed by policymakers and in relevant literature including: altering the cost share between the Trust Fund and federal requiring other users and beneficiaries of the waterways to contribute to the Trust Fund, increasing or adding fees for commercial users, expanding opportunities for local sponsors to contribute to funding pursuing alternative financing arrangements.\nWhile each option has potential benefits, stakeholders we interviewed identified limitations or trade-offs that could affect the feasibility of each option.\nAltering the Trust Fund cost share. Altering the percentage of the Trust Fund cost share for construction projects could increase available funding to complete construction projects. For example, in 2014 the Trust Fund’s cost share for the Olmsted Locks and Dam project was reduced by statute from 50 to 25 percent for fiscal year 2014, and to 15 percent for subsequent fiscal years—thereby increasing the federal share to 85 percent—to speed the pace of other inland-waterways construction projects (by increasing the overall funding available for those projects) and to reduce the costs to commercial users. The Inland Waterways Users Board (Board), in its April 2018 annual letter to Congress, proposed making such a change for all future projects. Specifically, the Board proposed increasing the federal government’s share of construction costs from 50 percent to 75 percent. According to the Board and some stakeholders, this could increase the available funding for Corps construction projects on the inland waterways system. Because each Trust Fund dollar would be matched by three dollars from general revenues as opposed to one dollar under a 50/50 split, overall funding may be increased. The Board stated that this approach may also enable the Corps to start and complete projects more quickly. For example, as shown in figure 12, with more upfront funding available for each project, the Corps may be able to contract for projects more efficiently than if it received smaller amounts of funding each year. However, some stakeholders said additional appropriations for inland waterways construction from general revenues would be required to achieve the benefits of this option, an approach that could, in turn, reduce funding available for other congressional priorities or increase the federal deficit. Absent additional appropriations, however, the amount of funding for construction could be reduced. For example, if appropriations from general revenues were $100 million per year under both scenarios, total funding for inland waterways under a 75/25 split would be only about $133 million, instead of $200 million under the traditional 50/50 split. To provide the same $200 million for construction, but reduce the costs to commercial users under a 75/25 split, appropriations from general revenues would need to increase to $150 million.\nRequire other users and beneficiaries of the waterways to contribute to the Trust Fund. Some stakeholders we spoke to proposed requiring that other users of the waterways contribute to the Trust Fund. Recreational boaters, municipal water utilities, and hydropower utilities already pay fees associated with their use of inland waterways, but this revenue is not directed toward the Trust Fund, for example: recreational users, such as recreational boaters and fishermen, on all waterways pay fees of about $628 million annually on fishing equipment and taxes on fuel used in motorboats that are currently deposited into the U.S. Fish and Wildlife Sport Fish Restoration and Boating Trust Fund, which is used to sustain sport-fishing populations; municipal water utilities that have Corps’ water storage contracts on the inland waterways pay fees that are currently deposited into the general fund of the Treasury; and power generated by federally owned hydroelectric dams (including those owned by the Corps on the inland waterways) is sold at rates intended to cover the government’s costs of operating and maintaining the dams, among other things.\nOther infrastructure trust funds are supported in part through user fees paid by both commercial and non-commercial users. For example, excise taxes, primarily on motor fuels and commercial trucks and tires, are deposited into the Highway Trust Fund, which is used to provide grants to state highway or transportation agencies. Some stakeholders said that all users who benefit from the pools created by navigation dams should bear some portion of the costs of the infrastructure, and revenue collected from these users could potentially be redirected to the Trust Fund. However, some other stakeholders said that these users as well as U.S. taxpayers that do not use the waterways already contribute to inland waterways construction, operations, and maintenance costs through their federal tax contributions to general revenues. We have previously found that in theory, the extent to which a program is funded by user fees should generally be guided by who primarily benefits from the program; however, the extent to which a program benefits users or the general public is not usually clear cut. In addition, redirecting revenue from fees currently paid by other users of the waterways to inland waterways would reduce funding available for other congressional priorities, as these funds are currently being directed towards other uses.\nIncreasing or adding fees for commercial users. Past administrations as well as entities such as the Congressional Budget Office have proposed increasing revenue for inland waterways construction by increasing existing fees or imposing additional fees, such as lockage fees, for commercial users of the inland waterways—the only group that is currently paying the fuel tax—as they are the primary beneficiaries. For instance, in a legislative proposal accompanying the fiscal year 2019 President’s budget request, the current administration proposed increasing the number of waterways subject to the fuel tax, which could have the effect of increasing the amount some users pay or increasing the number of commercial users subject to the tax. However, some stakeholders pointed out that increasing or adding fees for these users would raise the costs of transportation on the waterways, which could lead shippers to switch to other modes of transportation (such as trucks and rail, which are less efficient) and ultimately reduce both waterways traffic and Trust Fund revenue. Specific proposals for increasing or adding to existing fees are described in more detail below.\nIndex fuel tax to inflation: Two stakeholders said that indexing the fuel tax to inflation could help the Trust Fund retain its purchasing capability over time. In fiscal year 1994, the fuel tax was set at $0.20 per gallon, and it was not raised again until 2015, when Congress increased the tax to $0.29 per gallon with the support of commercial users–close to the inflation adjusted-level of the 1994 rate. However, the rate was not set to automatically rise with future inflation, which reduces the purchasing power of the fuel tax over time. For example, according to our analysis of fuel tax revenue for 1994–2014, if the fuel tax had been indexed to inflation as of 1994, about $400 million in additional revenues would have been raised over the 20-year period between 1994 and 2014. If the additional $400 million were matched by general revenues dollar for dollar, a total of $800 million more would have been available to the Corps for construction projects.\nAnnual vessel fee: Citing the insufficiency of existing revenue to pay the users’ share of capital investment costs, the current administration has proposed a new annual per vessel fee for commercial users to help finance future construction projects and cover a portion of the cost of operating and maintaining them (operations and maintenance has historically been a federal responsibility). The current administration expects this fee would raise approximately $1.78 billion in new revenue from fiscal years 2019–2028 ($178 million annually) to supplement revenue from the existing fuel tax. In its annual letter to Congress, the Board said this proposal is similar to what the prior administration proposed and that Congress has repeatedly rejected because it would more than double the amount collected from commercial users of the inland waterways system each year, with associated consequences for shipping costs and traffic diverted to other modes.\nLockage fees: Various groups have proposed collecting lockage fees from commercial users to tie fees more closely to use of the infrastructure and increase available funding. For example, prior administrations’ budget proposals have recommended replacing or supplementing the fuel tax with lockage fees. According to the Transportation Research Board, lockage fees could increase available funding for construction, are moderately easy to administer, and could be implemented on a system-wide basis, with lock operators keeping track of lock use. However, some stakeholders stated that the relative unknowns of how a lockage fee would be implemented make it less appealing than the current, familiar fuel tax, which they are able to incorporate into their operating budgets. Additionally, some stakeholders told us adding lockage fees—just like increasing the fuel tax or adding other fees—would increase shipping costs, and could reduce traffic on the inland waterways. Further, some stakeholders raised concerns about the equity of lockage fees, as all users benefit from the system as a whole, but not all users frequently pass through locks. For example, as one stakeholder pointed out: the Mississippi River has zero locks and dams from St. Louis to New Orleans, so users that operate chiefly on that part of the system may not need to pay lockage fees. As such, lockage fees would affect some commercial users more than others: if the fuel tax were replaced with lockage fees, some users (those that do not routinely pass through locks, but benefit from the pools created) may ultimately pay much less than they currently do, while others (those operating on areas of the system with a high number of locks) would pay much more.\nExpanding the use of contributed funds. Expanding the Corps’ authority to allow local sponsors—generally state and local governments or interstate agencies—to contribute to the costs of project construction, as is the case for other types of water resource projects, could increase available funding. The Water Resources Reform and Development Act of 2014 established a pilot project that enabled the Corps to accept contributed funds from nonfederal interests to pay for the costs of operating inland waterways facilities but does not allow such contributions for maintenance or construction.\nSome stakeholders said expanding the current use of contributed funds for operations expenses by enabling local sponsors to contribute funds for construction could potentially benefit some communities and increase available funding. However, the costs for construction and maintenance of facilities on high-use waterways would likely be too high for local sponsors to offset. Moreover, we have reported that state and local governments face long-term fiscal pressures, which may limit their ability to contribute to costs for navigation locks in their jurisdictions.\nPursuing alternative-financing arrangements. The current administration and others have proposed alternative-financing options that could enable the Corps to leverage either private capital or other available funds in order to provide full upfront funding for inland waterways construction projects. Numerous proposals call for the Corps to leverage private capital, such as public-private partnerships or debt financing, to access full funding at the beginning of inland-waterways construction projects. The Water Resources Redevelopment Act of 2014 authorized the Corps to implement pilot programs to explore the use of debt financing, such as low interest loans provided under the Water Infrastructure Finance and Innovation Act of 2014, and public-private partnerships for civil works water resources projects. Similarly, the current administration’s 2018 Legislative Outline for Rebuilding Infrastructure in America proposes authorizing the Secretary of the Army to execute agreements with non-federal public or private entities for civil works water resources construction projects.\nWhile some stakeholders stated that alternative-financing arrangements could increase available funding for inland-waterways construction projects, they were unsure of whether these agreements would work in practice. According to some stakeholders, public-private partnerships and debt-financing would provide upfront funding with an expectation of either a profitable return to a private equity partner or repayment of debt; however, according to some stakeholders, there is limited interest in entering into these financing arrangements among private sector investors because there is no clear and viable revenue stream to provide such returns. For instance, some stakeholders told us that increasing fees for commercial users to provide a revenue stream could have the effect of reducing traffic on waterways, which would reduce the revenue potential of fees.\nAlternative-financing arrangements would also require congressional action to implement. Specifically, depending on the structure of these financing agreements, alternative financing would require legislative changes, which could include granting the Corps authority to: (1) enter into public-private partnerships, (2) use debt financing, (3) use contract authority to obligate funding beyond what is appropriated in a given year, or (4) collect and retain revenue such as lockage fees. While the Water Resources Reform and Development Act of 2014 authorized the pilot programs to explore the use of public private partnerships and debt financing, Corps officials told us that they cannot enter into agreements of this type without specific appropriations, which they have not yet received. Corps officials stated that they are currently developing a high level policy to provide general direction about the use of alternative financing but according to them, the lack of a clear revenue source may make it more difficult to execute alternative-financing strategies that include private partners for inland waterways infrastructure.\nIn contrast, the President recently proposed establishment of a Federal Capital Revolving Fund, which could enable federal agencies to access full upfront funding for certain construction projects without leveraging private capital. According to the proposal, the revolving fund would transfer funding to agencies to finance large-dollar real-property capital projects designated in appropriations acts if the project receives an appropriation for the first of a maximum of 15 required annual repayments. If those conditions are met, the revolving fund would transfer funds to agencies to cover the full cost to acquire the capital asset—in the case of inland waterways, the full cost to construct the project. Purchasing agencies would repay the fund using annual appropriations— for inland waterways, this approach likely would mean that repayments could be made using appropriations from either the Trust Fund or general revenues. While Corps inland-waterways construction projects would not be eligible for funding under this proposal, this type of approach to alternative financing could potentially be used to enable the Corps to contract for inland waterways construction more efficiently. However, only projects included in the President’s budget request would be eligible to receive this funding. At present, only one inland waterway project— Olmsted Locks and Dam—meets that requirement, and the Corps does not anticipate other authorized projects meeting the current benefit-cost ratio threshold for inclusion. Congressional action would be required to implement the proposed Federal Capital Revolving Fund, as well as authorize eligibility of inland-waterways construction projects, or a separate fund that would include Corps infrastructure projects.", "The inland waterways are a critical component of the nation’s freight transportation system, and the Corps must manage the system within the context of competing priorities and limited resources. To effectively manage those resources, the Corps must accurately identify, assess, and communicate its priorities for operations, maintenance, and construction funding. The Corps cannot quantify deferred maintenance for inland waterways because it lacks a definition and measure (or measures) of deferred maintenance that reflects priorities and how deferral will affect system reliability. As such, the Corps is unable to clearly communicate its funding needs related to operating and maintaining the inland waterways.\nAs with many federal programs, the Corps manages inland-waterways- construction and major-rehabilitation projects within some fundamental constraints, including available Trust Fund revenue, which is less than the amount that would be needed to fully fund the estimated costs of any of the four ongoing new construction projects. Accordingly, Congress and the President have instead incrementally funded multiple construction projects at a time. However, this incremental-funding approach can lead to construction delays and increasing costs. As a result, other priority projects cannot be started, construction backlogs grow, and delays and closures continue to affect vessels at locks and dams that continue to deteriorate while waiting for replacement or rehabilitation. The Corps’ capital investment strategy identifies an approach to funding priority projects given estimated Trust Fund revenue, but given the constrained fiscal environment and the unpredictable nature of the annual appropriations process, cost increases and schedule delays are likely to continue. Should Congress decide that additional funding is warranted to reduce this inefficiency, our report includes several options stakeholders have identified for doing so, such as increasing the federal share of construction costs for these projects. In the absence of increased funding, however, stakeholders we spoke to identified actions the Corps could take in coordination with Congress to increase the efficiency of contracting for inland waterways projects. The Corps could explore changes—such as sequencing project construction or legislative changes to enable more upfront funding prior to starting construction, among other options discussed in this report—that would enable the Corps to contract for inland waterways construction in a more efficient way. However, all of the options we discuss have important policy trade-offs and other challenges that the Corps and Congress would need to carefully consider.", "We are making the following two recommendations to the Corps: The Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers should define and measure deferred maintenance for inland waterways in a way that enables the Corps to clearly communicate estimated costs for maintenance needs. (Recommendation 1)\nThe Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers should pursue ways to increase the Corps’ ability to use available funding for inland waterways construction more efficiently and, should changes to the Corps’ authority be necessary, develop a legislative proposal to request such authority. (Recommendation 2)", "We provided a draft of this report to the Secretaries of Defense, Transportation, and Homeland Security and the Director of the Office of Management and Budget for review and comment. The Department of Defense provided written comments that are reprinted in appendix V; the department concurred with our recommendations. The Department of Homeland Security and Office of Management and Budget provided technical comments, which we incorporated as appropriate. The Department of Transportation had no comments on the draft report.\nWe are sending copies of this report to appropriate congressional committees; the Secretaries of Defense, Transportation, and Homeland Security; and the Director of the Office of Management and Budget. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-2834 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. GAO staff who made key contributions to this report are listed in appendix VI.", "1. Alabama-Coosa Rivers: From junction with the Tombigbee River at river mile (hereinafter referred to as RM) 0 to junction with Coosa River at RM 314. 2. Allegheny River: From confluence with the Monongahela River to form the Ohio River at RM 0 to the head of the existing project at East Brady, Pennsylvania, RM 72. 3. Apalachicola-Chattahoochee and Flint Rivers (ACF): Apalachicola River from mouth at Apalachicola Bay (intersection with the Gulf Intracoastal Waterway) RM 0 to junction with Chattahoochee and Flint Rivers at RM 107.8. Chattahoochee River from junction with Apalachicola and Flint Rivers at RM 0 to Columbus, Georgia at RM155 and Flint River, from junction with Apalachicola and Chattahoochee Rivers at RM 0 to Bainbridge, Georgia, at RM 28. 4. Arkansas River (McClellan-Kerr Arkansas River Navigation System): From junction with Mississippi River at RM 0 to Port of Catoosa, Oklahoma, at RM 448.2. 5. Atchafalaya River: From RM 0 at its intersection with the Gulf Intracoastal Waterway at Morgan City, Louisiana, upstream to junction with Red River at RM 116.8. 6. Atlantic Intracoastal Waterway: Two inland waterway routes approximately paralleling the Atlantic coast between Norfolk, Virginia, and Miami, Florida, for 1,192 miles via both the Albermarle and Chesapeake Canal and Great Dismal Swamp Canal routes. 7. Black Warrior-Tombigbee-Mobile Rivers: Black Warrior River System from RM 2.9, Mobile River (at Chickasaw Creek) to confluence with Tombigbee River at RM 45. Tombigbee River (to Demopolis at RM 215.4) to port of Birmingham, RM’s 374-411 and upstream to head of navigation on Mulberry Fork (RM 429.6), Locust Fork (RM 407.8), and Sipsey Fork (RM 430.4). 8. Columbia River (Columbia-Snake Rivers Inland Waterways): From the Dalles at RM 191.5 to Pasco, Washington (McNary Pool), at RM 330, Snake River from RM 0 at the mouth to RM 231.5 at Johnson Bar Landing, Idaho. 9. Cumberland River: Junction with Ohio River at RM 0 to head of navigation, upstream to Carthage, Tennessee, at RM 313.5. 10. Green and Barren Rivers: Green River from junction with the Ohio River at RM 0 to head of navigation at RM 149.1. 11. Gulf Intracoastal Waterway: From St. Mark’s River, Florida, to Brownsville, Texas, 1,134.5 miles. 12. Illinois Waterway (Calumet-Sag Channel): From the junction of the Illinois River with the Mississippi River RM 0 to Chicago Harbor at Lake Michigan, approximately RM 350. 13. Kanawha River: From junction with Ohio River at RM 0 to RM 90.6 at Deepwater, West Virginia. 14. Kaskaskia River: From junction with Mississippi River at RM 0 to RM 36.2 at Fayetteville, Illinois. 15. Kentucky River: From junction with Ohio River at RM 0 to confluence of Middle and North Forks at RM 258.6. 16. Lower Mississippi River: From Baton Rouge, Louisiana, RM 233.9 to Cairo, Illinois, RM 953.8. 17. Upper Mississippi River: From Cairo, Illinois, RM 953.8 to Minneapolis, Minnesota, RM 1,811.4 18. Missouri River: From junction with Mississippi River at RM 0 to Sioux City, Iowa, at RM 734.8. 19. Monongahela River: From junction with Allegheny River to form the Ohio River at RM 0 to junction of the Tygart and West Fork Rivers, Fairmont, West Virginia, at RM 128.7. 20. Ohio River: From junction with the Mississippi River at RM 0 to junction of the Allegheny and Monongahela Rivers at Pittsburgh, Pennsylvania, at RM 981. 21. Ouachita-Black Rivers: From the mouth of the Black River at its junction with the Red River at RM 0 to RM 351 at Camden, Arkansas. 22. Pearl River: From junction of West Pearl River with the Rigolets at RM 0 to Bogalusa, Louisiana, RM 58. 23. Red River: From RM 0 to the mouth of Cypress Bayou at RM 236. 24. Tennessee River: From junction with Ohio River at RM 0 to confluence with Holstein and French Rivers at RM 652. 25. White River: From RM 9.8 to RM 255 at Newport, Arkansas. 26. Willamette River: From RM 21 upstream of Portland, Oregon, to Harrisburg, Oregon, at RM 194. 27. Tennessee-Tombigbee Waterway: From its confluence with the Tennessee River to the Warrior River at Demopolis, Alabama.", "Appendix II: Inland Waterways Stakeholders GAO Interviewed Entity American Association of State Highway and Transportation Officials American Society of Civil Engineers Big River Coalition (New Orleans)\nGulf Intracoastal Canal Association (New Orleans)\nIllinois Corn Growers Association (Rock Island)\nNational Grain and Feed Association Pacific Northwest Waterways Association (Walla Walla)\nRiver Industry Action Committee (Rock Island)\nWarrior-Tombigbee Waterway Association (Mobile)\nWaterways Association of Pittsburgh (Pittsburgh)\nWaterways Council, Inc.\nArcher Daniels Midland Company (Rock Island)\nCampbell Transportation Company, Inc. (Pittsburgh)\nCanal Barge Company, Inc. (New Orleans)\nChannel Shipyard Companies (New Orleans)\nCooper Marine & Timberlands Corp (Mobile)\nJ. Craig Stepan, formerly of U.S. Steel (Mobile)\nParker Towing Company (Mobile)\nShaver Transportation (Walla Walla)\nTidewater Barge Lines (Walla Walla)\nTurn Services (New Orleans)\nArkansas Waterways Commission (Little Rock)\nLittle Rock Port Authority (Little Rock)\nThe Port of New Orleans (New Orleans)\nThe Port of Pittsburgh Commission (Pittsburgh)\nWashington Grain Commission (Walla Walla)\nAlabama Scenic River Trail (Mobile)\nAllegheny River Development Corporation (Pittsburgh)", "Entity Boat Owners Association of the United States (BoatUS)\nLittle Rock Yacht Club (Little Rock)\nUpper Monongahela River Association (Pittsburgh)\nAllegheny County Sanitary Authority (Pittsburgh)\nClarksville Light & Water Company (Little Rock)\nSouthwestern Power Resources Association (Little Rock)\nC. James Kruse, Texas A&M University Chris Hendrickson, Ph.D., Carnegie Mellon University Craig Philip, Ph.D., Vanderbilt University Dennis Lambert, COWI Marine North America Edward Dickey, Ph.D., Dawson & Associates Gary Loew, Dawson & Associates Jill Jamieson, Jones Lang LaSalle Leonard Shabman, Ph.D., Resources for the Future Paul Bingham, Economic Development Research Group, Inc.\nB. Starr McMullen, Ph.D., Oregon State University Stephen Fitzroy, Ph.D., Economic Development Research Group, Inc.", "To illustrate the effects associated with the current-funding approach, which was consistently discussed as a challenge in interviews with agency officials and stakeholders, we developed a funding simulation for hypothetical projects using assumptions that were anchored in findings from a 2008 Corps study on factors contributing to cost increases for inland-waterways construction projects. This funding simulation was intended to demonstrate the effects of the pattern and timing of funding on total project costs and construction schedules. To inform our assumptions, we analyzed the results of the Corps study, which examined three inland-waterways construction projects and identified the many factors that contributed to cost increases and schedule delays for each project. One of the factors the report identified that led to higher funding requirements (that is, cost overruns) was inefficient contracting driven by the amount and timing of funding provided to each project.\nWe developed five hypothetical scenarios that represent different funding approaches of a set of four identical construction projects (including a control scenario in which full upfront funding for all projects is available) based on the following information: each project requires $500 million in funding; each project takes 5 years to construct if it is fully funded with $500 absent full upfront funding, projects were structured to expect funding of $100 million per year for the project; once started, funding is not interrupted over the period of our total amount of available funding to fund these projects is $200 million per year; and; the number of years the projects provide benefits—that is, the number of years a facility has been constructed and is available for use by vessels—varies within the period of time selected for the simulation (2020 through 2034).\nTo illustrate the effects of the different funding approaches on total project costs and time frames, we made assumptions about the effect of various funding structures on total funding requirements. These assumptions were informed by our review of the findings of the Corps’ study related to the effects of incremental funding and discussions of these issues with Corps officials. These assumptions include:\nRemaining required project funding was assumed to increase by 2 percent each year due to inefficient contracting that results from less than full upfront funding—that is, if the full $500 million of estimated project funding is not provided in year 1.\nRemaining required project funding was also assumed to increase by 0.5 percent each year if projects received less funding than is expected in a given year (less than $100 million) due to exacerbated project-contracting inefficiencies.\nAn increase of 2 percent per year of remaining required project funding was applied if the project’s start was delayed beyond its intended starting year due to inflation.\nWe applied increases to funding requirements where appropriate under the five different funding approaches:\nApproach A: Fund One Project at a Time—Funding only one project at a time with all available funding ($200 million). Once the first project has been fully funded, all available funding is provided to the second project, and so on.\nApproach B: Fund Multiple Projects at Different Amounts—Funding one project at a time at the expected level—that is, at $100 million each year until it is finished—then dividing remaining available funding equally to the remaining three projects. After the first project is complete, the second project receives $100 million each year until completion and the remaining funding is divided evenly, and so on.\nApproach C: Fund Two Projects at a Time—Available funding is divided among two projects; two projects receive funding at the expected level ($100 million) and the start of funding for the remaining projects is delayed until the first 2 are completed.\nApproach D: Delay Construction to Fully Fund One Project at a Time—Full upfront funding for one project at a time: allocation of funds is delayed until the entire remaining funding required ($500 million plus increases due to inflation) is available.\nApproach E: Fund Multiple Projects Equally—Equally funding all four projects at once: since the overall budget is $200 million, each project is funded at $50 million per year.\nWe found that the timing and amount of incremental funding resulted in varying degrees of cost overruns (see fig. 13). In addition, the different funding approaches led to varying years of benefits—as measured by the Corps as the number of years a facility has been constructed and available for use by vessels—counted over a 15-year span of our simulation. This variation is shown in figure 13, but these projects would provide many years of benefits beyond this timeframe. For example, we found that—compared to other approaches—an incremental funding approach that concentrates all available funding to one of the four projects at a time, as in Approach A, below, can reduce inefficiency.\nTo validate our findings, we solicited feedback from Corps officials from the Pittsburgh District, Pennsylvania and Rock Island District, Illinois— based on their past and current experience with inland-waterways construction projects—from the Corps’ Cost Estimating Center of Expertise in Walla Walla, Washington; and representatives from the Waterways Council, Inc. to understand the perspectives of industry stakeholders. They all generally agreed that our assumptions, approaches, and results were reasonable.", "In this report, we (1) assess how the Corps allocates funds for operations and maintenance projects for the inland waterways system; (2) describe how the Corps prioritizes and funds construction projects, and assess the effect of the current-funding approach on projects’ costs and schedules; and (3) present stakeholder opinions on proposed options to alter the funding and management of inland waterways and any associated limitations or trade-offs. The scope of our review includes Corps activities related to managing commercial navigation—including operations, maintenance, and construction—on the 27 inland waterways subject to the inland waterways diesel fuel tax. The fuel-taxed inland waterways system is made up of the navigable waterways of the Mississippi River and its tributaries, the Ohio River basin, the Gulf and Atlantic Intracoastal Waterways, and the Columbia-Snake Rivers, among others (see app. I for a list of fuel-taxed inland waterways). Commercial navigation activities are those that facilitate the movement of traffic along the waterways for commercial purposes, such as the transportation of goods for sale. For contextual information on operations, maintenance, and construction spending, we analyzed Corps financial data on obligations for operations and maintenance for inland-waterways navigation projects for fiscal years 2006 through 2017 (the only years for which data were available) and allocations for construction and major rehabilitation of locks and dams for fiscal years 1997 through 2018 from the Corps of Engineers Financial Management System. To determine the reliability of this data for the purposes of this report, we reviewed the data to identify obvious errors and missing data and interviewed appropriate Corps officials about related internal controls and procedures and the limitations of the data. We found these data to be sufficiently reliable for the purpose of providing contextual information about funding for inland waterways operations and maintenance and construction over time.\nWith regard to all of our reporting objectives, we interviewed a range of Corps officials at the headquarters, division, and district levels, as well as national and regional stakeholders. We interviewed district officials from a non-generalizable sample of 6 of the 24 Corps districts that manage fuel-taxed waterways within their district boundaries; we selected the districts to include a variety of geographic regions, waterway characteristics, primary commodities shipped, and history of construction projects funded through the Trust Fund. Based on these criteria, we selected the Corps districts in Little Rock, Arkansas; Mobile, Alabama; New Orleans, Louisiana; Pittsburgh, Pennsylvania; Rock Island, Illinois; and Walla Walla, Washington. In addition, we interviewed officials from the Corps’ Northwestern Division office, which oversees the Walla Walla District, to understand the division-level role in coordinating districts’ inland-waterways infrastructure projects. We also conducted a total of 42 semi-structured interviews with waterways stakeholders representing 43 different regional and national entities including commercial, recreational, and other waterway users and 12 researchers (academics, economists, and engineers) for a total of 55 stakeholders. National stakeholders were identified by reviewing related literature and our prior reports and recommendations from the Transportation Research Board and the Waterways Council, Inc. (an industry organization representing a range of waterway users including shippers, ports, energy providers, waterways operators, and other advocacy groups). Regional stakeholders in the six selected districts were identified through recommendations from agencies and national waterways stakeholder organizations to represent a mix of commercial users (such as barge companies and shippers with commercial interests in the U.S. inland waterways system); recreational users; and industrial water users (such as municipal water authorities and hydropower entities). From those stakeholders identified, we selected entities to interview to achieve diversity of waterway users’ perspectives and conducted interviews with both individual entities as well as associations representing a variety of users and companies. In addition to waterways’ users, we also interviewed stakeholders who have conducted research regarding the management of and allocation of funding for fuel-taxed waterways, selected based on their contributions to the relevant literature on options for funding and managing inland waterways, including academics, economists, and engineers who were knowledgeable about a range of topics including commodities transportation (agricultural, energy products, and other materials), engineering, and water resources. See appendix II for a list of entities represented among the stakeholders we interviewed.\nWe asked agency officials and stakeholders open-ended questions and did not conduct a survey in which a response was provided irrespective of whether a certain issue was relevant to the interviewee, so not every topic was brought up or discussed by every interviewee. We analyzed the responses to identify common themes and the range of opinions that arose in interviews, which we have reported on. To identify these themes and summarize the opinions of agency officials and stakeholders, potential themes were identified via review of a sample of interviews. Two analysts then conducted a content analysis to identify the themes discussed in each interview and categorize the opinions of the interviewees. For each interview, one analyst independently reviewed the record of interview, and the other analyst later verified that coding. If there was disagreement, the analysis discussed their assessment and came to a final determination on the categorization. Because we selected a non- generalizable sample of stakeholders, their responses should not be used to make inferences about a population. To characterize stakeholders’ views throughout this report, we defined modifiers (e.g., “some”) to quantify stakeholders as follows: “some” stakeholders represents stakeholders in 3 to 14 of the 42 interviews “many” stakeholders represents stakeholders in 15 or more of the 42 interviews.\nTo examine how the Corps allocates funds for operations and maintenance projects for the inland waterways system, we examined the President’s budget request for civil works and appropriations for fiscal years 1997 through 2018 as well as the Corps’ budget request development guidance to understand how the Corps develops its budget request and prioritizes operations and maintenance projects. We conducted site visits to Mobile, Alabama; New Orleans, Louisiana; and Pittsburgh, Pennsylvania, to interview Corps officials and various regional stakeholder groups in person, and to observe the condition of waterway infrastructure. We also interviewed officials from the Office of the Assistant Secretary of the Army for Civil Works (ASA-CW), the Office of Management and Budget (OMB), the Department of Transportation’s Maritime Administration, and the Department of Homeland Security’s U.S. Coast Guard to understand how the Corps coordinates with other agencies to fulfill its inland-waterways navigation mission. To assess the Corps’ efforts related to deferred maintenance we interviewed Corps officials about how the Corps measures and defines deferred maintenance and compared these practices with federal internal-control standards related to control activities and quality information.\nTo describe how the Corps prioritizes and funds inland-waterways construction projects and to examine the effect of the current funding approach on projects’ costs and schedules, we reviewed relevant statutes, agency policies and guidance, the Corps’ capital-investment strategy documents prepared in conjunction with the Inland Waterways Users Board, as well as the Corps’ Civil Works budget justification documents in support of President’s budget requests, congressional appropriations, and accompanying conference reports. We also reviewed relevant Corps documents, such as reports on ongoing construction projects and studies on construction cost increases; prior GAO reports; OMB capital funding guidance; and other academic studies to gather information on capital project funding approaches, including for inland waterways projects. We analyzed data from the Corps of Engineers Financial Management System to identify sources of funding for inland- waterways construction projects from fiscal years 1996 through 2018. As discussed above, we found these data sufficiently reliable for the purposes of providing contextual information about the Corps’ funding sources. In addition to interviewing Corps officials and stakeholders, as described above, we also interviewed officials from the office of the ASA- CW and OMB for their views regarding the prioritization and funding processes for inland waterways-infrastructure projects, and the roles their organizations play in those processes. We compared the established method of funding inland-waterways construction projects with federal internal-control standards, OMB guidance, and prior GAO work related to funding capital projects.\nTo illustrate the effects of the current funding approach on costs and schedules for inland-waterways construction projects, we developed a simulation of the effects of various funding approaches on the total funding requirements for a set of hypothetical construction projects. The simulation incorporates assumptions regarding the amount of total funding a project would require (including any cost overruns) due to the pattern and timing of funding made available. Our assumptions were anchored in findings from a 2008 Corps study on factors contributing to cost increases for three inland-waterways construction projects, and Corps officials and other industry stakeholders generally agreed that our assumptions and results were reasonable. Additional information on our methodology for developing this simulation and the full results are included in appendix III.\nFinally, to identify proposed options to alter the funding and management of inland waterways, we conducted a literature search—including scholarly/peer-reviewed journals, government reports, congressional hearings’ transcripts, and associations’ and think tanks’ publications—to identify relevant studies and proposals about inland waterways’ financing in the United States, published between 2007 and 2017. Through our literature search, we reviewed the abstracts for 103 potentially relevant studies and identified 24 for further review. For each of these 24 studies, we reviewed the entire study and determined 13 studies were relevant. We then reviewed these 13 studies to identify the options most commonly discussed or proposed. For the purposes of this report, we have divided those options into broad categories: altering the cost sharing between the Trust Fund and federal requiring other users and beneficiaries of the waterways to contribute to the Trust Fund, increasing or adding fees for commercial users, expanding opportunities for local sponsors to contribute to funding pursuing alternative-financing arrangements.\nIn addition, we reviewed proposals by recent administrations, including the fiscal year 2018 President’s budget request, and interviewed Corps officials and other entities including the Transportation Research Board and district and agency stakeholders selected as described above to ensure we had identified the most relevant options. During interviews with stakeholders (as discussed above) we asked about their general views on the potential benefits limitations, and trade-offs of those options. See appendix II for a list of the stakeholders we interviewed.\nWe conducted this performance audit from June 2017 through November 2018 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.", "", "", "Andrew Von Ah, (202) 512-2834 or [email protected].", "In addition to the contact named above, the following individuals made important contributions to this report: Susan Zimmerman, Assistant Director; Katie Hamer, Analyst-In-Charge; Amy Abramowitz; Faisal Amin; Krister Friday; Carol Henn; Hannah Laufe; Sara Ann Moessbauer; Josh Ormond; Cheryl Peterson; Amy Rosewarne; Alexandra Rouse; Lisa Shibata; and Pamela Snedden." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_title", "", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "h0_full h1_full", "", "", "", "" ] }

{ "question": [ "How does the Corps allocate its appropriated funding?", "What information does the Corps lack for this method?", "What challenges did the Corps and ASA-CW officials identify?", "How does a lack of an accurate measure of deferred maintenance hinder the Corps?", "What was GAO asked to review?", "What does this report assess?", "What data did GAO collect for this report?" ], "summary": [ "The U.S. Army Corps of Engineers (Corps) allocates its appropriated funding for operations and maintenance projects for the inland waterways based on risk and economic benefits.", "However, the Corps does not know how much deferred maintenance exists for inland waterways because there is no agreed upon definition for deferred maintenance.", "Corps and ASA-CW officials identified several challenges related to developing a useful definition with which to measure deferred maintenance. For example, a single measure may not be useful to gauge the condition of the waterways because the effect of deferred maintenance projects on the reliability of the waterways will vary.", "However, without a measure or measures of deferred maintenance for inland waterways that (1) the Corps finds useful, (2) reflects its priorities, and (3) accurately conveys a consistent and well-defined measure of deferred maintenance, the Corps is limited in its ability to manage its maintenance efforts and accurately communicate its estimated maintenance costs to OMB and the Congress.", "GAO was asked to review options to change the management of inland waterways.", "Among other things, this report assesses how the Corps allocates funds for operations and maintenance for the inland waterways, describes how the Corps funds construction projects, and assesses the effect of the current funding approach on projects' costs and schedules.", "GAO reviewed Corps documents and data; interviewed officials from Corps headquarters, six districts, and representatives of regional and national stakeholder groups—including commercial and recreational interests as well as contributors to relevant literature—selected to achieve a variety of viewpoints; and developed a simulation of the effect of various funding approaches on the total funding requirements and timelines for a set of hypothetical construction projects." ], "parent_pair_index": [ -1, 0, 0, 2, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 1, 1, 1 ] }

{ "title": [ "", "Overview", "Developments in 2017", "Progress in the Fight against the Islamic State", "Confrontation over Kurdish Referendum and Disputed Territories", "Iran and Iraq's Popular Mobilization Forces", "U.S. Foreign Aid and Security Assistance", "Political and Economic Profile", "Identity, Governance, and Politics", "The Rise and Retreat of the Islamic State14", "The 2014 Election, the Abadi Government, and Reform Debates", "Dynamics in 2017 and Preparations for 2018 Elections", "Politics and Potential Coalitions", "The Kurdistan Region of Iraq", "Kurdish Politics", "Uncertainty and Confrontation in Iraq's Disputed Territories", "Energy Resources", "Fiscal Challenges and Economic Conditions", "IMF Stand-by Arrangement", "Fiscal Issues in the Kurdistan Region", "Humanitarian Conditions", "Conditions in the Kurdistan Region", "Conditions for Minority Groups", "After the Islamic State: Security and Stabilization", "Issues for the 115th Congress", "U.S. Strategy and Engagement", "Defeating the Islamic State and Defining Future Security Partnership", "Relations with the Kurdistan Region and other Subnational Entities", "Iran's Relationship with Iraq", "Military Operations", "U.S. Assistance and Related Legislation", "Train and Equip Efforts", "Lending Support for Iraq's Security Sector", "Stabilization Programs", "Governance and Fiscal Support", "Humanitarian Assistance", "De-mining and Unexploded Ordnance Removal", "Arms Sales and the Office of Security Cooperation", "Select Areas of U.S. Concern", "Governance and Corruption", "Human Rights", "Religious and Ethnic Minorities", "Child Soldiers", "Outlook" ], "paragraphs": [ "", "Iraqis have persevered through intermittent wars, internal conflicts, sanctions, displacements, unrest, and terrorism for decades. A 2003 U.S.-led invasion ousted the dictatorial government of Saddam Hussein and ended the decades-long rule of the Baath Party. This created an opportunity for Iraq to establish new democratic, federal political institutions and reconstitute its security forces, but it also ushered in a period of chaos, violence, and political transition from which the country is still emerging. Latent tensions among Iraqis that were suppressed and manipulated under the Baath regime became amplified in the wake of its collapse. Political parties, ethnic groups, and religious communities competed with rivals and amongst themselves for influence in the post-2003 order, amid sectarian violence, insurgency, and terrorism. Misrule, foreign interference, and corruption also took a heavy toll on Iraqi society during this period, and continue to undermine public trust and social cohesion.\nIn 2011, when the United States completed an agreed military withdrawal, Iraq's gains proved fragile. Security conditions deteriorated from 2012 through 2014, as the insurgent terrorists of the Islamic State organization (IS, aka ISIS/ISIL)—the successor to Al Qaeda-linked groups active during the post-2003 transition—drew strength from conflict in neighboring Syria and seized large areas of northern and western Iraq. Since 2014, war against the Islamic State has dominated events in Iraq, and many pressing social, economic, and governance challenges remain to be addressed. (See Table 1 below for basic data.)\nIraqis are now celebrating the considerable successes their security forces and foreign partners have achieved in the fight against the Islamic State (see Figure 1 ), while warily eyeing a potentially fraught political path ahead. National legislative and governorate elections are planned for May 2018. Iraqi Prime Minister Haider al Abadi appears well positioned to campaign for reelection, although rivals from other Shia political factions may contest his leadership. Such potential challengers include former prime minister Nouri al Maliki and some figures associated with Iran-backed militia forces that are part of the Popular Mobilization Forces (PMF) mobilized to fight the Islamic State. Some Iraqi parties and individuals oppose a continued U.S military presence in Iraq and may scrutinize U.S.-Iraqi security cooperation during the election period.\nThe Kurdistan Region of Iraq (KRI) maintains considerable administrative autonomy under Iraq's constitution, and held a controversial advisory referendum on independence from Iraq on September 25, 2017. From mid-2014 through October 2017, Kurdish forces controlled many areas that had been subject to territorial disputes with national authorities prior to the Islamic State's 2014 advance, including much of the oil-rich governorate of Kirkuk. However, in October 2017, Iraqi government forces moved to reassert security control in many of these areas, leading to some armed confrontations and casualties on both sides and setting back Kurdish aspirations for independence.\nAcross Iraq, including in the KRI, long-standing popular demands for improved service delivery, security, and effective, honest governance remain widespread. Stabilization and reconstruction needs in areas liberated from the Islamic State are extensive. Paramilitary forces mobilized to fight IS terrorists have grown stronger and more numerous since the Islamic State's rapid advance in 2014, but have yet to be fully integrated into national security institutions. Iraqis are grappling with these political and security issues in an environment shaped by ethnic, religious, regional, and tribal identities, partisan and ideological differences, personal rivalries, economic disparities, and natural resource imbalances. Iraq's neighbors and other international powers are actively pursuing their diplomatic, economic, and security interests in the country.\nIraq's strategic location, its potential, and its diverse population with ties to neighboring countries underlie its importance as an area of influence to U.S. policymakers. In general, U.S. engagement with Iraqis since 2011 has sought to reinforce Iraq's unifying tendencies and avoid divisive outcomes. At the same time, successive Administrations have sought to keep U.S. involvement and investment minimal relative to the 2003-2011 era, pursuing U.S. interests through partnership with various entities in Iraq and the development of those partners' capabilities—rather than through extensive deployment of U.S. military forces.\nThe Trump Administration has sustained a cooperative relationship with the Iraqi government and has requested funding to continue security training for Iraqi forces beyond the completion of major military operations against the Islamic State. With those operations coming to a conclusion, the mission and nature of the U.S. military presence in Iraq is expected to evolve. U.S. officials and military personnel have discussed general plans to remain in Iraq at the invitation of the Iraqi government in order to assist Iraqis in consolidating gains made to date and to train security forces. The 115 th Congress has appropriated funds for ongoing U.S. military operations, in addition to security assistance, humanitarian relief, and foreign aid for Iraq. Congress is considering appropriations and authorization bills for FY2018 that would largely continue U.S. policies and programs on current terms. The goals, scope, and terms of some assistance are subject to debate and may evolve in relation to conditions in Iraq.", "", "In July 2017, Prime Minister Haider al Abadi visited Mosul to mark the completion of major combat operations there against Islamic State forces, which had taken the city in June 2014. Iraqi forces launched operations to retake Mosul in October 2016 and seized the eastern half of the city in January 2017. They then began operations in the city's more densely populated western half in February. Fighting in west Mosul resulted in greater displacement, casualties, and destruction of buildings and infrastructure than in the east, with some estimates of the city's overall reconstruction needs exceeding $1 billion. Estimates suggest thousands of civilians were killed or wounded during the battle, which displaced more than 1 million people.\nThe defeat of IS forces in Mosul left the group with isolated areas of control in Tal Afar in Ninewa governorate, near Hawijah in Kirkuk and adjacent governorates, and in far western Anbar governorate (see Figure 2 , above). Iraqi forces have since retaken Tal Afar and Hawijah, and launched new Anbar operations in late October amid tensions elsewhere in the disputed territories between the Kurdistan Regional Government (KRG) and national authorities. Prime Minister Abadi visited the western border town of Al Qaim in November and raised the Iraqi flag, and in mid-November Iraqi officials announced they had retaken Rawa, the last large populated area held by IS fighters in Iraq. With IS control over distinct territories of Iraq now virtually ended, analysts expect IS leaders and fighters to shift toward insurgency tactics and avoid major confrontations in coming weeks and months. Experts warn that the group's resiliency and its ability to use such tactics effectively should not be underestimated.", "On June 7, 2017, Kurdistan Regional Government (KRG) President Masoud Barzani announced that the KRG would hold an official advisory referendum on independence from Iraq on September 25. Iraqi Prime Minister Abadi called the proposed referendum unconstitutional and requested that it be delayed or cancelled in favor of resolving KRG-Baghdad differences through dialogue. The United States government, other countries and international observers, and some of Iraq's neighbors adopted that same position. KRG President Barzani and other leading Kurds described the proposed referendum as an inherent right of the Kurdish people in pursuit of self-determination. Enthusiasm among some Kurds for the referendum reflected long-stated desires in an environment in which security and economic circumstances were more favorable than in the past because of post-2014 developments. However, KRG leaders said they intended to pursue separation negotiations with Baghdad after the referendum, raising the potential stakes of preexisting territorial and resource disputes and contributing to concern among Iraqi critics.\nIn spite of U.S. and Iraqi opposition, Kurdish leaders held the referendum on time and as planned. According to Kurdish authorities, more than 72% of eligible voters participated and, of those votes deemed valid, roughly 92% were \"Yes\" votes and about 7% were \"No\" votes. In the wake of the referendum, Prime Minister Abadi has reiterated the national government's view that the referendum was \"unconstitutional,\" and he and Iraq's national legislature and courts have called for its results to be \"cancelled.\" Iraqi authorities also moved to begin reasserting national government control over all border crossings and the airspace of the KRI. Kurdish officials decried the measures, describing them as collective punishment and an attempt to institute a blockade.\nThe September 25 referendum was held across the KRI and in other areas that were then under the control of Kurdish forces, including some areas subject to territorial disputes between the KRG and the national government, such as the multiethnic city of Kirkuk, adjacent oil-rich areas, and parts of Ninewa governorate populated by religious and ethnic minorities. Kurdish forces had secured many of these areas following the retreat of national government forces in the face of the Islamic State's rapid advance across northern Iraq in 2014. In October 2017, Prime Minister Abadi ordered Iraqi forces to return to the disputed territories that had been under the control of national forces prior to the Islamic State's advance, including Kirkuk. A handful of clashes resulted in some casualties on both sides, but Kurdish forces—to some extent divided among themselves over the wisdom of the referendum and relations with Baghdad—mostly withdrew without incident. The involvement of some Iran-backed Popular Mobilization Force militia units in Iraqi national forces' operations has fueled concerns about Iranian influence in Iraq, as have reports about attempts by Iranian officials to pressure Kurdish leaders over the disputed territories.\nChanges in territorial control in the disputed territories since October have upended the Kurds' financial and political prospects, and related disputes have fueled further division among Kurdish leaders and parties. Some oil fields and infrastructure that had been under Kurdish control has been retaken by national government forces, and Kurdish leaders have traded recriminations and accusations of malpractice and betrayal. KRG President Barzani—who, along with his Kurdistan Democratic Party faction, was considered the driving force behind the referendum—announced that he will not seek reelection and directed that the authority of his office be exercised by other KRG entities until elections are held. In late October, the Kurdistan National Assembly voted to delay elections that had been planned for November for at least eight months.\nU.S. officials continue to encourage Kurds and other Iraqis to engage on outstanding issues of dispute and to avoid unilateral military actions that could further destabilize the situation. U.S. assistance to the KRG since 2014 has been provided with the national government's consent, and the Trump Administration has not publicly signaled any planned changes in U.S. assistance programs for either the national government or the Kurdistan region.\nFor background, see \" The Kurdistan Region of Iraq \" and \" Uncertainty and Confrontation in Iraq's Disputed Territories \" below.", "Since its founding in 2014, Iraq's Popular Mobilization Commission (PMC) and its associated militias—the Popular Mobilization Forces (PMF)—have contributed to Iraq's fight against the Islamic State, even as some of its leaders and units have raised concerns among Iraqis and outsiders about the PMF's future. In early July 2017, the U.N. Secretary-General reported to the Security Council that \"no tangible progress\" had been made in the implementation of the PMF law that Iraqis adopted in late 2016 to provide for a permanent role for the PMF as an element of Iraq's national security sector. The law calls for the PMF to be placed under the command authority of the commander-in-chief and to be subject to military discipline and organization.\nSome PMF units have since been integrated, but many remain outside the law's directive structure, including some units associated with groups identified by the State Department's 2016 Country Reports on Terrorism as receiving Iranian support. The report mentions Asa'ib Ahl al Haq and the Badr forces in this regard and warns specifically that the permanent inclusion of the U.S.-designated foreign terrorist organization (FTO) Kata'ib Hezbollah militia in Iraq's legalized PMF \"could represent an obstacle that could undermine shared counterterrorism objectives.\"\nSome Iran-aligned PMF forces participated in Iraqi operations in disputed territories following the September 2017 Kurdish referendum, and certain PMF figures such as Badr Organization leader Hadi al Amiri and Asa'ib Ahl al Haq leader Qais Khazali may intend to participate as political candidates in future elections. On October 31, Prime Minister Abadi emphasized that that the PMF law precludes registered PMF members from formally participating in politics, adding, \"Anyone in the PMF should not exercise any political activity and if he wants to do so, he should leave the PMF.\" Observers continue to speculate about whether and how PMF figures may seek to leverage their profile and accomplishments for political gain in upcoming elections.\nFor background, see \" Iran's Relationship with Iraq \" below.", "Legislation under consideration in the first session of the 115 th Congress would provide for the continuation of U.S. military operations, foreign assistance, training, and lending support to Iraq on current terms ( H.R. 3354 , H.R. 3362 , and S. 1780 ). The conference report on the FY2018 National Defense Authorization Act (NDAA, H.R. 2810 ) would extend the authorization for the U.S. train and equip program in Iraq through December 2019 and would modify the mandate of the Office of Security Cooperation at the U.S. Embassy in Iraq (OSC-I) to widen the range of forces the office may engage to include all \"military and other security forces of or associated with the Government of Iraq.\" The legislation would authorize the appropriation of $1.3 billion in FY2018 defense funding for continued train and equip efforts in Iraq, and the conference report would require a comprehensive report on conditions in Iraq and U.S. strategy.\nIn July 2017, the Trump Administration notified Congress of its intent to obligate up to $250 million in FY2017 Foreign Military Financing (FMF) funding for Iraq in part to support the costs of continued loan-funded purchases of U.S. defense equipment and to fund Iraqi defense institution building efforts. The Administration has requested $1.269 billion in defense funding to train Iraqis for FY2018. The Administration also has requested $347.86 million for foreign aid to Iraq in FY2018; including $300 million for post-IS stabilization. Since 2014, the United States has contributed more than $1.7 billion to humanitarian relief efforts in Iraq and more than $265 million to the United Nations Funding Facility for Stabilization (FFS)—the main conduit for post-IS stabilization assistance in liberated areas. The cost of military operations against the Islamic State in Iraq and Syria as of June 30, 2017 was $14.3 billion, and, through FY2017, Congress had appropriated more than $3.6 billion for train and equip assistance in Iraq.", "Iraq is a parliamentary republic, governed pursuant to a constitution adopted in a November 2005 referendum. Executive authority is exercised by the prime minister, while an indirectly elected president and three vice presidents carry out ceremonial and representative functions. Legislation originates with the prime minister or presidency. National legislative elections for Iraq's Council of Representatives (COR) were held in December 2005, March 2010, and April 2014. The 328-seat legislature is directly elected by proportional representation in multi-seat districts, with eight seats reserved for minority communities. Legislators vote to confirm nominees for the prime ministership, cabinet, and presidency. Elections for the next Council of Representatives are planned for May 2018.\nIraq's constitution provides for a sharing of some powers between the national government and recognized subnational entities known as regions. The Kurdistan Region of Iraq (KRI) is the sole constitutionally recognized region at present, and is home to most of Iraq's ethnic Kurdish minority. Laws adopted since 2008 also have nominally provided for the decentralization of many administrative and judicial authorities to governorates that are not part of recognized regions.\nIraq's economy benefits from the country's considerable energy resources, its location at the center of the Middle East region, and its young, resilient population. Since the downfall of the Baathist regime and removal of international sanctions on Iraq, the country's GDP per capita has increased between six- and seven-fold. Nevertheless, during this period, conflict, instability, and corruption have taken a significant toll on Iraqis, and these factors continue to hinder otherwise promising development and investment trends. Because Iraq's government depends on oil proceeds for nearly 90% of its revenue, lower global oil prices and the fiscal demands of war with the Islamic State have greatly strained public finances since 2014. Iraq has sought and obtained international aid and lending to meet its fiscal needs, while also accumulating arrears.", "Iraq's society is diverse and includes a Shia Arab majority, large Sunni Arab and Kurdish communities, and several other ethnic and religious minority groups. Iraqis have struggled to achieve an inclusive political order since gaining independence in 1932. Different groups' attitudes toward the state have evolved over time, reflecting changes in power relationships, shifting security developments, and evolving priorities and identities. Today, rivalries between and within religious and ethnic communities, socioeconomic groups, geographic areas, and political movements abound.\nPolitical change and conflict have swept the country since 2003, fueling anxieties about the future and contributing to sectarian political behavior and, at times, violence. In post-2003 Iraq, different groups have sought guarantees of autonomy, protection, or material benefits from the state, with confrontations being particularly pronounced at times between Sunnis and Shia and between Kurds and non-Kurds. Rivals have alternately accused each other of seeking to divide the country with foreign support or warned that the concentration of power may invite a return to centralized tyranny.\nAn elaborate, informal system has developed since 2003 to ensure the representation in government of various groups and political trends, but this has made divisive, identity-based politics durable. Leadership of key ministries has been determined according to identity and political orientation, with nominal communal representation in official positions serving as a weak guarantee of actual communal policy influence or benefits from the state. Extensive negotiations following national elections in 2005, 2010, and 2014 resulted in prime ministers drawn from Iraq's Shia Arab majority. By agreement, Iraq's presidency has been held by a member of the Kurdish minority, the speaker of the Council of Representatives has been a Sunni, and three vice presidencies have been held by representatives of the Shia Arab, Sunni Arab, and Kurdish communities.\nTensions and violence since 2003 have generated some calls for a nonsectarian political order, particularly since the collapse brought on by the Islamic State's advance in 2014. Proponents of merit-based rather than identity-based cabinet selections continue to face opposition from parties concerned about being left without representation in government or otherwise excluded. National reconciliation and reform proposals have been advanced by different factions, but Iraqis have struggled to overcome the gravity of zero sum competition. Observers of Iraqi politics are now monitoring debates over 2018 electoral legislation and the makeup of electoral authorities for indications of whether established patterns may prevail or a new chapter may be set to begin.", "U.S. military forces completed their agreed withdrawal from Iraq in late 2011, after negotiations failed to produce a framework for authorizing a residual U.S. military presence. The Islamic State of Iraq (ISI, the precursor to the Islamic State organization—IS, aka ISIL/ISIS) and other insurgent groups had by then suffered considerable losses at the hands of U.S.-backed Iraqi forces. U.S. government assessments at the time judged that Iraqi forces were capable of independent internal security operations, but warned of some military capability gaps and the potential for a reversal in security gains. Prime Minister Nouri al Maliki, then in his second term in office, adopted a confrontational posture toward Sunni political rivals immediately following the completion of the U.S. withdrawal in December 2011, levelling terrorism and corruption allegations against prominent Sunni figures.\nThe remnants of the Islamic State of Iraq grew stronger throughout 2012 in an atmosphere of increasing political discontent among Iraq's Sunni Arabs and confrontation between them and the Maliki government. The prime minister's use of heavy-handed tactics against Sunni protestors contributed to a growing chasm of distrust, while in the background, long established patterns of mismanagement, graft, and exploitation of government institutions continued, undermining the improvement of government services and hollowing out security forces.\nCapitalizing on Sunni disaffection and drawing resources and recruits from the escalating civil conflict in neighboring Syria, the Islamic State of Iraq rebranded itself as the Islamic State of Iraq and Syria in April 2013 and stepped up its campaigns of violence in both countries. Governorate council elections were held amid escalating violence in mid-2013, as the U.N. Secretary-General reported \"rising inter-sectarian tensions\" were \"posing a major threat to stability and security.\" Attacks against civilians increased rapidly, placing growing pressure on Iraqi leaders.\nIn late 2013, Prime Minister Maliki visited Washington to request additional military and intelligence support and pledged to take some conciliatory steps toward Iraqi Sunnis and implement security sector reforms. As Iraqis reached agreement on an election law, U.S. Deputy Assistant Secretary of State for Iraq and Iran Brett McGurk warned in November 2013 testimony to Congress that the Islamic State was \"trying to establish camps and staging areas in Iraq's western border regions\" and that Iraq lacked the capabilities to effectively monitor and interdict IS activities. In January 2014, Islamic State forces swept into the Anbar governorate cities of Ramadi and Fallujah, remaining in the latter until their defeat there in mid-2016.", "National legislative elections were held on April 30, 2014, for 328 COR seats (expanded from 325). In provisional results announced in May 2014, Prime Minister Nouri al Maliki's State of Law coalition claimed the most seats, with coalitions associated with Shia cleric Muqtada al Sadr, other leading Sunni and Shia parties, and Kurdish parties also winning significant percentages of the seats. As the Islamic State seized Mosul and threatened Baghdad in June 2014, Shia Grand Ayatollah Ali al Sistani issued a fatwa calling for Iraqis to volunteer to defend the country, providing the basis for the creation of the Popular Mobilization Commission and its associated volunteer militia forces. U.S. and Iranian officials joined Sistani and other leading Iraqi Shia clerics in demanding the prompt formation of a government and helped convince Iraqi leaders to support the nomination of another State of Law coalition figure, the Dawa Party's Haider al Abadi, as an alternative candidate to Maliki (also of the Dawa Party). Some Iraqis criticize what they view as an overly conditional U.S. approach to Iraq during this period, especially perceived U.S. decisions to link offers of security support with calls for Prime Minister Maliki's replacement.\nAfter being confirmed in mid-August 2014, Prime Minister Abadi moved quickly to nominate an inclusive cabinet and formally requested international military intervention to help halt and reverse the Islamic State's advance. President Obama had directed the deployment of additional U.S. military personnel to Iraq in June for personnel protection purposes, and U.S. air strikes against the Islamic State in Iraq began on August 8, as IS forces threatened the KRG capital at Erbil and besieged and overran Yezidi communities at Sinjar in northwestern Iraq.\nIn late 2014 and early 2015, Prime Minister Abadi and other Iraqi leaders made progress on a number of reconciliation and security issues, but their achievements slowed in mid-2015 as blackouts fueled a wave of mass protests demanding improved electrical services and an end to corruption swept the capital and southern governorates. The prime minister, heeding a call from Grand Ayatollah Al Sistani, proposed a package of sweeping reforms in August 2015, ordering the elimination of several official posts, consolidation of ministries, reductions in spending and salaries, and inquiries into allegations of corruption. Prime Minister Abadi's proposal to eliminate Iraq's three vice presidencies generated controversy, since these positions were occupied by former prime ministers Nouri al Maliki and Ayad Allawi, along with former COR speaker Osama Nujaifi. Iraqi courts overturned the proposal, and the three figures remain in office.\nThe Obama Administration and the United Nations Secretary-General welcomed Abadi's 2015 moves, but the proposals and reform initiatives provoked backlash from vested political interests. Iraq's government was politically paralyzed from late 2015 through mid-2016 (see Timeline , below), as Abadi called for parties to put forward new cabinet nominees and non-affiliated reform activists demanded action in confrontational and disruptive mass protests. Alliances among Abadi's rivals, including former prime minister Maliki, failed to force Abadi and his parliamentary allies from power, but a wider, durable pro-reform coalition spanning identity-group boundaries failed to coalesce behind Abadi's most ambitious proposals.", "Events in Iraq continue to be dominated by the effects of the war with the Islamic State, with establishment politicians advocating for their communities and regions while seeking to burnish their credentials as nationalists who support intercommunal reconciliation. Prime Minister Abadi has branded himself as a reformer and the commander in chief of the largely successful campaign against the Islamic State, even as entrenched interests continue to resist his reform initiatives and powerful rivals subtly challenge his authority. The future of the Popular Mobilization Forces and the Kurdistan Region of Iraq are perhaps the most important and politically sensitive issues at present, but discussion of post-IS stabilization, aid for the internally displaced, unemployment, services and utilities, and corruption also are prominent. Iraq's COR voted in August 2017 to again delay governorate elections, originally scheduled for May 2017, to be held at the same time as the May 2018 national elections. Debate has now shifted to consideration of the 2018 national elections law, which may limit action on other priorities. Iraq's Council of Representatives also is debating an electoral law for governorate/provincial council elections, including proposals for a seat-allocation formula that some smaller Iraqi parties and political reform advocates oppose.\nFormer prime minister and current Vice President Maliki remains politically active, and he continues to associate himself closely with Iran-backed PMF units, criticize Kurdish leaders in the wake of the advisory referendum on independence, and express anti-U.S. sentiment. Prime Minister Abadi and Vice President Maliki are both Dawa Party members, but Abadi appears to have greater appeal among non-Shia Arab Iraqis. Many Sunni and Shia Arab politicians, along with some minority community leaders, have expressed general opposition to the Kurdish referendum and express shared preferences for dialogue and the preservation of Iraqi sovereignty and territorial integrity. Some Iraqi Sunni and Shia leaders have expressed their support for the preservation of the Kurdistan Regional Government, presumably as a potential check on national authority and as a precedent for other potential federal regions. (See Figure 3 below.)\nDuring the fight against the Islamic State, some PMF leaders have sought Prime Minister Abadi's permission to join the fight against the Islamic State in Syria and/or to participate more directly in raids against IS-held strongholds. Prime Minister Abadi's resistance to and deflection of these requests has been consistent with his oft-stated desire to see Iraq's traditional security forces lead disciplined anti-IS operations and his concerns about limiting human rights abuses and sectarian political behavior. A prominent PMF role in anti-IS operations also could bolster the popularity of certain PMF factions and contribute to the political appeal and influence of their leaders. Many leading figures in Iraq speak with respect and gratitude for PMF volunteers' contributions and sacrifices in the war against the Islamic State, reflecting the movement's generally positive image among Iraqis, amid concerns about some units' human rights violations and foreign ties.", "Iraqi political leaders and parties have begun consulting and repositioning in advance of the national elections. In July 2017, Ammar al Hakim, a prominent Shia Arab politician and cleric whose family had long led the Islamic Supreme Council of Iraq (ISCI), announced the establishment of a new political movement—known as the Hikmah (Wisdom) National Trend. In doing so, Hakim broke with other ISCI members over reported generational and personal differences. Also in July, some Sunni leaders announced plans to coordinate under a National Forces Alliance, but the election plans and preferences of leading Sunni parties remain in flux.\nSome analysts of Iraqi politics have examined the potential for cooperation in the run-up to 2018 elections between Hakim, Prime Minister Abadi, the Wataniya (National) Coalition of Vice President Ayad Allawi, and the movement of Shia cleric Muqtada al Sadr. Sadr has publicly supported anti-corruption and service improvement initiatives in keeping with his populist political strategy. He also continues to speak in favor of full state control of all armed forces in the country and has called for changes to electoral legislation and management that could undermine the influence of larger parties. Vice President and former prime minister Nouri al Maliki could lead a potential rival coalition, to include PMF-associated figures. The participation and orientation of Kurdish parties in the election may become more consequential, particularly if one or more of the large parties boycotts or aligns with an emergent coalition.", "Northern Iraq is home to an estimated population of 5.6 million Kurds, the fourth largest ethno-linguistic group in the Middle East whose nearly 30 million members span the borders of Iraq, Syria, Turkey, and Iran ( Figure 4 ). The settlement of World War I and subsequent Treaty of Sevres (1920) raised hopes of Kurdish independence, but under a later treaty (Treaty of Lausanne, 1923) Kurds were left with minority status in several countries. Kurds in Iraq fought as insurgents intermittently over decades to secure their communities and exercise self-determination, facing resistance from successive Iraqi governments and interference from Turkey and Iran. An autonomy arrangement between the Kurds and the Baathist government in the 1970s failed, and the 1980s were marked by the pressures of the Iran-Iraq war and Saddam Hussein's brutal campaign against Kurdish communities, which resulted in thousands of deaths and the displacement of hundreds of thousands of Iraqi Kurds.\nKurdish self-government developed after the 1991 Gulf War under the protection of the no-fly zone that the United States and United Kingdom imposed over parts of northern Iraq. In 1992, Iraqi Kurds established a joint administration between Iraqi Kurdistan's two main political movements—the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK)—in areas under their control. The Kurds then held elections for a parliament, which in turn called for \"the creation of a Federated State of Kurdistan in the liberated part of the country.\" A subsequent breakdown in KDP-PUK power-sharing arrangements led to discord and armed conflict between 1994 and 1998. Kurdish factions resumed cooperation in the run up to the 2003 U.S.-led invasion of Iraq, and the post-Saddam Transitional Administrative Law and 2005 Constitution formally recognized the authority of the Kurdistan Regional Government (KRG) in areas that were under Kurdish control as of March 19, 2003.\nKurdish leaders participated in the post-2003 Iraqi Governing Council, the Interim Iraqi Government, and the Transitional National Assembly, working to ensure that emerging constitutional arrangements would allow Kurds to retain autonomy and formally recognize Kurdish political and security institutions. Elections for the Kurdistan National Assembly (KNA) were held in January 2005, July 2009, and September 2013. The KNA approved a draft constitution for the KRI in 2009, but the draft has not been put forward for approval by popular referendum because of the objections of national authorities and political disputes among Kurdish parties.\nThe KNA indirectly selected KDP leader Masoud Barzani as KRG President in June 2005. He was directly elected in July 2009, and the KNA approved a law extending his term for two years in August 2013. Barzani refused Kurdish opposition demands that he step down following the expiration of his extended term, and the KNA did not meet from October 2015 until September 2017. Overdue parliamentary and presidential elections for the Kurdistan region were proposed for November 2017, but were delayed for eight months in the wake of the September 2017 referendum on independence and subsequent Kurdish losses in Iraq's disputed territories. Elections in the KRG could be further derailed if relationships between and within leading Kurdish political movements breaks down further or if developments in the confrontation with Baghdad create new obstacles.", "Kurdish political movements in Iraq have alternated between collaboration and competition, at times presenting a unified front in the face of outside pressure and at times partnering with non-Kurds and non-Iraqis in pursuit of discrete agendas. The KDP is led by members of the Barzani family and has historically drawn its support from Erbil and Dohuk governorates. KRG Prime Minister Nechirvan Barzani is the son of the late brother of KRG President Masoud Barzani. Masoud Barzani's son Masrour serves as Chancellor of the KRG National Security Council and director of the KRG intelligence services. The PUK has long been associated with the Talabani family and has historically drawn its support from Suleimaniyah governorate. The death of former Iraqi President and PUK founder Jalal Talabani has opened the question of leadership in the PUK, with Talabani's widow Hero Ibrahim Ahmed, sons, and nephews occupying important roles, and other PUK figures influencing the movement's direction.\nKDP-PUK rivalries over time have been based on personal leadership, control over resources and revenue, and whether or how the Kurds should accommodate non-Kurds in Baghdad. Over time, the two factions have developed and maintained party-aligned militia forces (the KDP's 80s force of ~60,000 and the PUK's 70s force of ~ 48,000), which supplement forces under the KRG's Ministry of Peshmerga (~42,000 personnel). The KDP and PUK also exercise influence over police and intelligence forces in their respective strongholds.\nThe Gorran (Change) movement emerged from the PUK in 2009 and has challenged both parties with its vocal anti-corruption and political reform advocacy. Gorran selected new leaders following the May 2017 death of its founder, Nawshirwan Mustafa. Gorran advocated for reopening the region's parliament prior to holding the advisory referendum on Kurdish independence. Also in 2017, former KRG Prime Minister Barham Salih left the PUK to form his own political movement, known as the Coalition for Democracy and Justice (CDJ). The CDJ has called for a transitional administration for the KRG amid escalating post-referendum tensions with Baghdad. In addition, smaller Kurdish Islamist movements hold seats in the KNA and in the national COR. In the 2013 KNA elections, the KDP won 38 seats, the Gorran Movement won 24 seats, the PUK won 18 seats, the Kurdistan Islamic Union won 10 seats, and the Kurdistan Islamic Group won 6 seats. The KNA reserves 11 seats for religious and ethnic minorities.\nSince 2013, the KDP's insistence on its priorities and an on-again-off-again PUK-Gorran alliance have complicated Kurdish efforts to speak with a single voice in negotiations with Baghdad on a range of outstanding issues. As noted above, the KNA did not meet from October 2015 to September 2017 because of interparty disputes over the expiration of President Barzani's extended term in office, alleged mismanagement of public finances, and differences over the proper approach to take toward relations with Baghdad. KRG-Baghdad relations benefitted from positive coordination on security operations against the Islamic State, especially in Mosul. Nevertheless, they have been strained and uncertain in the aftermath of the referendum and October 2017 clashes in disputed territories.", "Kurds and non-Kurds in Iraq have long disputed territory and resources located along a northwest-to-southeast zone that spans the country diagonally from the borders with Syria and Turkey to the border with Iran ( Figure 5 ). Areas south of this zone are predominantly populated by ethnic Arabs, and areas to the north are predominantly populated by ethnic Kurds, with populations intermixed in some areas, including populations of religious and ethnic minorities such as Christians and Turkmen. Prior to 2003, recurrent periods of insurgency by Kurds in northern Iraq resulted in inconclusive agreements on partial autonomy for Kurdish areas with no durable agreement over or demarcation of respective areas of administrative control. The pre-2003 Baathist government rearranged administrative boundaries and used violence to reengineer the population of some disputed territories, at great cost to Iraq's Kurds.\nToday, the city of Kirkuk and the wider, oil-rich Kirkuk Governorate are the most prominent and strategically significant of Iraq's 'disputed territories,' which also include large areas of Ninewa Governorate and areas in Erbil and Diyala Governorates. The history of struggle over these territories, the location in some disputed areas of oil and other natural resources, and the presence and demands of resident ethnic minorities such as Turkmen and religious minorities, including Shia Muslims, Yazidis, and Christians, have produced complex webs of competing claims. In many areas, these claims remain unresolved and volatile.\nUnder post-2003 Iraqi law, the de jure boundaries of the constitutionally recognized Kurdistan Region of Iraq (KRI) have not been finalized. As of June 2004, Article 53(A) of Iraq's Transitional Administrative Law (TAL) recognized the Kurdistan Regional Government (KRG) \"as the official government of the territories that were administered by that government on 19 March 2003 in the governorates of Dohuk, Arbil, Sulaimaniya, Kirkuk, Diyala and Neneveh.\" These territories were defined in part by the de facto \"forward line of control\" that Saddam Hussein's security forces had maintained along a northwest-southeast line across northern Iraq as of March 2003. This line, though not precisely defined in law, is often referred to as 'the Green Line.' Article 117 of the 2005 Iraqi constitution recognized \"the region of Kurdistan, along with its existing authorities, as a federal region.\" Article 143 preserved the TAL definition of the KRG.\nFrom the perspective of most Kurds, the interim de jure demarcation at the 2003 Green Line failed to properly return to Kurdish administrative control some territories that historically had been populated by Kurds, including areas south of the Green Line that were subject to the pre-2003 government's forced displacement campaigns and 'Arabization' policies. The de facto presence after 2003 of Kurdish forces in areas south of the Green Line became a source of friction among Iraqis, with some Iraqi Arabs and Turkmen questioning the legitimacy of the Kurdish presence and all sides fearing their counterparts might impose a unilateral solution.\nThe constitution defined a framework for the resolution of claims and questions regarding disputed territories, calling in Article 140 for \"normalization,\" a census, and a referendum in Kirkuk and other territories on or before December 31, 2007. This deadline was not met, subsequent attempts to implement Article 140 failed, and negotiations failed to identify a viable alternative. Kurdish leaders planned, but then deferred, a constitutional referendum in July 2009 that would have asserted that several disputed territories, including Kirkuk, were part of the Kurdistan region. The United Nations Assistance Mission in Iraq (UNAMI) made significant efforts to prepare for and advance dialogue on the disputed territories, but Iraqi discussions remained open-ended. U.S. and coalition military initiatives created de-confliction mechanisms to prevent security incidents in disputed areas but these were phased out with the U.S. withdrawal.\nIn 2013, Kurdish authorities announced plans to move forward with the construction of new oil pipeline infrastructure that would allow the KRG to export larger quantities of oil from some fields within the KRI and disputed territories without the use of Baghdad-controlled infrastructure. By January 2014, this infrastructure was complete, and Kurdish oil exports via pipeline to Turkey grew in volume. In response, authorities in Baghdad announced they would withhold funds allocated for the KRG in the national budget, precipitating a deepening standoff.\nThe rapid advance of the Islamic State's forces across northwest Iraq in early 2014 soon overshadowed this dispute. Iraqi security forces withdrew southward from many of the disputed territories, and Kurdish peshmerga forces advanced, citing the need to establish a defensive perimeter for the rest of the KRI. This dynamic significantly altered prevailing de facto patterns of territorial control, placing several long-disputed territories and oil-rich areas under Kurdish control. This shift had the effect of altering expectations among some Kurds and foreign expectations about how eventual negotiations between Baghdad and the KRG regarding a de jure settlement of claims might proceed.\nFrom 2014 through mid-2017, Kurdish and Iraqi officials continued to treat the final status of disputed territories as formally undecided, and most leaders expressed preferences for a negotiated settlement of territorial claims. Some Kurdish figures made statements implying that KRG forces would not relinquish areas gained after 2014, while some non-Kurdish Iraqis demanded that the national government take action to reverse post-2014 changes. The June 2017 announcement by Kurdish leaders of their decision to hold a referendum on independence including in disputed territories concentrated the attention of Iraqis and outsiders on related questions. Kurdish leaders explained their decision to pursue the referendum in part as a response to what they described as the failure to implement Article 140 and other elements of the constitution they view as granting the KRG authority it has been denied.\nU.S. and U.N. officials engaged with Kurdish officials to emphasize their opposition to the timing of the referendum and the idea of holding it in disputed territories, and ultimately called for the referendum to be cancelled. As noted above, the referendum was held on September 25, and, in its wake, Iraqi national government officials moved to reassert national government authority over the border crossings and air space of the KRI.\nIn October 2017, the Iraqi government moved to reassert security control in areas of the disputed territories that had been held by national forces prior to the Islamic State's advance. Rapid changes in territorial control followed, and important oil fields and infrastructure that had been under Kurdish control from 2014 through September 2017 have been retaken by national government forces. The area near the Syria-Iraq-Turkey tri-border at Faysh Khabour has emerged as an area of particular attention and concern, especially because Kurdish oil export pipeline infrastructure transits the area.\nU.S. officials continue to encourage Kurds and other Iraqis to engage on outstanding issues of dispute and to avoid unilateral military actions that could further destabilize the situation. U.S. official statements on the disputed territories and recent developments have emphasized that recent changes in territorial control do not alter the U.S. position on the underlying status of the disputed territories: namely, that they remain disputed as a de jure matter and that their status and security and administrative arrangements within them should be determined through consultation pursuant to the Iraqi constitution. Past U.N., Iraqi, and Kurdish efforts to document and investigate territorial claims provide a detailed factual basis for such consultation and dialogue.", "Iraq's ample reserves of oil and natural gas have produced significant wealth for the country but remain subject to ongoing political competition and dispute. According to the Oil and Gas Journal , Iraq has 143 billion barrels of proven oil reserves, the world's fifth-largest and 9% of overall global proved reserves. The uneven geographic distribution of Iraq's energy resources increases their political sensitivity. Proven oil reserves are concentrated largely (65% or more) in southern Iraq, particularly in the southernmost governorate of Basra, with other large fields located in northeastern Iraq near the disputed city of Kirkuk ( Figure 6 ). Since 2003, KRG-Baghdad oil disputes have remained closely tied to questions about the political future of KRG-administered areas and control of disputed territories, including oil-rich areas of Kirkuk province that were occupied by KRG forces since 2014 and that have now been largely retaken by national forces. Kurdish efforts to independently develop and export oil resources in areas under KRG control have been pursued in accordance with the KRG's reading of the Iraqi constitution, but have been rejected by successive administrations in Baghdad. Meanwhile, predominantly Arab-populated provinces in Iraq's oil-rich south have sought guarantees that the export of locally produced oil will result in dedicated local funding, and oil-poor areas elsewhere have sought assurances that their needs will be met by shared revenues.", "The fiscal crises that are straining the public finances of the national government and the KRG amplify the pressure on leaders working to address the country's security and political challenges. On a national basis, the combined effects of lower global oil prices, expansive public sector liabilities, and the costs of the military campaign against the Islamic State have created budget deficits—estimated at 12% of GDP in 2015 and 14% of GDP in 2016. The IMF estimates Iraq's 2017-2018 financing needs at 19% of GDP. Oil exports continue to provide nearly 90% of public sector revenue in Iraq, while non-oil sector growth has been hindered over time by insecurity, weak service delivery, and corruption. Iraq's oil production and exports increased in 2016, but fluctuations in oil prices undermined revenue gains, and Iraq has since agreed to manage its overall oil production in line with mutually agreed OPEC output limits. In July 2017, Iraq exported an average of 3.2 million barrels per day (mbd, excluding Kurdish exports) at an average price of $43.80 per barrel, below the amended July 2017 budget's assumed oil export price of $45.3 per barrel and 3.75 mbd export assumption. The IMF projects modest GDP growth over the next five years and expects growth to be stronger in the non-oil sector if Iraq's implementation of agreed measures continues as oil output and exports plateau.", "To date, the national government has financed budget gaps through a mix of spending cuts, other austerity measures, currency reserve drawdowns, accumulation of arrears, and domestic and international borrowing. In July 2016, the International Monetary Fund (IMF) approved a $5.34 billion Standby Arrangement for Iraq, following $1.24 billion in Rapid Financing Instrument assistance provided in 2015 to meet pressing government needs. The IMF arrangement reflects Iraqi commitments to maintain support for internally displaced persons and other public support recipients and includes policy commitments to further reduce public sector outlays, even after substantial salary cuts and price hikes drew protests from Iraqis in 2015. The IMF arrangement was intended in part to boost the confidence of donor governments and private lenders who had remained relatively reluctant to extend financing to Iraq on affordable terms. It has helped Iraq attract additional foreign financing as planned, supplemented by U.S. loan guarantees and technical assistance. In January 2017, Iraq offered a $1 billion, U.S.-guaranteed five-year sovereign bond and raised an additional $1 billion in a July 2017 independent bond offering.\nIn August 2017, the IMF described Iraqi performance under the arrangement as \"weak in some key areas\" but noted that \"understandings have been reached on sufficient corrective actions to keep the program on track\" and argued that \"resolute implementation of the authorities' program, together with strong international support, will be key.\" The COR adopted an amendment to the 2017 budget in July, lowering spending further and making other changes requested by the IMF. The most recent IMF review emphasized the need for further fiscal belt tightening, growth in non-oil revenues, reform of the electricity sector, and improvements in public sector financial management. According to the review, Iraqi authorities\nagreed that the oil price outlook left no other choice but to contain spending to maintain fiscal and external sustainability. The adjustment process will need to be designed and implemented in a way that considers the spending pressures flowing from the war against ISIS, the internally displaced population, the vast investment needs of the country, and the parliamentary elections in 2018.", "The Kurdistan Region of Iraq (KRI) has faced economic and fiscal pressure in recent years, in spite of its reputation as a relatively attractive market and destination for investment in Iraq. In early 2014, then-Prime Minister Maliki responded to the KRG's decision to produce and export ~500,000 barrels per day of oil without Baghdad's approval by withholding the Kurdistan Regional Government's (KRG) share of the Iraqi national budget. Officials from the KRG and national government reached revenue sharing and production agreements in 2015 and 2016, but disputes over exports, the September 2017 referendum, and security have stalled their implementation. Oil produced in areas under Kurdish control, including in disputed territories, transits pipelines northwestward through Turkey and eastward via truck to Iran. Iraqi government efforts to assert control over border crossing points between the Kurdistan region in the wake of the referendum directly affect the KRI's potential for economic independence, particularly in far northwestern Iraq, where important road and pipeline infrastructure crosses into Turkey.\nBudget withholdings by Baghdad since 2014 have contributed to a fiscal and economic crisis in the KRI. Public sector salaries essential to a majority of the working-age Kurdish population have been delayed for months at a time; the KRG has been unable to meet higher salary and supply costs associated with the war against the Islamic State. Billions in unpaid salaries and other public sector obligations have accrued as arrears. The fiscal crisis has contributed to intra-Kurdish political tensions, with factions splitting over the national parliament's adoption of the 2017 budget law. The confrontation between Baghdad and the KRG over disputed territories and border control in October and November 2017 has widened the gap between the parties on fiscal issues. Prime Minister Abadi has offered to pay the salaries of KRG public sector employees while questioning the validity of the civil service lists submitted by KRG authorities. As in the rest of Iraq, the presence of so-called \"ghost employees\" on KRG civil service lists has long been reported.\nU.S. assistance to the Kurds has helped bridge the region's fiscal gap, but prospects for further U.S. budget support may be shaped by the status of Baghdad-KRG consultations and confrontations. In July 2016, the United States and the KRG signed an agreement (with Baghdad's approval) governing the provision of more than $480 million in U.S. financial and material assistance specifically to support the peshmerga . A follow-on agreement for the renewal of the stipend arrangement has been delayed in light of Baghdad-KRG differences over the September 2017 referendum and the control of disputed territories.", "Since August 2014, the United Nations has designated the situation in Iraq as a Level Three emergency, its designation for \"the most severe, large-scale humanitarian crises.\" Conflict and terrorist violence in Iraq have created long-running displacement crises, with the International Organization for Migration (IOM) estimating that 11 million Iraqis were in need of some form of humanitarian assistance as of October 2017. More than 5.4 million Iraqis have been displaced since 2014, and 2.1 million have returned to their home districts. Displacement in Iraq was concentrated in northern areas for most of 2017, amid Iraqi and coalition military operations against the Islamic State in and around the city of Mosul and elsewhere in Ninewa, Salah al-Din, and Kirkuk Governorates. Of the more than 1 million people estimated to have been displaced after the start of operations in Mosul in October 2016, approximately 72% remained displaced in mid-October 2017.\nDuring his March 2017 visit to Washington, DC, Iraqi Prime Minister Haider al Abadi reviewed progress in Iraq's campaign against the Islamic State and appealed for U.S. and international aid to help meet Iraq's short term humanitarian needs and longer term stabilization and reconstruction costs. The multilateral 2017 Humanitarian Response Plan appeal for Iraq sought $984.6 million, of which $717 million or 72.8% had been received as of November 16, 2017. According to the United Nations Office for the Coordination of Humanitarian Affairs (UNOCHA), the \"full cost of the aggregate humanitarian needs of 11 million Iraqis is estimated at well over U.S. $3 billion. \"\nIraqi authorities and international organizations are working to assist civilians across the country, including non-Iraqi refugees and the families and communities that host and have hosted IDPs and refugees during years of conflict. This includes more than 244,000 registered Syrian refugees in Iraq, more than 95% of whom are located in the KRI. The appeal for the Iraq component of the 2017-2018 Regional Refugee and Resilience Plan (3RP) in response to the Syria crisis requested $228.1 million, of which $122.3 million (53.6%) had been received as of November 16, 2017.\nInterrelated security, political, economic, social, and health challenges complicate assistance efforts and the viability of civilians' attempts to return home. In northern Iraq, several persistent obstacles to the return and reintegration of Iraqi IDPs include ongoing conflict, a lack of security and services in cleared areas, endemic levels of unexploded ordnance, fear of reprisal, and destruction of private property and public infrastructure. Among returning individuals and their neighbors, localized tensions may flare regarding property disputes and damage, politics, economic opportunities, and accountability for alleged crimes. National politics also may intrude, with some local communities finding themselves on the front lines of broader national and international disputes over territory, resources, and security.\nFamilies of confirmed or suspected Islamic State members also face unique challenges, as Iraqi authorities seek to isolate potential security threats and family members face scrutiny, hostility, extrajudicial violence, and/or expulsion from their homes. Human rights organizations have expressed concern about the isolation of confirmed or suspected IS family members in \"rehabilitation camps,\" and United Nations officials have warned that individuals indirectly associated or accused of affiliation with the Islamic State may be targeted in revenge attacks.", "According to the IOM, as of October 31, 2017, more than 925,000 IDPs were present in Dohuk, Erbil, and Suleimaniyah Governorates, the principal territories of the KRI. This includes more than 184,000 persons displaced after disputed territories changed hands between KRG and national forces in October 2017. More than 263,000 additional IDPs are present in Kirkuk Governorate, which is jointly administered by Kurdish and national forces. KRG officials estimate that the annual cost of hosting IDPs and refugees is approximately $1.4 billion per year, inclusive of costs to KRG infrastructure. IOM reporting in 2017 has suggested that IDPs present in the KRI are generally positive about security and social conditions but face economic strains, limited services, unemployment, and language barriers in some areas. The United States provides humanitarian assistance for programs in the KRI, with approximately $175 million in FY2016 funding having been directed for KRI-based humanitarian responses and comparable FY2017 funding planned.", "Members of religious and ethnic minority groups, including various Iraqi Christian communities and Yezidis, face added difficulties because their communities have been violently targeted by the Islamic State since 2014 and because they lack the resources and capacity for protection that have allowed some other groups to return home. In March 2017, the IOM reported that \"while Arab Sunni and Arab Shia Muslims, Kurdish Sunni and Turkmen Sunni Muslims have significantly returned home, Shabak Shia Muslims, Kurdish Yazidis, Chaldean Christians and other minorities remain displaced across Iraq.\"\nMinorities who previously had fled from violence elsewhere in the country to northern Iraq, including to Ninewa Governorate and the Ninewa Plain region, in some cases have suffered multiple displacements as a result of the Islamic State conflict. While Iraq's national leaders have insisted that security forces prioritize civilian protection and adopt a non-sectarian approach, reports suggest that some civilians, including some minority group members, have suffered at times from instances of sectarian intimidation and/or violence at the hands of local or extra-local forces, including militias. The concentration of many minority communities in areas subject to territorial and security disputes adds to their vulnerability to violence and political intimidation. The relative movements of national and KRG forces in disputed territories since October 2017 have heightened the concerns of some communities, and renewed clashes between national and KRG forces could lead to deteriorating security for minority communities in some areas.", "With major combat operations against the Islamic State reaching their conclusion in Iraq, officials and observers are directing greater attention toward questions of security and stability in areas retaken from the group. Concerns for the immediate future focus on defending against an expected terrorism and low level insurgent campaign by the Islamic State's surviving supporters to demonstrate their persistence. In the context of these concerns, Iraqi officials and foreign donors are supporting a range of stabilization programs designed to help communities reestablish damaged infrastructure, protect public health, provide economic opportunities, and overcome disputes that emerged or were exacerbated by the rise of the Islamic State. More broadly, the State Department continues to warn of significant terrorism and crime risks throughout Iraq and identifies Iran-backed militias as a threat to U.S. personnel and interests.\nFighting has damaged formerly IS-held towns and cities, and in some cases, such as Ramadi and Mosul, large areas of key population centers have been destroyed and rendered temporarily uninhabitable. Retreating IS fighters have left behind booby-trapped houses and neighborhoods, mined essential farmland and roads with IEDs, and exploited ties with locals established during their occupation to carry out retaliatory post-withdrawal terrorist attacks. Unexploded ordnance, corpses, and disrupted water and power infrastructure continue to delay the prompt return of displaced civilians. Destruction, damaged infrastructure, and explosive remnants of war are expected to impose costs on Iraqi communities for years to come.\nIn spite of these challenges, some polling suggests that Iraqis broadly feel the security situation has improved since early 2016, although terrorist attacks in Baghdad and other cities have resulted in criticism of the Iraqi government's performance and led to leadership reorganizations. The intense focus of regular security forces on operations against the Islamic State reportedly has created space for militia groups and criminal organizations to assert themselves and disrupt security in areas far from the front lines, especially in far southern Iraq near Basra. National elections planned for early 2018 are creating an environment in which security incidents and trends may take on added political significance, as leaders compete for the confidence and support of the Iraqi public.\nIn areas of Anbar, Salah al-Din, and Ninewa governorates where the Islamic State has receded, Iraqis are working to overcome resettlement, reconstruction, service delivery, governance, and security force integration challenges. In many instances this involves simultaneously working to combat IS re-infiltration, repair damaged infrastructure, administer an overburdened criminal justice system, and root out corruption. Reports from different communities suggest that recovery is underway, but progress is uneven and the concerns of some local groups are not being addressed by local and national authorities.\nIraqi officials have emphasized the importance of securing reclaimed communities and delivering immediate assistance to restore essential services and provide employment. The availability of water and electricity services and the quality of road, health, and education infrastructure was uneven in many affected areas prior to the Islamic State's advance, and the effects of conflict have raised the costs and potential importance of needed improvements.\nComplex local reconciliation efforts also may be required in areas where the rate of return lags for political or social reasons. Struggles to overcome divisive suspicions and build trust among local populations and national groups may prove more lasting and challenging than the physical battle against the Islamic State's forces, requiring sustained commitment from Iraqis and their leaders at all levels and presenting fewer obvious opportunities for direct and effective foreign involvement.", "", "Iraq's strategic location, its potential, and its diverse population's ties to neighboring countries underlie its enduring importance to U.S. national security policymakers. In general, U.S. engagement with Iraqis since 2011 has sought to reinforce Iraqi unity and avoid fragmentation. At the same time, successive Administrations have sought to keep direct U.S. military involvement and investment minimal relative to the 2003-2011 era, pursuing U.S. interests primarily through partnership with various entities in Iraq and the development of those partners' capabilities.\nResults have been mixed. The collapse of portions of the U.S.-trained and equipped Iraqi army in the face of the Islamic State's assault in 2014 coincided with the paralysis of the country's post-2003 identity-based political order and led to the need for renewed U.S. military intervention to support beleaguered government forces. Since 2014, the United States has increased its direct involvement in Iraq in response to the Islamic State's resurgence but successive Administrations have maintained a modest military presence and favored working by, with, and through Iraq's national government and other partners. Some sub-state groups such as the Kurdish peshmerga and Sunni militia have proven to be valuable U.S. partners in the fight against the Islamic State. Nevertheless, U.S. preferences for limited direct involvement and assistance to partners arguably has created incentives and opportunities for sub-state actors, including Iran-backed Shia militia groups, to become more powerful than they otherwise might have.\nOver time, some Iraqis have criticized some U.S. legislative proposals and executive branch initiatives that they view as undermining Iraq's sovereignty by setting conditions on assistance or as weakening Iraq's national unity by strengthening sub-state groups. Some anti-U.S. Shia figures accuse the United States of having supported the rise and resurgence of the Islamic State as an excuse to re-intervene and weaken Iraq's ties to neighboring Iran. Other Iraqis oppose U.S. support to Kurdish forces and the KRG and U.S. support for Iraqi government decentralization initiatives based on their concern for preserving Iraq's territorial integrity and the strength of its national government. These various views are rooted in competing Iraqi visions for their government and for Iraq's relations with its neighbors and other foreign governments.\nThe Trump Administration, like its predecessors, has articulated a vision for U.S. engagement in which U.S. assistance supports the initiatives of the national government in a politically, economically, and territorially integrated Iraq. Legislation before 115 th Congress reflects the Administration's overarching commitment to work with and through Iraq's national government, while seeking to ensure or promote the protection and provision of aid to some specific sub-state groups, including Kurds, Sunni Arabs, and religious and ethnic minorities. Congress is engaged in oversight of U.S. programs and is directing the executive branch to provide new reporting on its plans and intentions in Iraq.\nU.S. grant assistance to Iraq has increased in conjunction with the Islamic State crisis and Iraq's fiscal crises since 2014, but assumptions about the longer term structure of U.S. assistance to Iraq do not appear to have changed. The Trump Administration's FY2018 budget requests for Iraq continue an established pattern of proposing a mix of loan and grant assistance, in addition to U.S. military operations and training funding. This approach reflects legislative-executive consensus that since Iraq is a major oil exporter, it should be relatively financially self-sufficient over the long term, limiting the need for U.S. grant assistance and making the use of loans and sales-based security cooperation more appropriate.", "U.S. military operations against Islamic State targets in Iraq continue at the request of and with the permission of the Iraqi government. As remaining IS strongholds are retaken, policymakers are shifting toward consideration of a redefined U.S.-Iraqi security partnership that allows for U.S. counterterrorism assistance and provides for training and advice to consolidate and extend improvements in the management and performance of Iraqi forces. Secretary of Defense Mattis reportedly has discussed terms for a continued U.S. training presence with Iraqi counterparts during visits in 2017. In July, Vice Chairman of the Joint Chiefs of Staff General Paul Selva said in congressional testimony that \"if the Iraqis will agree, we will likely need to do continued advising and assisting and training of Iraqi security forces.\"\nThe Trump Administration considers current U.S. military operations in Iraq to be authorized by the 2001 Authorization for Use of Military Force and the 2002 Authorization for Use of Military Force in Iraq. It is unclear whether the Trump Administration envisions a partnership with Iraq that would allow U.S. forces to conduct their own counterterrorism or limited military strike missions inside Iraq after the defeat of the Islamic State's remaining force concentrations. As noted above, the U.S. military presence in Iraq is governed by an exchange of diplomatic notes that reference the security provisions of the 2008 bilateral Strategic Framework Agreement. This arrangement has not required approval of a separate security agreement by Iraq's Council of Representatives.\nAs Iraqis debate issues in the run-up to planned 2018 elections, candidates seeking to strengthen their nationalist credentials or undermine rivals may grow more critical of the presence of foreign military forces, including U.S. forces. Some Iraqis, including Shia militia groups with ties to Iran, remain highly critical of the U.S. presence in Iraq and periodically threaten to attack U.S. military and diplomatic personnel.", "The United States protected Kurdish-populated areas of northern Iraq as they developed autonomous political institutions in the 1990s, with U.S. ground forces temporarily crossing the Turkish border to deter the Iraqi military and provide relief followed by U.S. and coalition air forces imposing a no-fly zone north of the 36 th parallel (Operations Provide Comfort I and II and Northern Watch). From 2003 to 2011, U.S. diplomats and military personnel supported the emergence of the new political order that formalized recognition of the Kurdistan Region in Iraq's constitution and sought to defuse emergent tensions between Kurds and other Iraqis over security, territory, resources, and authority.\nSince 2014, the KRG, Kurdish security forces, and other subnational entities such as Sunni tribal militia have benefitted from U.S. economic and security assistance with Iraqi government approval and in line with congressional directives. As the KRG prepared for the September 25 advisory referendum on independence, latent Iraqi sensitivities about the KRG's foreign ties and activities became more pronounced. In parallel, U.S. opposition to the referendum and U.S. endorsement of the national government's security control in some disputed areas also appears to have revived Kurdish concerns about the durability of U.S. commitments to Kurdish security and U.S. security ties to Iraq.\nIraqi officials have not yet publicly expressed concern about U.S. security assistance to Kurdish peshmerga forces, but may do so if relations between the KRG and the national government deteriorate further. Under such circumstances, the government of Iraq might seek to place limitations on the delivery of U.S. assistance or otherwise seek to place conditions on the continued presence and operations of U.S. military or diplomatic personnel in the country. Other subnational entities (such as religious minority groups) also may continue to seek congressional support for the inclusion of legislative provisions directing the provision of assistance to them and/or the inclusion of additional conditions and reporting requirements on assistance provided to the national government of Iraq.\nTo date, the United States has emphasized the importance of providing support to inclusive security forces under central government command, maintained support for forces affiliated with the KRG on these terms, and sought to preserve Iraq's political and territorial unity pursuant to its constitution. The Trump Administration has given no public indication that this position could change. Appropriations legislation for FY2017 ( P.L. 115-31 ) includes provisions encouraging and directing the use of security and foreign assistance funding in the KRI and among minority populations in Iraq (see below). The executive branch has obtained commitments from Iraq's government regarding sharing of the proceeds of U.S.-guaranteed loan financing among all Iraqis, including citizens in the KRI.\nIn 2016, Congress also conditionally authorized the potential provision of U.S. security assistance directly to sub-state forces in Iraq \"for the purpose of supporting international coalition efforts against ISIL\" if the president finds and reports to Congress that the Iraqi government \"has failed to take substantial action to increase political inclusiveness, address the grievances of ethnic and sectarian minorities, and enhance minority integration in the political and military structures in Iraq.\" The Obama Administration submitted a related required report to Congress in December 2016 stating that the Iraqi government had taken meaningful steps toward integrating minorities into military and political structures and was governing more inclusively.", "Iran's security interests continue to dictate a close interest in Iraq's regional orientation and foreign policies, and Iran's current leadership actively seeks to shape developments in Iraq for ideological and strategic reasons. Close cultural and religious ties have linked communities in what is now Iran with predominantly Shia areas of what is now southern Iraq for centuries. Southern Iraq is home to several historical sites and shrines of importance to Shia Muslims, and transnationally prominent Shia clerics are based in Najaf, a major Shia theological center. Iraq's Shia Arab majority shares religious ties with Iran's majority Shia population, but believers in the two countries differ in their associations with individual religious leaders and over the role of religious leaders in governing. Some Iraqi Shia embrace the Islamic Republic of Iran's velayat-e-faqih (rule of the jurisprudent) theory of religious governance, even though most prominent senior Iraq-based Shia clerics and their followers do not support the Iranian model. Iranian relations with parties and leaders in the Kurdistan Region of Iraq have played a role in Iran's competition for regional influence with Turkey and in its management of its own Kurdish minority population.\nState-to-state confrontation characterized Iraq-Iran ties for much of the last 40 years, and the two countries fought a destructive, nearly decade-long war during the 1980s. Patronage relationships between the Islamic Republic of Iran and several Iraqi Shia parties and leaders date to the Saddam Hussein era, when Iran hosted and supported several Iraqi Shia oppositionists. Since Saddam's ouster in 2003, Iran's influence in Iraq has grown through new state-to-state ties and through new and legacy partnerships with select Iraqi politicians and militia groups, not all of whom are Shia. Iran has supported armed groups in post-Saddam Iraq, including some groups that attacked and killed U.S. personnel during the 2003-2011 U.S. military presence and that U.S. officials describe as continuing threats to U.S. personnel and interests. Since 2011, new energy production and commercial links have helped to bind the two countries, and Iran has used Iraqi fighters and territory to bolster its own support for the Asad government in Syria.\nIranian leaders responded quickly to the Islamic State's summer 2014 offensive, sending weapons and advisors to Iraq while post-election leadership negotiations among Iraqis were still ongoing. Senior Iraqi officials, including Prime Minister Abadi, praise Iran for supporting Baghdad in its war against the Islamic State since 2014, even as some also express concern about Iranian influence and support to some armed sub-state groups. Iraqi security officials acknowledge the presence in Iraq of Iranian advisers and rhetorically equate the presence of Iranian personnel with the presence of other countries' advisors as invited and officially approved guests of the sovereign Iraqi government. Intermittent public appearances in Iraq by Iran's Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) commander, Major General Qassem Soleimani in Iraq have drawn attention, and some Iraqis, including some Iraqi Shia, vocally oppose what they decry as undue Iranian interference or attempts to assert hegemony.\nTo date, Prime Minister Abadi and other Iraqis have rejected requests by some Iran-linked militia leaders and fighters to formally pursue the fight against the Islamic State across Iraq's western border in Syria. Nevertheless, a number of Iran-backed Iraqi militias have fought without the Iraqi government's permission in Syria since 2012. Prime Minister Abadi maintains an open and frank dialogue with his Iranian counterparts and welcomes approved formal Iranian security support for Iraq, but articulates a vision for Iraq that seeks positive relations with neighbors and aims at mitigating the negative effects of cross-border entanglements and regional rivalries.", "Thousands of U.S. military personnel in Iraq are working with coalition partners to train Iraqi military and counterterrorism units, advising and assisting Iraqi units, providing lethal fire support by air and on the ground, and offering force protection and logistical support. The Trump Administration has not continued the Obama Administration's practice of providing force deployment updates and U.S. military sources report that the force management level for Iraq officially remains at the Obama Administration-set level. The U.S. force presence is governed by a bilateral exchange of diplomatic notes executed pursuant to the 2008 bilateral Strategic Framework Agreement.\nThe Trump and Obama Administrations have considered groups and individuals associated with the Islamic State and participating in hostilities against the United States or its coalition partners to be legitimate military targets pursuant to the 2001 Authorization for the Use of Military Force against Al Qaeda ( P.L. 107-40 ; 50 U.S.C. §1541 note), subject to executive branch discretion. As discussed above, U.S. military operations against the Islamic State in Syria commenced in August 2014 and expanded in September 2014 at the specific request of the Iraqi government.\nU.S. advice and assistance to Iraqi combat units continues down to the ISF brigade level, and U.S. advisers have accompanied Iraqi brigade commanders in forward areas of operation. Unlike during the 2003-2011 U.S. intervention in Iraq, U.S. forces currently do not perform, manage, or secure stabilization or reconstruction activities. In August 2017, U.S. officials announced that the U.S. military would assist contractors in locating unexploded ordnance and explosive hazards in Mosul.\nCongress has appropriated billions of dollars in additional defense funding to support military operations against the Islamic State in Iraq and other countries since 2014. According to the Defense Department, \"as of June 30, 2017, the total cost of operations related to ISIS since kinetic operations started on August 8, 2014, is $14.3 billion and the average daily cost is $13.6 million for 1058 days of operations.\" This includes the cost of more than 13,300 airstrikes against IS forces in Iraq.", "The United States government supports security, stabilization, governance, and humanitarian initiatives across Iraq and blends U.S.-funded programming with lending and credit guarantees in light of Iraq's needs, current fiscal difficulties, and its status and financial potential as a major oil exporter. Both State Department and Defense Department funds and authorities support U.S. programs in Iraq. For FY2018, President Trump requested a total of $347.86 million in bilateral foreign assistance and $1.3 billion in defense assistance to Iraq, most of which would support post-conflict stabilization in areas liberated from the Islamic State and the continuation of U.S. military train and equip programming ( Table 2 ).\nLegislative provisions on Iraq enacted and proposed in the 114 th and 115 th Congresses reflect congressional concern about the extent to which U.S. support for Iraq's national government encourages Iraqi leaders to pursue inclusive policies. With regard to both U.S. grant and loan assistance, Congress has directed the executive branch to report on the extent to which U.S.-backed programs benefit all Iraqis, including minority groups and the Kurdistan region.", "Congress authorized the Iraq train and equip program in the FY2015 National Defense Authorization Act (NDAA, Section 1236 of P.L. 113-291 ) and has amended and extended the authority in subsequent legislation. As of July 2017, U.S. officials reported that more than 100,000 Iraqi personnel had received training, including Iraqi Security Forces, police, Kurdish peshmerga , Sunni tribal fighters, and border forces. Through November 2017, Congress has appropriated more than $3.6 billion for the program and is considering President Trump's request for an additional $1.269 billion for FY2018 ( Table 3 ).\nThe House and Senate Appropriations Committee-reported versions of the FY2018 Defense appropriations act recommend $1.769 billion for the Counter ISIS Train and Equip Fund (CTEF,) of which $1.269 billion would be for Iraq and remain available through FY2019. The FY2018 NDAA ( H.R. 2810 ) extends the authority for the Iraq program to December 31, 2019 and authorizes the appropriation of the requested CTEF funding level.", "In recent years, U.S. Foreign Military Financing (FMF) assistance has subsidized the cost of Iraqi loans that support Iraqi procurement and sustainment of U.S.-origin defense articles and services such as armored vehicles, tanks, coastal vessels, and combat aircraft. In FY2016, Iraq used $250 million in FMF assistance to subsidize the cost of a $2.7 billion defense procurement loan, and, in July 2017, the Administration notified Congress of its intent to use $250 million in FY2017 FMF to subsidize the cost of a new $1.85 billion loan. President Trump did not request FMF for Iraq for FY2018.", "U.S. stabilization assistance to liberated areas of Iraq is directed through the United Nations Development Program (UNDP)-administered Funding Facility for Stabilization (FFS), which includes a Funding Facility for Immediate Stabilization (FFIS), a Funding Facility for Expanded Stabilization (FFES), and Economic Reform Facilities for the national government and the KRI. U.S. contributions to FFIS support stabilization activities under each of its \"Four Windows:\" (1) light infrastructure rehabilitation, (2) livelihoods support, (3) local official capacity building, and (4) community reconciliation programs. A number of FFS programs have been completed and are underway in areas populated by religious minorities, including in the Ninewa Plain. In August, UNDP and the Iraqi government also reached agreement on a new initiative focused on community reconciliation initiatives, including assistance in atrocity documentation efforts and support for local peace committees working to resolve grievances.\nAs of November 2017, UNDP Iraq reported that the FFS had received more than $420 million in resources since its inception. Since mid-2016, the executive branch has notified Congress of its intent to obligate $265.3 million in assistance funding to support UNDP FFS programs, including post-IS stabilization funding made available through FY2018 in the December 2016 continuing resolution ( P.L. 114-254 ). Of U.S. funds that had been obligated for UNDP's Iraq programs as of March 2017, $65.3 million was supporting FFIS programs and $50 million was supporting FFES programs. The Trump Administration requested an additional $300 million in FY2018 Economic Support and Development Fund monies for Iraq, a portion of which would fund continued U.S. contributions to post-IS stabilization programs. House and Senate versions of the FY2018 foreign operations appropriations bill would make Economic Support Fund (ESF) monies available for contributions to stabilization in Iraq on different terms.", "The U.S. Agency for International Development (USAID) oversees implementation of the Governance Strengthening Project (GSP)/ Taqadum program and implementing a new $25 million Iraq Governance Performance and Accountability Project. The latter project seeks to build the capacity of Iraqi governors, governorate councils, local officials, and ministry directorates to provide services and monitor delivery and public expenditure in support of Iraq's decentralization plans. In addition, USAID provides technical assistance to the national government and KRG to help them manage current fiscal pressures, secure financing, implement recommended reforms, and meet performance targets agreed under the IMF Standby Arrangement.\nIn September 2016, the Obama Administration requested that Congress include in the FY2017 continuing resolution an authorization for a $1 billion sovereign loan guarantee to Iraq from amounts provided within the Economic Support Fund (ESF) account. The December 2016 CR authorized the use of FY2017 ESF-OCO funds for sovereign loan guarantees in support of Iraq's current IMF agreement. In January 2017, Iraq offered a $1 billion, U.S.-guaranteed five-year sovereign bond. The House and Senate versions of the FY2018 Foreign Operations appropriations act would authorize further loan guarantees for Iraq.", "In September 2017, the Trump Administration announced that an additional $264 million would be directed to humanitarian programs in Iraq ($150.38 million in USAID-administered funds and $113.47 million in State Department-administered funds). This brings the U.S. humanitarian assistance contributions in Iraq since 2014 to $1.7 billion, of which $581 million has been identified in FY2017. The United States provides humanitarian assistance specifically for programs in the KRI, with approximately $175 million in FY2016 funding having been directed for KRI-based humanitarian responses and comparable FY2017 funding planned. U.S. humanitarian assistance provides food; safe drinking water; improved sanitation and hygiene; emergency and transitional shelter; relief items—including blankets, kerosene heaters, and kitchen sets; assistance for displaced and vulnerable communities to rebuild their livelihoods; critical health interventions; and protection services.", "In July 2017, U.N. OCHA reported that \"after decades of war, the sheer volume of explosive devices renders Iraq one of the most heavily contaminated countries in the world.\" Unexploded ordnance and improvised explosive devices pose risks to individuals returning to liberated areas pose complex challenges in urban environments and rural agricultural areas. The U.S. government funds a range of programs that assist in de-mining, conventional weapons destruction, and unexploded ordnance removal in Iraq, supported by funding from Nonproliferation, Antiterrorism, Demining, and Related Programs (NADR) account.", "Since 2003, the United States has worked to help reconstitute and support the development of Iraq's security forces, especially its military services and counterterrorism units. U.S. grant assistance and lending and Iraqi purchases of U.S. defense articles and services have funded a robust range of systems acquisitions, training programs, and advisory missions. Since 2011, a U.S.-funded Office of Security Cooperation at the U.S. Embassy in Baghdad (OSC-I) has assisted in the implementation of hundreds of Foreign Military Sales (FMS) cases for Iraq involving acquisition, training, and maintenance (see Appendix B ).\nU.S. defense funds have sustained the activities of the OSC-I, and Congress has reduced annual funding allocations for the office in successive years. The FY2018 NDAA would authorize the use of up to $42 million for OSC-I activities, and would restate the office's authority to focus on professionalization and management support and expand the range of Iraqi national security forces eligible for support, to include all forces with a national security mission that are of or associated with the government of Iraq.\nIn the FY2017 defense appropriation act and joint explanatory statement accompanying the FY2017 NDAA, Congress directed the executive branch to report on plans for the transition of U.S.-funded OSC-I activities to another entity or the transition the funding of OSC-I activities to another source. The FY2018 NDAA would prohibit the use of half of the defense funds authorized to be made available by the act until 30 days after the report requested in the FY2017 NDAA joint explanatory statement is submitted.\nRecent OSC-I oversight reporting to Congress describes U.S. efforts to support Iraqi and KRG security leaders in their efforts to develop long term force structure plans and to reorganize and reconstitute their forces as the military fight against the Islamic State winds down. The legislative requirement for biannual reporting on OSC-I activities, including basic capability assessments of Iraqi forces, expires in November 2017.", "Over time, the executive branch and some Members of Congress have expressed concern about a range of governance and human rights-related issues in Iraq in annual reporting, through inter-branch correspondence, in statements in hearings and at other public events, or through the introduction of legislation and amendments for congressional consideration. Annual congressionally-mandated executive branch reporting on human rights, international religious freedom, international narcotics control, and trafficking in persons reflects these concerns. In the 115 th Congress, these concerns are reflected in ongoing congressional oversight efforts and legislation such as H.R. 390 , the Iraq and Syria Genocide Emergency Relief and Accountability Act of 2017.", "The State Department reports that public sector corruption, including in some military and security agencies, is widely recognized as a problem in Iraq, and some Iraqi leaders continue to make statements pledging to improve action on the issue. According to Transparency International, corruption in public services has been enabled by weak public administration, limited state capacity to manage and account for assistance funds, and limited civil society oversight. The State Department's 2017 International Narcotics Control Strategy Report notes Iraqi progress on anti-money laundering issues related to terrorist financing, but states that \"investigations into financial gains from political corruption... remain virtually nonexistent.\" The State Department also attributes related problems to a lack of coordination among Iraqi intelligence agencies, the Central Bank of Iraq, Iraq's Financial Investigation Unit, and the judiciary. Personnel and technical capacity problems are prevalent in many of these entities. At the governorate level, leaders in different areas of the country, including governors, have been forced from office in 2017 amid corruption charges against them. KRG authorities enforce Iraq's 2015 anti-money laundering law, but coordination with Baghdad has remained minimal.", "The State Department report on human rights conditions in Iraq in 2016 concluded that \"severe human rights problems were widespread,\" attributing most serious abuses to terrorist groups and citing \"sectarian hostility, widespread corruption, and lack of transparency at all levels of government and society\" as factors weakening government authority. The report states that a lack of effective Iraqi civilian oversight of the Iraqi security forces, armed forces, law enforcement, Popular Mobilization Forces (PMF), and p eshmerga forces in the KRI continues to contribute to human rights violations. According to the department, sectarian tensions, corruption, and lack of governmental transparency have also undermined the Iraqi government's ability to curtail human rights abuses.\nState Department analysis also cites reports that Iraqi security forces, federal police, and p eshmerga have committed human rights violations, along with instances in which PMF members reportedly have killed, tortured, or kidnaped civilians. According to the department, during 2016, the Iraqi government investigated some alleged PMF and security forces human rights abuses but did not make the results public. The KRG established a 'High Committee to Evaluate and Respond to International Reports' to investigate alleged p eshmerga human rights violations against internally displaced persons but did not prosecute p eshmerga members. Conditions reportedly remain harsh in Iraqi prisons, judicial due process guarantees remain weak, and women continue to face barriers from attaining key positions of power.", "State Department reports on human rights conditions and religious freedom in Iraq have documented the difficulties faced by religious and ethnic minorities in the country for years. In some cases, these difficulties and security risks have driven members of minority groups to flee the country or to take shelter in different areas of the country, whether with fellow group members or in new communities. Minority groups that live in areas subject to long running territorial disputes between Iraq's national government and the KRG face additional interference and exploitation by larger groups for political, economic, or security reasons.\nMembers of diverse minority communities express a variety of territorial claims and administrative preferences, both among and within their own groups. Some minorities in the disputed territories may prefer administrative alignment with the Kurdistan Region, while others may seek alignment with the national government. Still other may seek federally recognized administrative status on communal or territorial terms.\nWhile much attention is focused on potential intimidation or coercion of minorities by majority groups, disputes within minority communities over various options also have the potential to generate tension and violence. Members of minority groups who align themselves with Kurdish or national government entities also may seek to influence the preferences and decisions of members of their own groups through intimidation or coercion.", "In 2016, the State Department included Iraq on a list of countries designated \"as having governmental armed forces or government-supported armed groups that recruit and use child soldiers.\" President Obama waived the applicability of related sanctions pursuant to the Child Soldiers Protection Act of 2008 in September 2016. The designation followed reports that Iraqi militia groups, including some Popular Mobilization Forces, were training and deploying minors. The State Department chose not to include Iraq on the 2017 list, although its 2017 Trafficking in Persons report notes allegations of the continued recruitment and use of child soldiers by some armed groups in Iraq. The report recommends that Iraq \"continue to make efforts to stop the recruitment and use of child soldiers by the PMF and tribal forces, hold complicit individuals accountable for child soldiering, and provide protection services to child soldiers.\" On November 21, press reports cited a reported State Department memorandum from department officials objecting to the Administration's decision not to include Iraq on its 2017 list. In October 2017, the U.N. Secretary-General reported to the Security Council that U.N. officials have received reports that the Islamic State and some parts of the Popular Mobilization Forces have used child soldiers in 2017.", "U.S. support for Iraq's campaign against the Islamic State and U.S. respect for Iraqi sovereignty have contributed to an improvement in U.S.-Iraqi relations since 2014. Nevertheless, the presence and activities of foreign military forces in Iraq remain sensitive domestic political issues among Iraqis. President Trump and Prime Minister Abadi have signaled their shared preference for close bilateral ties to continue beyond the current joint military campaign, and officials in both governments have discussed taking steps to more fully implement the 2008 Strategic Framework Agreement to deepen current patterns of cooperation.\nFrom a U.S. perspective, partnership with Iraq may present opportunities to further strengthen increasingly capable and professional Iraqi security forces, limit the potential for resurgence by the Islamic State and other violent Islamist extremists, and limit the likelihood of greater Iranian government influence over Iraq's security forces. At the same time, the prospect of continued U.S. assistance to Iraq may reopen contentious U.S. debates about the proper scope, form, content, and conditions of U.S. assistance to Iraq, including the presence and missions of any U.S. forces deployed to Iraq after remaining Islamic State forces are defeated.\nFrom an Iraqi perspective, partnership with the United States may allow Iraq to consolidate and extend the improvements its security forces have made, while providing a bulwark against unwanted interference by neighboring countries or other global powers. However, controversy surrounding partnership with the United States and the opposition of some Iraqis (and the government of Iran) to close U.S.-Iraqi ties also may present risks from the perspective of some Iraqi leaders.\nExpanded U.S. and other international support for the KRG and for peshmerga forces since 2014 has been largely transactional and driven by the logic of defeating the Islamic State. Once that defeat is secured in military terms, the United States and other KRG patrons may face thorny questions about the continuation of assistance, particularly if some Kurdish leaders continue to advocate and work toward independence or if disputes between Kurdish factions or between Kurds and non-Kurds over territory, oil, and/or security descend further into violence.\nWith elections pending and the future of relations between Iraq's national government and the Kurdistan region uncertain, U.S. decision-makers might also consider how less desirable scenarios could affect bilateral ties and U.S. interests, including scenarios under which Iraqi leaders might rescind permission for or place undesirable conditions on the continued presence of U.S. forces in Iraq. Under current or new leadership, Iraq's national government could demand the United States cease its support for the KRG in the context of KRG-Baghdad disputes. It is also possible that confrontation among Iraqis over the question of a continued U.S. presence could lead to new rounds of violence, and groups hostile to continued U.S.-Iraqi cooperation might attack U.S. personnel or facilities as a means of protest or provocation.\nWhile the Islamic State has been on the defensive in Iraq since mid-2015 and appears incapable of overcoming the range of forces arrayed against it there at present, its antecedents demonstrated a capacity for resilience and reemergence that is focusing the attention of some U.S. and Iraqi observers on \"winning the peace\" and avoiding past \"mistakes.\" Iraqis and their U.S. counterparts may draw different lessons about what led to the Islamic State's rise and may reach different conclusions about how best to preserve gains made to date. As noted above, capacity shortfalls and corruption in national and local government in Iraq remain problematic, with security forces also facing significant capability and management gaps. Iraq's fiscal resources are constrained, stabilization and reconstruction needs are daunting, and more robust reform efforts may prompt opposition from entrenched interests. Addressing these challenges may require persistence and sacrifice from Iraqis, and the ability of U.S. assistance programs to address them may remain limited.\nHaving recaptured most areas that had been overrun and occupied by the Islamic State since 2014, Iraqis and their U.S. and coalition partners are now preparing to combat renewed insurgent violence from the group while looking beyond to 2018 national elections. Military coordination among different forces has contributed to success against the Islamic State but has not guaranteed political accommodation among the victors. The roles played and actions taken by various Iraqi forces and political actors in the run up to spring 2018 election may reshape relationships that are important for the country's stability and, by extension, important to U.S. interests. Prominent considerations in this regard may include:\nthe relative success or failure of national authorities in integrating and depoliticizing forces mobilized to fight the Islamic State, including the PMF; Baghdad-KRG disputes over territory, security, resources, and revenue transfers; the future of Iraqis uprooted by fighting, who are returning to damaged, underserved areas and some of whom may remain wary of empowered militias; re-emergent rivalries within the Shia Arab majority, some of whose members may fear a resurgence of Sunni radicalism and remain skeptical of Kurdish and U.S. intentions; and the future mission, extent, and terms of any enduring U.S. military presence.\nMembers of Congress and U.S. officials face difficulties in developing policy options that can secure U.S. interests on specific issues without provoking levels of opposition from Iraqi constituencies that may jeopardize wider U.S. goals. Debates over U.S. military support to Iraqi state and sub-state actors in the fight against the Islamic State have illustrated this dynamic, with some U.S. proposals for the provision of aid to all capable Iraqi forces facing criticism from Iraqi groups suspicious of U.S. intentions or fearful that U.S. assistance could empower their domestic rivals. U.S. aid to the Kurds has been provided with the approval of the Baghdad government, and U.S. assistance to Baghdad is provided on the understanding that U.S. equipment will be responsibly used by its intended recipients. Recent confrontations between the national government and Kurdish forces in disputed territories implicates these issues directly and may complicate the continuation of prevailing patterns of assistance.\nOverall, it seems reasonable to expect that Iraqis will assess and respond to U.S. initiatives (and those of other outsiders) primarily through the lenses of their own domestic political rivalries, anxieties, and agendas. Reconciling U.S. preferences and interests with Iraq's evolving politics and security conditions may thus require continued creativity, flexibility, and patience.\nAppendix A. Timeline: U.S. Relations with Iraq\nAppendix B. Proposed U.S. Foreign Military Sales" ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 2, 3, 3, 3, 3, 2, 3, 2, 2, 2, 3, 3, 1, 2, 2, 1, 1, 2, 3, 3, 3, 2, 2, 3, 3, 3, 3, 3, 3, 2, 2, 3, 3, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h1_full", "h0_title h3_title", "", "h0_full", "h0_full", "h3_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "h1_full", "", "", "", "h0_title h2_title h3_title", "h0_full h2_full h3_title", "h3_full", "", "", "", "h3_title", "h3_full", "", "", "h3_full", "", "", "", "", "", "", "", "", "h0_full h2_full" ] }

{ "question": [ "What are the 1115th Congress and the Trump Administration considering in regards to engagement with Iran?", "What challenges does Iraq face?", "What is being determined in regards to the PMF?", "What did the Kurdistan Regional Government hold in September 2017?", "What task do Iraqi leaders face?", "What has been identified to help promote this task?", "How is the Iraqi Prime Minister furthering this task?", "How are diminished oil exports affecting the country?", "What has the US done in regards to Iraq since 2014?", "How has President Trump worked to strengthen relations with Iraq?", "How do Iraqis feel about engagement with the US?", "What decisions might influence US-Iraqi relations?", "What military involvement has Congress authorized in Iraq?", "What funding has President Trump requested?", "What would legislation under the 115th Congress provide?" ], "summary": [ "The 115th Congress and the Trump Administration are considering options for U.S. engagement with Iraq as Iraqis look beyond the immediate security challenges posed by their intense three-year battle with the insurgent terrorists of the Islamic State organization (IS, aka ISIL/ISIS).", "While Iraq's military victory over Islamic State forces is now virtually complete, Iraq's underlying political and economic challenges are daunting and cooperation among the forces arrayed to defeat IS extremists has already begun to fray.", "The future of volunteer Popular Mobilization Forces (PMF) and the terms of their integration with Iraq's security sector are being determined, with some PMF groups maintaining ties to Iran and anti-U.S. Shia Islamist leaders.", "In September 2017, Iraq's constitutionally recognized Kurdistan Regional Government held an advisory referendum on independence, in spite of opposition from Iraq's national government and amid its own internal challenges. More than 90% of participants favored independence.", "With preparations for national elections in May 2018 underway, Iraqi leaders face the task of governing a politically divided and militarily mobilized country, prosecuting a likely protracted counterterrorism campaign against IS remnants, and tackling a daunting resettlement, reconstruction, and reform agenda.", "More than 3 million Iraqis have been internally displaced since 2014, and billions of dollars for stabilization and reconstruction efforts have been identified.", "Iraqi Prime Minister Haider al Abadi is linking his administration's decisions with gains made to date against the Islamic State, but his broader reform platform has not been enacted by Iraq parliament.", "Oil exports, the lifeblood of Iraq's public finances and economy, are bringing diminished revenues relative to 2014 levels, leaving Iraq's government more dependent on international lenders and donors to meet domestic obligations.", "The United States has strengthened its ties to Iraq's security forces and provided needed economic and humanitarian assistance since 2014, but Iraqis continue to disagree over how U.S.-Iraqi relations should evolve.", "President Trump and Prime Minister Abadi met in Washington, DC, in March 2017 and, according to the White House, \"agreed to promote a broad-based political and economic partnership based in the [2008] Strategic Framework Agreement,\" including continued security cooperation.", "Some Iraqis have welcomed U.S. engagement with and assistance to Iraq, whereas other Iraqis view the United States with hostility and suspicion for various reasons. Prime Minister Abadi has expressed the desire for the United States to provide continued support and training for Iraq's security forces, but some Iraqis—particularly those with close ties to Iran—are deeply critical of proposals for a continued U.S. military presence in the country.", "U.S. decisions on issues such as policy toward Iran, the conflict in Syria, the Israel-Palestinian conflict, and U.S. relations with Iraqi Kurds and other subnational groups may influence future bilateral negotiations and prospects for cooperation.", "Congress has authorized a Defense Department train and equip program for Iraqi security forces through December 31, 2019, and has appropriated more than $3.6 billion requested for the program from FY2015 through FY2017, including funds specifically for the equipping and sustainment of Kurdish peshmerga. U.S. military operations against the Islamic State continue with the consent of Iraq's elected government. Congress has authorized the use of FY2017 funds for sovereign loan guarantees to Iraq and for continued lending for Iraqi arms purchases from the United States.", "President Trump has requested $1.269 billion to train Iraqis for FY2018 and seeks $347.86 million for foreign aid to Iraq, including $300 million for further U.S. contributions to United Nations-coordinated post-IS stabilization efforts.", "Appropriations and authorization legislation enacted and under consideration in the 115th Congress generally would provide for the continuation of U.S. assistance and engagement with Iraq on current terms (H.R. 2810, H.R. 3354, S. 1780 and S. 1519)." ], "parent_pair_index": [ -1, -1, -1, -1, -1, 0, 0, -1, -1, 0, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "Background", "Ex-Im’s Mission, Financing Products, and Risks", "Budgetary Treatment of Federal Credit Programs", "Ex-Im’s Business Grew Substantially in Recent Years Due to Market Conditions and Other Factors", "Ex-Im Uses Modeling to Estimate Subsidy Costs and Reserves, and Accounts for Multiple Risks in These Processes and in Setting Fees", "Ex-Im Overhauled its Loss Model in 2012", "Opportunities Exist for Improvements to the Loss Estimation Model", "Ex-Im’s Fees Are Guided by International Agreements and Internal Analyses", "Ex-Im Reported a Default Rate under 1 Percent and Generated Receipts, but the Long-Term Budgetary Impact Is Uncertain", "Ex-Im Has Not Maintained Data Useful for Assessing the Performance of Recent Business", "Ex-Im Faces Operational Risks from Its Growing Portfolio", "Ex-Im Uses Various Techniques to Manage Transaction Risks", "Ex-Im Has Started Developing a More Comprehensive Risk- Management Framework", "Ex-Im Has Not Yet Determined the Volume It Can Prudently Manage", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the U.S. Export- Import Bank", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Ex-Im, the official ECA of the United States, is an independent agency operating under the Export-Import Bank Act of 1945, as amended. Its mission is to support the export of U.S. goods and services overseas, thereby supporting U.S. jobs. Official ECAs are organizations that provide export credits with explicit government backing, where either the government or the government-owned ECA assumes all or a portion of the risk. Export credits are financing arrangements designed to mitigate risks to buyers and sellers associated with international transactions. Buyers and sellers in international transactions face unique risks, such as foreign exchange risk, difficulties in settling disputes when damages to shipments occur, or instability in the buyer’s country. For these reasons, private lenders may be reluctant to finance a buyer’s purchase of foreign goods or finance a seller’s operations. Export credit products are meant to facilitate international transactions by mitigating these risks.\nAn international agreement, the Organisation for Economic Cooperation and Development (OECD) Arrangement on Officially Supported Export Credits (the OECD Arrangement), governs various aspects of U.S. and other member countries’ ECAs. The OECD Arrangement aims to provide a framework for the use of officially supported export credits; promote a level playing field, where competition is based on the price and quality of the exported goods and not the financial terms provided; and provide transparency over programs and transactions. For example, the OECD arrangement sets minimum transaction fees. Participants include Australia, Canada, the European Union, Japan, South Korea, New Zealand, Norway, Switzerland, and the United States. The OECD Arrangement applies to officially supported export credits with repayment terms of 2 years or more.\nCongress has placed specific requirements on Ex-Im’s operations. For example, Ex-Im’s charter states that it should not compete with the private sector. Rather, Ex-Im’s role is to assume the credit and country risks that the private sector is unable or unwilling to accept. In addition, Ex-Im must submit annual reports to Congress on its actions to provide financing on a competitive basis with other ECAs, and to minimize competition in government-supported export financing. Furthermore, Ex- Im must make available at least 20 percent of its authorized aggregate loans, loan guarantees, and insurance (export financing) each fiscal year for the direct benefit of small businesses. Congress also has given Ex-Im instructions on the share of its financing for environmentally beneficial exports, including renewable energy, and to expand the promotion of its financing in sub-Saharan Africa.\nEx-Im offers a number of export financing products, including direct loans, loan guarantees, and export credit insurance. Ex-Im makes fixed-rate loans directly to international buyers of goods and services. These loans can be short-term (up to 1 year), medium-term (more than 1 year up to 7 years), or long-term (more than 7 years). Ex-Im also guarantees loans made by private lenders to international buyers of goods or services, promising to pay the lenders if the buyers default. Like direct loans, loan guarantees may be short-, medium-, or long-term. Additionally, Ex-Im provides export credit insurance products that protect the exporter from the risk of nonpayment by foreign buyers for commercial and political reasons. This allows U.S. exporters the ability to offer foreign purchasers the opportunity to make purchases on credit. Credit insurance policies can cover a single buyer or multiple buyers and can be short- or medium- term. Insurance policies are also available to cover lenders and exporters that finance purchases by foreign buyers. Ex-Im’s short-term insurance covers a wide range of goods, raw materials, spare parts, components, and most services on terms up to 180 days. Medium-term insurance policies protect longer-term financing to international buyers of capital equipment or services, covering one or a series of shipments. Financing under medium-term insurance policies generally can extend up to 5 years.\nSome of Ex-Im’s short-term products are geared toward U.S. small businesses that have the potential to export but lack sufficient funds to support export efforts and include direct loans and loan guarantees to provide these businesses with working capital. Working capital loans are fixed-rate loans that provide exporters with 6- or 12-month revolving lines of credit. Working capital guarantees generally cover 90 percent of the principal and interest on a loan made to an exporter by a private lender. The guarantees are typically 1 year, but can extend up to 3 years and be used on a single transaction or on a revolving basis. Ex-Im delegates the authority for underwriting most of these transactions directly to Ex-Im- approved private-sector lenders.\nEx-Im’s long-term products are often used in project finance transactions, what Ex-Im terms “structured finance” transactions, and aircraft transactions. These transactions involve complicated financing arrangements, and Ex-Im has separate divisions to handle them. These transactions also generally involve a direct loan or loan guarantee and their value is usually greater than $10 million. Project finance is an arrangement in which Ex-Im lends to newly created project companies in foreign countries and looks to the project’s future cash flows as the source of repayment instead of relying directly on foreign governments, financial institutions, or established corporations for repayment of the debt. The projects involve a large number of contracts for completion and operation. Project finance transactions have repayment terms up to 14 years (18 years for renewable energy transactions) and typically include the financing of development of a new facility in a foreign country, such as a factory or power plant, or significant facility or production expansions. Most of Ex-Im’s project finance transactions have been oil and gas and power sector projects. In structured finance transactions, Ex-Im provides direct loans or loan guarantees to existing companies located overseas based on these companies’ balance sheets plus credit enhancements, such as escrow or reserve accounts, subject to Ex-Im’s control; special insurance requirements; and letters of credit pledged to Ex-Im through a bank or other third party. Structured finance transactions generally have repayment terms of 10 years (12 years for power transactions). Among others, Ex-Im has completed structured transactions for oil and gas projects and air traffic control, telecommunications, and manufacturing entities. Finally, Ex-Im provides long-term direct loans and loan guarantees that support the purchase of aircraft. Ex-Im uses external advisers to assist in arranging project finance, structured finance, and aircraft transactions. These advisers can include financial, legal, technical, insurance, market, and environmental consultants.\nEx-Im faces multiple risks when it extends export credit financing. These risks include credit, political, market, concentration, foreign-currency, and operational risks, which are defined as follows:\nCredit risk. The risk that an obligor may not have sufficient funds to service its debt or be willing to service its debt even if sufficient funds are available.\nPolitical risk. The risk of nonrepayment resulting from expropriation of the obligor’s property, war, or inconvertibility of the obligor’s currency into U.S. dollars.\nMarket risk. The risk of loss from declining prices or volatility of prices in the financial markets. Market risk can arise from shifts in macroeconomic conditions, such as productivity and employment, and from changes in expectations about future macroeconomic conditions.\nConcentration risk. Risk stemming from the composition of a credit portfolio. Concentration risk comes into being through an uneven distribution of credits within a portfolio. Ex-Im faces three types of concentration risk: Industry concentration. The risk that events could negatively affect not only one obligor but also many obligors in the same industry simultaneously.\nGeographic concentration. The risk that events could negatively affect not only one obligor but many obligors simultaneously across a country or region.\nObligor concentration. The risk that defaults from a small number of obligors will have a major adverse impact on the portfolio because they account for a large share of the portfolio.\nForeign-currency risk. The risk of loss as a result of appreciation or depreciation in the value of a foreign currency in relation to the U.S. dollar in Ex-Im transactions denominated in that foreign currency.\nOperational risk. The risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events.", "In 1990, to more accurately measure the cost of federal credit programs, Congress enacted FCRA, which requires agencies that provide domestic or international credit, including Ex-Im, to estimate and request appropriations for the long-term net losses, or subsidy costs, of their credit activities. Credit programs incur subsidy costs when estimated payments by the government (such as loan disbursements or claims paid on defaulted loans) exceed estimated payments to the government (such as principal repayments, fees, interest payments, and recoveries), on a net present value basis over the life of the direct loan or loan guarantee, excluding administrative costs.when the present value of estimated payments by the government exceeds the present value of estimated payments to the government (collections). When credit programs have a positive subsidy cost, they require appropriations. Conversely, negative subsidy programs are those in which the present value of estimated collections is expected to exceed the present value of estimated payments.\nCredit programs have a positive subsidy FCRA requires that agencies have budget authority to cover credit subsidy costs before entering into credit transactions. For their annual appropriation requests, agencies estimate credit subsidy costs by cohort. To estimate their subsidy costs, credit agencies estimate the future performance of direct loans and loan guarantees. Agency management is responsible for accumulating relevant, sufficient, and reliable data on which to base these estimates. To estimate future credit performance, agencies generally have models that include assumptions about defaults, prepayments, recoveries, and the timing of these events and are based on the nature of their credit programs. In addition to assumptions based on agencies’ programs, agencies also must incorporate economic assumptions included in the President’s budget for credit subsidy calculations. An agency’s credit subsidy costs can be expressed as a rate. For example, if an agency commits to guarantee loans totaling $1 million and has estimated that the present value of cash outflows will exceed the present value of cash inflows by $15,000, the estimated credit subsidy rate is 1.5 percent.\nUnder FCRA, agencies generally must produce annual updates of their credit subsidy estimates—known as reestimates—of each cohort based on information about the actual performance and estimated changes in future credit performance. This requirement reflects the fact that estimates of credit subsidy costs can change over time. Beyond changes in estimation methodology, each additional year provides more historical data on credit performance that may influence estimates of the amount and timing of future cash flows. Economic assumptions also can change from one year to the next, including assumptions on interest rates. When reestimated credit subsidy costs exceed agencies’ original credit subsidy cost estimates, the additional subsidy costs are not covered by new appropriations but rather are funded from permanent, indefinite budget authority.\nIn addition to estimating credit subsidy costs for budgetary purposes, Ex- Im calculates future credit losses for its annual audited financial statements. Ex-Im’s financial statements are prepared according to generally accepted accounting principles in the United States applicable to federal agencies. These principles require Ex-Im to follow Federal Accounting Standards Advisory Board (FASAB) guidance when establishing loss allowances for direct loans and loss reserves for loan guarantees or insurance transactions to cover future credit losses.", "Ex-Im business activities grew substantially in recent years. From 1990 through 2012, Ex-Im’s financial exposure grew by more than 250 percent (or about 120 percent after adjusting for inflation), with most of the growth occurring after 2008 (see fig. 1). From 1990 through 2007, Ex-Im’s exposure grew from about $30 billion to $57.5 billion—an average annual increase of just under 4 percent. From 2008 through 2012, Ex-Im’s exposure rose from $58.5 billion to $106.6 billion—an average annual growth rate of more than 16 percent.\nMost of Ex-Im’s recent growth occurred through its long-term loan guarantee and direct loan products. Overall, annual Ex-Im authorizations rose from $14.4 billion in 2008 to $35.8 billion in 2012 (see fig. 2). Over the same period, annual authorizations for long-term products grew from $8.5 billion to $26.6 billion—a more than three-fold increase—and accounted for almost 75 percent of the authorizations Ex-Im made in 2012. In particular, annual authorizations for new project and structured finance transactions, almost all of which used long-term loan guarantees and direct loans, increased from $1.9 billion in 2008 to $12.6 billion in 2012, or almost half of the long-term authorizations that Ex-Im made in 2012.\nBy region, annual authorizations grew most rapidly in Asia and Oceania (see fig. 3). For example, Ex-Im authorizations for export financing to Asia grew from $3.6 billion in 2008 to $13.5 billion in 2012, an increase of about 275 percent. Overall, Asia accounted for almost 38 percent of Ex- Im’s authorizations in 2012. Financing for exports to Oceania, which accounted for a smaller portion (about 9 percent) of Ex-Im’s 2012 authorizations, rose even more sharply—from about $1 million in 2008 to $3.2 billion in 2012.\nBy industry sector, financing for aircraft industry exports was the single largest source of authorizations in recent years, but authorizations in other sectors grew more quickly (see fig. 4). Aircraft-related authorizations grew from $5.7 billion in 2008 to $11.9 billion in 2012—an increase of about 110 percent—and accounted for about one-third of Ex- Im’s authorizations in 2012. Over the same period, authorizations in the service sector rose more than 20-fold—from $229 million to $5.3 billion— and represented 15 percent of Ex-Im’s authorizations in 2012. Additionally, authorizations increased by more than 400 percent in the power utilities sector (from $0.6 billion to $3.1 billion) and by more than 130 percent in the oil and gas mining sector (from $1.8 billion to $4.2 billion). The power utilities sector and oil and gas mining sector accounted for 9 percent and 12 percent of Ex-Im’s 2012 authorizations, respectively.\nEx-Im officials and all of the representatives from industry trade associations and research groups we interviewed agreed that reduced availability of private-sector financing after the 2007-2009 financial crisis was the leading factor contributing to increased demand for Ex-Im financing. For example, officials from Ex-Im’s Policy and Planning Group and industry representatives told us that the growing reluctance of commercial banks to provide export financing in the wake of the financial crisis was a primary driver of Ex-Im’s growth. They explained that the financial crisis diminished the availability of commercial lending and that Ex-Im provided financing to fill the void. Officials from the foreign ECAs we contacted described similar effects on their business activity. For example, officials from the ECAs in Canada and France explained that as commercial banks withdrew from the trade finance market, their own export credit activities grew as they made efforts to fill the resulting gap.\nOfficials from Ex-Im, industry trade and research organizations, and other ECAs we interviewed, also said that the ongoing and future implementation of international banking standards further limited private- sector financing, contributing to growth in ECA activities. For example, officials cited the Basel Committee on Banking Supervision “Basel III” standards for banking institutions that include risk-based capital and other requirements. As of December 2012, U.S. regulators were preparing to finalize rules for implementation of these standards. Ex-Im’s 2011 report to Congress on export credit competition notes that the transition to Basel III practices would require most banks to increase prices for export and other types of financing, and consequently, direct loans from ECAs became the preferred mechanism for some long-term trade deals.five representatives from industry trade associations and research groups with whom we discussed this issue agreed that the ongoing implementation of Basel regulations could further constrain private-sector export financing in the already tightened lending environment following the financial crisis. Similarly, officials from Canada’s ECA noted that their business increased partly in response to banks’ plans for implementing Basel requirements.\nCommercial bank lending trends in the United States and Europe broadly demonstrate the reduced availability of private-sector financing during the 2007-2009 financial crisis, including for U.S. small businesses. As shown in figure 5—which shows the percentage of lenders that tightened or eased credit standards at different points in time—credit standards generally tightened during the financial crisis. Following the crisis, more U.S. banks began to ease rather than tighten credit standards, while more banks in the euro area continued to tighten standards, though not as dramatically as they had during the crisis.\nIn emerging markets, following the onset of the 2007-2009 financial crisis, perceptions of risk and the cost of credit in corporate bond markets also jumped—dramatically for higher-risk borrowers. As shown in figure 6, risk premiums for corporate bonds spiked in late 2008 and early 2009 and remain above precrisis levels.\nEx-Im and officials from industry trade associations and foreign ECAs noted the significance of Ex-Im’s direct loan product to Ex-Im’s recent growth. For example, in its 2011 report to Congress on export credit competition, Ex-Im noted the competitive advantage that direct loans—a product not offered by some other ECAs—gave Ex-Im and other ECAs with similar products. As previously shown in figure 2, long-term direct loan authorizations grew from $356 million in 2008 to almost $12 billion in 2012. Representatives from industry trade associations noted that Ex- Im’s ability to offer direct loans helped Ex-Im to fill the gap in private- sector lending following the financial crisis and implementation of more stringent banking regulations. Other ECAs also pointed to direct lending as contributing to their ability to fill financing gaps following the recent financial crisis. Of the four foreign ECAs we interviewed, two (Canada and Japan) had existing direct lending capability prior to the 2007-2009 financial crisis. Both agreed that their capability to make direct loans was an important factor in their ability to fill trade financing gaps.\nEx-Im officials and representatives from industry trade associations and research groups identified other possible drivers of Ex-Im’s business that may have contributed to the recent growth trend. These include increased demand for U.S. goods and services from emerging markets, increased production by significant Ex-Im customers, Ex-Im’s outreach efforts to small businesses and key export markets, and Ex-Im’s response to growing competition from foreign ECAs. First, Ex-Im has suggested that demand for U.S. exports, particularly from industrializing emerging markets (such as in Asia), adds to demand for Ex-Im services. For example, as shown previously in figure 3, Ex-Im authorizations in Asia grew more than 275 percent from 2008 through 2012. While Ex-Im activity in some emerging markets did grow in recent years, we did not find evidence of a positive correlation between Ex-Im activity and U.S. exports. For example, Ex-Im’s highest growth came in 2009, when total U.S. exports and U.S. exports to emerging markets were falling.\nSecond, Ex-Im officials also said that increased production by Boeing, Ex- Im’s primary aircraft exporter, contributed to authorization growth. Officials emphasized that while Ex-Im’s significant activity in the airline sector has contributed to Ex-Im’s recent growth, they did not expect growth in the aircraft sector to continue at the same high rate, because the commercial market for aircraft finance is beginning to recover and implementation of a 2011 international agreement among OECD ECAs may result in ECA financing being less competitive than commercial financing.authorizations—the single largest industry Ex-Im supports.\nNonetheless, for 2012, aircraft represented 33 percent of new Third, according to Ex-Im officials, Ex-Im’s efforts to offer small business products and increase awareness of available export financing assistance also may have been a factor in its recent growth. Ex-Im recently launched several new small business products and opened four new regional Export Finance Centers throughout the United States to support small business exporters. These efforts stem from Ex-Im’s mandate to make available at least 20 percent of annual authorizations to small businesses. Ex-Im officials explained that outreach efforts are important because meeting the 20 percent small business requirement has been increasingly difficult as Ex-Im’s overall portfolio has grown. In addition to its small business outreach, Ex-Im has been identifying private-sector and public- sector buyers, financial institutions, and key governmental agencies for each of nine foreign “key markets” where it expects U.S. export growth to be strongest in the near future. In its 2010-2015 strategic plan, Ex-Im cites these country outreach efforts as a way to focus limited Ex-Im resources in areas with high potential for furthering the agency’s mission of supporting exports and the jobs they provide. Ex-Im selected the key markets based on a number of factors, including the size of the export market for U.S. companies, projected economic growth, anticipated infrastructure demand, and the need for Ex-Im financing. According to Ex- Im officials, some of these efforts already have produced new transactions in markets such as Brazil.\nLastly, according to Ex-Im and representatives from industry trade associations and research groups, Ex-Im’s activity may continue to grow in response to increased competition from other ECAs, particularly those in non-OECD countries, but none of the other ECAs we spoke with suggested that this was a significant factor. Ex-Im’s 2012 Annual Report emphasizes the importance of its role in ensuring that U.S. exporters have a fair opportunity to compete with foreign exporters. While the OECD Arrangement governs various aspects of U.S. and other member ECAs’ activities, non-OECD ECAs sometimes offer financing terms more favorable than the terms permitted under the OECD Arrangement. Ex-Im can respond to foreign competition in export financing by notifying OECD that it is meeting terms offered by other ECAs in order to preserve U.S. exporters’ competitiveness. But, because these ECAs are not beholden to the transparency requirements of the OECD Arrangement, it can be difficult to confirm the terms and conditions of non-OECD ECA export financing transactions. Some representatives from industry trade associations and research groups we interviewed agreed that Ex-Im’s response to competition from non-OECD ECAs, particularly China, may have been, and likely would continue to be, a significant factor in increased Ex-Im activity. Others, such as officials from the Berne Union (a worldwide association for export credit and investment insurers) noted that while competition based on financing terms might be a significant determinant for a small number of international trade transactions, importers primarily base purchase decisions on the equipment or services that best meet their needs. None of the officials from the four foreign ECAs we interviewed suggested that increased competition was a significant factor in their own or Ex-Im’s activity growth.", "Ex-Im uses a loss estimation model to estimate credit subsidy costs and loss reserves and allowances. This model accounts for various risks and underwent a major update in 2012, but opportunities exist for additional improvements. Ex-Im’s product fees account for credit and political risk and are guided by international agreements and internal analyses.", "Ex-Im uses a loss estimation model to build the agency’s credit subsidy estimates in the President’s budget as well as for calculating loss reserves and allowances reported in Ex-Im’s annual financial statements. The model includes quantitative and qualitative factors to account for various risks facing the agency. In 2012, Ex-Im made several adjustments to the model to better account for uncertainty associated with a growing portfolio and changing economic conditions. However, opportunities exist for additional improvements.\nThe model considers historical data, as well as qualitative information, to estimate loss rates on Ex-Im’s transactions—that is, the percentage loss that Ex-Im can expect for each dollar of export financing. Mathematically, Ex- the loss rate is the probability of default times the loss given default.Im’s current model uses historical information on loan guarantee and insurance transactions authorized from 1994 through 2011.information includes the default and loss history of those transactions as well as variables that are predictive of defaults and losses, including transaction amount and length, obligor type, product type, and “risk rating”—a numerical risk score that Ex-Im assigns to each transaction. The model calculates a loss rate for each Ex-Im risk rating and product type.\nAs previously noted, risk ratings are a key variable in the loss model. Ex- Im underwriters assign the ratings, which are based on assessments of credit, political, and market risks. risky) to 11 (most risky). These risk ratings are determined partly through the Interagency Country Risk Assessment System (ICRAS), a working group that includes Ex-Im and other federal agencies involved in providing international credit. According to Ex-Im, for each country, ICRAS ratings are based on entities’ (1) ability to make payments as indicated by relevant economic factors, and (2) willingness to pay as indicated by payment record and political and social factors. There are two types of ICRAS ratings—one for foreign government (sovereign) borrowers and one for private-sector entities in foreign countries. For transactions with foreign governments, Ex-Im officials apply the ICRAS sovereign-risk rating. For transactions with private-sector entities, Ex-Im officials assign risk ratings based on the ICRAS private-sector rating and potentially other information such as obligor financial statements and ratings of the obligors by credit rating agencies.\nEx-Im does not assign risk ratings to short-term insurance in multibuyer transactions or to working capital transactions. All long- and medium-term transactions and short-term insurance in single-buyer transactions are assigned risk ratings.\nThe loss rates produced by the model are used to estimate future cash flows, which, in turn, are used to determine credit subsidy costs contained in the President’s budget and to calculate loss reserves and allowances reported in Ex-Im’s annual financial statements. To estimate the subsidy costs of future transactions as part of the annual budget process, Ex-Im uses the loss rates to help determine cash inflows (such as repayments, fees, and recoveries) and outflows (such as claims) for the book of business it expects in the upcoming year. Because the cash inflows and outflows occur in the future, they must be discounted to determine their net present values. To do this, OMB guidance requires Ex-Im to enter cash flows into OMB’s credit subsidy calculator, which generates the original credit subsidy cost estimate for that book of business. In accordance with FCRA, the discount rates in the OMB credit subsidy calculator are based on interest rates for U.S. Treasury securities.\nEx-Im also uses the estimated future cash flows to calculate loss reserves or allowances—financial reporting accounts for estimated losses—for each transaction at authorization. The total loss reserves and allowances are reported in Ex-Im’s annual financial statements. Each year, Ex-Im adjusts the loss reserve or allowance amount for each transaction using updated estimates of future cash flows, which consider the impact of actual credit performance and estimated changes in future credit performance.\nIn addition to the risks discussed previously, the loss model also accounts for the foreign-currency risk Ex-Im faces from its transactions denominated in a foreign currency. In 2012, Ex-Im authorized about $1.7 billion in guarantees denominated in a foreign currency, or about 5 percent of its total authorizations for that year. According to an Ex-Im official, the loss model uses a methodology that captures the cost of buying a foreign currency at a particular time in the future. Therefore, Ex-Im factors this cost into the credit subsidy cost and the related loss reserve or allowance at the time it authorizes a transaction denominated in a foreign currency and updates it during the reestimate process. In addition, an Ex-Im official told us that Ex-Im adjusts its loss reserves monthly to reflect changes in currency exchange rates.\nEx-Im adjusts the loss estimation model annually to enhance the reliability of loss rates used to estimate subsidy costs and calculate loss reserves and allowances. In 2012, Ex-Im made several adjustments to both implement recommendations from external auditors and the Ex-Im IG and to make the model more flexible for the various types of transactions in its portfolio. Among other things, Ex-Im changed how it used its historical dataset and added several qualitative factors.\nDue to data limitations, Ex-Im’s model does not control for the age of transactions in estimating the probability of default, potentially reducing Ex-Im changed how it used the dataset the precision of the estimates.underlying the loss model, which helped to mitigate this limitation. Specifically, to help avoid underestimating the probability of default, Ex-Im removed transactions authorized in 2012 from the dataset because these transactions generally did not have enough time to default. Ex-Im also excluded any long-term transactions that were within 3 years of the obligor’s first payment. In addition, Ex-Im removed all transactions that had not been disbursed as of June 30, 2012, because some transactions are never disbursed and therefore never have the opportunity to default. According to Ex-Im, these changes were made so the dataset more accurately reflected the nature of its defaults. An Ex-Im report on the 2012 changes to the loss model stated that these adjustments increased the percentage of defaulted transactions in the dataset—from 14 percent to 19 percent for loan guarantee transactions and from 11 percent to 14 percent for insurance transactions. From a dollar perspective, the adjustments increased the loss rate for transactions in the dataset from 0.9 percent to 1.2 percent for loan guarantees and from 6.2 percent to 6.9 percent for insurance transactions.\nConsistent with audit recommendations and industry best practices, Ex- Im also incorporated five qualitative factors into the loss model in 2012 to adjust for circumstances that may cause estimated losses to differ from historical experience. Ex-Im added these factors in recognition of the substantial growth in Ex-Im’s portfolio in recent years and of the potential differences between its historical loss experience—on which the quantitative part of the model is based—and future loss experience. According to Ex-Im, the five qualitative factors enhance the reliability of the model by better accounting for uncertainty in loss expectations. Four of the five qualitative factors Ex-Im added to the model in 2012 increased the estimated loss rate, and therefore increased the related loss reserve and allowance amounts for some transactions.\nThe five qualitative factors are as follows:\nMinimum loss rate. Ex-Im established minimum loss rates for products that historically had very low losses and therefore would have very low estimated loss rates based solely on historical data. According to Ex-Im, they added this factor to recognize that although some segments of the data may have low (or zero) historical loss rates Ex- Im should not forecast no losses in the future. The minimum loss rates affected sovereign and other public-sector transactions of long terms with good risk ratings and some short-term insurance transactions with good risk ratings. Ex-Im’s 2012 report on the loss model stated that the addition of this qualitative factor increased loss reserves and allowances by 2 percent.\nGlobal economic risk. This factor attempts to account for some market risks associated with changes in international economic and business conditions that may affect Ex-Im’s portfolio and make future losses differ from historical losses. First, Ex-Im uses a 1-year forecast from Moody’s of default rates on speculative-grade corporate bonds to predict an Ex-Im default rate.Im’s historical default experience. If the estimated default rate is greater than Ex-Im’s historical experience, Ex-Im increases its loss estimate in proportion to the difference between the estimated default rate and its historical experience. For 2012, this factor did not result in an adjustment to Ex-Im’s loss model.\nEx-Im then compares this rate with Ex-\nPortfolio concentration risk, including the three factors of region concentration, industry concentration, and obligor concentration in the aircraft portfolio. Ex-Im added these three qualitative factors to adjust loss rates to account for uncertainties associated with growing concentrations in its portfolio. Conceptually, the region and industry concentration factors treat each growing region and industry as if it were an entity that was issuing debt—making the entity more risky and potentially lowering its credit rating. Ex-Im used certain credit rating agency methodologies to develop synthetic ratings for each “entity” and used these ratings to adjust loss rates for transactions in the corresponding regions or industries. Ex-Im’s 2012 report on the loss model stated that the addition of the region concentration factor and the industry concentration factor increased loss reserves and allowances by 7 percent and 13 percent, respectively. Ex-Im also developed a concentration factor for obligors in the aircraft sector, which accounted for 46 percent of Ex-Im’s exposure at the end of 2012. For example, this factor increases the loss rate for an aircraft transaction if the estimated loss given default (based only on the market value of the aircraft and the transaction amount) is larger than the loss given default predicted by the model (which incorporates other factors). Ex-Im indicated that the addition of the obligor concentration factor increased loss reserves and allowances by 0.8 percent.", "Notwithstanding recent enhancements to the loss estimation model, opportunities exist for additional improvements to the model, as well as Ex-Im’s model development and validation processes. Ex-Im’s independent financial statement auditor and Ex-Im’s IG have made recent recommendations designed to improve Ex-Im’s loss modeling process. In conjunction with its audit of Ex-Im’s 2012 financial statements, Ex-Im’s independent financial statement auditor reviewed the loss model and found it to be reasonable overall. However, the auditor recommended additional improvements to Ex-Im’s loss modeling process, including (1) considering enhancements to the adjustment for global economic risk by using economic data or related indicators that would better predict the overall impact to the portfolio; (2) conducting analysis to determine events that trigger defaults; (3) identifying and monitoring industry-specific drivers of risk; and (4) having an independent department or service provider test the accuracy of the model. Ex-Im officials stated they would take these recommendations into consideration as they update the model for the next fiscal year. Additionally, in its September 2012 report, the Ex- Im IG recommended that Ex-Im design and implement a formal governance framework that defines roles and responsibilities for financial models and includes policies and procedures for validating models. Ex-Im agreed with the recommendation and noted that it has begun developing a formal governance framework for financial models. Also, Ex-Im said that it will conduct external validations of future financial models.\nAs previously discussed, Ex-Im incorporated a qualitative factor into the model to adjust the loss estimates to account for uncertainty related to potential changes in global economic conditions. The factor uses a 1-year forecast of bond defaults to make this adjustment. According to Ex-Im, the bond default rates originally forecasted each year correlated with Ex- Im’s observed default rates between 1994 and 2011. In addition, Ex-Im officials said the 1-year forecast was appropriate because Ex-Im will use subsequent 1-year forecasts in annual updates to the loss model. However, a 1-year forecast may not capture the uncertainty associated with Ex-Im’s longer-term transactions, and the use of subsequent short- term forecasts does not address this limitation. FASAB guidance for federal credit agencies states that agencies should develop cash flow projections for their transactions based upon the best available data.\nOne-year forecasts may not represent the best available data for transactions that span multiple years. As a result, Ex-Im may not be making the appropriate adjustment to the estimated future losses, which could lead to underestimation of loss rates, credit subsidy cost estimates, and the related loss reserves and allowances for financial reporting purposes.", "Ex-Im’s fees for medium- and long-term products account for the credit and political risk associated with each transaction and are guided in large part by the OECD Arrangement, which establishes guidelines for determining “minimum premiums”—fees to cover the risk of not being repaid—and minimum interest rates that participant ECAs charge. Ex- Im officials told us that the “exposure fee” they charge is generally the minimum premium required by the OECD Arrangement, but that the OECD Arrangement allows them to increase this fee if they deem that the minimum premium does not cover the risk of a transaction. Ex-Im also charges the minimum interest rate required by OECD, but can charge above that rate.\nEx-Im’s pricing structure for medium- and long-term products (about 85 percent of Ex-Im’s exposure) includes the following:\nExposure fees. These fees cover the credit and political risks associated with a direct loan, loan guarantee, or insurance transaction. Ex-Im generally sets these fees at the level of the OECD minimum premium.\nCommitment fees. These fees are a flat percentage per year of the undisbursed portion of a direct loan or loan guarantee that Ex-Im charges to encourage the obligor’s use of the credit. These fees are not meant to cover the risk of nonrepayment and are not guided by the OECD Arrangement.\nInterest rates on direct loans.minimum interest charge of 1 percentage point above the U.S. Treasury rate for a security of comparable length.\nThe OECD Arrangement specifies a To determine the OECD minimum premium for a direct loan, loan guarantee, or insurance transaction, Ex-Im must take several aspects of the transaction into account, including the following:\nObligor’s country. OECD established a system for classifying the risk associated with transactions in different countries. OECD classifies the countries using a scale from 0 (least risky) to 7 (most risky), and Ex-Im applies the relevant country classification for each These classifications take into account risks associated transaction.with a country’s financial, economic, and political situation, as well as the historical payment experience of ECAs that are members of OECD and that have provided credit in the country.\nObligor’s credit risk. OECD established a framework for classifying obligors based on credit risk and provides guidelines to assist participant ECAs in doing so. Using the guidelines, Ex-Im places each obligor into one of eight classifications, which range from better-than- sovereign credit quality (least risky) to weak credit quality (most risky). Ex-Im uses the obligor’s recent financial information and other information, such as the obligor’s industry position and ratings by credit rating agencies, to assign a credit risk classification.\nOther characteristics affecting the risk of nonrepayment. In determining minimum premiums, Ex-Im also must take into account the type of export financing product, the length of the transaction, and the percentage of the overall credit amount for which Ex-Im is responsible in the event of nonpayment. Additionally, the application of risk-mitigation techniques, such as obligor credit enhancements, reduces the minimum premium.\nFor specific types of medium- and long-term transactions, different procedures apply. For example, for obligors in high-income OECD countries, high-income euro area countries, or countries with an OECD country risk classification of 0, the OECD Arrangement requires ECAs to set fees based on available market information and the characteristics of the underlying transaction. This is achieved by using prices of certain comparable private-sector products, or “market benchmarks,” to help set fees. The OECD Arrangement specifies seven products that participant ECAs may use for this purpose, including certain corporate bonds and certain credit default swaps. According to OECD, the level of country risk is considered negligible for these countries, and the credit risk associated with transactions in these countries is predominantly related to the credit risk of the obligor. In addition, Ex-Im sets fees for its aircraft transactions according to a separate OECD agreement, updated in 2011, This agreement provides guidance on specifically for the aircraft sector.the commitment fees to be charged in aircraft transactions. According to Ex-Im, when the updated agreement is fully implemented in 2013, Ex-Im’s fees for these transactions will rise substantially.\nThe fee structures for Ex-Im’s short-term products are not covered by the OECD Arrangement or any other international agreements and differ by export financing product, as follows:\nWorking capital. Ex-Im generally charges a fee of 1.75 percent of the direct loan or loan guarantee amount. Ex-Im does not factor political risk into its fees for this product because the obligors are U.S. exporters. Ex-Im also generally does not differentiate between the credit risk of different obligors.\nShort-term insurance. Ex-Im’s fees include a premium that is based on the length of the credit, the type of entity purchasing the export (i.e., a foreign government, financial institution, or nonfinancial institution), and the OECD country risk classification for the country of the obligor. Some short-term insurance programs also factor into the premium amount the credit risk of the obligor.\nIn 2011, Ex-Im conducted internal analyses to help ensure that the fees it charges are sufficient to cover losses. For instance, Ex-Im officials told us that in 2011 they determined that the credit subsidy rate for the working capital program was positive by 9 basis points (0.09 percent), indicating that fee levels for this program were not sufficient to cover losses. As a result, in 2012 Ex-Im raised fees for the working capital program from 1.5 percent to 1.75 percent (or 25 basis points) of the direct loan or loan guarantee amount to avoid the need for an appropriation to cover the credit subsidy costs. Similarly, Ex-Im officials said the 2011 analysis showed that one of Ex-Im’s short-term insurance products had a positive subsidy cost. In response, Ex-Im implemented a more risk-based fee structure to increase fees and make the product credit subsidy cost- neutral. Ex-Im officials said that they will conduct similar product analyses on an annual basis. Whether recent fee changes will avoid the need for a future credit subsidy will depend on the extent to which future losses are consistent with Ex-Im’s historical experience.", "Ex-Im calculates and reports default rates for its portfolio, but it has not maintained data useful for assessing the performance of newer books of business. Ex-Im has been self-sustaining for appropriations purposes since 2008, but its long-term budgetary impacts are uncertain.", "As of December 31, 2012, Ex-Im reported a default rate for its active portfolio of 0.34 percent. Ex-Im defines the active portfolio as those transactions for which the maturity date has not been reached or that have reached maturity but are still within the time frame during which a claim can be submitted. Ex-Im calculates the default rate as the sum of net claims paid on loan guarantees and insurance transactions and unpaid past due installments on direct loans divided by disbursements. Ex-Im’s default rate declined steadily from about 1.6 percent as of September 30, 2006, to just under 0.3 percent as of September 30, 2012, before edging up slightly by the end of the calendar year. However, this downward trend should be viewed with caution because Ex-Im’s portfolio contains a large volume of recent transactions that have not reached their peak default periods. Recent transactions have had limited time to default and may not default until they are more seasoned. For example, according to Ex-Im, the peak default period for long-term loan guarantees—which represent almost 57 percent of Ex-Im’s 2012 exposure—is about 3.9 years after authorization. As of the end of 2012, about 53 percent of Ex-Im’s active long-term guarantees (in dollar terms) had been authorized within the last 4 years. Therefore, the ultimate impact of Ex-Im’s recent business on default rates is not yet known.\nAs of December 31, 2012, Ex-Im’s reported default rate varied by product type, region, and industry. For example, default rates were 0.14 percent for short-term products (working capital loan guarantees and insurance), 7.50 percent for medium-term products (direct loans, loan guarantees, and insurance), and 0.20 percent for long-term products (direct loans and loan guarantees). Among all products, the default rate ranged from a low of 0.07 percent for working capital loan guarantees to a high of 8.74 percent for medium-term insurance. Across regions, default rates ranged from 0.002 percent in Oceania to 0.58 percent in Asia. Across Ex- Im’s largest industry sectors, default rates ranged from 0 percent in oil and gas to 0.71 percent in manufacturing.\nA technique called vintage analysis is useful for examining the performance of growing portfolios, but Ex-Im has not maintained the data necessary to conduct such analysis. Vintage analysis separates and compares the performance of seasoned cohorts and newer cohorts at comparable points in time (for example, a certain number of years after authorization). This technique can help evaluate the credit quality of recent business by comparing the early performance of these cohorts with the early performance of older cohorts. As such, it can provide early warning of potential performance problems in newer business. Federal banking regulator guidance suggests that banks conduct vintage analysis to help manage growing portfolios. For example, the Federal Deposit Insurance Corporation’s Risk Management Manual of Examination Policies states that loan review and monitoring analysis should consider the effects of portfolio growth and seasoning and that vintage analysis can be used to do this. In addition, interagency guidance from federal banking regulators states that reporting from management information systems should include vintage analysis and that such analysis helps management understand historical performance trends and their implications for future default rates. Although Ex-Im information systems produce quarterly performance snapshots of individual cohorts, the systems overwrite the snapshots with each quarterly update, according to Ex-Im officials. Because Ex-Im has not retained historical cohort-level performance data, it is unable to compare the performance of different cohorts at comparable points in time. Ex-Im officials said that they use several tools to provide early warning of performance problems, including monitoring individual transactions of more than $1 million, maintaining an Obligors of Concern List, and analyzing monthly and annual trends in claims. However, by not maintaining the information necessary to conduct vintage analysis, Ex-Im’s ability to understand the early performance of recent cohorts and implications of this performance on future default rates may be limited. Additionally, as previously noted, the lack of point-in-time performance data may reduce the precision of Ex- Im’s loss estimation model.\nAnother measure of portfolio performance is the proportion of credit- impaired (impaired) assets to Ex-Im’s total exposure. Ex-Im defines impaired assets as delinquent direct loans, loan guarantees, and claims with an amount of $50,000 or more past due at least 90 days; rescheduled direct loans, loan guarantees, and claims; or nondelinquent A direct loans, loan guarantees, and claims above a certain risk rating. substantial portion of Ex-Im’s impaired assets are from transactions that preceded the implementation of credit reform in 1992. For example, from 2008 through 2012, pre-credit reform transactions accounted for about 50 to 60 percent of impaired assets each year. As a percentage of total exposure, Ex-Im’s impaired assets generally declined over that period (see fig. 7). In 2008, Ex-Im had about $3.4 billion in impaired assets, which represented approximately 6 percent of total exposure at that time. In 2010, the corresponding figures were about $4.4 billion and 5.8 percent. In 2012, impaired assets were approximately $2.6 billion, or about 2.5 percent of Ex-Im’s total exposure for that year. Again, the trend in this performance measure should be interpreted cautiously, because Ex-Im’s portfolio was growing during this period, which resulted in more of its portfolio being of recent vintage.\nEx-Im has been self-sustaining since 2008. Each year, Ex-Im is appropriated a specified amount of funds for administrative costs and However, since 2008, appropriation acts have credit subsidy costs.required Ex-Im to repay appropriated funds dollar-for-dollar with offsetting collections so that the result is a net-zero appropriation. Ex-Im’s offsetting collections are generated by transactions that are initially estimated to result in negative credit subsidies when fees collected from obligors are estimated to be greater than estimated losses (net of recoveries). For example, for 2012, Ex-Im was appropriated about $90 million for administrative costs and $58 million for credit subsidy costs and also authorized to retain up to $50 million in offsetting collections. That year, Ex-Im generated about $1 billion in collections. With these funds, Ex-Im reimbursed Treasury for the appropriation of administrative costs. In addition, Ex-Im retained $108 million—the $58 million for credit subsidy costs plus the $50 million in retained offsetting collections—for obligations occurring within the next 3 years. Unlike the administrative costs appropriation, which Ex-Im must repay in the same year as received, Ex- Im has 3 years to repay the credit subsidy appropriation and obligate the $50 million it retained in offsetting collections. The remaining collections, roughly $800 million, were sent to Treasury.\nAccording to Ex-Im, since the implementation of FCRA, it has sent about $5.8 billion more to Treasury than it has received in appropriations. From 1992 through 2012, Ex-Im was appropriated about $9.8 billion for credit subsidy costs and administrative costs. Over the same period, Ex- Im sent about $15.6 billion to Treasury as a result of credit subsidy reestimates ($12 billion), cancelled authority ($1.6 billion), returned collections ($1.3 billion), and rescissions ($675 million).billion of the $5.8 billion net return to Treasury occurred from 2008 through 2012.\nWe determined that Ex-Im’s figures for appropriations received and amounts sent to Treasury were reasonable based on our analysis of Ex-Im appropriations acts, budget appendixes, and financial statements from 1992 through 2012. downward reestimates in the early- to mid-2000s were due primarily to a switch from standard loss rates prescribed by OMB to loss rates that reflected Ex-Im’s historical experience, which tended to be lower. Ex-Im officials attributed the upward reestimates in 2010 to changes they made that year in their loss estimation model to account for increased loss experience in 2009 and uncertainty stemming from the global financial crisis. Ex-Im officials said that the upward reestimates for 2011 and 2012 for direct loans stemmed from declines in obligor interest rates, which reduce estimated cash flows. In addition, Ex-Im officials said they expected further upward reestimates due to modeling changes they made in 2012, including the addition of the qualitative factors discussed previously. These modeling changes will be reflected in the subsidy estimates and reestimates in the 2014 budget.\nThe extent to which Ex-Im will continue to send more funds to Treasury than it receives in appropriations and permanent, indefinite budget authority will depend partly on future credit subsidy reestimates. Credit subsidy estimates are based, in part, on economic assumptions that are uncertain and can change from year to year. In addition, the estimates are developed using Ex-Im’s loss estimation model, which is not intended to capture the impact of unexpected economic scenarios that could substantially affect Ex-Im’s losses. Therefore, changes in underlying assumptions or adverse economic events could result in upward subsidy reestimates that may require drawing on permanent and indefinite budget authority.", "", "Ex-Im uses a number of risk-management techniques throughout the different stages of a transaction, which include underwriting, monitoring and restructuring, and claims and recovery. In January 2013, Ex-Im completed a comprehensive revision of its policies and procedures manual that covers each stage.\nEx-Im manages risks through the underwriting process in several ways. First, Ex-Im produces a Country Limitation Schedule (CLS) that specifies the types of transactions eligible for financing in each country and the conditions under which they are eligible. For example, in some countries, Ex-Im will not provide financing because the credit and political risks are deemed to be too high or because of legal prohibitions. In countries where Ex-Im does business, Ex-Im may only provide financing for transactions of certain durations or for either public- or private-sector borrowers. Ex-Im has basic eligibility requirements for obligors. For example, an obligor must not have been suspended or debarred from doing business with the U.S. government and may be required to have been in the same line of business for a specified number of years. Requirements for obligors also vary by product type and transaction length.\nFor transactions that meet CLS and eligibility requirements, Ex-Im assigns a risk rating used to determine whether there is a reasonable assurance of repayment. As previously discussed, the ratings range from 1 (least risky) to 11 (most risky). For transactions conveying the full faith and credit of a foreign government, Ex-Im officials apply the ICRAS sovereign risk rating. ICRAS ratings for sovereign obligors are based on macroeconomic indicators, such as indebtedness levels, balance-of- payments factors, and political and social factors. For most private-sector transactions, Ex-Im officials use the private-sector ICRAS rating as a baseline and adjust that rating depending on their assessment of the obligor’s creditworthiness and other factors. ICRAS ratings for private- sector transactions in a country are based on qualitative and quantitative assessments of the depth of private-sector business activity in a country, the strength of private-sector institutions, foreign exchange availability, political stability, and other factors. Ex-Im officials assess obligors’ creditworthiness by reviewing information including financial statements and corporate credit ratings. For more complex transactions, Ex-Im considers additional information to develop the risk rating. For example, for project finance transactions, Ex-Im considers the allocation of risk among project participants, the financial strength of the project, and market pricing of project inputs and outputs. Ex-Im generally does not authorize transactions with risk ratings over 8.\nIn addition to the CLS and risk rating, Ex-Im uses other processes, standards, and conditions in underwriting transactions. Examples of these include the following:\nDue diligence process. Ex-Im reviews information related to the integrity of the transaction and the character and reputation of the participants. For example, Ex-Im determines whether it has had adverse prior experience with a participant or if the participant presents a risk due to poor references or investigations by local legal or regulatory authorities.\nCollateral standards. As applicable, Ex-Im requires assets to secure the transactions and prefers the asset value to exceed the loan value in most transactions. For example, working capital loan guarantees must be secured by raw materials, finished goods, accounts receivable, or other specified assets. Additionally, each Ex-Im aircraft transaction is secured not only by the aircraft being financed under that transaction, but also by any other aircraft Ex-Im is currently financing for the obligor.\nRisk-sharing conditions. These conditions require lenders and exporters to share a percentage of the credit risk with Ex-Im. For example, for working capital loan guarantees, Ex-Im guarantees 90 percent of the principal and interest on a loan issued by a private lender. In the event of a claim, Ex-Im reimburses the lender for 90 percent of both the outstanding principal balance of the loan and accrued interest, and the lender is responsible for the remaining 10 percent.\nEx-Im monitors the performance of all medium-term direct loan, loan guarantee, and insurance transactions and long-term direct loan and loan guarantee transactions above $1 million to help contain risk. Ex-Im conducts ongoing reviews of these transactions to identify and address any deterioration in credit quality before the obligor defaults. This includes assessment of the operating environment and financial condition of the obligor to determine whether or not there have been changes that might increase or decrease credit risk. Ex-Im updates a transaction’s risk rating at least annually to reflect any changes in credit risk, which, in turn, affects the estimated credit subsidy cost and loss reserve or allowance associated with the transaction. Specific monitoring activities include evaluating the capacity of obligors to repay their debts, reviewing the value of pledged collateral, and staying abreast of actions by the obligor to respond to adverse market changes, and on-site visits at crucial project milestones (as applicable). Through the monitoring process, Ex-Im develops a Watch List, which tracks transactions that show signs of impairment, and an Obligors of Concern List, which tracks transactions that are impaired. These transactions are subject to more frequent monitoring than other transactions. In addition, monitoring staff share these lists with the Office of the Chief Financial Officer and other senior management to keep them informed of emerging credit issues.\nAccording to Ex-Im, no lenders failed the 156 examinations conducted from 2008 through 2012.\nIm. Further, in 2012, Congress directed Ex-Im to improve and clarify its due diligence procedures.expected to have the revised procedures completed by the summer of 2013.\nIn response, Ex-Im officials said they Ex-Im restructures transactions with credit weaknesses to help prevent defaults and increase recoveries on transactions that do default. According to Ex-Im, restructuring can involve substantial revision of transaction terms and conditions. For example, in 2012, Ex-Im restructured a defaulted project finance transaction into a direct loan with the implicit backing of a foreign government. Restructuring can also involve the addition of credit enhancements such as extra collateral or third-party guarantees. According to Ex-Im, the agency restructures as many as eight transactions per year. According to Ex-Im officials, the agency is developing a dedicated restructuring team to help reduce the workload of staff currently responsible for both monitoring and restructuring tasks. In addition, they indicated that restructuring staff inform underwriting staff of trends in credit deteriorations or problems with particular borrowers to help ensure that any lessons learned are applied to future transactions.\nEx-Im pays claims when a loan that it has guaranteed or an insurance policy that it has issued defaults. Ex-Im tries to minimize losses on claims paid by pursuing recoveries. For example, Ex-Im takes steps to collect on the assets of the obligors, which can include the collateral backing a transaction. For all products combined, Ex-Im’s recovery rate— the total amount recovered divided by the total amount of claims paid plus recovery expenses—was about 50 percent on average from 1994 through 2012. In addition, when Ex-Im pays a claim for a loan guarantee that is denominated in a foreign currency, Ex-Im manages its foreign-currency risk by purchasing the foreign currency to pay the claim to the lender and then seeks recovery on the U.S. dollar equivalent, which represents the obligor’s debt obligation. This policy effectively shifts the foreign-currency risk from Ex-Im to the obligor after a claim has been paid.", "In September 2012, the Ex-Im IG issued a report on Ex-Im’s management of risk at the overall portfolio level. On the basis of industry best practices, the report made a number of recommendations to improve Ex- Im’s portfolio management in areas such as stress testing, portfolio concentrations, and risk governance. Our review of federal internal control standards and industry practices suggests that the IG’s recommendations in these areas represent prudent risk-management techniques. Ex-Im has begun to implement some of the IG’s recommendations and is in the process of analyzing others to determine their applicability to Ex-Im and the risk-management benefits that could be gained from them.\nThe Ex-Im IG recommended that Ex-Im develop a systematic approach to stress testing its portfolio that would be conducted at least annually as part of the process for reestimating credit subsidies. A stress test is a “what-if” scenario that is not a prediction or expected outcome of the economy. Stress testing is one tool to measure the vulnerability of portfolios to unexpected losses—that is, losses associated with extreme yet plausible events. The IG stated that in light of concentrations in Ex- Im’s portfolio, stress testing would provide Ex-Im information on how its portfolio would react to shocks in financial markets. Ex-Im agreed to implement this recommendation.\nStress testing is consistent with our internal control standards and industry practices. For example, our internal control standards state that agencies should have adequate mechanisms to identify risks arising from external factors and analyze the possible effects of these risks.addition, in its best practices manual on credit portfolio management, the In International Association of Credit Portfolio Managers (IACPM) states that institutions should conduct stress testing to inform management about the portfolio’s vulnerabilities and to establish the portfolio’s sensitivity to risk factors. Similarly, guidance from regulators of federal financial institutions notes that the recent financial crisis underscored the need for banking organizations to incorporate stress testing into their risk- management practices.credit agencies with which we spoke conduct stress testing on their portfolios. For example, officials from one ECA told us that they conduct stress tests every 6 months using scenarios related to current world issues to determine the impact those scenarios would have on obligors.\nFurthermore, the foreign ECAs and U.S. federal Ex-Im officials stated that they have conducted ad hoc stress tests in the past, but have been developing a systematic approach. This approach will involve assessment of (1) how the entire portfolio or portions of the portfolio would be affected by extreme economic events and (2) the impact that particular adverse scenarios may have on specific obligors. Ex-Im officials told us that they will first stress test the aircraft portfolio, which accounts for about 50 percent of the agency’s exposure. According to Ex-Im, the stress test results will be included in a quarterly internal report on the financial status of Ex-Im’s portfolio. Ex-Im officials stated that the results of the stress testing will be used to inform the loss modeling process and will be used by senior management in making decisions about the agency’s resource allocations and strategic planning efforts. Ex-Im officials also indicated that they intend to share their stress testing and loss modeling methodologies with other federal credit agencies so that others may benefit from Ex-Im’s efforts.\nEx-Im has not yet made plans to report its stress scenarios and stress test results to Congress. Such reporting could help Congress oversee Ex- Im’s activities by providing additional information on Ex-Im’s risk exposure. Through provisions in the Export-Import Bank Reauthorization Act of 2012, Congress has required Ex-Im to provide analysis of the agency’s default rates and risk of loss associated with its increased exposure limits. Information on Ex-Im’s stress testing would complement that analysis by disclosing the magnitude of losses that Ex- Im could face under adverse scenarios. Additionally, reporting such information would be consistent with our internal control standards, which indicate that communications with external parties, including Congress, should provide information that helps them better understand the risks facing the agency.\nAs previously discussed, Ex-Im’s portfolio is concentrated in certain industries, regions, and obligors. These concentrations expose Ex-Im to the risk associated with negative events in those market segments. In light of these concentrations, the Ex-Im IG recommended that Ex-Im implement “soft portfolio concentration sublimits”—that is, informal thresholds for the portion of total exposure within different segments of the portfolio. The IG recommended that Ex-Im set the soft portfolio sublimits by industry, geography, or transaction risk rating and use them as internal guidance to inform future pricing and portfolio risk- management decisions (e.g., ways to diversify the portfolio). According to IG officials, the establishment of soft portfolio sublimits (as opposed to hard limits) would help Ex-Im manage portfolio concentrations without restricting its ability to meet exporters’ demand for financing or adversely affecting Ex-Im’s competitiveness with other ECAs.\nPortfolio sublimits represent one technique for managing a “risk appetite”—that is, the amount of risk an institution is willing to accept. Setting a risk appetite is consistent with our internal control standards, which state that agencies should develop an approach for risk management based on how much risk can be prudently accepted. Additionally, industry best practices identified by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the Institute of International Finance (IIF), and IACPM cite the establishment of risk appetite, including through portfolio sublimits, as a sound risk- management practice.including the Overseas Private Investment Corporation (OPIC) and two foreign ECAs, set a risk appetite by establishing limits on the volume of financing they provide to different industries, countries, or obligors. Setting a risk appetite can help senior management determine the point at which the institution’s exposure has reached a level that may require implementation of additional risk controls.\nSome organizations with which we spoke, As of December 2012, Ex-Im had not established soft portfolio sublimits. However, Ex-Im officials said that they were evaluating whether this practice was suitable for the agency in light of potential implications for Ex-Im’s ability to meet client demands and competitiveness with other ECAs. Given the potential benefits of this risk-management practice, following through on this evaluation will be important for Ex-Im. Furthermore, if it determines that soft portfolio sublimits are appropriate, following industry guidance for setting a risk appetite will also be important. For example, guidance issued by COSO in January 2012 states that in developing a risk appetite an institution should consider its existing risk profile (current level and distribution of risks); risk capacity (the amount of risk that an organization is able to support); risk tolerance (the acceptable level of variation an organization is willing to accept); and stakeholders’ attitudes towards growth, risk, and return.\nIn its September 2012 report, the Ex-Im IG also stated that Ex-Im’s risk governance structure was not commensurate with the size, scope, and strategic ambitions of the institution. Among other things, the IG noted that Ex-Im lacked an official responsible for managing the full spectrum of risks facing the agency and developing risk-management strategies. The IG recommended that Ex-Im create the position of chief risk officer (CRO) to oversee the design and implementation of an enterprisewide risk- management function.\nIndustry best practices and corporate governance principles of the Basel Committee on Banking Supervision highlight the importance of having focal points for all the activities required to manage enterprisewide risks. For example, best practices published by IIF state that financial firms should assign responsibility for risk management to an officer at a senior level, in most cases a CRO. The Global Association of Risk Professionals has indicated that the typical roles of a CRO include establishing risk- management policies and procedures consistent with entitywide policies, reviewing and approving models used for pricing and risk measurement, measuring risk on a global basis as well as monitoring exposures and changes in risks, and communicating risk-management results to senior management. OPIC and some foreign ECAs with which we spoke have CROs and cited benefits of this function, including risk assessment that is independent from other business functions. For example, OPIC officials said that OPIC’s CRO function is carried out by a small unit led by a Director of Risk Management that reports directly to the agency’s Chief Financial Officer.\nEx-Im does not have a centralized CRO function and instead distributes responsibilities for risk management to several parts of the organization, including the Office of the Chief Financial Officer, Office of General Counsel, Credit Management Group, and Credit Policy Committee. For example, the Office of the Chief Financial Officer’s responsibilities include loss modeling, determining credit subsidy estimates, and portfolio monitoring. The Office of General Counsel’s responsibilities include conducting due diligence on transaction participants to manage reputational risk and assisting in documenting transactions. The Credit Management Group takes the lead in reviewing and recommending broad credit policy and underwriting standards. Finally, the Credit Policy Committee is responsible for formulating, coordinating, and making recommendations to Ex-Im’s Board of Directors in the areas of country risk, sovereign and private-sector risk, changing or modifying CLS, and addressing other risk issues.\nAs of February 2013, Ex-Im officials told us that they were analyzing the possibility of establishing a more centralized CRO function. The officials said that in performing this analysis, they were reviewing other organizations that have a CRO, including OPIC, the World Bank, the International Finance Corporation, and the African Development Bank. Careful consideration of the potential benefits of a CRO function and the extent to which the agency’s current structure comprehensively addresses enterprisewide risks is critical given Ex-Im’s growing financial exposure. Further, taking into account the potential expansion of its risk- management activities, such as the implementation of soft sublimits and regular stress testing, will be important for Ex-Im’s analysis.\nIn addition to the three recommendations discussed previously, the IG recommended that Ex-Im: (1) develop a systematic approach for modeling portfolio risk, including identifying appropriate qualitative risk factors; (2) with the assistance of external experts, implement a formal framework for the use of financial models, including procedures for model validation; (3) review risk metrics and reporting procedures to enhance transparency and to better inform key stakeholders; and (4) amend its by- laws to provide for oversight of an agencywide risk-management function by Ex-Im’s Board of Directors. Ex-Im has taken actions to address the first three of these recommendations. As already noted, Ex-Im incorporated qualitative risk factors into its loss estimation model. In addition, Ex-Im hired a contractor to serve as an external expert in reviewing and analyzing Ex-Im’s loss estimation model and plans to conduct external validation of future financial models. Ex-Im also began issuing a quarterly default report and is identifying portfolio management best practices—including risk metrics and reporting procedures—through a review conducted by subject-matter experts. Ex-Im disagreed with the fourth recommendation. Ex-Im stated that the agency’s charter does not provide this oversight function to the Board of Directors, but rather provides the President of Ex-Im broad operational authority for the management of Ex-Im, including oversight of all of Ex-Im’s risk- management functions.", "Ex-Im’s annual authorizations increased from about $12 billion in 2006 to nearly $36 billion in 2012, an increase of about 195 percent. Over the same period, Ex-Im’s staff level, as measured by full-time equivalents (FTE), increased from 380 to 390 FTEs, about 3 percent (see fig. 9).\nThe rapid increase in business volume, coupled with a modest growth in FTEs, creates potential operational risks for Ex-Im. If demand for Ex-Im’s services exceeded its capacity, the agency’s ability to properly underwrite and monitor transactions might suffer. Agencywide, the average dollar amount of annual authorizations per FTE rose from $32 million in 2006 to about $92 million in 2012, an increase of more than 150 percent. Over the same period, the number of transactions per FTE rose from 7.0 to 9.7, an increase of 38 percent. Ex-Im acknowledged that its current resources would not be sufficient for the high levels of activity it expected to see in the coming years. In addition, Ex-Im division managers with whom we spoke noted the strain of the increased and increasing workloads on employees and said they could use additional staff. Ex-Im officials stated that risks to the agency have been increasing as a result. While the officials told us that the increased business volume primarily had affected the underwriting function, the impact had been mitigated somewhat by the agency’s delegation of some underwriting to private lenders for working capital loan guarantees. However, the officials said that Ex-Im’s other transaction-related functions, including legal and monitoring activities, were expected to have significantly higher workloads as transactions complete the underwriting phase and move on to other phases.\nEx-Im has taken some steps to manage its increased workload. Ex-Im asked for additional administrative resources in its annual budget requests, in part to hire more staff. For example, in its 2013 budget request, Ex-Im requested a $7 million increase in administrative resources to support underwriting and small business outreach. While acknowledging the constrained federal budget environment, Ex-Im officials said that future budget requests likely also would request resources for additional staff. In the interim, Ex-Im officials said that when vacancies occurred, they allocated the positions to areas of highest need rather than automatically refilling the vacancies. Ex-Im also hired a consultant to identify best practices for improving operational efficiency of the monitoring function. In addition, Ex-Im officials said they planned to update the agency’s 2009-2012 Human Capital Plan following a forthcoming revision to Ex-Im’s strategic plan. Ex-Im’s workforce planning process involves assessing its current workforce, anticipating future needs, analyzing gaps, and developing strategies to address those gaps.\nAlthough Ex-Im has acknowledged growing risks associated with its increasing workload, it has not formally determined the level of business it can prudently manage—either agencywide or within specific functional areas—with a given level of resources. For example, while Ex-Im has reported the average number and dollar amount of authorizations per FTE, officials stated that they have not determined the level at which operational risks are too high. Additionally, Ex-Im officials within different functional areas were unable to provide formal, documented assessments of resource needs. As previously noted, our internal control standards state that agencies should develop an approach for risk management based on how much risk can be prudently accepted. In addition, these standards indicate that agencies should decide upon specific control activities to manage or mitigate risks entitywide and at each activity level. Ex-Im officials said the dramatic increase in business was not anticipated and that the agency historically did not need to make major workforce adjustments because its business volume was stable. However, without benchmarks to determine when workload levels have created too much risk, Ex-Im’s ability to monitor and manage operational risks associated with its already increased business volume may be limited. Monitoring workloads against such benchmarks would help Ex-Im determine when additional steps—such as tightening underwriting standards or increasing requirements for lender participation—may be needed to mitigate Ex-Im’s increased risk. Moreover, legislated increases in Ex-Im’s exposure limits provide room for additional increases in Ex-Im’s business volume, and thus Ex-Im could continue to experience strains on its workforce.", "In recent years, Ex-Im has assumed an increased role in supporting the export of U.S. goods and services. In part, this increase resulted from a decline in the availability of private-sector credit that accompanied the 2007-2009 financial crisis. For several years, Ex-Im has been self- sustaining for budgetary purposes, although the long-term cost of Ex-Im’s new business is not yet known. In addition, Ex-Im has made recent improvements to its risk management, including enhancements to its loss estimation model and plans for a more systematic approach for stress testing its portfolio. However, the growth in Ex-Im’s portfolio and the spectrum of risks Ex-Im faces underscore the need for continued improvements in risk management. Recommendations made by the Ex- Im IG in September 2012 and further supported by our work point to additional steps that Ex-Im could take to strengthen its risk-management framework. These steps include establishing soft portfolio sublimits and assessing the benefits of a more centralized CRO function. Following through on these recommendations will be critical to help manage the risks and challenges associated with the agency’s greater financial exposure.\nIn addition, our work identified other opportunities for Ex-Im to improve how it monitors, manages, and reports on the risks it faces. First, while Ex-Im added qualitative factors to its loss model in 2012, the factor that adjusts loss estimates for potential changes in global economic conditions uses a 1-year forecast for speculative-grade corporate bond defaults for all its transactions, regardless of their length. Because many of Ex-Im’s transactions span multiple years, a 1-year default forecast may not represent the best available data for making default adjustments for these transactions. The use of default forecasts or other economic data with a longer time horizon may produce more reliable loss estimates and would be consistent with FASAB guidance on using the best available data for developing cash flow projections. Second, Ex-Im has not maintained the data necessary to conduct vintage analysis, a technique federal banking regulators have cited as useful for monitoring growing portfolios. Once a sufficient amount of data has been retained, such an analysis could help Ex-Im to assess the early performance of new books of business by providing comparisons to seasoned books at a comparable point in time. It could also provide Ex-Im an additional early warning indicator to assist Ex-Im in taking timely actions to mitigate emerging risks. Such data also have the potential to strengthen Ex-Im’s future loss modeling efforts by providing additional information about when defaults occur over the life of a transaction. Third, Ex-Im has made progress toward implementing a systematic approach to stress testing its portfolio, but has not yet made plans to report the scenarios and results to Congress. Providing this information to Congress—potentially as part of Ex-Im’s annual report— would be consistent with federal internal control standards for effective external communication and would aid congressional oversight of the agency. Finally, although Ex-Im has recognized and taken some steps to address workload challenges, it has not developed benchmarks for the level of business it can properly support with a given level of resources. This is contrary to federal internal control standards, which indicate that agencies should develop a risk-management approach based on how much risk can be prudently accepted. Ex-Im’s workload challenges may continue to grow because of increases in Ex-Im’s exposure and exposure limit, coupled with resource constraints in the current budgetary environment. In the absence of workload benchmarks, Ex-Im lacks a sound basis for workforce planning and for determining when additional control activities might be needed to manage operational risks.", "We recommend that the Chairman of the Export-Import Bank of the United States take the following four actions:\nTo help improve the reliability of its loss estimation model, Ex-Im should assess whether it is using the best available data for adjusting loss estimates for longer-term transactions to account for global economic risk.\nTo conduct future analysis comparing the performance of newer and older business and to make future enhancements to its loss estimation model, Ex-Im should retain point-in-time, historical data on credit performance.\nTo help Congress better understand the financial risks associated with Ex-Im’s portfolio, Ex-Im should report its stress test scenarios and results to Congress when such information becomes available.\nTo help manage operational risks stemming from Ex-Im’s increased business volume, Ex-Im should develop workload benchmarks at the agencywide and functional area levels, monitor workload against these benchmarks, and develop control activities for mitigating risks when workloads approach or exceed these benchmarks.", "We provided a draft of this report to Ex-Im for its review and comment. In written comments, which are reproduced in appendix II, Ex-Im agreed with our recommendations. Ex-Im also provided technical comments that we incorporated into the final report, as appropriate.\nIn its written comments, Ex-Im said it would begin to implement all four of our recommendations in fiscal year 2013. Specifically, Ex-Im said it would implement our recommendation to assess data for adjusting loss estimates for longer-term transactions as part of a spring 2013 reevaluation of its loss estimation model. Concerning our recommendation that Ex-Im retain point-in-time data on credit performance, Ex-Im said it had already begun doing so and would use these data to compare the performance of newer and older books of business and to enhance its loss estimation model. Ex-Im also agreed with our recommendation that it provide stress testing scenarios and results to Congress and said it would include the results of its stress tests in the default reports it submits to Congress. Ex-Im did not indicate whether it would also include its stress test scenarios in the default reports. Because stress testing results are only meaningful in the context of the stress scenarios used, our recommendation emphasizes reporting both types of information to Congress. Finally, concerning our recommendation that Ex-Im set workload benchmarks to help manage operational risk, Ex-Im said it planned to form an Enterprise Risk Committee consisting of senior management from the business, financial, legal, policy, resource, and risk-management areas. Ex-Im stated that operational risk would be one of the first areas the committee examines.\nWe are sending copies of this report to appropriate congressional committees and the Chairman of the U.S. Export-Import Bank. The report is also available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8678 or [email protected]. 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 III.", "Our objectives were to examine: (1) how the U.S. Export-Import Bank’s (Ex-Im) business changed in recent years and possible reasons for these changes; (2) how Ex-Im determines credit subsidy costs, loss reserves and allowances, and product fees, and how these processes account for different risks; (3) how Ex-Im’s financial portfolio has performed and the budgetary impact of its programs; and (4) the extent to which Ex-Im has a comprehensive risk-management framework.\nTo assess how Ex-Im’s business changed in recent years and possible reasons for these changes, we analyzed information on Ex-Im’s financial exposure and authorizations, including data from Ex-Im annual reports and data compiled by the agency from its Ex-Im Bank Reporting System. We examined Ex-Im’s total exposure levels for each year from 1990 through 2012 to identify growth trends both in nominal and inflation- adjusted terms. We also examined Ex-Im’s annual authorizations for each year from 2006 through 2012. We chose that period in order to cover Ex- Im’s pre- and post-financial crisis business activity. We analyzed trends in the dollar volume of Ex-Im’s total authorizations each year, the volume of total U.S. exports, as well as Ex-Im authorization levels disaggregated by product type, region, and industry sector. To identify possible reasons for trends in Ex-Im’s business activity, we reviewed a variety of Ex-Im documents, including annual reports, competitiveness reports, the agency’s strategic plan for 2010-2015, and reports issued by Ex-Im’s Office of Inspector General (IG). We also reviewed relevant reports by the Basel Committee on Banking Supervision, academics, and foreign export credit agencies (ECA). Because Ex-Im can play a countercyclical role in export finance (i.e., expanding when private sector credit is retrenching), we also analyzed data related to the availability and cost of credit from 2006 through 2012. In particular, we analyzed (1) calendar 2006-2012 survey data from the Board of Governors of the Federal Reserve System and the European Central Bank on the percentage of commercial lenders that were tightening or easing lending standards and (2) calendar 2006- 2012 data on corporate bond risk premiums from Bank of America-Merrill Lynch. We also analyzed International Monetary Fund data on the volume of U.S. exports over fiscal years 1990 through 2012 in order to compare changes in export volume with changes in Ex-Im authorizations. Additionally, we interviewed Ex-Im officials and six representatives of industry trade associations and research organizations about reasons for changes in the agency’s business volume. We selected the trade association and research organization representatives to interview on the basis of a literature review of relevant published articles, prior GAO work on Ex-Im and international trade issues, and recommendations from knowledgeable federal agency and industry officials about individuals with expertise on Ex-Im’s activities or export financing generally. Our literature review focused on publications that cited Ex-Im, export credit agencies, trade finance, and export finance. Three of the entities we interviewed represented industry trade associations (the Coalition for Employment through Exports, the Berne Union, and the Bankers’ Association for Finance and Trade and International Financial Services Association) and three represented research groups (Peterson Institute for International Economics, the Rhodium Group, and the Research Division of the U.S. International Trade Commission). Further, to obtain perspectives on ECA growth generally, we conducted telephone interviews with officials from four foreign ECAs: Export Development Canada (Canada), Compagnie Française d’Assurance pour le Commerce Extérieur (France), UK Export Finance (United Kingdom), and Japanese Bank for International Cooperation (Japan). We selected theses ECAs based on their similarity to Ex-Im in terms of: (1) their role in supplementing rather than competing with private markets for export credit support, (2) the types of export credit products they offer, and (3) the presence of a small business directive or mandate.\nTo examine how Ex-Im determines subsidy costs, loss reserves and allowances, and product fees, and how these processes account for different risks, we reviewed relevant requirements and guidance. This included the Federal Credit Reform Act of 1990; the Office of Management and Budget (OMB) Circular No. A-11 (Preparation, Submission, and Execution of the Budget); the Statement of Federal Financial Accounting Standards No. 2 (Accounting for Direct Loans and Loan Guarantees); the Federal Accounting Standards Advisory Board’s Federal Financial Accounting and Auditing Technical Release 6 (Preparing Estimates for Direct Loan and Loan Guarantee Subsidies under the Federal Credit Reform Act); and the Organisation for Economic Cooperation and Development Arrangement on Officially Supported Export Credits (OECD Arrangement). We identified types of risks applicable to Ex-Im by reviewing Ex-Im’s documents, including annual reports and policy manuals, as well as prior GAO work on credit programs and risk management. To examine how Ex-Im accounts for these risks, we reviewed information on the tools and processes Ex-Im uses to determine subsidy costs and loss reserves and allowances, including Ex- Im’s loss estimation model. We reviewed documentation on the structure of the model, updates made to the model in 2012, and findings and recommendations made by the Ex-Im IG and Ex-Im’s independent financial statement auditor about the model. We also reviewed relevant workpapers from the independent auditor’s audit of Ex-Im’s 2012 financial statements. We also reviewed Congressional Budget Office and OMB reports on discounting methodologies for federal credit programs. To obtain additional information about Ex-Im’s subsidy cost and loss reserve and allowance calculations, we interviewed Ex-Im and Ex-Im IG officials, representatives from Ex-Im’s independent financial statement auditor, and OMB officials responsible for approving Ex-Im’s subsidy cost estimation methodology. In addition, we spoke with other federal agencies that provide international credit—including the Small Business Administration, the Department of Agriculture’s Foreign Agricultural Service and Farm Service Agency, and the Overseas Private Investment Cooperation (OPIC)—and the four foreign ECAs cited previously about their processes for estimating program costs and reserving for future losses. To obtain information about how Ex-Im sets product fees and what risks they account for, we reviewed fee-setting requirements contained in the OECD Arrangement and Ex-Im analyses used as a basis to adjust fees for different products. An assessment of the appropriateness of the fee levels resulting from the OECD Arrangement was outside the scope of our review. We interviewed Ex-Im officials and officials from the U.S. Department of the Treasury responsible for negotiating for the United States at OECD, including negotiations on minimum premiums. We also discussed with the four foreign ECAs how they set product fees.\nTo assess how Ex-Im’s financial portfolio has performed and the budgetary impact of its programs, we reviewed agency data and documentation—including Ex-Im performance data, annual reports, financial statements, and quarterly default reports—and information contained in the President’s budgets and Federal Credit Supplements. Specifically, to determine how Ex-Im’s portfolio has performed, we analyzed data Ex-Im compiled from the Ex-Im Bank Reporting System on active transactions—including authorized and disbursed amounts, amounts in arrears, claims paid, and recoveries—to calculate overall default rates and default rates by product type. We examined end-of- fiscal-year data for 2006 through 2012 and data as of December 31, 2012. We reviewed federal banking regulator guidance on default monitoring, including vintage analysis, and determined whether Ex-Im conducted or maintained data to perform such an analysis. In addition, we reviewed data on the ratio of Ex-Im’s impaired assets to total exposure from 2008 through 20012. To determine the budgetary impact of Ex-Im’s programs, we reviewed Ex-Im’s analysis of the funds it has been appropriated and the funds it has sent to the U.S. Treasury (the net of upward and downward credit subsidy reestimates, cancelled authority, returned collections, and rescissions) from 1992 through 2012. To do this, we compared Ex-Im’s analysis to data contained in appropriation acts, the President’s budgets, and Ex-Im’s financial statements for the same years.\nBased on this comparison, we determined that Ex-Im’s analysis was reasonable. Additionally, we analyzed Ex-Im’s annual credit subsidy reestimates for 1992 through 2012 using information in the President’s budgets. We discussed the performance and budget data with knowledgeable Ex-Im officials to ensure that we interpreted the data correctly.\nTo assess the extent to which Ex-Im has a comprehensive risk- management framework, we reviewed the practices Ex-Im uses to manage risks at the transaction, portfolio, and agency level. At the transaction level, we reviewed Ex-Im’s policies and procedures related to the underwriting, monitoring and restructuring, and claims and recovery functions. We also interviewed Ex-Im senior management and division managers responsible for various products about these procedures. To assess how Ex-Im manages risks at the portfolio level, we reviewed a September 2012 report by the Ex-Im IG on Ex-Im’s portfolio risk management and followed up with Ex-Im officials to determine the actions they had taken in response to the report’s recommendations. We also identified relevant criteria in GAO’s Standards for Internal Control in the Federal Government and Internal Control Management and Evaluation Tool and documents from financial industry groups describing sound Additionally, we discussed practices for managing financial portfolios.portfolio and general risk-management practices with officials from the federal credit agencies and foreign ECAs cited previously, a representative from the International Association of Credit Portfolio Management, and Ex-Im officials. Finally, we reviewed information related to potential operational risks stemming from Ex-Im’s increasing business volume and workload and identified relevant criteria from our internal control standards. We limited our work in this area to Ex-Im’s human capital management. Specifically, we analyzed Ex-Im data on the number of full-time equivalents and the number and dollar volume of transactions authorized from 2006 through 2012. We also reviewed Ex-Im’s Human Capital Plan for 2009-2012, Reauthorization Act of 2012 Business Plan, and congressional budget justifications from 2008 through 2013, and internal Ex-Im analyses of agency workloads. Additionally, we interviewed Ex-Im officials responsible for resource management.\nTo assess the reliability of the data provided by Ex-Im, including exposure and authorization amounts and performance statistics, we (1) reviewed information related to data elements, system operations, and controls; (2) performed electronic testing for obvious errors in accuracy and completeness; (3) compared data to published documents; and (4) interviewed Ex-Im officials knowledgeable about the data. To assess the reliability of data we used to describe capital market conditions and U.S. exports, we (1) reviewed related documentation, (2) interviewed knowledgeable officials about the data, and (3) performed electronic testing and inspected the data for missing observations and outliers. We concluded that the data elements we used were sufficiently reliable for purposes of describing Ex-Im’s growth and financial performance.\nWe conducted this performance audit from June 2012 to March 2013 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 individual named above, Steve Westley, Assistant Director; Daniel Alspaugh; Kathryn Bolduc; Marcia Carlsen; Pamela Davidson; Cole Haase; Michael Hoffman; Christine Houle; Susan Irving; Risto Laboski; Felicia Lopez; Colleen Moffatt Kimer; Melissa Kornblau; Robert Pollard; Barbara Roesmann; Jessica Sandler; Eva Su; and Celia Thomas made key contributions to this report." ], "depth": [ 1, 2, 2, 1, 1, 2, 2, 2, 1, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "h0_full", "h0_full", "h0_full", "h0_full", "h1_full", "h1_full", "h2_title", "", "h2_full", "h2_full", "h2_full h1_full", "", "", "h0_full h2_full", "", "", "", "" ] }

{ "question": [ "What do Ex-Im's processes account for?", "How does Ex-Im make calculations?", "What factors does Ex-Im account for in its calculations?", "How might Ex-Im's model be improved?", "What are Ex-Im's fees guided by?", "What did Ex-Im report as of December 2012?", "What has Ex-Im not maintained data on?", "How might this affect the precision of Ex-Im's model?", "Why is Ex-Im's long-term impact uncertain?", "What has Ex-Im been developing?", "What did GAO's review of internal control standards indicate about the IG's recommendations?", "What has Ex-Im not yet addressed?", "What risks does Ex-Im face?", "How has Ex-Im responded to these concerns?", "What do GAO's internal control standards state?", "How might the lack of such an approach negatively affect Ex-Im?" ], "summary": [ "Ex-Im's processes for determining credit subsidy costs, loss reserves and allowances, and fees account for multiple risks.", "To implement the Federal Credit Reform Act of 1990 and other requirements, Ex-Im calculates subsidy costs and loss reserves and allowances with a loss model that uses historical data and takes credit, political, and other risks into account.", "Consistent with industry practices, Ex-Im added factors to the model in 2012 to adjust for circumstances that may cause estimated credit losses to differ from historical experience.", "Opportunities exist to further improve the model. For example, Ex-Im uses a 1-year forecast of certain bond defaults to predict possible changes in loss estimates from changed economic conditions. However, a short-term forecast may not be appropriate for adjusting estimated defaults for longer-term products.", "Ex-Im's fees are generally risk-based and, for medium- and long-term products (about 85 percent of Ex-Im's exposure), guided by international agreements that set minimum fees that account for credit and political risk.", "As of December 2012, Ex-Im reported an overall default rate of less than 1 percent.", "However, Ex-Im has not maintained data needed to compare the performance of newer books of business with more seasoned books at comparable points in time, a type of analysis recommended by federal banking regulators.", "Also, without point-in-time data showing when defaults occur, the precision of Ex-Im's loss model may be limited.", "Ex-Im has been self-sustaining since 2008 and has generated receipts for the government. But, because Ex-Im's portfolio contains a large volume of recent transactions, the long-term impact of this business on default rates and the federal budget is not yet known.", "Ex-Im has been developing a more comprehensive risk-management framework but faces operational risks. Ex-Im manages credit and other risks through transaction underwriting, monitoring, and restructuring. Ex-Im also started addressing recommendations by its Inspector General (IG) about portfolio stress testing, thresholds for managing portfolio concentrations, and risk governance.", "GAO’s review of internal control standards and industry practices indicates that the IG’s recommendations represent promising techniques that merit continued attention.", "Ex-Im has not yet made plans to report its stress test scenarios and results to Congress, although doing so would aid congressional oversight and be consistent with internal control standards for effective external communication.", "Ex-Im faces potential operational risks because the growth in its business volume has strained the capacity of its workforce.", "Ex-Im has determined that it needs more staff, but it has not formally determined the level of business it can properly manage.", "GAO internal control standards state that agencies should develop a risk-management approach based on how much risk can be prudently accepted.", "Without benchmarks to determine when workload levels have created too much risk, Ex-Im’s ability to manage its increased business volume may be limited." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, -1, 1, -1, -1, 0, -1, -1, 3, -1, 5 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "A Brief Overview of Marijuana Production", "Why a Federal Excise Tax on Marijuana?", "Taxes to Reflect External Costs", "Discouraging Use, Including Among Youth", "Capturing the Current Differential Between Cost and Price", "Funding Marijuana Research and Information Programs", "Raising Revenue", "A Sample Calculation", "Using Data from Colorado to Estimate Market Size", "Design Issues for a Federal Marijuana Excise Tax", "Choosing the Stage of Production to Levy an Excise Tax", "Choosing the Excise Tax Base", "Weight", "Potency", "Price", "Special Considerations", "Other Options", "Tax Treatment of Existing Plant and Product Inventories", "Restrictions, Exemptions, and Special Tax Treatment", "Age Restrictions", "Customer Purchasing or Possession Limits", "Production Limits", "Exemption or Inclusion of Medical Marijuana", "Exemption for Home Production", "Special Tax Rates for Small Producers", "Special Tax Rates for More Energy Efficient Production", "Occupational Taxes", "Tax Administration, Enforcement, and Other Regulations", "Tracking the Production of Legal Marijuana", "Labeling and Measurement", "Strict Enforcement of Medical Marijuana Prescription Standards", "Distinguishing Marijuana from Industrial Hemp", "Effects of Federal Marijuana Laws on State Tax and Regulatory Regimes", "Conclusion" ], "paragraphs": [ "", "The cultivation, distribution, and possession of marijuana are prohibited for any reason other than to engage in federally approved research under the federal Controlled Substances Act of 1970 (CSA; P.L. 91-513). Yet, 23 states, the District of Columbia, and Guam have passed legislation or initiatives legalizing qualified sale, possession, manufacture, and distribution of medical marijuana, and 17 states and the District of Columbia have decriminalized the possession of marijuana. In addition, in November 2012, Colorado and Washington became the first states to legalize, regulate, and tax small amounts of marijuana for non-medicinal use (so-called recreational) by individuals 21 and older. Commercial sales of recreational marijuana became legal in the state of Colorado beginning on January 1, 2014—the first jurisdiction in the world to do so. Washington's commercial marijuana market opened on July 7, 2014. On November 4, 2014, Alaska and Oregon became the third and fourth states to approve ballot initiatives to legalize, regulate, and tax marijuana for recreational purposes. That same day, the District Columbia approved further measures to legalize the cultivation, possession, and exchange (but not the commercial sales) of marijuana.\nIn addition to state and local movements to decriminalize or legalize the production, sales, or use of marijuana, there has been a general shift in popular sentiment toward marijuana policy. According to polls conducted by Rassmussen, the Pew Research Center, and Gallup, a majority of Americans favor legalizing marijuana.\nThe combination of state policies and general sentiment has led to heightened debate over the merits of marijuana legalization at the federal level. For example, in the 113 th Congress, bills have been introduced that would remove marijuana from the list of Schedule I drugs prohibited by the Controlled Substances Act and impose a federal excise tax on the production and importation of marijuana. Another bill proposes the establishment of a National Commission on Federal Marijuana Policy that would review the potential revenue generated by taxing marijuana, among other things. Overall, the debate concerning marijuana legalization is complex, as it spans across issues ranging from criminal justice to public health and safety. The revenue-raising potential of a marijuana tax could become a contributing factor in the desirability of legalizing marijuana.\nThis report focuses solely on one aspect of the economic debate over federal marijuana legalization: imposing an excise tax on legalized marijuana. First, it provides a brief overview of marijuana production. Second, it presents possible arguments for taxes and, in some cases, estimates the level of tax suggested by that rationale. Third, possible marijuana tax designs are analyzed.", "Marijuana is a preparation of the plant, C annabis sativa , generally used as a recreational drug or medicine primarily for its psychoactive and physiological effects. The term marijuana refers to the dried leaves and flowers of the cannabis plant. The main psychoactive ingredient in marijuana is delta-9-tetrahydrocannabinol (THC). THC is the primary cannabinoid responsible for the \"high\" that users experience when consuming the drug. Still, THC is only one of many \"cannabinoid\" chemical compounds in marijuana that contribute to the effects of the psychoactive effects of marijuana (in terms of strength, onset, duration, etc.). Consumers could desire different strains of marijuana for the contents of other cannabinoids that do not produce a psychoactive effect. For example, marijuana strains high in cannabidiol (CBD) are often sought to provide relief from anxiety.\nDepending on its preparation, the potency, or relative concentration, of a particular product derived from marijuana can vary. The stalks and stems of a marijuana plant have almost no psychoactive content, whereas the leaves and flowers (buds) of the plant have increasing concentrations of THC. The hair-like trichomes on the buds are coated with a translucent resin that contains the highest concentration of THC on the plant. Marijuana plants are also either male or female. If female plants are grown in controlled environments, separate from pollination of male plants, then the female plants are capable of growing buds that produce more resin. This process is used to grow sinsemilla (Spanish for without seed) varieties of marijuana, which typically contain 10%-18% THC content (about three times the level of conventional, commercial-grade marijuana derived from pollinated plants).\nMarijuana consumption methods vary. Marijuana is generally consumed by smoking the dried plant matter. A \"joint\" is made by rolling marijuana in cigarette paper whereas a \"blunt\" is made by hollowing some or all of the tobacco from a cigar and replacing it with marijuana. Although smoking habits vary by user, a typical joint contains less than half a gram of marijuana, and each \"hit\" or drag on the joint contains approximately one-twentieth of a gram of marijuana. Numerous other devices for consuming marijuana exist, ranging from glass pipes to vaporizers (which heat the chemicals in marijuana, but avoid creating the smoke irritants associated with combustion).\nCannabis can also be processed into a number of different products, all with their own THC concentration levels and typical methods of consumption. For example, hashish or \"hash\" is made by pressing trichomes together into a brick-shaped product with more than 40% THC content. THC is also capable of being dissolved in fats, oils, and alcohol for use in the creation of \"edibles,\" such as candy or baked goods.", "Economic analysis as a general rule suggests that excise taxes are less desirable than more general taxes (such as income or broad based sales taxes) because they distort prices of different commodities. This section discusses several possible reasons for imposing an excise tax on marijuana: (1) reflect external, or spillover, costs to society; (2) discourage use, particularly for youth; (3) prevent too rapid a fall in price; (4) fund related programs; and (5) raise revenue.", "Economic efficiency occurs when the price of a commodity (at the margin) equals its costs. If consumption of marijuana imposes costs on others, then the consumer cost is too small and economic efficiency could be achieved by imposing a tax equal to consumption cost. This rationale has often been used for similar commodities, such as alcohol and tobacco.\nIn considering this justification and the level of tax economic analysis suggests, the external costs should be separate from the costs the user bears. For example, if a substance causes early death, the value of the lost years of life and the individual's own costs in treating illness falls on the individual. Society bears the loss of tax revenue from those lost earnings and some of the costs of treating illness that fall on private or social health insurance. However, society also receives gains from the early death in the amount of smaller health costs and transfer payments (such as Social Security) in the future. These future costs should be discounted. At least in studies of other substances, these external costs are typically much smaller than the total costs. A 1991 study by Manning et al. used this method to estimate the external costs of alcohol and tobacco. Adjusting these estimates for price changes, those results imply a cost of $30 billion for alcohol, which will be used to estimate the cost for marijuana, for which no study of this nature exists. As with the case of tobacco, these external costs are typically much smaller than the total costs.\nAlthough no U.S. study of marijuana of this nature could be located, it is possible to investigate the likely magnitude of a tax necessary to correct for externalities of marijuana use by examining studies that compare the costs of cannabis use to alcohol.\nA British study ranked different drugs by harm on a scale of 1 to 100. Overall, alcohol ranked 72, whereas cannabis ranked 20, or 28% of alcohol. Considering just the external harm, alcohol ranked 47 and cannabis ranked 9, or 19% of alcohol. A Canadian study found an even smaller ratio of health costs per user, about 12%. It is also likely that the non-health costs of marijuana are lower than for alcohol. For example, part of the spillover effect of alcohol is in the effect of traffic accidents, but studies tend to find that marijuana impairs driving ability less than alcohol. Evidence also suggests that smoking marijuana is inversely related to domestic violence. The Canadian study found larger enforcement costs for marijuana, but that effect is probably due to marijuana's illicit status. (For additional discussion of some of the various social effects of marijuana, see Appendix A .)\nIn addition to indications that the externalities of marijuana are smaller per user than alcohol, the prevalence of marijuana use is smaller. According to the National Survey of Drug Use and Health (NSDUH), alcohol usage in 2013 for the population 12 and older was 66.3% in the past year and 52.2% in the past month, whereas marijuana usage was 12.6% and 7.5% respectively. Thus marijuana usage is 19% (based on use in the past year) and 14% (based on use in the past month) as common as alcohol usage. These numbers suggest that the external costs of marijuana range from $0.5 billion to $1.7 billion.\nTo translate this amount into a tax per ounce requires an estimate of the total market size and the price. A 2014 report issued by the White House Office of National Drug Control Policy (ONDCP) provides estimates of the unit price, total expenditure, and total consumption weight of marijuana in the United States. The calculations extrapolate from two sets of data: (1) the NSDUH, which is a self-reported survey of drug use habits; and (2) survey data from drug-offense arrestees in a limited number of areas designated as Arrestee Drug Abuse Monitoring (ADAM) jurisdictions. The report finds that from 2002 to 2010, the amount of marijuana consumed in the United States likely increased by about 40%. The ONDCP report also provides estimates of $30 billion, $41 billion, and $60 billion (given various assumptions) for total U.S. expenditures on marijuana in 2010. Additionally, the report indicates that THC levels in marijuana increased from 2000 to 2010.\nUsing the ONDCP estimates of the market cited above ($30 billion to $60 billion), the estimates of external cost imply a tax of 0.8% to 5.3% of current price.\nThe White House's 2014 ONDCP report provides estimates of the price per gram of marijuana from 2000 to 2010. The nominal price of marijuana is roughly constant over the period, implying the inflation-adjusted price of marijuana was likely decreasing over time. In 2010, the White House report estimates that the price per gram of marijuana was $7.11 per gram ($199.08 per ounce), not accounting for differences in quality.\nIn addition, there are anecdotal prices recorded through anonymous sources and informal interviews with consumers or dealers in the underground market. Other researchers have used different techniques and newer data sources to estimate the price of marijuana across a wider range of locations. One website, priceofweed.com, contains anonymous, volunteer-submitted data on individual transactions across a variety of global locations, down to the level of particular towns or cities. Using data from priceofweed.com, the price of marijuana can be estimated as $317 per ounce, after weighting the observations for the quality of marijuana reported. However, it is unclear if data submitted to priceofweed.com are representative. Anecdotal reports in the media indicate that high-quality marijuana can be obtained in some areas, such as Washington State, for $28 per eighth of an ounce ($224 per ounce, but presumably less if bought in bulk). Another source suggests that consumers would have to pay at least $10 per gram, or $238 per ounce.\nTax rates ranging from 0.8% to 5.3% of the price might seem small to some, but marijuana prices are currently much higher than the production cost because of the illicit nature of the market. In a legal market, prices would be lower. These estimates of external cost range from $1.60 to $16.80 per ounce. The smaller estimate assumes a 0.8% tax and a $200 price; and the larger estimate assumes a 5.3% tax and a $317 price. Estimates discussed in subsequent sections suggest the price in a fully competitive market could be as low as $5 per ounce, so that the tax would be greater relative to price.\nIf a typical joint contains a half of a gram of marijuana, then the largest estimate is the equivalent of $0.30 per joint. For comparison, the federal tax on cigarettes is $0.05 for each cigarette whereas taxes on alcoholic drinks range from $0.04 for a five ounce glass of wine, $0.05 for a 12 ounce beer, and $0.13 for a 1.5 ounce shot of distilled spirits. Thus, the tax on a joint would be about the same as the tax on a six-pack of beer. States (and sometimes localities) also impose taxes on alcohol and tobacco, and they presumably would also tax marijuana as Colorado and Washington have. These state taxes are probably already in excess of the external costs of marijuana.\nAlthough clearly many uncertainties surround attempts to measure the external costs of marijuana (as reflected in the range of estimates), the information that is available suggests a relatively small tax compared with current prices.", "An argument can be made for imposing a tax to discourage marijuana users because these potential consumers underestimate long-term health costs and possible dependence when they begin to use the substance. This argument may be particularly important to underage use of marijuana.\nSome disagree that marijuana is physically addictive, although it may result in dependence. A recent study found that about 9% of marijuana users become dependent. Another study found that medical marijuana laws in the United States increase the probability of marijuana abuse or dependency by 15%-27% among adults aged 21 or older.\nInformation on the risks of marijuana could be improved with more research and dissemination of the results of that research. In the case of the risk of addiction or dependence, economists disagree on whether the behavior of users is suboptimal, at least in the case of adults. \"Rational addiction\" theories indicate that as long as consumers are informed they are making desirable choices. Other economists argue that individuals can be engaged in hyperbolic discounting, in which they make time-inconsistent choices in the present that their future selves would not prefer.\nAn important issue in determining a tax that is intended for the best interests of the potential user is that the tax would also reduce income. If the purpose of the tax is to increase the user's welfare, that benefit must be offset by the reduced income. Individuals that typically consume multiple joints per day consume a disproportionate share of the marijuana used in the United States (a trend similar to alcohol use) and in heavier doses. Researchers have estimated that 20% of marijuana users constitute about 80% of consumption. Like taxes on alcohol and tobacco, the majority of the burden of a marijuana tax would fall primarily on the heaviest users.\nA tax on marijuana, like most excise taxes, is likely to be regressive, and this outcome might be considered undesirable (although current users are likely to benefit from a decline in price from making marijuana legal).\nEvaluating the potential benefit to users of imposing taxes to discourage consumption depends on how users' participation in the market and the quantity purchased respond to the tax. It is assumed that the tax is passed on in price. Responses to price changes are generally expressed as elasticities by economists: the percentage change in quantity divided by the percentage change in price. For example, if the elasticity is -0.5, a 10% increase in price leads to a 5% decrease in quantity consumed. If the price elasticity is low, the tax alters behavior very little, while imposing a significant tax burden, and users are harmed by the tax although their small change in consumption may be closer to the optimal choice (i.e., the choice they would make fully accounting for the costs).\nGallet (2014) examines a combination of 42 studies on the demand for various illicit drugs, 13 of which measure the price elasticity demand of marijuana. After controlling for various factors related to the studies, Gallet's model predicts elasticities of demand for marijuana ranging between -0.15 and -0.31. In other words, a 1% increase in the price of marijuana results in a 0.15% to 0.31% decrease in the demand for marijuana. Consumer demand is relatively unresponsive to changes in price. Thus, it is more likely that users would be harmed overall by a tax imposed for their own benefit, because gains in moving to more optimal consumption may be more than offset by lost income from the tax.\nGovernment policy is often focused on limiting use of drugs (whether legal or illegal) by minors. Current, state marijuana legalization laws disallow purchases by those under 21 years old, but, as with other commodities, youth may still obtain them in various ways. Estimates of the price elasticity for minors tend to be larger. One study had an overall estimate of -0.44 but an estimate of -1.01 for ages 12-17 years old. Thus taxes may be more effective in reducing usage among youth (assuming these youth are not purchasing marijuana through illegal markets or acquiring legally produced marijuana through informal, secondary channels without cost).\nThe policy question then may be how much of a tax burden should be placed on non-responsive adult users to limit consumption of youth. (A similar issue arises with taxation of tobacco.) This question has no quantifiable answer, but one objective that might be considered is to set the tax so that the price of marijuana does not fall substantially with legalization and expanded demand, especially among minors who are more responsive to price. The next section discusses the potential level of such a tax.", "The characteristics of a legalized, and low-cost, marijuana market, as well as the concerns discussed above about youth consumption, may suggest a tax to keep these prices from falling precipitously until the consequences of a legal market can be determined. Depending on those consequences, a relatively high tax may be retained, or the tax may be reduced.\nAfter legalization, it is estimated that the cost of marijuana will decrease significantly because more will be produced and the implicit costs of evading law enforcement will decline. Many producers are currently confined to smaller-scale or indoor operations that lack economies of scale. Workers in the illicit trade of marijuana must also be compensated more than comparable workers in industries that are not subject to law enforcement risk (e.g., laborers harvesting fruits or vegetables). Although a legalized market for marijuana could develop in such a way that some firms are able to attain market power and charge higher prices for their particular brands of marijuana compared with generic brands, the market for marijuana could become more competitive. In a competitive market, firms earn no profit above the normal return necessary to attract capital (if they did, other firms would enter to exploit it). Prices would, therefore, fall to reflect lower production costs.\nThe difference between the projected cost in a legal competitive market and current prices (which largely reflect illicit production) provides a range within which a federal tax rate might be considered, at least initially. The tax should not be set too high (including any state and local taxes) to encourage illicit productions, so that this approach might be aimed at offsetting only part of the price reduction expected from the legalization of marijuana.\nCaulkins (2010) estimates the costs of producing and processing legalized marijuana, under a number of methods and scenarios. As shown in Table 1 , Caulkins estimates that the production cost per pound of high-quality marijuana would be roughly equivalent to the current retail price per ounce . Outdoor production of marijuana is estimated to cost substantially less, per pound of output. However, marijuana cultivated outdoors is less likely to contain the higher levels of THC found in plants grown indoors in controlled growing environments. The estimated production costs in Table 1 do not include processing costs, which are estimated to add an additional $20 to $35 per pound.\nProducing high-quality marijuana in greenhouses appears to cost, at the upper limit, $215 plus $35 per pound for processing, or around $15 per ounce. Using outdoor production, of $10 plus $35 a pound, the cost is about $2.80 per ounce. These products vary by THC concentration; as noted earlier, sinsemilla contains 10% -18% THC, or about three times the potency conventional commercial-grade marijuana that is pollinated.\nIn a different estimate, Easton (2009) indicates that government-sponsored marijuana in Canada can be produced at 33 cents per gram ($9 per ounce or $144 per pound). He also suggests that, based on tobacco sales, the cost per gram of going to a retail market is about 10 cents per gram, or $2.80 per ounce ($44.80 per pound). Adding this amount to estimated costs leads to a cost (and expected price) of $5-$18 per ounce ($80-$288 per pound).\nIn jurisdictions where marijuana has become quasi-legal, prices tend to be lower than the street price in most cases but higher than these cost estimates. In an article indicating an increased price for medical marijuana in Canada, the price was listed as $1.80-$5 per gram to the final consumer, $50-$140 per ounce. In that same article, a lawyer representing numerous suppliers said his clients could supply for $1-$4 per gram, or $28-$110 per ounce. The street price was listed as $10-$15 per gram, or $280-$420 per ounce. Of course, the price could be discounted if bought in larger quantities. These street prices are high compared with the averages in priceofweed.com. Beginning in April 2014, the Canadian government set the price of medical marijuana at $7.60 (CAD) per gram, which is higher than the current average and closer to the street price. Small growers and homegrown marijuana will no longer be permitted under the new law. These prices are higher than the costs discussed above but also apparently do not reflect an unfettered and mature competitive market.\nActual prices can also be observed in Colorado marijuana shops through online websites, such as Leafly.com. Leafly is a website and mobile phone application that helps users find marijuana shops, medical marijuana dispensaries, and doctors that prescribe medical marijuana located in their areas. Like the consumer website and application, Yelp (which is used to review restaurants, stores, and other sites of interest), Leafly provides consumer reviews of each location and various strands of marijuana and provides \"menu\" prices of products available at each shop. According to an examination by the authors of some of the most-reviewed marijuana shops in Denver, a gram of marijuana is priced around $9 to $15, an eighth of an ounce of marijuana can be priced around $29 to $40, and an ounce can be priced around $190 to $350. Some of the higher prices listed on Leafly include tax, but it is unclear from the \"menu prices\" whether some of the prices are before or after tax (although they are most likely before tax, unless noted).\nSubmissions to priceofweed.com report that marijuana prices in Colorado are lower than the national prices reported earlier, with high quality at $238 per ounce and medium quality at $197 per ounce (compared with $377 and $245 reported for the United States overall). These prices still reflect a mix of the illicit and legal markets but would presumably include taxes on any legal purchases.\nColorado prices provide some indication of falling prices with legalization, but prices appear not close to the cost of production. The prices in Colorado, however, may not reflect those in a fully legal market because they are still in a quasi-legal status. Because the federal government does not recognize the legality of these operations, media reports indicate that these producers may have trouble getting banking assistance, including deposit accounts, much less business loans. These operations are potentially subject to very large federal income taxes, which can be imposed without allowing for deductions because they remain illegal. These taxes can be the equivalent of excise taxes at the federal rate and can apply at each stage of production. (See discussion in Appendix B .) And marijuana businesses are still subject to the threat of potential enforcement from federal authorities.\nIn a 2010 study of the possible effects of legalization in California, researchers from the RAND Corporation estimate that the pretax retail price of marijuana would likely decrease by more than 80%, suggesting a price of $40-$60 per ounce. Miron and Waldock, however, estimate a 50% price reduction, based on a comparison of prices in the United States and the Netherlands (sold in coffee shops). This price reduction would suggest a price of $100-$150 per ounce on average. The Netherlands, however, is, like Colorado, not an instance of a fully legalized market because the Netherlands bans imports and has anti-drug laws on the books.\nAlthough the range of projected prices in a fully legal market is wide, from a few dollars to $100 per ounce, street prices of $200-$300 per ounce suggest that there could be a wide scope for a tax rate designed to align legalized marijuana prices close to current street prices of illegal marijuana. For example, if the eventual competitive price is $50 per ounce and the average street price is $250 per ounce, there is scope for taxes up to $200 tax per ounce.\nThere are several caveats to this point. The first is state and local governments will likely collect a tax that will absorb some of the differential. The second is a tax that is set too high would encourage the illicit market, and one of the advantages of legalizing marijuana is to largely eliminate the illicit market, reducing law enforcement costs. Moreover, the potential scope of the difference is uncertain, but lowering tax and observing market conditions may be the best initial strategy.", "Some or all of the yield from a marijuana tax could be used to fund marijuana research. Medical marijuana, as noted, has been approved by 23 states and the District of Columbia. Research on the effects of medical marijuana, which would be helpful in providing guidance to patients and doctors, could be funded in part by the tax. A recent report by the American College of Physicians noted that limitations on marijuana research are caused, in part, by barriers encountered for federal approval, the lack of high-grade, research-quality marijuana, and the general classification of marijuana as a Schedule I illegal drug. The report discusses a wide range of conditions that marijuana may be beneficial for and urges study of the efficacy and side effects of marijuana.\nWith legalization it would also be more feasible to study a wide array of issues (as discussed in this report), such as externalities, addictive properties, and health effects on recreational as well as medical users. Revenue could also be used to finance information programs on both the risks of marijuana use and to discourage consumption by minors.", "Historically, the primary purposes of excise taxes in the United States have been to raise revenue, including revenues for emergency spending. Cigarette taxes have been used to offset higher spending levels on health care, such as the Children's Health Insurance Program (CHIP), in recent years.\nGiven assumptions about price and demand, an excise tax on marijuana can be designed in such a way to achieve a certain revenue target. This section provides some illustrations of how much revenue might be raised from an excise tax were marijuana to become legal. These revenue consequences are quite uncertain given the broad uncertainty about potential price and quantity in the market.\nIn addition, casual consumers may enter the marijuana market and increase revenue. These consumers may purchase marijuana because concerns about punishment are no longer present or because of a distaste for participating in illegal activities in general. These effects are not necessarily captured in the existing price elasticity estimates (which mostly reflect consumers that are determined enough to defy law enforcement to consume marijuana), and the legal market, even setting price aside, could be much larger than the current market for this reason.\nThe pace of legalization and taxation of marijuana at the state level could also affect potential revenue collected from a federal excise tax. If more states tend to legalize marijuana, and try to set their excise tax rates to roughly equalize the price of legal (under state laws) marijuana with illicit marijuana, then federal lawmakers could be more constrained in their ability to levy excise taxes on marijuana without encouraging production in the illicit market.\nSome analysts have tried to estimate the potential revenue that could be raised from nationwide legalization of marijuana using various economic models, and may in some cases include excise taxes. (Legalization itself would presumably increase revenues by moving more of national income into legal sectors subject to income, such as sales and business taxes, even without an excise tax.)\nMiron and Waldock of the Cato Institute estimate that a federal excise tax could raise $5.8 billion (in 2008 dollars) annually in excise taxes if marijuana is taxed at a rate equal to 50% of its price to consumers. Their calculations assume the national market for marijuana at $13.13 billion (in 2008), a 50% fall in price after legalization, and a 25% increase in consumption. They also estimate $3.3 billion in annual savings in expenditures from law enforcement. Miron and Waldock do not report price and quantity separately, but they are probably estimating a tax of around $50-$75 per ounce. Miron and Waldock note that their market size estimates, which are extrapolated from survey data, are small by comparison with other estimates. At the same time, they appear to be assuming a greater response from consumers than that suggested by the literature review.", "This calculation outlines how to estimate revenues from an excise tax, using the example of a $50 per ounce tax. It takes into account the effects on aggregate consumption and interactions with income taxes. The results depend on the specific assumptions about market conditions as well as state and proposed federal taxes.\nTo estimate revenue yield, data on price and quantity are needed. As noted earlier, data on the value of the market ranged from $30 billion to $60 billion according to ONDCP. The current price was estimated at between $200 and $300 per ounce. For this example, assume intermediate values of a $40 billion market and a $250 current price.\nTo illustrate the potential effect on revenue assume a fully legalized industry nationwide, assume a pretax price of $50 per ounce, a state tax of $50 per ounce, and the consequences of a federal tax of $50 per ounce. The taxes and costs bring the total price to $150 per ounce.\nThe federal excise tax collection, therefore, is $50 multiplied by the quantity (in ounces). In the current market, quantity would be determined by dividing $40 billion by $250. If quantity did not change the federal excise tax revenue would be $50 multiplied by $40 billion divided by $250, or $8 billion. Collections, however, would be somewhat larger because the fall in price from legalization would increase consumption. Using a constant elastic formula, the ratio of the new quantity to the old is (P*/P)^E, P* is the new price, P is the old price, and E is the price elasticity (which is negative). Assuming a price elasticity of -0.25, the effect of legalization alone, which is assumed to reduce the price to $50 per ounce, would lead to a 50% increase in quantity. With federal, state, and local taxes, the price is $150 and the increase in quantity is 14%, leading to a projected excise tax collection of $9.1 billion. By comparison, the tax on alcoholic beverages is $10 billion, a much lower tax applied to a much larger market.\nThe actual revenue gained is, according to standard estimating conventions, reduced by 25% to account for the loss of income and wage taxes because excise taxes produce a wedge between output and income. Thus the projected revenue gain is $6.8 billion. As a reminder, this estimate is based on a series of assumptions, changes to which would alter the revenue estimate.\nThe yield will also depend on how widespread the movement for legalization is and whether medical marijuana is covered. Currently only Colorado and Washington allow recreational marijuana, and they represent less than 4% of the population, so the short-term yield might be less than $300 million. More revenue would be gained if medical marijuana in other states were taxed.", "As previously mentioned, calculations based on data from the illicit market for marijuana might not be representative of a fully commercialized market. Given the scale of policy changes at the state level, tax collection data from Colorado and Washington could serve as early indicators of the potential tax base of a national legalized market.\nMarijuana sales are subject to several layers of taxation at the state and local level. In Colorado, recreational marijuana sales are subject to three different state taxes: (1) a 15% marijuana excise tax on the unprocessed product, (2) a 10% retail marijuana excise tax, and (3) a 2.9% general sales tax. The approximate effective tax rate on marijuana products is between 15% and 25%, before the imposition of the state's 2.9% general sales tax. Medical marijuana in Colorado is subject to the 2.9% general sales tax. Local taxes, such as the Denver city sales tax, can also apply on top of the state taxes.\nFrom January 2014 to September 2014, Colorado has collected more than $37.0 million in sales taxes, excise taxes, and retail license fees on recreational marijuana (in addition to $13.7 million collected from medical marijuana sales taxes and license fees).\nBy extrapolating from the actual tax revenue data from Colorado, the national market for marijuana could be estimated. These calculations are detailed in Appendix C . After adjusting the September 2014 tax data from Colorado to control for usage rates in different states, it can be estimated that the national sales tax base for recreational marijuana could be between $15.9 billion and $17.0 billion per year (assuming market conditions currently in Colorado prevail nationally). It is difficult to extrapolate medical marijuana data in Colorado to the general U.S. population due to incomplete data in some states, but the tax collections data from Colorado indicate that medical marijuana consumption could roughly double that consumption base.\nThe combined medical and recreational marijuana sales in Colorado roughly extrapolated to the United States suggest a market of at least $30 billion, which is small compared with most estimates considering that the price should be smaller than in the illicit markets. It may be that the Colorado market is insufficiently developed, and substantial levels of illicit sales are continuing (either due to lower prices on the illicit market or preexisting relationships between buyers and sellers in the black market). However, consumption in Colorado could be overstated due to non-resident sales (also known as \"pot tourism\").\nThe estimates do, however, suggest that the issue of whether to exempt medical marijuana and how to enforce any medical exemption that might develop are potentially important issues.", "Aside from the general level of the tax, there are a number of design issues for an excise tax discussed in this section.", "In general, an excise tax that is levied at earlier stages of production has lower administrative costs and fewer opportunities for tax evasion. In most situations, consumers vastly outnumber producers. Trying to implement an excise tax at the consumer retail outlet often results in a duplication of processes and increases the risk of tax evasion. As a result, federal excise taxes are generally levied on manufacturers and imports (with an exemption for exports).", "In general, marijuana can be taxed based on a per unit measurement or the product price. Each tax base has its own advantages and disadvantages, and multiple tax bases could be combined.", "A tax by weight is similar to the federal excise tax regime for tobacco because regulations limit the per unit size of cigarettes, cigars, etc. A tax by weight is relatively easy to administer (after accounting for moisture content). The tax could be levied based on the \"wet\" weight, right after the leaves and flowers are picked, or the weight after drying. A weight-based tax would need to be administered at the manufacturing level, as a retail-based weight tax could create significant issues for different types of products. However, a weight-based tax could encourage the production of more potent marijuana.", "Most potency-based tax proposals are based on the per-ounce THC content. In comparison to a weight-based tax, a potency-based tax could be more complicated and costly to enforce and administer. The largest administrative hurdle to a potency-based tax is ensuring that lab testing of marijuana strains is accurate and reliable. Regulations defining the number and weight of any samples that producers need to submit for testing would be required. According to one lab in Oakland, CA, samples of two grams can be used to evaluate the potency of up to two pounds of marijuana. Costs of these lab tests can be much as $100-$120 per sample, and as low as $60-$75 per test with a bulk discount. If marijuana is legalized, it can be expected that more labs that perform similar services will enter the market, and possibly reduce the price of testing. More competition in testing could encourage the development of more reliable technology, but it could also lead growers to pick a lab that tends to understate the amount of THC in a product.\nUltimately, it could be difficult to measure final THC content with any degree of reliability, given the nature of some marijuana products. Another disadvantage to a tax based on THC potency is that it could encourage more consumption of less-potent marijuana. If the public health costs of smoking marijuana outweigh the health costs of consuming more potent marijuana, then the effects of this option might be undesirable.\nAn alternative potency calculation could be based on the ratio of THC to cannabidiol (CBD). Such a tax base could encourage consumers to purchase marijuana with more sedative effects.", "A tax could be levied as a percentage (ad valorem) of the manufacturers or retail sales price of marijuana. Ad valorem taxes have several advantages: they (1) automatically adjust for changes in price, and (2) can be easily applied to a wide variety of products that might otherwise be difficult to quantify in a per unit manner. Both the tax regimes in Colorado and Washington use some form of an ad valorem tax on wholesalers as one method to tax marijuana, and H.R. 501 , the Marijuana Tax Equity Act of 2013, proposes a 50% tax on the producer or importer price. The main disadvantage of an ad valorem tax is the required regulations to specify the taxable price the taxes apply to.\nA manufacturers tax (i.e., imposed after the plant is first grown and harvested) is the most simple form of administration because there are generally fewer firms involved in manufacturing than retailing. Most federal excise taxes are imposed at the manufacturer stage (e.g., tobacco, alcohol, firearms). For vertically integrated firms that are both manufacturers and retailers (or some other sort of intermediate firm, such as a wholesaler), regulations need to identify how to construct a manufacturers price if no market transaction takes place.\nIn contrast, a retail tax regime, resembling a sales tax, could be created to capture any price markup due to the type of product or any \"market power\" of firms with branding or advertising advantages. The price of a product containing marijuana or THC could be determined by a number of characteristics other than its intoxication potential.", "In the case of a per unit tax (e.g., weight or potency), the tax rate can be indexed for inflation using some sort of measure of price changes, such as increases in the Consumer Price Index (CPI). Most other federal excise taxes are unindexed (e.g., alcohol, tobacco, gasoline), and, as a result, have declined in real value over time, absent legislative increases in statutory tax rates.\nGiven the uncertainty over prices and demand after legalization, sunset provisions for the tax could be incorporated into any initial authorizing language of a marijuana tax. Sunset provisions could encourage legislators to revisit marijuana tax laws to better reflect the evolving conditions of the nascent, legalized industry. For example, the initial tax rate for legalized marijuana could be set low enough to undermine the illicit market, but then increased gradually to set the tax rate high enough to limit consumption. Alternatively, legislation could delegate authority to the Secretary of the Treasury (or a similar official) to adjust tax rates according to certain criteria.", "Various methods of taxation could also be combined. For example, a general tax on marijuana could be levied based on price or weight, with either a surcharge for higher-THC products or differential rates for various products, such as edibles. Differential tax rates could help shape consumption in such a way that it could reduce some of the negative social costs of marijuana. But, different tax rates could add complexity and unequal tax burdens across various marijuana consumers.\nBy comparison, alcohol is taxed by potency (i.e., alcohol content) as well as category, with taxes per alcohol content lower for beer and wine than for distilled spirits. Cigarettes are taxed on a per unit basis. Cigars are subject to an ad valorem tax with a high ceiling, although the tax is imposed at the manufacturers' level.", "The initiation of a federal marijuana tax could also raise the question of whether to integrate existing stocks of marijuana into the tax base. Lawmakers would have to address the taxation of marijuana plants and any consumer goods sold in jurisdictions that have legalized medical and recreational sales. Integrating more preexisting marijuana plants and products into the tax base could enable producers and retailers to better meet the initial demand for marijuana (at prices potentially low enough to undercut the illegal market), reduce complexity between federal and local tax regulations, and increase initial federal tax revenue. However, some preexisting marijuana plants and products might not comply with new federal regulations or purity standards that are likely to accompany any federal tax regime.\nAn alternative option could include ample lead time between the enactment of such a tax and the effective date of the first legalized sales, giving producers sufficient time to comply with any federal regulations. Although this might help legal producers and retailers compete with the underground market, it would add complexity to the multiple layers of taxation of marijuana in some jurisdictions.\nColorado and Washington have taken slightly different approaches to this issue. In Colorado, retail licenses were initially issued to existing medical marijuana dispensaries (some of which were already growing their own plants). In Washington, current plants grown indoors or outdoors can be converted to legal stocks if the owner has a producer license and the growing space meets all of the state's guidelines.\nIn general, when federal excise taxes are increased, untaxed floor stocks are subject to tax (sometimes with exemptions for small retail operations). The purpose is to prevent building up inventories in advance of the effective date of the tax.", "Several issues could arise concerning restrictions, exemptions, and special treatment under a federal tax on marijuana. Policy makers could choose to implement such regulations at the federal level or allow the states to make their own laws pertaining to each of these issues. Any of these differential tax treatments, however, would make the tax more complicated.", "State laws in Colorado and Washington limit recreational marijuana purchases to individuals aged 21 or older. Age restrictions could have a limiting effect on the tax base, as surveys indicate that younger individuals use marijuana at higher rates than those over 26 years old. However, this trend could change post-legalization as the stigma among adult use lessens and the exotic appeal of an illicit drug lessens among youth. In any case, excluding these consumers from the legal tax base could support some underground production activity (which would be untaxed), or indirect sales of legally purchased marijuana through of-age connections (which could still be preferable to direct transactions with illicit dealers).", "Under state law, Colorado residents are allowed to possess up to one ounce of marijuana and make as many transactions as desired as long as they do not exceed the one ounce limit. Non-Colorado residents are restricted to purchasing one quarter of an ounce (7 grams) in a single transaction. The restriction on non-residents is primarily intended to reduce the risks for larger-scale diversion or export. It has yet to be seen if this restriction has had a significant effect on diversion. More restrictive purchasing limits (by weight) coupled with an ad valorem tax rate can also serve to increase the effective tax rate on heavy users, who are more likely to benefit from a bulk discount.", "Production limits could be enacted based on the total market size or per grower. Washington has a target of 80 metric tons (half for dried marijuana and half for marijuana-extract based products, such as edibles and lotions) for the maximum size of its marijuana market. The primary rationales behind this policy are to monitor possible diversion of sales to other states and guide the number of licenses issued. Colorado has no target. Similarly, concerns could be raised about the diversion of underground exports from the United States to countries where marijuana is still illegal. A tax administered closer to the beginning of the production chain might be more capable of monitoring such diversion. Mark Kleiman, Professor of Public Policy at UCLA and former marijuana policy consultant to the state of Washington, has been quoted as saying that a production limit could also reduce the power of larger producers who, if left unregulated, could increase the negative social consequences of marijuana consumption in pursuit of maximizing profit.\nIn general, production limits generate inefficiency and can contribute to windfall profits for firms already in the market. Production limits have never been considered for any other commodity by the federal government and are unlikely to work for states and a national legal market.", "The tax treatment of medical marijuana varies in the jurisdictions that have legalized medical marijuana. Each jurisdiction applies its general sales tax or a special gross receipts or revenue tax on medical marijuana. For example, medical marijuana sold in Colorado is subject to the 2.9% general, state sales tax but is not subject to the 10% retail marijuana state sales tax or the 15% retail marijuana excise tax.\nMedical marijuana, and the extent to which users are in medical need, is an issue that is contentious. This use might be more attractive to consumers who hesitate or dislike participating in an illicit market. Evidence suggests a negative correlation between medical marijuana and prescription drugs because deaths from prescription drug overdoses have declined in states with medical marijuana.\nAlthough there is a possible justification for exempting this medical use, differences in the after-tax price of recreational and medical marijuana could also provide incentives for users to seek out medical prescriptions. As indicated by the analysis of tax data in Colorado, exempting medical marijuana from a federal tax could also significantly limit the tax base if strict standards for medical prescriptions are not enforced. Preventing such abuse, however, could significantly increase the cost of tax administration.\nIf medical marijuana is exempt, and the tax is imposed at the production level, producers would have to know the end use of the product. Thus, a segregation of sales of medical marijuana and a marking or stamping device would likely be necessary.", "Rules vary across different products that are subject to excise taxation. Colorado allows individuals to grow up to six plants for recreational use, and households can grow up to 12 plants. Washington does not allow home growing of marijuana for recreational use. In comparison, in federal law, no home distilling of alcohol is legal, whereas wine and beer can be made in limited amounts, and tobacco can be grown without limit.\nIf home production is allowed and exempt from taxation, another issue is whether a quantity limit should apply and if so what that limit might be. Pat Oglesby, former chief tax counsel of the Senate Finance Committee and noted expert on state marijuana taxes, indicates that a single plant can yield 448 grams (or approximately a pound of marijuana) and the average user consumes about 100 grams (less than four ounces) per year, so any home-growing limit would probably be seen as high. At the same time, Oglesby (2011) argues that production for home use is not likely to be much of a threat to the tax because even with high illicit prices, even where homegrown is legal, users participated in the illicit market rather than growing their own. However, Caulkins et al., suggest that home production would seriously undermine enforcement because anyone in possession of nontaxed product could claim home production. Banning home production could also increase the revenue generated from a marijuana tax.", "Small wine and beer producers are eligible for lower tax rates, so there is some precedent for tax reductions for small producers. This exemption or lower rate would be linked to a point of collection at the packaging and distribution level. The value of a lower tax for small producers is not clear. In general, however, it is more efficient to collect the tax from a few larger producers, and a benefit for small firms would act against that objective. Additionally, a small businesses exemption could encourage larger forms of evasion, because processing and distribution may be easier on a small scale.", "Another possibility is to apply a lower tax to marijuana grown outdoors, which uses less energy than indoor growing. One study indicates that legalization could reduce the price of marijuana, and lead to less costly cultivation practices outdoors rather than indoors. In contrast, concerns exist that outdoor marijuana cultivation could divert land and bodies of water, thereby generating another set of negative environmental effects. Incentives to produce higher-potency marijuana (e.g., a tax rate based on weight) could encourage indoor production, where growing conditions can be better managed.", "Another federal tax option is levying a special occupational tax (SOT) on any business involved in the production, distribution, or sales of marijuana. SOTs are not licensing fees. Generally, SOTs are levied as a flat fee annually on each firm and comprise a small amount of revenue relative to excise taxes. Currently, federal SOTs are collected on certain businesses in the tobacco or firearms industry. Segments of the alcohol trade were also subject to SOTs until they were repealed in 2008.\nThe Marijuana Tax Equity Act of 2013 ( H.R. 501 ) would impose an occupational tax of $1,000 per year on each marijuana producer, importer, or manufacturer, and a $500 per year tax for any other person engaged in a marijuana enterprise.", "History suggests that the role of enforcement and administrative efforts could be the difference between a sustainable and unsustainable federal tax regime on marijuana. The illicit trade and importation of bootleg spirits in the United States continued after Prohibition ended in 1934 until cuts in tariff rates on spirit imports were negotiated with trading partners (thereby lowering the price of legal spirits), and until the Department of the Treasury hired or assigned more than 1,000 agents to work on enforcing alcohol-related laws during the late 1930s.\nToday, marijuana enforcement efforts would have to deter regular consumers from engaging in illicit transactions with dealers they have presumably built a relationship of trust with in terms of secrecy and product integrity. Additionally, enforcement would have to compel producers to obtain licenses and pay taxes. Without increasing resources for tax-enforcement authorities commensurate with federal-policy change, legalizing and taxing marijuana would likely undermine the long-term viability of any federal tax base.", "Some tax experts have noted that marijuana smuggling might be more prevalent compared with illegal alcohol production because marijuana is more compact and easier to transport than alcohol. However, marijuana is more pungent than packaged alcohol.\nCollecting a tax closer to the point of production, rather than point of sales, could reduce the number of taxable entities and increase the scale of tax units that would need to be monitored (e.g., greenhouses compared to joints). If the tax is applied early in the stage of production, some marker or evidence that the tax has been paid would be needed. As with the case of alcohol and tobacco, tax stamps could be used, or seals on packages (although packages can be opened and refilled, so this method is not completely foolproof). If sold as joints, individual marks could be put on each paper cylinder. Another possibility is the use of dye. New technological developments are also discussed by Oglesby, such as genetic markers or tracking systems that would monitor production from seed to final sale.\nColorado developed several planks for its enforcement system. It tracks marijuana plants from \"seed to sale\" using radio frequency identification (RFID) tags attached to each plant. When the plant is harvested, the leaves and buds are given a new RFID tag and a label printed with the plant's authorized source. Marijuana enterprises are required to report their inventory to the Colorado Department of Revenue's Marijuana Enforcement Division through a linked-computer system called Marijuana Inventory Tracking Solutions (MITS). These systems are meant to complement traditional forms of enforcement, such as physical surveillance.", "Regulations that would standardize weights and potency measurements would most likely need to accompany a marijuana tax regime. Such a regime would contribute to consumer safety and more accurate dosing. Additionally, the U.S. Department of the Treasury could develop marketing standards on the issues related to labeling and branding of different strains of marijuana. These marketing standards are currently negotiated with industry representatives as a means to inform consumers and prevent competition from domestic and imported products that do not meet the same standards. For example, regulations could define what can be labeled \"indica,\" \"sativa,\" or certain types of hybrid strands.", "As previously mentioned, different tax rates in medical and recreational marijuana could create significant arbitrage opportunities for consumers. This is particularly the case for heavy users, who stand the most to gain from evading a significant excise tax burden. Medical marijuana dispensaries are typically organized as nonprofit organizations. Thus, enforcement of regulations will also be important for proper collection of income taxes if these nonprofits are allowed to organize as Section 501(c) entities.", "Hemp has no commercial value as a psychoactive due to its low concentrations of THC. The 113 th Congress made changes to U.S. policies regarding industrial hemp during the omnibus farm bill debate. The Agricultural Act of 2014 ( H.R. 2642 ; commonly known as the \"farm bill\") includes a provision that would allow certain research institutions and also state departments of agriculture to grow industrial hemp, if allowed under state laws where the institution or state department of agriculture is located. Because hemp is a useful agricultural plant, some might also think that it would be reasonable to legalize hemp for industrial production (and exempt it from taxation) if marijuana is legalized for commercial production.\nFor tax purposes, hemp could be distinguished from marijuana for purposes of taxes by its THC quantity. Oglesby notes that proposed legislation in the United States used a THC content of less than ½ of 1% and less than 1% by weight to distinguish hemp from marijuana. Europe and Canada currently allow hemp to be grown and require less than 0.3% THC by weight to distinguish legal hemp from illegal marijuana.\nAn argument made by Oglesby (and others) is that marijuana can be hidden in hemp fields, one reason that hemp is illegal. This claim is likely overstated, as cross-pollination would weaken the effectiveness of the marijuana plants. As previously mentioned, higher-quality strains of marijuana require controlled climates isolated from pollination in order to reach peak THC potency.", "Some experts have also noted that the decision, or delay, of legalization at the federal level could have significant effects on the development of marijuana tax policy at the state level. As long as marijuana remains illegal at the federal level, states with marijuana legalization laws could rely on a system of licensing private businesses to grow and sell marijuana, instead of systems in which a state-based monopoly regulates the sale of marijuana (i.e., as some states currently have over liquor retail sales). Proponents of state-based monopolies see them as a tool to regulate consumption (e.g., state-approved retail locations, restricted marketing), while opponents of state-based monopolies see them as susceptible to corruption, and driven mostly for purposes of raising revenue (a common critique of many state-run lottery commissions). Although the differences in the level of revenue extracted from a licensing scheme versus a state monopoly scheme might be difficult to predict or even negligible, the dominance of licensing systems across states could make it difficult for lawmakers to roll back such systems and encourage state monopolies (for whatever reasons) in the future.", "The uncertainty over many aspects of marijuana creates difficulties in arriving at conclusions about the possible effects of a legalized and taxed marijuana market.\nThese uncertainties include the post-legalization price of marijuana (and even the current illicit price), the size of the market, and the response of consumers to price changes. These aspects make the projection of revenues for a particular tax uncertain. The uncertainty about prices as well as the spillover and health effects of marijuana makes the setting of the level of the tax difficult. Even choosing how to impose the tax is limited by uncertainties as to differential consumer response to potency and price and the compliance costs of taxing for potency.\nIn terms of revenue-raising potential, it appears that the tax base for legalized marijuana sales is much more limited compared with alcohol or tobacco, at least in the short term. This outcome is particularly the case if medical marijuana sales are exempt from a federal marijuana tax.\nAppendix A. Some Additional Social Costs and Benefits of Marijuana\nThe discussion in the text reported some broader information on the magnitude of the social costs and benefits of marijuana. This appendix discusses some of the components of those social costs.\nRelationship Between Marijuana and Alcohol Consumption\nOne of the potential determinants of social costs of marijuana legalization is the relationship between marijuana consumption and alcohol consumption. Social costs of alcohol consumption have been well documented in academic studies. If marijuana is a substitute for alcohol, then arguably marijuana has some positive spillover effects on society because marijuana consumption has fewer social costs than alcohol consumption. However, if marijuana is consumed with alcohol, then arguably marijuana results in some negative spillover effects on society.\nResearchers have not reached a consensus on this issue. Many economic studies that measure the relationship between marijuana and other substances (i.e., cross-price elasticity of demand) do not capture long-term effects, could be measuring spurious relationships, or examine individuals who might not be representative of the national population. Marijuana research is highly regulated in the United States. The National Institute on Drug Abuse, the agency primarily responsible for policy research, has been quoted in media sources that it \"does not fund research focused on the potential beneficial medical effects of marijuana.\" Additionally, no study captures the effects of commercial and recreational legalization on the scale of Colorado or Washington because no other jurisdiction in the world has pursued such policies.\nThis uncertainty surrounding the relationship between alcohol and marijuana use is important because it limits the plausibility that a marijuana tax could be initially levied based on the external costs to society. For example, marijuana legalization could impose significant external costs or savings on society, even if marijuana consumption has a minor effect on the demand for alcohol due to the relatively large external costs of alcohol consumption. Initiatives at the state levels in Colorado and Washington could provide researchers with an opportunity to better understand the effects of broader legalization policies.\nPolydrug Use\nIn addition, the social costs of marijuana legalization could vary based on the relationship between the consumption of marijuana and other illicit drugs (commonly referred to as \"polydrug use\"). Studies indicate that marijuana has a lower risk of addiction and abuse than cocaine, crack, or heroin. Some claim that marijuana is a \"gateway drug\" to further illicit drug use. In survey data, about 10% of infrequent marijuana users in the past year report using other illegal drugs whereas the rate for \"heavy\" marijuana users (21-30 days per month) is slightly more than 25%.\nDriving Under the Influence\nCurrent research on the effects of marijuana use on traffic fatalities is limited by methodological and technological shortcomings. As noted earlier, some researchers have used controlled experiments to measure the effects of marijuana use on standard driving measurements, such as ability to track driving lanes. Other researchers have studied the extent to which marijuana use has been linked to actual driving fatalities. Among non-alcohol drugs, marijuana is the most frequently detected substance in the general driver population as well as in drivers being involved in crashes. However, this is not the same as saying that there is a causal link between marijuana use and traffic fatalities. Studies using data from actual crash sites typically measure the driver's blood, urine, or saliva for alcohol and metabolites released by the body in reaction to consumption of various types of drugs (including marijuana). Marijuana testing technology is currently limited in its ability to detect the level of marijuana intoxication at a given time. In the words of one study, \"it is possible for a driver to test positive for cannabinol in the blood up to one week after use. Thus, the prevalence of nonalcoholic drugs ... should be interpreted as an indicator of use, not necessarily a measure of drug impairment.\" For example, more advanced metabolite tests or mouth swabs would need to be developed to distinguish between a positive driving under the influence (DUI) test of a recent user and a chronic medical marijuana patient that has not been under the psychoactive effects of marijuana.\nCriminal Incarcerations\nSome claim that marijuana legalization could lead to savings in criminal justice spending at the federal, state, and local levels. Some of the estimates cited in media sources have been quite large. For example, Jeffrey Miron, a researcher at Harvard University, estimated in 2005 that legalizing marijuana would save $7.7 billion per year in total enforcement costs at state and federal levels.\nHowever, subsequent research suggests that estimates could be much smaller. Sevigny and Caulkins (2004) estimated that 8% of state and federal prison inmates serving sentences for drug law violations were marijuana-only offenders. Some prisoners caught trafficking other drugs could have also possessed marijuana, but these individuals would have been incarcerated even if marijuana were legal.\nAccording to the U.S. Sentencing Commission, 31.2% of offenders in FY2013 were sentenced to a federal prison for a primary offense related to drugs. The vast majority of these sentences are for drug trafficking. Of these drug-related offenses, 28.4% of the sentences were related to marijuana (the highest share among drug-related categories). Federal legalization of marijuana would likely not affect federal inmates already serving sentences for marijuana-related charges. It is unclear how federal legalization of marijuana might impact the future federal prison population.\nIn state and local jails, drug violations account for about one-fifth of incarcerations and marijuana-only violations account for less than 10% of those charges. According to these estimates, legalizing marijuana could lead to 2% fewer prisoners in jails over time. Federal legalization would likely not affect state and local inmates already serving sentences for marijuana-related charges, and would not affect future state and local incarcerations in jurisdictions that do not choose to legalize it.\nThese benefits, large or small, would be related to legalizing marijuana, not taxing it. If taxes or regulations are so large or onerous that they encourage a continuation of the illicit market, some of these gains would be lost.\nMarijuana-Related Crime, Violence, and Corruption\nThe majority of costs associated with the black market for illicit drugs are related to illegal stimulants and opiates, not marijuana. This is because the price per pound of these other drugs is typically more than marijuana. Many marijuana exchanges take place indoors among parties (such as friends and family) where there is less risk for conflict, whereas many other drug transactions take place outdoors among strangers or in public.\nAppendix B. Current Treatment of the Deductibility of Expenses for Marijuana-Related Businesses\nMarijuana producers and retailers may not deduct the costs of selling their product (e.g., payroll, rent, and advertising) for the purposes of the federal tax filings. The Internal Revenue Code (IRC) Section 280E states that\nNo deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.\nMedia reports indicate that the Internal Revenue Service (IRS) has enforced this provision in audits of marijuana-related businesses by refusing to accept these business deductions. Effectively this constitutes an implicit tax on marijuana-related businesses equal to the value of the tax benefit of such deductions if firms engaged in an industry that was legal under federal law.\nSome businesses have challenged the IRS's practices through the courts. For example, Sacramento-based, Canna Care marijuana dispensary is challenging IRS tax penalties of more than $800,000 in a case before the U.S. tax court in San Francisco, CA. Media reports indicate that the IRS refused to accept $2.6 million in business deductions for employee salaries, rent, and other costs over three years (although the IRS allowed Canna Care to deduct the cost of the marijuana itself).\nThe discrepancies between federal and state and local tax treatments of marijuana-related businesses create economic incentives to engage in the underground economy. In addition to the uncertainty of federal tax enforcement procedures (and costs of any related legal assistance), the inability of marijuana businesses to deduct their business expenses is effectively an implicit tax up to 39.6% (if organized as sole-proprietor or partnership) or 35% (if organized as a corporation) of the cost of these expenses. These implicit taxes are paid in addition to state and local sales and special excise taxes.\nThe status quo administration of federal tax laws creates an economic advantage for illicit marijuana sellers, who are not subject to direct taxation of their sales.\nIn the 113 th Congress, the Small Business Tax Equity Act of 2013 ( H.R. 2240 ) would exempt a business that conducts marijuana sales in compliance with state law from the IRC Section 280E prohibition against allowing business-related tax credits or deductions for expenditures in connection with trafficking in controlled substances.\nAppendix C. Technical Calculations for the Estimate of a National Marijuana Tax Base from Colorado Data\nAn estimate of the total sales volume of a national sales base can be calculated by extrapolating tax collection data from Colorado or Washington. Data from both states likely underrepresent total demand because licenses for more production and retail businesses are pending. Additionally, it is unknown if the underground market for marijuana significantly declined from the opening of state-licensed stores.\nFor the purposes of this report, the most recent tax revenue data from Colorado are used to calculate an estimate of the state's marijuana tax base (dollar amount of total sales). The recreational tax base can be calculated using tax collections data from the 10% retail marijuana sales tax or the 2.9% general sales tax (which provide two measures to derive the total tax base), where tax base is equal to tax collections divided by the tax rate. Because each of the two taxes yields slightly different tax bases, the two calculations are averaged to determine a monthly aggregate tax base for recreational sales.\nFor example, the Colorado Department of Revenue reported that the 10% retail marijuana sales tax collected $2.9 million and the 2.9% sales tax collected $886,915 (on retail, non-medical marijuana) in September 2014. Using the methodology above, this would lead to tax base calculations of $29.4 million and $30.6 million, respectively. Averaging these two numbers leads to an estimate of $30.0 million in recreational marijuana sales in the state of Colorado in September 2014.\nThe data from Colorado can then be extrapolated for each state and the District of Columbia to calculate an estimate of the national sales tax base. The recreational sales tax base averaged from the two data points in Colorado can be multiplied by each state's or district's population (indexed, relative to Colorado) and then multiplied by the marijuana usage rates (indexed, relative to Colorado) as reported by the National Survey of Drug Use and Health (NSDUH). In other words, this simple calculation assumes the primary sources of variation in consumption in each state or district are based on population and usage rates and does not assume major changes in price (e.g., the large-scale production of relatively cheap, unbranded marijuana; or variations in state tax rates) that could lead to further supply and demand effects. Using the August 2014 data from Colorado, it can be estimated that the national sales tax base for recreational marijuana could be $14.5 billion or $15.4 billion per year. These estimates could be subject to revision, as recreational tax revenue in Colorado has been generally increasing since January 2014.\nA similar process can be used to calculate the medical marijuana tax base in Colorado, although there is only one tax levied on medical marijuana in Colorado (the 2.9% general sales tax). Based on September 2014 data, medical marijuana sales in Colorado were $31.3 million. From January to September 2014, monthly medical marijuana sales in Colorado have ranged between approximately $31 million and $35 million. In FY2013 (ending June 30, 2013), before the legalization of recreational marijuana, state sales tax collections data from the Colorado Department of Revenue imply an annual medical marijuana tax base of $314.2 million in sales. It is too early to conclude whether the opening of the recreational marijuana market has affected the demand for medical marijuana in Colorado.\nHowever, it is difficult to extrapolate medical marijuana data in Colorado to the general U.S. population because of incomplete data in some states. Additionally, the medical marijuana patient data could have a self-selection bias, as some individuals could have been willing to relocate to states permitting medical marijuana use, if they felt that they had few other options to alleviate their condition. Based on Colorado's tax collections data, medical marijuana consumption could double marijuana consumption total amounts, if not more. Even if medical marijuana regulations were more tightly enforced, post-legalization, users denied for a medical card could purchase marijuana for recreational purposes." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 1, 2, 2, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 3, 2, 1, 2, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "", "h2_title h3_title", "h2_full", "h3_full", "h3_full", "", "h3_full h2_full", "", "", "h0_title h1_full", "", "h0_title", "", "", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h2_full" ] }

{ "question": [ "What has the combination of state policy and general public opinion favoring the legalizing of marijuana led to?", "How would the Marijuana Tax Equity Act of 2013 tax marijuana?", "How would the National Commission on Federal Marijuana Policy Act of 2013 tax marijuana?", "What does this report focus on?", "What does this report provide an overview of?", "How does this report analyze possible marijuana tax designs?", "What tax administration and enforcement issues does this report discuss?", "According to economic theory, what is the efficient level of taxation equal to?", "What is marijuana's external cost to society?", "What does this indicate about the effective level of taxation for marijuana?", "How would an increased number of users likely affect the market for marijuana?", "How could demand for marijuana be curtailed?", "How effective would such taxation likely be?", "What demographics would likely be most affected by such taxation?" ], "summary": [ "The combination of state policy and general public opinion favoring the legalizing of marijuana has led some in Congress to advocate for legalization and taxation of marijuana at the federal level.", "The Marijuana Tax Equity Act of 2013 (H.R. 501) would impose a federal excise tax of 50% on the producer and importer price of marijuana.", "The National Commission on Federal Marijuana Policy Act of 2013 (H.R. 1635) proposes establishing a National Commission on Federal Marijuana Policy that would review the potential revenue generated by taxing marijuana, among other things.", "This report focuses solely on issues surrounding a potential federal marijuana tax.", "First, it provides a brief overview of marijuana production.", "Second, it presents possible justifications for taxes and, in some cases, estimates the level of tax suggested by that rationale. Third, it analyzes possible marijuana tax designs.", "The report also discusses various tax administration and enforcement issues, such as labeling and tracking.", "Economic theory suggests the efficient level of taxation is equal to marijuana's external cost to society.", "Studies conducted in the United Kingdom (UK) and Canada suggest that the costs of individual marijuana consumption to society are between 12% and 28% of the costs of an individual alcohol user, and total social costs are even lower after accounting for the smaller number of marijuana users in society. Based on an economic estimate of $30 billion of net external costs for alcohol, the result is an external cost of $0.5 billion to $1.6 billion annually for marijuana.", "These calculations imply that an upper limit to the economically efficient tax rate could be $0.30 per marijuana cigarette (containing an average of one half of a gram of marijuana) or $16.80 per ounce.", "An increased number of users in a legal market would raise total costs, but not necessarily costs per unit.", "Some could also view excise taxes as a means to curtail demand, particularly as the price of marijuana can be expected to drop from current retail prices of up $200-$300 per ounce to prices closer to the cost of production at $5-$18 per ounce, if broadly legalized.", "The demand for marijuana is estimated to be relatively price inelastic, meaning that consumer demand is relatively insensitive to price changes. Although previous studies of marijuana demand largely examine consumers willing to engage in illegal activities, it appears that higher tax rates would have a minor effect on reducing demand.", "With this said, tax policy, coupled with adequate law enforcement, could be an effective tool to limit marijuana consumption among youth, as empirical studies indicate that their demand is more sensitive to price than non-youth." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 0, 0, -1, 0, 1, -1, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "Background", "The Field Study Followed Several Accepted Research Standards, but Did Not Report Its Limitations or Make Conclusions That Were Fully Linked to the Results", "FMCSA Anticipated Several Effects of the 2011 Hours of Service Rule, and While Available Data Provide Some Insight, Data Limitations Hinder the Ability to Fully Assess the Rule’s Effects", "FMCSA Used Several Key Assumptions to Estimate the Potential Effects of the Rule", "Analysis of Available Data Provides Some Insight into the Effects of the Rule", "Lack of Representative Driver Schedule Data Limits Analysis of the Effects of the HOS Rule", "Conclusions", "Matter for Congressional Consideration", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Methodologies for Evaluating the Field Study", "Methodologies for Evaluating the Anticipated and Actual Effects of the Hours of Service Rule", "Appendix II: Analysis of Data Analysis and Collection in FMCSA’s Field Study", "Sensitivity Tests", "Power Analysis", "HOS Study Analytical Methods and Data", "Power Analysis for Multiple Subpopulations", "Composite Hypotheses", "Multiple Simple Hypotheses", "Power Analysis for the Overall Population", "Appendix III: GAO Identified Assumptions in the Hours of Service Rule’s Regulatory Impact Analysis", "Appendix IV: Analysis of Driver Schedule Data", "Filtering the Data", "Defining and Calculating a Driver’s Work Week", "Number of Days in a Work Week", "Calculation of a Work Week", "Weekly On-Duty Categories", "Unit of Analysis", "Restart Length", "Data Analysis", "Analysis of the Dataset over Different Time Periods", "Results: Hours Worked per 8-Day Week", "Results: Number/Rate of Restarts", "Appendix V: Biomathematical Models of Fatigue", "Simulated Schedules for Drivers Working Maximum Allowed Hours during Daytime Hours", "Simulated Schedules for Drivers Working Maximum Allowed Hours during Nighttime Hours", "Simulated Schedules for Drivers Working 60- to 70- Hour Shifts during Nighttime Hours", "Simulating Schedule Changes due to the Two- Night Provision Reported by Drivers", "Simulating Schedule Changes due to the 168- Hour Limit Reported by Drivers", "Appendix VI: GAO Analysis of Vehicle Count Data", "Appendix VII: GAO Analysis of Crash Data", "Trends in the Numbers of Crashes", "Crashes Occurring between 5 a.m. and 9 a.m.", "Appendix VIII: Comments from the Department of Transportation", "Appendix IX: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The commercial motor-carrier industry is a vital part of the U.S. economy. As of December 2013, FMCSA estimates that there were more than 539,000 active motor carriers and 5.6 million commercial drivers operating in the United States that transport freight and move people, numbers that fluctuate over time due to the tens of thousands of carriers that enter and leave the market annually. Truck carriers are responsible for transporting approximately 13 billion tons of cargo annually, representing 67 percent of all cargo weight that was shipped in 2012.\nThe United States’ commercial motor-carrier industry represents a range of businesses, including private and for-hire freight transportation, passenger carriers, and specialized transporters of hazardous materials. These carriers can be small and involve a single vehicle that is owned and operated by a single individual, or large corporations that own tens of thousands of vehicles. Similarly, commercial motor-vehicle operations differ greatly, including whether a carrier operates locally, regionally, or across the country (i.e., “over-the-road”), as well as the time of day when a driver operates. In addition, some carriers move goods as part of a single shipment to one destination (called “truckload” operations), while other carriers make numerous deliveries to many different destinations (called “less-than-truckload” operations).\nPrivate carriers run an internal trucking operation to support a primary business in another industry, such as a retail store chain, while for-hire carriers sell their trucking services on the open market. vehicle. FMCSA has reported that the most commonly cited driver-related factor in a fatal truck crash in 2012 was speeding. That same year, driver impairment, including by fatigue, was the fourth most commonly cited factor.\nResearch indicates fatigue can lead to a state of diminished capacity, which can have ramifications for humans such as having more difficulty maintaining attention, becoming less communicative, and having reduced situational awareness. People are then at greater risk of committing errors in their work, which can ultimately lead to more crashes. Managing fatigue is particularly critical for tasks that require constant attention, such as driving a commercial vehicle.\nFMCSA is responsible for overseeing the large and diverse commercial motor-vehicle industry. To do so, FMCSA establishes safety standards for interstate motor carriers as well as intrastate hazardous-material carriers operating in the United States. To enforce compliance with these standards, FMCSA partners with state agencies to perform roadside inspections of vehicles and investigations of carriers. In fiscal year 2014, FMCSA had a budget of approximately $572 million and almost 1,100 FMCSA staff members located at headquarters, four regional service centers, and 52 division offices.\nDrivers of commercial motor vehicles in the United States have been subject to driving and working hour restrictions for almost 80 years. In 1937, the entity that previously carried out certain of FMCSA’s current functions—the Interstate Commerce Commission—adopted the first HOS rule. While the specific requirements in several of the provisions of that rule have changed over time, there are three general requirements that are still in place today:\nDaily off-duty period: Drivers must be off-duty—not working or driving—a minimum number of hours per day.\nDaily driving limit: Drivers can only drive a maximum number of hours per day.\n60/70 hour on-duty limit: Drivers are restricted from driving when they reach a total of 60 or 70 hours of on-duty time over a rolling 7- or 8-day period, respectively.\nBecause the 60/70 hour on-duty limit is a rolling period, drivers must calculate these hours by looking back over the prior 7- or 8-day period. For example, according to the schedule below, the driver has accumulated 68 hours in the 8-day rolling period from Thursday to Thursday, and 72 hours of on-duty time from Friday to Friday (see fig. 1). In this example, the driver worked under 70 hours (68 hours total) and is in compliance with the 60/70 hour on-duty limit from Thursday to Thursday, but not from Friday to Friday when he worked more than 70 hours (72 hours total) over an 8 day period.\nIn 2003, FMCSA altered the HOS rule for drivers transporting freight in several significant ways:\nCreated a 14-hour “driving window” that restricts driving beyond the 14th consecutive hour after a driver comes on-duty.\nIncreased the daily driving limit (from 10 to 11 hours).\nIncreased the off-duty period (from 8 to 10 hours).\nCollectively these provisions allow drivers to operate a commercial motor vehicle for 11 hours a day and be on-duty or work up to 14 hours per day, but also require drivers not to work or drive for at least 10 hours per day.\nFMCSA retained the 60/70 hour on duty limit, but allowed drivers transporting freight to “restart,” or begin at zero, their on-duty hours following an off-duty period of 34 hours or longer. Drivers are not required to take this 34-hour break, but may choose to do so to increase their scheduling flexibility, among other reasons. The provision, according to FMCSA, was adopted because it would provide drivers experiencing sleep loss or significant sleep debt with an opportunity to recover and, therefore, prevent a significant number of fatigue-related crashes.\nTo understand the restart provision, consider the example depicted below in which a driver does not have any on-duty hours for Saturday and Sunday (48 hours). Prior to the restart provision, this driver would have reported working 72 hours from Friday through Friday and would be out of compliance with the HOS rule. Under the restart provision, the driver may now reset his/her total accumulated hours to zero on Monday because the driver was not driving or working over the weekend, a period greater than 34 hours. Therefore, while the driver was not in compliance with the 60/70 hour on-duty limit under the prior rule, he/she would be in compliance using the new restart provision, having accumulated only 60 hours for the 8 day period from Friday to Friday. (See figure 2).\nAs previously discussed, in 2011 FMCSA made several significant changes to the HOS rule, including the restart provision. Specifically, the rule added the following provisions:\nTwo-night provision: For the 34-hour off-duty period to count as a restart, it must include two nighttime periods from 1 a.m. to 5 a.m.\n168-hour limit: Drivers can only take a 34-hour restart every 168 hours (once per week).\n30-minute rest break: Drivers must take a 30-minute, off-duty break during the first 8 hours of their work day in order to continue to drive.\nAccording to FMCSA, the 2011 changes were made for several reasons. Specifically, the two-night requirement was intended to allow drivers more nighttime rest, which is more restorative than daytime rest because it better accords with the body’s circadian rhythms. The 168-hour limit was put into place to reduce fatigue by limiting the ability of drivers to work close to the maximum number of on-duty hours permitted on a continuing basis. For example, prior to the 2011 rule changes drivers who used a restart could work more than 80 hours in an average week. By limiting use of the restart to once every 168 hours, drivers could work no more than 70 hours in an average week. Lastly, the rest break requirement was designed to alleviate fatigue and fatigue-related performance degradation.\nFMCSA asserted that, while the 2011 rule would result in some economic costs, the changes would affect only a small percentage of drivers who regularly work long hours and that the safety and health benefits would outweigh any loss in productivity. Several organizations that represent motor carriers, however, have stated that the rule negatively impacted a larger portion of the trucking industry than was anticipated by FMCSA and that the rule had several unintended consequences, such as forcing a large amount of commercial vehicle traffic onto the roads during congested periods of the day.\nIn July 2012, FMCSA was required by federal law to conduct a study examining the efficacy of the restart rule, which was to be completed by March of 2013. The study was to include statistically valid analysis and data on drivers in real world conditions affected by the maximum driving- time requirements. FMCSA was required to develop a methodology consistent with prior research examining the two-night provision that was conducted in a laboratory. Based on these requirements, FMCSA completed a field study (i.e., looking at drivers in real world conditions) that focused on the two-night provision, but did not examine the other two new HOS provisions: the 168-hour limit and the 30-minute rest break. To complete the field study, FMCSA contracted with Washington State University and Pulsar Informatics—a technology development and research company.amounts of data from 106 commercial vehicle drivers during two duty cycles that included two different restarts of at least 34 hours or longer. Data collected included information on sleeping and activity patterns, caffeine use, and three fatigue measures: Researchers from these institutions collected large the psychomotor vigilance test (PVT), which was the primary outcome measure of the study and measured a driver’s ability to react to visual stimuli, e.g., flashing lights, on a smart phone within a specific amount of time; the Karolinska Sleepiness Scale (KSS) that includes a subjective self- assessment of how tired a driver was at a specific point in time; and lane deviation, which measured lateral vehicle movements within a driving lane.\nResearchers used these data to compare fatigue levels for drivers taking a restart that included one-nighttime period versus drivers taking a restart that included two-or-more nighttime periods. Based on this evidence, the study concluded that a restart with two-nighttime breaks helps to mitigate fatigue and provides support of the efficacy of the new restart rule. The final report was submitted to FMCSA in September 2013 and issued publicly in January 2014.\nIn December 2014—approximately 18 months after the HOS rule went into effect—congressional action resulted in the suspension of two provisions: the 168-hour limit and the two-night provision. These provisions are suspended until September 30, 2015, or FMCSA completes a new, naturalistic study—currently underway—examining the operational, safety, health, and fatigue impacts of the restart provisions in the HOS rule, whichever comes later. While similar in many respects to the prior field study, the new study is required to include more robust data and examine several issues not discussed as part of the prior field study. For example, both studies collected or will collect PVT data to assess driver fatigue. However, the new study will collect data over a significantly longer time period (approximately two weeks of data for each driver for the prior field study versus 5 months of data for the new study) and will examine crash and driver health data that were not considered as part of the field study. FMCSA is required to provide a copy of the new study to Congress by December 2015.", "Based on our prior work evaluating research programs, our internal expertise in research design, and established guidelines and reports for conducting research and program evaluations, we identified six generally accepted research standards that are critical for designing, analyzing, and reporting the results of scientific research. FMCSA’s 2014 field study followed three of these standards, including using measures that are valid and reliable, employing quality controls, and reporting results that are supported by data (see table 1). The field study partially met the standards of using a methodology that supports the study’s objectives and reporting conclusions that are linked to the results. The field study did not meet the standard of reporting methodological limitations and their impacts.\nThe primary fatigue measure used in the field study is valid and reliable and supported by two secondary measures: According to our literature review and interviews with fatigue experts, the primary fatigue measure used in the field study—the PVT—is a reliable and valid measure of fatigue and is widely used in fatigue science research. While we identified limitations on the reliability and validity of the secondary measures used in the field study—the KSS and lane deviation—we also We also discussed their found they are widely used in fatigue science.use with FMCSA officials and determined that the KSS and lane deviation measures were used to support the primary findings from the PVT. Specifically, FMCSA officials stated, and we agree, that using multiple measures with different strengths and weaknesses can help to reinforce findings. In the case of the field study, each of these three measures independently supported the finding that drivers taking a one-night restart were more fatigued than those taking a two-or-more night restart.\nThe field study included controls to identify data inconsistencies and errors: Specifically, the field study involved a visual data check that compared data for each driver across nine variables, including activity— as recorded by a wrist monitor, test results on the PVT and KSS, and GPS location. Researchers used this data check to identify any obvious errors and possible contradictions in the data, such as instances when the data might indicate a driver was coded as driving and sleeping simultaneously. Researchers also debriefed the study participants at the end of the study to discuss inconsistencies, mistakes, or missed entries as well as any outliers on the fatigue measures. This approach allowed researchers to account for incomplete or obviously biased data. Based on our review of the data and statistical coding, we believe that these quality controls were sufficient to ensure the data used in the field study are reliable.\nThe results and analysis reported in the study are supported by the data: To assess whether the results and analysis were supported by the data, we replicated several aspects of the study. First, we acquired the raw data and the computer programs used in the field study to process the data and run statistical analyses. As a check on the reliability of the computer programs, we applied the programs to the data for one driver and verified that the results were consistent with numbers reported in the field study. Because the same computer program was applied to all drivers by the authors of the field study, this check provided assurance that the analysis for all drivers was reliable. Second, using data files provided by the authors, we replicated demographic information reported in the study, including average age, years of experience, and sex of the driver, among others. Similarly, using data files provided by the authors, we replicated the main study results. For example, our replication showed that the study accurately reported the number of reaction time errors or “lapses” on a PVT test for drivers following a one-night restart and a two- or-more night restart.\nThe methodology used in the field study partially supports the study’s objectives: The field study examined drivers in a naturalistic environment, driving their normal routes, and collected fatigue related data in a way that was consistent with the study’s objectives. The study collected data on sleep patterns, fatigue, and driving behavior using wrist monitors, smartphones, and sensors attached to truck equipment. These methods did not require drivers to interact repeatedly with researchers or change their driving behaviors in response to study requirements, which otherwise might have biased measurements or prevented the results from applying to real world conditions. In addition, we determined the statistical method used to evaluate the study’s findings—mixed-effects regression modeling—was appropriate. Mixed effects modeling is an accepted method of analyzing longitudinal data, which, in this study, involved the same drivers taking the PVT at various times of day over several weeks. In addition, the models reasonably allowed for the possibility that the rule’s effects could vary according to the time of day and period of observation.\nHowever, we did find one area in which the methodology used did not support the study’s objectives. Specifically, the purpose of the study was to examine the efficacy of the 2011 HOS rule, which required drivers choosing to take a restart include two-nighttime periods (from 1 a.m. to 5 a.m.). This rule was expected to reduce fatigue for drivers that previously took restarts with one-nighttime period as part of their restart. Therefore, the study should have been designed to compare the ability of drivers to perform fatigue tests, e.g., the PVT, after a one-night or a two-night restart. However, the field study actually compared drivers with one-night restart breaks to those with two or more nights of rest. One concern with including drivers taking more than two nights rest is the possibility of biasing the results. For example, drivers with more rest could be less fatigued and have fewer lapses on a PVT test. Thus, including such drivers does not directly support the objective of the study to determine the impact of the changes to the restart provision from a one-night to a two-night restart. According to FMCSA officials, the decision to include drivers taking more-than-two night restarts was a judgment call made by researchers, and was likely due to the timeframe mandated by law for completing the study.\nFollowing the study’s issuance FMCSA officials stated that they conducted additional analysis and determined that the inclusion of drivers with a two-or-more night restart did not influence the results. We conducted a similar analysis and also found that the inclusion of drivers with two-or-more night restarts did not bias the results. Specifically, we found that the number of on-duty, PVT lapses for drivers who took a two- night restart was virtually the same as those taking a two-or-more night While we did not identify any bias, the decision to include drivers restart.with more than two-night restarts was not appropriate given the objectives of the study.\nThe results of the field study support the report’s conclusions about fatigue, but conclusions about crash risk may be overstated: The study found a statistically significant difference across several measures between drivers with a one-night restart and those with a two-or-more night restart. Specifically, drivers with a one-night restart had more lapses on the PVT, rated themselves as more sleepy on the KSS, and had greater lane deviation than those with a two-or more night restart.\nFMCSA used these results to support two points in the conclusions section of the study: (1) the two-night provision mitigates fatigue, and (2) the two-night provision supports the efficacy of the restart rule and has implications for real-world driving performance, road safety, and crash risk. As discussed above, our review of relevant research and discussions with fatigue experts shows that the primary measure used in the field study—the PVT—is a reliable and valid measure of fatigue and is supported by the KSS and lane deviation, which are widely used in fatigue science. Therefore, the evidence supports FMCSA’s conclusion in the study that the two-night provision mitigates fatigue.\nLane deviation, as defined in the field study, could mean lateral movement within a lane and did not imply crossing a line into another lane. test—an average difference of 0.3 lapses. In addition, FMCSA found a larger difference in the number of lapses between drivers taking a one- night versus a two-or-more night restart when operating at night—an average difference of 0.8 lapses per PVT test. FMCSA used these results to support its conclusions that this number of additional lapses, i.e., 0.8 more lapses, has “implications for real-world driving performance, road safety threat detection, evasive maneuvering and braking response speed and crash risk.” Further, FMCSA also provided a hypothetical example of the distance a truck could travel during a single lapse, noted that such inattention may mean the driver is not seeing critical information—such as road signs, traffic signals or other vehicles—and concluded that “an increase in lapses of attention increases crash risk.”\nThe conclusion of the report—which implies a direct relationship between the study’s results and crashes—may overstate the findings and erroneously imply that this study provides evidence of reduced crash risk. As we discuss later in this report, while there is evidence that fatigue and crashes are generally related, we found little research that attempted to quantify this relationship using any of the fatigue measures in the field study. In particular, through our review of literature and conversations with fatigue experts, it was uncertain the extent to which, if any, a difference of 0.3 or 0.8 lapses on the PVT might be related to on-road safety outcomes.directly link results to crash risk due to challenges associated with According to FMCSA officials, its study does not performing such a study. Instead, FMCSA used lane deviation as a proxy measure for crashes and driving performance. In addition, FMCSA officials stated that, since fatigue is connected to crash risk, increases in fatigue, such as those shown in the field study, are associated with crash risk. While we agree that evidence generally supports that fatigue and crash risk are related, we are uncertain how fatigue differences of the size reported in the field study would be associated with crash risk. Thus, the safety implications and policy importance of the study’s estimated effects on fatigue may be overstated.\nThe field study did not report all of its methodological limitations, including how these limitations might have affected the results: As with any research effort, FMCSA made methodological choices to achieve the goals of the study under the requirements outlined in MAP-21. For example, according to FMCSA, many of the decisions on recruiting drivers to participate were dictated by the short time frame under which FMCSA was required to complete the study—approximately 9 months— and the availability of resources. After considering several of these methodological choices that we reviewed, such as the sample size used, they appear to be reasonable given these constraints. However, by not reporting how certain decisions may have limited the study and impacted the results, FMCSA did not follow accepted research standards, as discussed below:\nThe field study did not describe its driver recruitment process.\nAccording to FMCSA officials, participants in the study were recruited from three carriers that performed several different types of operations (i.e., local, regional, and over-the-road). One of these motor carriers was selected because of a prior relationship it had with FMCSA and the other two carriers were chosen after being identified as relatively safety conscious. A third-party data provider used logbook data from these carriers to identify drivers that met several criteria—including working near the maximum allowable weekly hours—which FMCSA used to identify specific operating locations that were likely to employ drivers meeting the study’s requirements. By not including information on the recruiting process in the field study, FMCSA’s study prevents readers from assessing potential bias in the collection of data and invites skepticism of the recruitment process. For example, FMCSA did not disclose that it recruited a substantial proportion of its sample of drivers with a one-night restart from a single, large U.S. city, according to one of the carriers selected to participate in the field study. Because these drivers likely operate in a similar environment, such a sample raises questions about whether these drivers’ measured fatigue levels after one-night restarts might have been related to other factors with that location. Such other factors might include characteristics of the local traffic or trucking operations. According to FMCSA officials, they recruited drivers in this manner because they needed to complete the work in a relatively short time frame—approximately 9 months—and had difficultly identifying drivers likely to take a one-night restart. While this method of recruiting drivers does not necessarily bias the study’s results, it has the potential to do so and should have been reported by FMCSA.\nThe field study did not report the implications of its sample size. The field study collected data on a sample of drivers that produced statistically significant results. However, the sample size was not sufficient to address questions that have been raised about how the restart provision affects the diverse commercial-trucking industry. Several stakeholders we spoke with said that the restart provision likely has different effects across industry segments, including local, regional, and over-the-road drivers. These stakeholders said that the restart provision may more successfully reduce fatigue for over-the- road drivers who are away from home for weeks at a time than for drivers who operate locally and sleep in their own beds every night.\nWe analyzed the study’s data to assess the implications of its sample size. We found that, while the field study included a diverse population of drivers from industry segments, its sample did not include enough drivers from each of these segments to estimate differences in PVT at all or to identify statistically significant differences.assessed the sample size that might have been required to estimate significant differences across industry segments. We found that the field study’s sample size was insufficient to estimate significant differences in the primary fatigue measure—the PVT—for each of In addition, we several segments of the industry.decisions on the sample size for the field study were made to accommodate the deadline for when it must be completed. Given the importance of understanding how the results of the field study might have varied by segment, FMCSA should have stated how the study’s sample size limited the generality of its findings and conclusions.\nAccording to FMCSA officials,\nThe study did not report how a critical analytical decision might impact the results. As was discussed above, the field study compared drivers with one- versus two-or-more night restart breaks. According to accepted research standards, FMCSA should have reported why drivers taking a more than two-night restart were included in the study, even though the rule should have been designed to compare ability of drivers to perform fatigue tests, e.g., the PVT, after a one- night or a two-night restart. Furthermore, FMCSA should have reported the potential for this decision to bias the results and, in particular, to exaggerate the difference in fatigue between the two groups of drivers.\nAccording to FMCSA officials, researchers followed several standards when developing and conducting the field study, including Office of Management and Budget’s (OMB) guidelines on the use of independent peer review panels and the DOT Scientific Integrity Policy. The OMB guidelines FMCSA used require agencies to use a peer review process for important scientific information to enhance its quality and credibility. FMCSA officials reported using the guidelines to evaluate the research design prior to implementation as well as to assess the report findings. In addition, DOT’s Scientific Integrity Policy lays out nine elements that primarily detail the importance of communication, transparency, and integrity when using scientific information for decision making. While these standards address several important considerations, including enhancing credibility and transparency, they do not provide specific guidance on how to determine appropriate methods for designing, analyzing, and reporting the results of scientific research. Without such guidance, FMCSA research may not include critical elements, as occurred in the reporting of the field study. Without these elements, FMCSA leaves itself vulnerable to criticism over the integrity of its research—an important consideration, given the heightened profile of HOS regulations.", "FMCSA used several key assumptions to estimate the costs and benefits of the 2011 HOS rule. For example, FMCSA assumed that the rule would result in schedule adjustments for approximately 15 percent of drivers who work more than 65 hours per week on average. These assumed schedule adjustments drove FMCSA’s estimates of the economic costs and the health and safety benefits of the 2011 HOS rule. Our analysis of available data provides some insights into the potential effects of the 2011 HOS rule. For example, we found that about 12 percent of drivers in our dataset worked an average of over 65 hours per 8 day work week before the rule went into effect. The lack of nationally representative driver schedule data limits the ability of researchers to fully evaluate the rule’s impact. Although soon all carriers will be required to collect schedule data electronically and these data could be useful for evaluating the effects of this rule and in formulating future rules, current legal restrictions limit how these data can be used.", "As part of its rule-making process, FMCSA developed assumptions about the motor carrier industry and its operations to estimate the economic costs and the safety and health benefits of the 2011 HOS rule. For example, FMCSA assumed that drivers working more than 65 hours per week would incur the majority of schedule changes as a result of the rule. FMCSA estimated that such drivers made up approximately 15 percent of the driver workforce. FMCSA then made assumptions about how drivers would likely be affected by the rule to estimate a weekly per driver work time reduction of 0.05 hours (3 minutes) for drivers working an average of 60 hours per week; .38 hours (23 minutes) for drivers working an average of 70 hours per week; and 8.7 hours for drivers working an average of 80 hours per week. To estimate the economic costs of the rule, FMCSA calculated the cost of this lost work time and estimated $430 million in annual costs. Further, FMCSA assumed that reduced work time would increase a driver’s opportunity to sleep leading to safety and health benefits. FMCSA estimated the rule would save between 10 and 26 lives per year and result in $150 to $390 million in annual safety benefits. FMCSA also estimated between $70 million and $850 million in health benefits. (See figure 3).", "Analyzing available data can help provide some insight into the rule’s potential effects and the extent to which they aligned with FMCSA’s assumptions and estimates. Specifically, we conducted a comprehensive search for available data that might provide insight into the rule’s effects in the five main areas in which FMCSA made assumptions: (1) which drivers were affected, (2) how drivers were affected, (3) economic costs, (4) safety benefits, and (5) health benefits. The results from our analysis of schedule data from 16 for-hire carriers is consistent with FMCSA’s assumption that drivers working more than 65 hours per work week would be more likely to reduce their work hours. We also found support for FMCSA’s assumption that certain schedule changes could reduce driver fatigue and while total crashes, and crashes with injuries did not appear to change, crashes involving fatalities may have declined after the rule went into effect. However, we were unable to assess, due to a lack of data, FMCSA’s assumptions on economic and health effects. All of the data and analyses we used had limitations, including the extent to which the data are representative of the motor carrier industry and the extent to which we can attribute observed differences to the rule change. In addition, we could not fully analyze the possible effects of the 2011 HOS rule due to the relatively short time frame during which the rule was in place—approximately 18 months. (See table 2).\nWhich drivers were affected: Our analysis of 2012 to 2014 driver schedule data from 16 for-hire motor carriers is consistent with FMCSA’s expectation that the percentage of drivers working the longest hours— over 65 hours per 8-day work week—decreased after the rule went into effect on July 1, 2013. Specifically, we found that the percentage of drivers in our dataset working over 65 hours per 8-day work week decreased from 12 percent immediately before the rule went into effect to 6 percent afterwards. Our analysis also found that the percentage of drivers working between 55 and 65 hours per 8-day work week decreased from 33 percent to 29 percent. In contrast, the percent of drivers working 35 to 55 hours per 8-day work week increased from 48 percent to 57 percent after the rule went into effect. (See figure 4). However, the driver schedule data used in our analysis are not representative of the entire motor carrier industry and do not include any information on drivers who work in some segments of the trucking industry, such as private motor carriers. Therefore, our findings cannot be generalized to the motor carrier industry as a whole.\nIn addition, our interviews with representatives from 20 motor carriers suggest that a wide variety of motor carrier operations were potentially affected by the HOS rule. Specifically, 13 motor carriers we spoke with, including 10 for-hire carriers and three private carriers, stated they were affected by the rule. These carriers described themselves as truckload carriers, less-than-truckload carriers or a combination of both and employed drivers working both more than and less than 65 hours per week. In addition, seven motor carriers reported they were not affected by the HOS rule, including three for-hire carriers, three private carriers, and one carrier that used a truck on a part-time basis and did not fall into either category.\nHow drivers were affected: Our analysis of schedule data from 16 for-hire carriers supports the assumption that some drivers may be working fewer hours and using restarts less often. Specifically, as shown above in figure 4, these schedule data show that fewer drivers were working more than 55 hours per 8-day work week after the rule went into effect in July 2013.\nWe also estimated that drivers, on average, worked approximately 1 to 2 fewer hours per work week after the rule went into effect. In addition, the number of restarts drivers took per calendar week (168 hours) generally declined after the rule went into effect, including for drivers working more than 65 hours per 8-day work week (see fig. 5). We also found that drivers took approximately 6 percent fewer restarts per week, on average, after the rule went into effect.\nWe also found evidence supporting a shift in traffic volume from night time hours to other parts of the day following the effective date of the HOS rule. These shifts cannot be directly attributed to the rule change and the data we analyzed from the Federal Highway Administration were limited to 14 states. Our analysis showed that commodity carrying, i.e., commercial, motor vehicle traffic volume increased by 2.6 percent between November and December 2012 and November and December 2013. However, as figure 6 shows, this increase was not consistent across the time of day. Specifically, commodity carrying motor vehicle traffic mostly increased during daytime hours (6 a.m. to 6 p.m.) and decreased during evening and nighttime hours (6 p.m. to 6 a.m.), relative to the increase in overall commodity carrying vehicle traffic. The largest differences from the growth in traffic volume occurred in the middle of the night (11 p.m. to 4 a.m.), when volume declined or remained flat despite an increase in commodity carrying vehicle traffic overall and in the mid- morning hours (7 a.m. to 10 a.m.) when volume grew faster than the overall growth rate.\nConsistent with our data analysis, representatives from 13 of the 20 motor carriers we interviewed reported a range of operational effects or changes they attributed partially or entirely to the 2011 HOS rule. The other seven motor carrier representatives did not report any operational effects due to the rule. For example, motor carriers reported a decrease in driving hours per driver (10 carriers), less frequent restart use (10 carriers), more driving during periods of traffic congestion (8 carriers), hiring more drivers (6 carriers), and an overall decrease in operational flexibility (10 carriers). Several of these operational changes, such as a decrease in driving hours per driver and subsequent hiring of more drivers to make up for reduced driver productivity, could lead to more commercial vehicles on the road.\nEconomic Costs: We interviewed motor carriers and industry stakeholders about the economic impacts of the 2011 HOS rule but did not find a data source that would allow us to reliably analyze these impacts for the industry. Representatives of 11 out of the 20 motor carriers we interviewed mentioned negative economic impacts due to the 2011 HOS rule. Ten motor carriers reported a productivity loss, six reported a decrease in delivery timeliness, six reported less profitability, and four reported an increase in driver turnover. The other nine motor carriers we interviewed reported no negative economic effects. In addition, four of the eight drivers we spoke with reported a decrease in their income due to the 2011 HOS rule. These drivers reported that reduced work time—fewer or shorter work shifts—was the reason for their loss in income. The four drivers that reported no decrease in pay either did not have a schedule change or were working more hours per week to compensate for schedule changes due to the rule. Other industry stakeholders we interviewed, including 12 out of 13 associations representing segments of the motor carrier industry, shippers, and warehouse operators, also reported negative economic impacts on their respective industries due to the 2011 HOS rule, such as reduced productivity. For example, some industry stakeholders told us their members must hire more drivers to do the same amount of work and keep more inventory in stock to mitigate delays and delivery uncertainty.\nSafety Benefits: According to academic literature we reviewed, fatigue can negatively impact the ability to perform tasks. Fatigue, as a result of being awake for long periods of time or insufficient sleep, can have a negative impact on driver performance and can lead to safety critical events, including crashes. However, the literature is less clear on which HOS interventions (e.g., rest breaks and limiting driving and on-duty time) best minimize fatigue and reduce crash risk. For example, research has found that crash risk is higher when drivers start their shifts or after taking an extended break; but research also shows that drivers who do not take breaks have a higher crash risk than drivers who do take breaks.\nOur analysis suggests that drivers’ operating after the HOS rule went into effect on July 1, 2013, could have a lower risk of fatigue. To assess the extent to which the 2011 HOS rule might affect driver fatigue, we conducted two separate analyses using a biomathematical fatigue model. First, we used the model to compare hypothetical driver schedules that complied with two of the 2011 HOS rule provisions—the 168-hour limit and the two-night provision—to similar schedules that did not comply with the rule but were in compliance with the previous HOS rule.the rule went into effect would result in lower fatigue scores and, We found that some schedule changes that would be required after therefore, a lower risk of driver fatigue.schedules we modelled that had to change after July 1, 2013, in order to comply with the rule were:\nMaximum Allowed-Hours Day and Night schedules: 14-hour shifts over 5 consecutive days or nights. Drivers following a daytime schedule of 14-hour shifts would have to modify their schedules to comply with the 168-hour limit. Specifically, they could no longer take a restart with less than 168 hours (7 days) between when they began their last restart period and the beginning of the next restart period. To comply with the 168-hour limit, drivers following this daytime schedule must take 2 days off instead of one day off between work cycles. For night drivers working 14-hour shifts, working 5 consecutive days with one day off for a restart would not comply with either the 168-hour limit or the two-night provision. These drivers must also take 2 days off instead of one day off between work cycles. The longer restart period (2 days versus one day) taken by these hypothetical day and nighttime drivers working the maximum hours allowed each day results in lower fatigue scores and, therefore, lower risk of driver fatigue over the five day work cycle.\nSixty- and 70-Hour Night Schedules: 10- to 12-hour shifts over six consecutive nights. Drivers working through the night but working less than the maximum allowed 14 hours each day would also have to change their schedules after July 1, 2013. Specifically, these drivers would have to take 2 days off between work cycles in order to comply with the two-night provision. Again, the longer restart period (2 days versus one day) results in the hypothetical driver having lower fatigue scores and, therefore, a lower risk of fatigue over the 6-day work cycle.\nOur second analysis using the biomathematical fatigue model estimated possible fatigue effects of the 2011 HOS rule based on information provided by motor carriers, industry stakeholders, and drivers we interviewed. We found that some of the real world schedule changes described by motor carriers resulted in a lower risk of driver fatigue, while other schedule changes showed a higher risk of driver fatigue. For example, a motor carrier told us that, to comply with the two-night provision, several of its nighttime drivers switched from a 6-day schedule to a 5-day schedule. Our analysis of this schedule change shows that drivers under this schedule have a lower risk of fatigue after the rule went into effect. In contrast, a different motor carrier told us that, to comply with the 168-hour limit, several of its nighttime drivers switched from a 4-day schedule with 3 days off to an alternating schedule of 5 days working and 2 days off and then 5 days working and 3 days off. Our analysis of this schedule change shows that these drivers have a higher risk of fatigue on certain days in their schedule after the rule went into effect. This may be due to more work time and less off-duty time for drivers following the schedule that complies with the 2011 HOS rule.\nWe also collected data on crashes involving commercial trucks from 2008 to 2014. As shown in figure 7, the monthly incidence of truck crashes and crashes involving fatalities varies considerably over time. To assess whether the rule had any discernable effect on crashes, we conducted two types of analyses. We examined (1) whether the rule affected the number of monthly crashes and (2) whether the rule resulted in any shift in the time of day in which crashes occurred.\nTrend in crashes over time: Many factors influence the number of crashes over time. For example, as the economy grows, typically there will be more trucks on the highways moving freight and this would be expected to be correlated with a higher incidence of crashes, all other things being equal. We used a statistical model to examine how the rule’s implementation may have affected the number of monthly crashes, crashes with injuries, and fatal crashes, while controlling for other factors that affect the incidence of crashes, such as a proxy for trucking volume and seasonal variation. Our analysis showed a strong correlation between our measure of trucking volume and crashes—crashes occurred with more frequency when the industry was moving more freight—which is consistent with other previous work.found a positive statistical association between the implementation of the rule and the number of all crashes, suggesting that crashes rose—holding other factors constant—after the rule when into effect. However, our discussions with industry participants indicated that the winter of 2013 to 2014 was unusually harsh and made operations very difficult for the industry. These weather conditions may have been a contributing factor, irrespective of the rule change, to a short-term rise in crashes in December 2013 through February 2014. When we used statistical methods to control for these months in a second iteration of our analysis, we no longer found a statistically significant increase in the number of crashes after implementation of the rule. That is, the incidence of crashes would appear to not have changed due to the rule in this scenario. Our analysis of crashes with injuries and crashes with fatalities was similarly structured—we included variables to account for truck volume, seasonal variation, and in a second iteration of the model, the unusual 3 months of weather during the winter of 2013 to 2014. We found that the implementation of the rule was not associated with any change in the incidence of crashes with injuries, whether or not we statistically controlled for the winter of 2013 to 2014. However, our analysis does indicate that crashes involving fatalities may have become less frequent after the implementation of the HOS rule.\nIn addition, our initial analysis Time of day shifts in crashes: Some stakeholders told us that the two- night provision of the HOS rule would potentially result in an increase in crashes involving commercial trucks during morning rush hours (i.e., 5 a.m. to 9 a.m.). They believed that some truckers who might have previously driven during the middle-of-the-night hours would be shifted to the early and mid-morning timeframe due to provisions of the new HOS rule. To test this possibility, we developed statistical models to examine whether, conditional on the number of crashes that occurred, there was a change in the likelihood of truck crashes occurring between 5 a.m. and 9 a.m. after the HOS rule went into effect. Our analysis found no statistically significant change in this likelihood associated with the implementation of the rule.\nAn important caveat to our statistical analyses of crash data is that there are only 15 months of available data following the implementation of the rule. These limited data, which have non-trivial variation month to month, may not suffice to discern trends in the incidence of crashes. For example, as we explained above, our post-rule time frame covers only one winter—a time when crashes tend to rise—and we were told that this was an unusually difficult winter for the industry. These data limitations affect the ability to draw empirical inferences on the effects on crashes of the rule’s implementation.\nThe 20 motor carriers we interviewed said they believed the rule had no noticeable effect or a negative impact on safety. Of the eight drivers we interviewed, one said the rule had no effect on safety, and seven said they had seen a negative impact on safety. For example, drivers mentioned that the time pressures they stated were associated with the 2011 HOS rule—particularly the 30 minute rest break—had resulted in more speeding. Drivers said that speeding occurs as drivers try to make deliveries or mileage goals before taking a 30-minute rest break. Safety groups we interviewed generally supported the 2011 HOS rule and thought it could improve safety for certain segments of the industry, but had concerns about ensuring compliance with the rule.\nHealth Benefits: Academic literature we reviewed indicates that insufficient amounts of sleep have negative health impacts. These effects include obesity, diabetes, hypertension, and cardiovascular disease. However, we did not find a data source that would allow us to assess health impacts of the rule. According to FMCSA officials and other stakeholders we spoke with, it could take years to identify health impacts following an intervention, such as the HOS rule. In addition, representatives from 16 of the 20 motor carriers we interviewed said they believed the 2011 HOS rule had no noticeable health effects. The other four motor carriers said they either noticed negative health effects— due to increased stress or fatigue as drivers tried to make up for lost income, among other reasons—or had no way to measure health impacts. In addition, of the eight drivers we interviewed, six said their health was negatively impacted by the 2011 HOS rule, and two said there has been no impact. Those reporting a negative health impact cited, for example, being more stressed as they adjust to new schedules or try to make up for lost income. Safety groups we spoke with generally thought the 2011 HOS rule could improve driver health, but that health impacts would be difficult to attribute to the rule change.", "The ability of FMCSA and others to assess the effects of the 2011 HOS rule is impacted by the limited availability and representativeness of driver schedule data (i.e., records of drivers’ work hours). No organization, including FMCSA, collects or maintains a centralized database with representative driver schedule data that can be generalized to the entire motor-carrier industry. For example, while we obtained and analyzed drivers’ schedule data from a private research organization that includes over 15,000 usable driver records from 16 for-hire trucking companies, findings from that dataset cannot be generalized to the estimated 539,000 active motor carriers and 5.6 million drivers who operate in the United States. As a result it is not possible to determine the extent to which different types of commercial motor carriers, such as private carriers or drivers who own and operate their own vehicle, were affected by the rule because they are not included in the dataset. Similarly, FMCSA does not collect or use representative driver schedule data. Instead it uses roadside inspection, compliance review, and safety audit data as well as special studies to analyze motor carrier and drivers’ safety behaviors.\nCollecting representative schedule data is well recognized as a valuable analytical resource. Other DOT agencies that regulate the hours of service for transportation operators have demonstrated the importance of using representative schedule data. For example, the Federal Railroad Administration has collected logbook data from a representative sample of rail employees to examine fatigue and safety concerns since 2001. The Federal Aviation Administration also has access to electronic flight data on aircraft operations that is used to identify and analyze national trends, target agency resources, and identify and reduce or eliminate safety risks. In addition, FMCSA itself has cited the need to evaluate the actual impacts of its regulations, including the 2011 HOS rule, in order to meet executive requirements on regulatory review. We have also found that sufficient and appropriate data are critical for rulemaking, decision making, and assessing the effects of regulations and programs. As we have previously found, using data is especially critical for FMCSA, which has limited resources to oversee a large and diverse industry.\nCollecting these types of data has historically been difficult, but a recent statutory change to how driver schedule data will be collected provides a potential opportunity to do so. Many carriers use paper logbooks, a practice that makes collecting and analyzing schedule data administratively unmanageable. MAP-21 required FMCSA to develop a rule that will require motor carriers to stop using paper logbooks and instead, install electronic devices on individual vehicles to record and store drivers’ schedule data. This shift to electronic data will provide a potential source of representative data that could more easily be accessed and analyzed. However, FMCSA officials said that they do not currently plan to collect and use such data for research purposes because MAP-21 limits their use to the enforcement of laws.\nAs we have shown, representative data on the motor carrier industry— specifically the number of drivers nationwide, the amount they drive, and how they use the restart provision—would provide critical information to FMCSA about the operations of the industry it oversees. Access to this type of data would also support data-driven rulemaking efforts and regulations. According to FMCSA officials, access to driver schedule data would enhance program evaluation, rulemaking, and the analysis of existing rules, including the HOS rule. We recognize, however, that there are concerns to collecting, storing, and analyzing these data, for example:\nPrivacy: MAP-21 put protections in place to ensure driver privacy, including provisions to limit the harassment of drivers, protect personally identifiable information, and preserving the confidentiality of any personal data. Additionally, as we have previously found, collecting motor vehicle data raises concerns about sharing data with third parties, tracking drivers’ movements, and vehicles’ speed and location.\nCost: FMCSA officials expressed concerns about the costs to the agency and industry to collect, store, and analyze representative schedule data. For example, FMCSA officials believe that obtaining, standardizing, and depersonalizing data for millions of drivers would pose substantial costs on the agency, motor carriers, and drivers.\nThere may be ways of mitigating these privacy and cost concerns, but FMCSA has not examined the costs and benefits of collecting electronic driver-schedule data on a large-scale and currently does not plan to do so. For example, to address privacy concerns, information can be “de- identified” for the purposes of analyzing data. Specifically, the Federal Aviation Administration uses de-identified electronic flight data to identify and reduce or eliminate safety risks. In addition, our analysis of the effects of the HOS rule used schedule data from several thousand drivers, which we analyzed without any personally identifiable driver or motor carrier information. Cost concerns could potentially be addressed by collecting a nationally representative sample of the data—rather than from the entire universe of drivers. Sampling is a commonly used social science practice that allows researchers to apply conclusions drawn from a subset of a population to the entire population. Although FMCSA officials told us that they have no plans to examine the possibility of collecting, storing, and analyzing electronic driver schedule data because of the MAP-21 provision, they thought privacy concerns, for example, could be addressed through stripping raw data of drivers’ personally identifiable information before being shared with the agency or others. Until FMCSA evaluates the potential for collecting, storing, and analyzing data; the potential benefits of using the data; and privacy and cost concerns as well as the potential for FMCSA to mitigate them, the agency’s ability to use electronic schedule data in the future will remain unknown.", "The HOS rule has now been debated for over a decade with supporters and critics arguing over the extent to which it improves safety and health outcomes and negatively impacts the economy. FMCSA has attempted to quantify these effects through research efforts, but many continue to question the results. This is why it is critical for FMCSA to evaluate potential effects of rules, such as the HOS rule that has a heightened public profile, using established research standards and representative schedule data. FMCSA’s field study demonstrated that the agency did a reasonable job in designing the study and analyzing data. However, because the agency did not use guidance outlining specific standards for conducting and reporting the results of scientific research, the field study fell short in reporting several limitations and did not fully link the results to its overall conclusions. These shortcomings leave the agency open to criticism over the integrity of the study and invite skepticism about the results.\nSimilarly, by not having access to and analyzing representative driver schedule data, FMCSA may continue to face challenges to the credibility of its rules. The lack of representative schedule data required FMCSA to make a number of assumptions about how the motor carrier industry would be affected by the HOS rule. Due to current data limitations, it is not possible to fully evaluate the rule’s impact. For example, our analysis suggests that the rule may have affected a larger population of drivers than FMCSA anticipated, but without representative data there is no way to be certain this is universally the case. Understanding the population of drivers affected by the HOS rule is critical for determining the associated economic costs and safety and health benefits. While electronically collected, representative schedule data that will soon be available to FMCSA would allow it to assess the impact of its rules, MAP-21 places limitations on the use of this data for purposes other than enforcing laws.\nFurther, collecting, storing, and analyzing the data would require mitigating privacy and cost concerns. Given the potential value of such data for evaluating the impact of future regulatory rules, Congress may benefit from information on how the electronic data to be collected in response to the MAP-21 requirements could be extracted, stored, and analyzed and how privacy and cost concerns associated with the use of these data could be addressed. Such a study could help Congress determine whether limitations on the use of electronic schedule data for purposes other than enforcement could be amended in the future.", "Congress may wish to consider directing DOT to study and provide a report to Congress identifying approaches for extracting, storing, and analyzing electronically collected motor carrier drivers’ schedule data, including the potential benefits, privacy, and cost concerns, and options for how such concerns could be mitigated.", "To help ensure that FMCSA’s future studies follow generally accepted research standards, the Secretary of Transportation should direct the FMCSA administrator to adopt guidance outlining research standards for designing, analyzing, and reporting the results of scientific research.", "We provided a draft of this report to DOT for review and comment. DOT provided written comments, which are reprinted in appendix VIII. In its written comments, DOT stated that FMCSA agreed with our recommendation, although DOT also stated that FMCSA adhered to standard principles and practices of scientific research in conducting its January 2014 HOS study. As stated in this report, we identified generally accepted research standards that DOT followed; however, we also identified standards that it did not fully follow, namely, using a methodology that supports the study’s objectives, reporting conclusions that are linked to the study’s results, and reporting methodological limitations. We believe that FMCSA would strengthen its future research and enhance the integrity of future studies by adopting guidance outlining research standards for agency employees to follow.\nDOT also stated in its written comments that our report recognized several achievements associated with its 2011 HOS rule, specifically a decrease in the frequency of drivers using long work schedules, a lower risk of driver fatigue, and a reduction in the number of commercial vehicle crashes involving fatalities. As we state in this report, however, these findings cannot be directly attributed to the rule.\nIn addition to the written comments, DOT also provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to the Administrator of FMCSA, the Secretary of the Department of Transportation, and interested congressional requesters. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff has any questions about this report, please contact me at (202) 512-2834 or [email protected]. 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 IX.", "Our objectives were to examine (1) the strengths and limitations of the Federal Motor Carrier Safety Administration’s (FMCSA) field study that examined whether the two-night provision reduces commercial driver fatigue, and (2) the key assumptions FMCSA used, at the time the 2011 hours of service (HOS) rule was promulgated, in estimating its effects and what is known about the economic, safety, and health effects of the rule.", "To assess the strengths and limitations of the field study, we drew on established guidelines and reports for assessing research and analysis, our reports on evaluating research programs, and our internal expertise in research design. We identified key standards used by professional associations, academics, and our prior work, with an emphasis on standards applicable to the design and methods used in the field study. (See table 3). Specifically, we identified six standards relating to (1) choosing evaluation measures that are valid and reliable; (2) using quality controls to identify data inconsistencies or errors; (3) reporting results and analysis that are supported by the data; (4) using a methodology, including statistical techniques, that support the objectives of the study; (5) reporting conclusions that are linked to the results; and (6) reporting all methodological limitations, including their potential impact on the results. We compared these standards to information included in the field study, statements made by FMCSA officials and researchers contracted by FMCSA to complete the study, and our analysis of study data.\nTo assess the reliability and accuracy of data and results reported in the field study, we collected and reviewed data provided by the primary researchers. These data, collected between January and July 2013, included between 50 and 60 files for each of the 106 study participants, which the authors of the study used to build summary-level datasets for each driver. We also acquired the computer programs used by the field study’s authors to process the data and run statistical analyses. As a check on the reliability of both the computer programs and the data we received, we applied the programs to the data for one driver and verified that the results were consistent with numbers reported in the field study.In addition, we replicated results for 15 driver demographic variables, including age ranges, gender, experience, and type of operation, among others. For example, we confirmed that 100 men and 6 women participated, as the study reported. We also talked with the primary authors of the study about the steps they took to ensure the completeness and accuracy of the data, and checked the data for completeness and reasonableness. We determined that the data were sufficiently reliable for the purpose of our data analysis; in particular, we determined that we could, with sufficient reliability, conduct additional analysis of the data and align our results with those reported in the field study.\nWe assessed the sensitivity of the study’s results to various alternative methodological choices. For example, we tested whether the results varied depending on whether the study included drivers having more than two nights of rest, as suggested by several stakeholders we interviewed.\nMore discussion on this theory is included in the body of our report. those reported in the field study.our sensitivity testing and results, see appendix II.\nDatabases consulted for these searches include Ei Compendex®, Embase®, EMCare®, MEDLINE®, NTIS: National Technical Information Service, PsycINFO, and Transport Research International Documentation, among others. selected these experts based on their numbers of published articles related to the fatigue measures used in the field study, as well as our prior work on rail’s HOS regulations, work that included opinions from several fatigue-science experts.\nTo identify the data collection and analytical methods used in the field study we spoke with officials from FMCSA and individuals contracted to complete the study, including the primary researchers of the study. These officials provided information on the statistical analysis used in the field study, driver recruitment, and data reliability assessments. To better understand the recruitment process and data collection methods, we also interviewed officials from all three motor carriers that participated in the study. Finally, we spoke with numerous industry and safety stakeholders to get their views on the strengths and limitations of the field study. For a list of these stakeholders, see table 6 below.", "To identify key assumptions FMCSA used to estimate the effects of the 2011 HOS rule, a GAO economist, not involved in other aspects of our work and with substantial experience in cost-benefit analyses, reviewed the Regulatory Impact Analysis for the 2011 HOS rule. This expert identified an initial list of assumptions. We further categorized these assumptions into five areas: which drivers were affected, how drivers were affected, economic costs, safety benefits, and health benefits. FMCSA officials confirmed that our characterization of key assumptions was accurate. For more information on this process and the full list of FMCSA assumptions, see appendix III.\nTo identify what is known about the possible economic, safety, and health effects of the 2011 HOS rule, we conducted a comprehensive search for existing databases with information on motor carrier operations. We conducted web searches of academic journals, as well as government and other stakeholder websites. We also used search engines and asked officials from FMCSA and other stakeholders for recommendations on databases we could use to analyze the effects of the rule. We categorized the databases we found by the type of data collected, source, whether that data was publicly or commercially available, and potential costs. Based on this information we identified three different, relevant data sources, which were used for a variety of purposes (see table 5). To assess the reliability of these databases, we reviewed documentation on data collection efforts and quality assurance processes, talked with knowledgeable officials about these data, and checked the data for completeness and reasonableness. We determined that the data were sufficiently reliable for the purpose of our data analysis, though we also identified limitations in each dataset. More information on our analysis of American Transportation Research Institute (ATRI) logbook data, Federal Highway Administration (FHWA) vehicle count data, and FMCSA crash data can be found in appendixes IV, VI, and VII, respectively.\nWe spoke with multiple stakeholders, including organizations representing motor carriers, safety advocacy organizations, motor carrier companies, commercial vehicle drivers, and customers of the motor carrier industry (e.g., companies that ship freight) to understand how the 2011 HOS rule affected them and their members (see table 6). We selected stakeholders and shipping organizations to interview based on our prior work on commercial motor-carrier safety and recommendations from these stakeholders. We used FMCSA’s Motor Carrier Information Management System to select active, U.S.-based motor carrier companies subject to the hours of service rule. Our selection was based on three primary criteria: (1) operation type (for-hire versus private), (2) fleet size, and (3) cargo type (interstate versus intrastate hazardous material). Using these criteria we created six selection groups to identify target populations that included for-hire and private carriers and had a range of fleet sizes. We also created a seventh group that included only hazardous material carriers. We randomly selected 150 carrier companies from each of these groups for a total of 1,050 carrier companies across all seven groups. We then selected 3 to 5 carrier companies from each group using four additional selection criteria: (1) driver radius in miles (to identify carriers that drove a wide range of distances); (2) FMCSA region (for the purposes of ensuring geographic diversity); (3) HOS violations in the past 2 years (to identify carriers that might have experience with these violations); and (4) years in operation (to identify carriers with a range of experience in the industry). Motor carrier companies we spoke with also put us in contact with eight drivers whom we interviewed to understand how the 2011 HOS rule had impacted them. The information collected from these interviews with representatives of motor carriers and drivers is not generalizable to all motor carrier companies or drivers.\nTo summarize information from our interviews with motor carriers, we systematically analyzed information they provided on how the 2011 HOS rule had impacted them. To do so, one analyst coded interview responses. A second analyst randomly selected three interviews to code. The results from the two analysts were compared to ensure that the coding method was consistently applied, which confirmed that the coding done by the first analyst was reliable.\nTo identify possible fatigue effects on driver safety and health as well as the effectiveness of HOS rules in mitigating fatigue we conducted a literature review. Our literature review was also used to provide additional information on the biomathematical fatigue model we selected to analyze simulated and example driver schedules (see below). We identified specific articles for our literature review through searches conducted by a GAO librarian across bibliographic databases containing peer-reviewed materials, government reports, and conference papers.list of results by reviewing abstracts and focusing on articles published since 2008. This process identified 54 articles, most of which we used for background purposes or to provide additional context. We also identified several articles related to the effectiveness of HOS rules that were used We honed the to support our findings and required additional review. To select these articles we had two analysts code 10 of the 54 articles as either relating to effectiveness of HOS rules, relationship between fatigue and driver performance and safety, and/or relationship between fatigue and driver health. We compared the coding results and determined that the remaining coding could be reliably completed by a single analyst. Using this method we identified 15 articles related to the effectiveness of HOS rules. The methodologies and findings of these articles were reviewed by GAO’s technical experts (research methodologists and an economist) to ensure that the findings were well supported.\nTo examine the potential effects of the 2011 HOS rule on driver fatigue, we used a biomathematical fatigue model of human alertness response to work and rest patterns. We obtained the Fatigue Audit InterDyne™ (FAID) model from InterDynamics Pty Ltd as the result of a competitive procurement. Our analysis using the FAID model involved two parts: 1. We developed schedules with different work periods (day and night) and different shift lengths (e.g. 14-hour shifts to simulate the maximum allowed daily on-duty hours).We then created different scenarios based on whether a schedule would need to change to comply with the two restart provisions in the 2011 HOS rule. For example, we used the FAID model to compare driver fatigue levels for a driver working 14-hour night shifts 5 days a week with one-night off (not in compliance with the two restart provisions in the 2011 HOS rule) to a driver working the same 14-hour night shifts 5 days a week with two-nights off (in compliance with the two restart provisions in the 2011 HOS rule). 2. We analyzed real world schedules described to us by motor carrier operators and drivers we interviewed regarding how they had changed schedules due to the new rule. For example, we used the FAID model to analyze fatigue levels of drivers for a motor carrier that told us their drivers had changed from six shifts per week (before the 2011 HOS rule went into effect) to five shifts per week (after the 2011 HOS rule went into effect) in order to be compliant with aspects of the rule.\nFor a technical discussion of the scope, methodology, and additional results using the FAID model, see appendix V.", "As part of our review of the strengths and limitations of FMCSA’s field study that examined the two-nighttime provision of the 2011 hours of service (HOS) rule, we conducted two statistical analyses, as described below. First, we conducted sensitivity tests to assess how certain methodological decisions in the field study potentially affected its results. Second, we conducted a power analysis to assess the adequacy of the study’s sample size for estimating how the rule affected fatigue within each of several industry segments.", "During the course of our review, we asked stakeholders we interviewed to describe their general impressions of the data and statistical methods used to evaluate the rule. Stakeholders specifically questioned two methodological decisions: 1. The study analyzed data for drivers who had taken more than a two- night restart. Some stakeholders expressed concern that this decision did not conform with the purpose of the study to analyze the impact of changing the restart provision from requiring one-night of rest to exactly two nights. 2. The study collected data from what stakeholders characterized as a small sample of drivers, a sample that included local and regional drivers. Some stakeholders said that the study’s sample size of 106 drivers was not large enough to provide enough data to draw sound conclusions or be representative of the trucking industry. In addition, several stakeholders we spoke with said that the restart provision likely has different effects across industry segments, including local, regional, and long-haul or over-the-road drivers.\nTo test the validity of these concerns, we acquired the source data and computer code used in the field study from the authors. We conducted sensitivity tests of these data that assessed whether the study’s results might have been different if the researchers had made different methodological choices. Our tests examined whether the results of the psychomotor vigilance tests (PVT) and the Karolinska Sleepiness Scale (KSS) would have been different had the study: 1) excluded drivers taking a two-or-more night restart and 2) allowed the outcomes to vary by the drivers’ industry segments, i.e., local, regional, or over-the-road.\n𝑌𝑖𝑗 ~ N(𝐱𝐢𝐣𝛃 + 𝜇𝑗,𝜎𝑌2) 𝜇𝑗 ~ N(𝜇,𝜎𝜇2) xij = Condition = = Timingij Periodij = {I(Condition x Timingij x Periodij)} {1 night restart, 2+ night restart} {12:00 – 4:00 AM, 4:00 – 8:00 AM, … , 8:00 – 11:59 PM} {1st duty period, restart period, 2nd duty period} given by 𝑁 = ∑𝑁𝑗 Yij denoted the number of PVT lapses or the KSS score for driver j = 1, 2, … , J on measurement occasion i = 1, 2, … , N, with the total sample size . xij was a vector of indicator variables for each level of the Cartesian product of Condition, Timingij, and Periodij, similar to a design vector in an experimental study. Condition measured the number of nights in the restart period between the two duty periods in the study. Timingij and Periodij measured the time of day and stage of the study, respectively, when the PVT or KSS outcomes were measured.column vector of fixed coefficients. Since xij did not include an intercept 𝛃 was a and all covariates were categorical, 𝛃 denotes the cell means for each subgroup in xij.\nWe increased the granularity of Condition in order to estimate the effect of interest, the contrast between mean fatigue after one-night versus two- night night restarts, by adding a separate category for three-or-more night restarts. The study estimated this overall contrast by taking equally weighted linear combinations of the estimated effects across subpopulations defined by Timingij x Periodij, using the “least-squares means” method implemented in SAS.order to minimize methodological changes other than those we evaluated.\nWe used the same approach, in Our test found that including drivers who took more than a two-night restart in the treatment group did not affect the results, as shown by table 7. On-duty drivers taking only a two-night restart had 0.32 lapses more lapses per PVT bout, on average, than drivers taking a one-night restart. This estimate is statistically indistinguishable from the 0.33 lapses reported by the field study, which included drivers taking more than a two- night restart in the effect estimate. The results from the study and our tests are both statistically distinguishable from zero at the 0.10 level of confidence. Similarly, the KSS results reported in the field study for on- duty drivers are statistically indistinguishable to those we found when removing drivers taking more than two-night restarts from the treatment group.\nOur second sensitivity test estimated the difference in mean PVT and KSS outcomes between drivers with one-night restarts and two-or-more night restarts, separately by industry segments defined by local versus regional and over-the road operations. We attempted to estimate separate effects for the regional segment alone, but the study data did not include any regional drivers who took one-night restarts. As a result, we combined regional and over-the-road drivers, who may behave in similar ways such as driving longer distances and sleeping away from home with some regularity. Finally, we omitted effects for Periodij to simplify the model, since the estimated treatment effects did not vary when this variable was included or excluded. Thus, we estimated two alternatives: = xij Condition = Timingij = Operation = {I(Condition x Timingij x Operation)} {1 night restart, 2 night restart, 3+ nights restart} {12:00 – 4:00 AM, 4:00 – 8:00 AM, … , 8:00 – 11:59 PM } {Local, Regional or Over-the-Road} xij = Condition = Timingij = Operation = {I(Condition x Timingij x Operation)} {1 night restart, 2+ nights restart} {12:00 – 4:00 AM, 4:00 – 8:00 AM, … , 8:00 – 11:59 PM } {Local, Regional or Over-the-Road} Our test found that the field study did not sample enough drivers from each of these segments to estimate effects for each subgroup that were statistically distinguishable from zero (significant). We found that regional and over-the-road drivers had a significant difference of 0.42 PVT lapses and an insignificant difference of 0.13 KSS scores, on average, between drivers with a one-night and a two-or-more night restart (see table 8). In contrast, local drivers had insignificant differences of -0.15 PVT lapses and 0.26 KSS scores, on average. We found similar effects when comparing drivers with one-night versus two-night restarts. In sum, the variation in the results suggests that the 2011 HOS rule may have had variable effects on different segments of the industry. However, the relatively wide confidence intervals of these estimates, in part due to limited sample sizes within each industry segment, makes the exact degree of variation uncertain.", "To assess stakeholder concerns about the adequacy of the field study’s sample, we conducted a statistical power analysis to assess how many drivers and PVT measurements might be needed to estimate the HOS rule’s effects for each of several segments of the industry. In general, a power analysis estimates the probability that a study will conclude that an effect exists when, in fact, the effect does exist in the population of interest. In our application, we estimated the probability of identifying differences in mean PVT results for drivers taking a one-night versus two- night restart, separately for subpopulations of drivers operating in the local and regional or over-the-road industry segments and at various times of day.\nWe found that the field study’s sample size was insufficient to estimate statistically significant differences in the primary fatigue measure—the PVT—for each of these industry segments and times. By collecting data from approximately 100 drivers, each taking 25 PVTs, the study would have had an approximately 5 percent or lower chance of identifying statistically significant differences as small as 0.3 PVT lapses for each subpopulation. This effect size is similar to what the study found across all time periods, using a sample of a similar size. In contrast, collecting data from approximately 4,000 to 6,000 drivers, each taking 200 PVTs, would have increased the chance of identifying significant differences for each subpopulation separately to approximately 40 to 60 percent. For an effect of 1 PVT lapse—slightly larger than what the study found for overnight observation periods—sample sizes of 800 drivers and 200 PVTs would have achieved approximately 60 to 80 percent power. These results illustrate the range of sample sizes that FMCSA would need to consider, subject to available resources for driver recruitment and study administration, in order to confidently detect effects of this size for each of several industry subpopulations.\nBelow, we discuss the methods we used to conduct the power analysis and its results in more detail.", "The HOS study evaluated the effects of the rule on three measures of driver fatigue: PVT, KSS, and lane deviation. For the purpose of our power analysis, we focused on scores on the PVT due to the extensive scientific research that has validated this measure of fatigue. PVT scores consist of the number of lapses in attention a study participant experiences across a battery of tests. The study administered the PVT test at various times during the participation period, which spanned one- duty period, a restart period, and a second-duty period. Our power analysis focuses on the duty periods during which drivers would need to be alert in order to safely operate their commercial motor vehicle.\nTables 9, 10, and 11 provide descriptive statistics about the study’s data collected during the duty periods from the 106 participating drivers. The number of PVTs varied across drivers from 8 to 53, with a median of 24.5 and a mean of 25.0. The study collected a total of 2,653 non-missing observations during the duty periods at the level of driver-tests, after excluding observations during the restart period. Across all observations, the mean number of PVT lapses was 1.8. PVT lapses had a skewed distribution, with a 90th quantile of 5, a 95th quantile of 8, and a 99th quantile of 18. (See table 9.) The study administered several hundred PVTs to drivers taking one, two, or three-or-more night restarts across various types of operations (e.g., local, regional, and over-the-road). (See table 10.) The study made fewer observations across subpopulations defined by restart nights and time period of observation, however, ranging from 44 to 274 tests per subpopulation (see table 11). This suggests that the three-way cross-classification of restart nights, operation type, and time period may produce limited sample sizes for each subpopulation.\nAs we discuss above, the authors of the field study analyzed these data using a hierarchical linear model, with normally distributed random effects at the level of drivers but fixed effects otherwise. To analyze power, we used models similar to those we used above to estimate separate effects across industry segments.\nWe used two separate methods to estimate power. These methods estimated power to detect effects for each of several subpopulations of drivers and for the overall population, respectively. Using the first method, we made distributional assumptions about the data generation process, informed by the field study’s results, and used Monte Carlo simulation methods and the actual model of the data to be estimated (from above). Using the second method, we made similar distributional assumptions, but we applied power equations for simplified versions of this model available in the statistical literature.", "Our analysis estimates power for estimating separate effects for each of 12 subpopulations defined by two industry segments (local versus regional/over-the-road) and six equally spaced observation periods (e.g., 12:00 AM to 4:00 AM).\n𝑌�𝑖𝑗(𝑚) ~ 𝑁(𝐱�𝐢𝐣(𝐦)𝛃� + 𝜇�𝑗(𝑚),𝜎�𝑌2) 𝐱�𝐢𝐣(𝐦) ~ 𝑀𝑢𝑙𝑡𝑖𝑛𝑜𝑚𝑖𝑎𝑙(𝛉�) 𝜇�𝑗(𝑚) ~ 𝑁(𝜇̂,𝜎�𝜇2)\nFor the mth simulated dataset, the estimates of interest are 𝛅(𝑚)T = [𝛽̂21(𝑚)− 𝛽̂11(𝑚),… ,𝛽̂2𝐾(𝑚) – 𝛽̂1𝐾(𝑚)], which, under the model, have entries equal to the difference in mean outcomes between drivers in subpopulation k having two versus one-night restarts. We use the set of M simulated values of δ to test composite hypotheses about effects for all subgroups, as well as multiple simple hypotheses about the effects for each subgroup.", "This implies that RTβ = δ = 0 under HLet VR = Var(RTβ) = RTVβR, where Vβ is the covariance matrix of β. For each simulated dataset, we test these hypotheses using the multivariate Wald test statistic, = 𝛃T𝐑𝐕𝐑−𝟏𝐑T𝛃 ~ 𝜒𝐾2 , with each simulation’s value equal to 𝐻(𝑚)= 𝛃�(𝑚)T 𝐑𝐕�𝐑(𝑚)−1 𝐑T𝛃�(𝑚). We reject H for simulation m if , the critical value of the chi-squared distribution with K 𝐻(𝑚)>𝜒𝐾,.952degrees of freedom, assuming α = .05.\nSince we assume that H) = E[I(Reject H in simulation m. We estimate power as �1−𝛽̂�= 1𝑀∑ I(𝐻(𝑚)>𝜒𝐾,.952 where I() is an indicator function ranging on {0,1}.", "that the inner product is the joint probability of rejecting all hypotheses.\nThis is follows from the contrast weights in 𝐑𝐓, whose orthogonality implies independent comparisons.\nSample and effect sizes similar to those in the field study provided low amounts of power to detect effects of -0.3 or -1 PVT lapses, as shown in table 12. The probability of detecting effects of this size for each of the 12 driver subpopulations was approximately 5 percent or less when sampling 100 drivers and administering 25 PVTs, using either a joint hypothesis test or multiple simple tests across subpopulations. Power increased to 0.11 when detecting an effect equal to -1 lapse using a joint test, but it remained approximately zero using multiple simple tests. These results confirm that the field study could not reliably estimate separate effects by type of driver and time of day.\nOur analysis found that increasing the field study’s sample size by several hundred additional drivers and PVTs would be necessary to achieve conventional levels of power, depending on the true effect size to be detected. Using a joint hypothesis test or multiple simple tests when the effect equaled -0.3 lapses, we found that about 6,000 drivers and 200 PVTs would be required to achieve power of 0.6 using a joint hypothesis test and 0.37 using multiple simple tests. To detect an effect of -1 lapse with power of approximately 0.6 to 0.8, samples of more than 800 drivers and 200 PVTs would be necessary. Since the field study reports effects in this range, the appropriate sample size would appear to fall between these bounds, subject to available resources for driver recruitment and study administration.\nPower generally increased more strongly with increases in the number of drivers, rather than the number of PVT tests. This result is consistent with the statistical literature on hierarchical linear models in which the marginal The moderately high effects of interest vary only across clusters.intraclass correlation of 0.68 in the study’s PVT data within drivers increases the required driver sample size to achieve a given level of power, all else being equal. However, the number of PVTs increases power more strongly when using multiple simple tests, because more PVTs increases the number of observations across time periods and therefore increases power for each test.", "To provide an alternative power estimate for the overall population of drivers, using less complex methods, we analyzed power for a simplified version of the model using results from the literature on hierarchical linear models.\nFor this analysis, we calculated power for estimating one treatment effect 𝛿 as defined above, without assuming that the effect varied across subpopulations. This reduced the model to xij = {I(1 night restart), I(2+ night restart)}. We further assumed that the sample had the same (balanced) number of observations for each of the two treatment conditions. This simplified the model so that variance estimation, hypothesis testing, and power calculation became tractable using the closed-form methods developed by the literature on hierarchical linear models (largely by avoiding many covariates). The more realistic Monte Carlo analysis summarized above compensated for these simplifications, since using two different methods checked the robustness of results from either one.\nH0: 𝛽2 − 𝛽1 = 0 H1: 𝛽2 − 𝛽1≠0 E(𝑀𝑆𝑡𝑟𝑒𝑎𝑡𝑚𝑒𝑛𝑡)=𝑁𝜎𝜇2+𝜎𝑌2+𝑁𝐽𝛿24 𝐹(1,𝐽−2,𝜆)=𝐸(𝑀𝑆𝑐𝑜𝑛𝑑𝑖𝑡𝑖𝑜𝑛) similar to the Monte Carlo analysis above, and using various values for N We estimate F() using estimates of 𝜎𝜇2 and 𝜎𝑌2 from the prior study’s data, and J. We estimate power as (1−𝛽̂𝑘) = Pr(𝐹� > 𝐹.95) , where 𝐹.95 is the noncentrality parameter 𝜆= 𝜆̂, assuming α = .05. critical value of the F distribution with (1, J-2) degrees of freedom and Our analysis found that the field study had more power to detect overall effects than effects across multiple subgroups (see table 13). The field study’s approximate sample size of 100 drivers and an average of 25 PVTs had a 0.08 probability of detecting effects of -0.3 PVT lapses and a 0.42 probability of detecting effects of -1 PVT lapses for the overall population of drivers. Given these results, the study had low power to detect the overall effect of -0.33 lapses that it reported across all time periods, suggesting that the result may have been statistically unusual. Our analysis found that increasing the sample size to approximately 2,000 to 4,000 drivers and 200 PVTs would have been required to detect an effect of -0.3 PVT lapses with conventionally adequate levels of power. However, samples as small as 250 drivers and 25 PVTs would be sufficient to detect effects of -1 PVT lapse.", "As part of our review of the effects of the 2011 hours of service (HOS) rule, we were asked to identify the assumptions used by the Federal Motor Carrier Safety Administration (FMCSA) to estimate the costs and benefits of the rule. To do so, a GAO economist identified the key assumptions in the regulatory impact analysis (RIA) used by FMCSA to detail the costs and benefits of the 2011 HOS final rule. This expert developed an initial list of key assumptions after reading the RIA. We then categorized these assumptions into five groups: which drivers were affected, how drivers were affected, economic costs, safety benefits, and health benefits. We also had a sixth category for assumptions that did not clearly fit into one of the aforementioned categories. FMCSA officials reviewed our list of assumptions, offered some corrections, and ultimately agreed that the list of assumptions accurately represented the key assumptions used in the RIA.\nBelow is a list of the assumptions we identified and FMCSA officials confirmed. These assumptions cover which drivers would be affected by the HOS rule and how they would be affected. The assumptions below also detail how operational changes (e.g. driver schedule changes) result in the economic costs and the safety and health benefits of the HOS rule that went into effect July 1, 2013. (See table 14).", "To identify possible effects of the 2011 hours of service (HOS) rule, including which drivers were affected and how those drivers were affected, we purchased 3 years of drivers’ schedule data from the American Transportation Research Institute (ATRI). The data contain information on daily on-duty hours for drivers that worked for 16 for-hire motor carriers from January 1, 2012, through December 31, 2014. Specifically, the dataset includes a driver identification number, the number of recorded on-duty hours for each driver for each day in the dataset, and the length of each restart the driver took. The 2012 dataset contains 57,096 unique driver records; the 2013 dataset contains 60,196 unique driver records, and the 2014 dataset contains 63,957 unique driver records. The data we used for our analysis of drivers’ schedule data are not representative of the motor carrier industry, and therefore, our findings based on these data cannot be generalized to all carriers in that population.", "The data we purchased was not filtered or processed by ATRI. We applied four data-quality filters to remove records that contained likely errors and to exclude drivers with minimal on-duty time that could potentially bias our results, specifically:\nWe removed driver records with five or more null values in the on- duty-hours cells. This filter removed 40,622 records from the 2012 dataset, 42,496 records from the 2013 dataset, and 45,564 records from the 2014 dataset.\nWe removed driver records with one or more instance of 18 or more hours of on-duty recorded in a single day. This filter removed 1,126 records from the 2012 dataset, 1,735 records from the 2013 dataset, and 1,520 records from the 2014 dataset.\nWe removed driver records with less than 20 hours of total on-duty time logged during the year. This filter removed 32 records from the 2012 dataset, 34 records from the 2013 dataset, and 9 records from the 2014 dataset.\nWe removed driver records that did not have a 0 value in the on-duty hours column on the day before a recorded restart with a value of 48 or greater. This filter removed 8 records from the 2012 dataset, 13 records from the 2013 dataset, and 61 records from the 2014 dataset.\nAfter applying these filters, there were 15,308 unique driver records in the 2012 dataset, 15,918 unique driver records in the 2013 dataset, and 16,803 unique driver records in the 2014 dataset.", "To compare our driver data to the Federal Motor Carrier Safety Administration’s (FMCSA) estimates of drivers’ weekly hours as well as to provide a meaningful denominator for hours worked (e.g. on-duty hours per work week), we defined and calculated a driver’s work week. As described below, we considered several specifications in our analysis, including how many days to include in a work week, how to calculate a work week, whether to use the driver or the work week as the unit of analysis that is compared over time, and how to categorize weekly on- duty time.", "As described in the background section, drivers may follow either a 70- hour over 8 days on-duty limit or a 60-hour over 7 days on-duty limit. According to ATRI, the majority of the drivers in the dataset we purchased likely follow the 70-hour on-duty limit. We calculated a work week using both 7 and 8 days to ensure we covered the range of possible work weeks. However, given that the majority of drivers in the dataset likely followed the 70-hour/8-day work week, we included these results in the body of this report. The number of days used to calculate a driver’s work week has an effect on the total and average hours worked.", "We used a fixed 7 day and fixed 8 day work week in the analysis presented below and in our report. Before making this decision, we considered two ways of calculating a driver’s work week: 1) a fixed work week and 2) a rolling work week. For drivers following the HOS rule, a work week is not based on a set week (e.g. Monday through Friday). Rather, drivers calculate their 60- or 70-hour on-duty limits over a rolling period of 7 or 8 consecutive days. To take this into account, we calculated a fixed work week and a rolling work week to approximate the weekly on- duty hours of drivers in our dataset. The fixed work week has 7 or 8 consecutive days that do not overlap. For example in a 90 day period, there are 12 7-day weeks and 11 8-day weeks. The rolling work week also has 7 or 8 consecutive days, but each subsequent week shifts the start of the week by only one day. Each rolling week overlaps with the previous week. We tested these two calculation methods on a subset of data (January 1 to March 31, 2013, and 2014), and we found that the method we used to calculate a work week did not change the results of our analysis.", "To examine the assumptions and estimates FMCSA made in its regulatory impact analysis (RIA) for the 2011 rule, we categorized our results using weekly on-duty hour categories similar to those included in that document.following parameters: FMCSA defined four categories of drivers with the “Moderate”—average weekly work time of 45 hours, includes weekly averages between 20 to 55 hours “High”—average weekly work time of 60 hours, includes weekly averages greater than 55 to 65 hours “Very High”—average weekly work time of 70 hours, includes weekly averages greater than 65 to 75 hours “Extreme”—average weekly work time of 80 hours, includes weekly averages greater than 75 hours In our analysis, we split the Moderate category into two groups: those working less than 35 hours per week and those working more than 35 hours per week. We did this split to determine whether the behavior changes made by those at the low end of the Moderate category differed from those at the high end of the Moderate category. As a result, our analysis uses five weekly on-duty categories.", "To analyze the data, we considered two different units of analysis: a driver and an individual work week. Specifically, for the time periods we examined, we determined the number of drivers whose average work weeks fell into each of the on-duty hour categories described above. For example, a driver that averaged 57 on-duty hours per 8-day work week would be placed in the greater than 55- to 65-hour on-duty category. We also analyzed the data by the number of work weeks that fell into each of the on-duty categories. For example, we identified 342,747 out of 959,529 total weeks with on-duty hours between 35 and 55 from January 1, 2012, to June 15, 2013 (see table 24 below).", "To analyze drivers’ use of restarts within our dataset, we followed the practice of both FMCSA and ATRI of excluding restarts longer than 72 hours (3 days). The rationale for this practice is that off-duty periods greater than 72 hours do not represent a normal or operational restart period by a commercial motor vehicle driver. While we provide descriptive information on all restarts in our dataset (see table below), we exclude restarts greater than 72.99 hours from our analysis of restart use by driver or driver groups (see tables 20, 21, and 25 below).", "We analyzed driver schedule data in two different ways. In the first section, we describe our analysis of the data by dividing the 3 years of data into: 1) seasonal datasets by creating 12 individual datasets composed of 75- to 90-day seasons and 2) before and after the rule datasets by creating two datasets of approximately 18 months before and after July 1, 2013. In the second section, we describe our statistical analysis of drivers’ schedule data using a subset of the full dataset that covered the entire time frame—2012 to 2014—but were limited to drivers for whom we had data in all 3 years.", "We divided each year of data into four seasons: winter, spring, summer, and fall. The spring, summer, and fall seasons were truncated to account for (1) the effective date of the 2011 HOS rule on July 1, 2013, and (2) the suspension of two of the restart provisions in the 2011 HOS rule.\nSpecifically, data from June 16 to June 30 were removed to ensure that behavior changes in anticipation of the rule’s going into effect did not bias the dataset. Similarly, data from July 1 to July 14 were removed to account for drivers’ getting used to and understanding the rule. We also omitted data from December 16 through December 31 to account for the suspension of several restart provisions on December 16, 2014. To ensure we were comparing the same time periods in each season, all of these changes were applied across each year of data. (See table 15.)\nDividing the data into seasons allowed us to isolate changes potentially due to seasonal variation and to show how drivers’ behavior—averaged over a relatively short period of time (75 to 90 days)—changed. For example, several motor carriers and drivers told us that bad weather in January and February 2014 disrupted operations for many motor carriers. By separating the datasets into seasons, we were able to ensure that changes we observed from one period to another were consistent across all seasons and were not only due to seasonal variation.\nWe found that the percentage of drivers in our dataset working more than 55 hours per work week decreased after the 2011 HOS rule went into effect—between spring 2013 and summer 2013. In addition, our analysis suggests that the percentage of drivers working 55 or fewer hours per work week increased after the rule went into effect. Tables 16 through 22 show the results of our seasonal analysis of drivers’ schedule data using an 8-day work week and a 7-day work week.\nConsistent with our results using drivers as the unit of analysis, the overall percentage of weeks from our dataset in the more-than-55-hours- per-week categories decreased after the 2011 HOS rule went into effect. The overall percentage of weeks in the 55-or-fewer-hours categories increased after the rule went into effect. In both tables 18 and 19, the percentage of weeks with total on-duty hours greater than 65 hours per work week is higher than those found in tables 16 and 17. This finding suggests that while a driver may have an intense work schedule over one week, on average, drivers tend to have less intense work schedules over longer periods of time. Tables 18 and 19 show the total number of weeks that fell into our on-duty categories for drivers in our dataset using an 8- and 7-day work week.\nWe found that restarts per driver remained relatively constant before and after the 2011 HOS rule went into effect for drivers in our dataset working between 35 to 75 hours per 8-day work week. We also found an increase of approximately one restart per driver for those working more than 75 hours per 8-day work week and a reduction of approximately one restart per driver for drivers working less than 35 hours per 8-day work week. Table 20 compares the restart use per driver across the on-duty hour categories.\nWe also analyzed restart use per driver per calendar week to understand how often drivers in our dataset use a restart. With this specification, we found that restart use after the 2011 HOS rule went into effect appears to vary by drivers’ average weekly on-duty hours (see table 21). For drivers working on average more than 55 hours to 75 hours per 8-day work week, restart use per calendar week remained relatively constant before and after the 2011 HOS rule went into effect. For drivers working more than 75 hours per 8-day work week, restart use per calendar week appears to increase by almost 1. However, before the rule there were 69 drivers in this category and after the rule there were 15 drivers, therefore the change observed in Table 20 is based on a relatively small number of drivers. For drivers working 55 hours or less per 8-day work week, restart use per calendar week appears to decrease after the 2011 HOS rule went into effect.\nWe analyzed the length of restart periods to understand how many off- duty hours drivers in our dataset took. We found that before the 2011 HOS rule went into effect, about 8 percent of the restarts taken by drivers in our dataset were between 34 and 37 hours (see table 22). As a percentage of all restarts taken in each season, restarts with lengths of 34 to 37 hours decreased after the rule went into effect. The percentage of restarts with a length between 45 to 72.99 hours increased after the rule went into effect. As our dataset did not contain the start and end times of a driver’s schedule or restarts, we are not able to analyze the extent to which there was a change in restarts with one- or two-night periods. For example, a driver working during daytime hours could take a 34 hour off- duty period that contains two nighttime periods (1 a.m. to 5 a.m.). In contrast, a driver working during nighttime hours may not have two nighttime periods (1 a.m. to 5 a.m.) when taking a 34-hour off-duty period. Therefore, we cannot determine the change in actual nights taken off-duty by looking at the length of a restart period on its own.\nAnalysis of Data before and after the HOS Rule We also analyzed the data by dividing driver records into two periods: (1) before the rule went into effect—January 1, 2012, to June 15, 2013—and (2) after the rule went into effect—July 15, 2013, to December 15, 2014. As with the analysis by seasonal datasets, we applied filters to each year of data. To avoid double-counting drivers who appear across multiple years of data, we used the driver identification number to connect driver records with data in multiple years. The weekly on-duty hour average is calculated using the weeks that we have data for a driver. If a driver is only present in the 2012 data set, then that driver’s average weekly on- duty hours are calculated based on only 2012 data. If a driver is present in both the 2012 and 2013 datasets, then that driver’s average weekly on- duty hours are calculated using 2012 and 2013 (up to June 15, 2013) on- duty hours. The calculation for the post-rule dataset used the same method.\nWe compared the number and percentage of drivers in our dataset by average weekly on-duty hours before the rule went into effect and after the rule went into effect. As with the seasonal analysis, the percentage of drivers in our dataset working more than 55 hours per work week decreased, and the percentage of drivers in our dataset working 55 hours or less per 8-day work week increased. While this analysis shows similar trends in the data, there are differences in the number and percentage of drivers in each weekly on-duty hour group. Specifically, in the seasonal analysis, before the rule went into effect (winter 2012 through spring 2013) the percentage of drivers in our dataset working more than 65 hours per 8-day work week ranges from about 9 to close to 12 percent. As shown in table 23, approximately 8 percent of drivers in our dataset before the rule went into effect are categorized as working more than 65 hours per 8-day work week on average. This difference is likely due to the time frame over which the average weekly on-duty hours are calculated.\nWe also compared the number and percent of weeks before and after the rule went into effect categorized by total weekly on-duty hours (see table 24). Consistent with the seasonal analysis, the percent of 8-day work weeks with total on-duty hours of more than 65 also decreased.\nWe also analyzed the length of restarts used by drivers’ average weekly on-duty time. We found that before the rule went into effect the percentage of 34- to 36.99-hour restarts taken by drivers in our dataset in each on-duty time category ranges from about 6 to 11-percent (see table 25). After the HOS rule went into effect, the relative distribution of restarts by length taken in each weekly on-duty category changed. Specifically, the percentage of restarts lasting 34- to 36.99- hours decreased for all driver categories. The percentage of 34- to 36.99-hour restarts taken by drivers in our dataset working the longest hours decreased from close to 11 percent to about 9 percent. The percentage of 34- to 36.99-hour restarts taken by the other driver groups saw larger decreases. As with our seasonal analysis of restart length, our results do not allow us to state that the number of night time periods in a restart period changed after the 2011 HOS rule went into effect.\nStatistical Analysis of Driver Schedule Data We also analyzed whether there were differences in how the same set of drivers behaved before and after the 2011 HOS rule went into effect. To do this analysis, we developed several statistical regression models of hours worked and restart use, in order to further account for seasonal variation and differences across drivers who do not change over time, such as carrier. Using these models, we estimated whether the differences in hours worked and restart use before and after the 2011 HOS rule went into effect were statistically distinguishable from zero. We applied these models to a sample of 6,934 drivers who met our filters for the entire period between January 1, 2012, and December 31, 2014.\nWe estimated two sets of models, which made different assumptions about the distribution of the outcomes and the structure of the correlation of those outcomes within drivers over time. Both sets of models included season or month fixed effects and predicted hours worked per week; working 35 to 54, 55 to 64, or 65 or more hours per 8-day week; or the number of restarts per week.\nFirst, we estimated linear models with driver fixed effects (implemented through a within-transformation) and standard errors that were robust to arbitrary forms of heteroskedasticity and driver-level autocorrelation. These adjustments corrected for heteroskedasticity caused by using linear models to analyze binary outcomes and for autocorrelation caused by analyzing repeated outcomes within drivers over time.\nSecond, we estimated generalized estimating equations (GEE) models, with outcomes within drivers having exchangeable or AR1 covariance structures. These covariance models were appropriate for the 3-year period, when the autocorrelation of driving schedules should be relatively consistent across days (exchangeable) or decline linearly (AR1). The models assumed the outcomes to be distributed normally, binomially, or negative binomially, depending on the scale, and used canonical link functions.\nWe summarize the results of our analysis as ranges across models in the estimated contrast between time periods before and after the policy change. Most of our findings were robust to these plausible model assumptions.", "Drivers in our analysis sample worked approximately 1.1 to 2.5 fewer hours per 8-day week, on average, after the HOS rule was implemented than before, depending on model assumptions. Expressed as a proportion, the differences ranged from approximately 2.0 to 4.8 percent fewer hours. These differences were statistically distinguishable from zero at the 0.001 level.\nDrivers in our analysis sample were approximately 24 to 29 percent less likely to work 65 hours or more per 8-day work week after the HOS rule Similarly, drivers was implemented, depending on model assumptions.were approximately 12 percent more likely to work 35 to 54 hours per 8- day work week. All of these differences were statistically distinguishable from zero at the 0.001 level. The likelihood of working 55 to 64 hours per 8-day work week after the rule went into effect changed by less than 2 percent but the statistical significance and direction of the change varied according to model assumptions.", "Drivers took approximately 6.1 to 6.5 percent fewer restarts per 8-day week, on average, after the HOS rule was implemented than before, depending on model assumptions and adjusting for variation in driving intensity (as a measure of exposure). These differences for the overall analysis population of drivers were statistically distinguishable from zero at the 0.001 level.", "GAO was asked to assess the safety impacts of the 2011 hours of service (HOS) rule, which are predicated on reducing driver fatigue. To assess whether the rule change could result in less fatigued drivers and potentially fewer fatigue-related crashes, we used a biomathematical fatigue model—the Fatigue Audit InterDyne™ (FAID) model—to assess the risk of driver fatigue for schedules that comply with the 2011 HOS rule and similar schedules that do not.\nThe FAID model provides a fatigue score based on the start and end time of a work shift. The higher the FAID score, the higher the risk of fatigue. A standard work week of 40 hours, Monday to Friday, 9 a.m. to 5 p.m. results in a peak FAID score of 41. In contrast, a 40-hour work week from 11 p.m. to 7 a.m. results in a peak FAID score of 97. Research indicates that scores above 80 are comparable to the fatigue-related impairment found in individuals with a blood alcohol level of over 0.05 percent, above the legal limit in many countries. those based on hypothetical driver schedules and those based on interviews with motor carriers, differ significantly from a typical 9 a.m. to 5 p.m. 40-hour work week.\nThe examples described below, both The schedules we modelled below often involve working long hours—60 or more hours per week—and working overnight. As a result, many of the peak fatigue scores shown below are well above the range considered safe. The purpose of our analysis is to show the relative difference in peak fatigue scores for schedules in operation after the rule went into effect and those in operation before the HOS rule went into effect.\nA. Fletcher, N. Lamond, C. van den Heuvel, and D. Dawson, “Predication of performance during sleep deprivation and alcohol intoxication by a quantitative model of work-related fatigue,” Sleep Research Online, 5(2) (2003). The study found that a fatigue score of 80 is comparable to the impairment that would be observed in an individual with a blood alcohol concentration of 0.09 percent or greater.\nTwo-night provision (two 1 a.m. to 5 a.m. periods in a restart)\n168-hour limit (limits restarts to once every 168 hours)\nWe also created scenarios based on interviews with motor carriers and drivers. These interview-based scenarios include the schedules interviewees reported using before the 2011 HOS rule went into effect and schedules interviewees said they started using in order to comply with the 2011 HOS rule. These schedules demonstrate real world adaptations to the 2011 HOS rule as described to us. Our analysis is not generalizable to the entire industry, but rather is intended to illustrate how HOS schedule changes can affect the risk of driver fatigue.\nOf the schedules we simulated, some did not require a change after the rule went into effect. For those that did require a schedule change, figures 8 through 11 below show the daily peak fatigue score when complying with the two-night provision and 168-hour limit in the 2011 HOS rule and the daily peak fatigue score for similar schedules that do not comply with one or both of those provisions in the 2011 HOS rule.", "Drivers can work up to 14 hours per day until reaching 70 hours—at which point they must either take a restart of at least 34 hours or remain off-duty until their consecutive 8-day sum of hours is less than 70. Therefore, we modelled a maximum daytime schedule with the following parameters:\n14-hour shifts on-duty from 6 a.m. to 8 p.m. over five consecutive Under the previous HOS rule, a driver following this schedule would only need to take 34 hours off-duty to have a valid restart. However, after the rule went into effect and to comply with the 168-hour limit, a driver with this schedule must take 2 days off between work cycles. For example, the driver can work 14 hours between 6 a.m. and 8 p.m. on Monday through Friday, but must be off-duty Saturday and Sunday. This results in 58 hours off-duty. This schedule change—2 days off between work cycles instead of one day off—effectively lowers the average number of hours a driver can work. In terms of work time per 7-day period, the schedule that complies with the 168-hour limit averages 72 hours and the schedule that does not comply averages 82 hours. As shown in figure 8, the peak daily fatigue scores for the schedule that complies with the 2011 HOS rule (the schedule with 2 days off) are lower than the peak daily fatigue scores for the schedule that does not comply with the 2011 HOS rule. The peak daily fatigue scores for both of these schedules are high and above the levels generally considered safe on several days that are modelled.", "We also modelled a driver working the maximum allowed hours but during nighttime hours. The hypothetical schedule had the following parameters:\n14-hour shifts on-duty from 8 p.m. to 10 a.m. over 5 consecutive days Under the previous HOS rule, the driver only had to take off 34 hours between the end of the work shift at 10 a.m. on Saturday and the start of the next work shift at 8 p.m. on Sunday, but this schedule violates both the two-night provision and the 168-hour limit because the off-duty period does not contain two periods from 1 a.m. to 5 a.m. and begins less than 168 hours after the prior restart period began. Thus, to comply with both the two-night provision and the168-hour limit in the 2011 HOS rule, a driver with this schedule must take 2 days off between work cycles. For example, the driver can work a 14-hour shift between 8 p.m. and 10 a.m. on Monday through Friday nights, but must be off-duty Saturday and Sunday nights to comply with the 2011 HOS rule. This results in an off- duty period of 58 hours. As shown in figure 9, the peak daily fatigue scores for the schedule used after the rule went into effect (the schedule with two days off) are lower than the peak daily fatigue scores for the schedule in use before the rule went into effect. The peak daily fatigue scores for both of these schedules are high, above the levels generally considered safe.", "Of the schedules we simulated, two additional hypothetical schedules needed to change to comply with the 2011 HOS rule. These hypothetical schedules had the following parameters:\n10- to 12-hour on-duty shifts between 10 p.m. to 10 a.m. over 6 consecutive days (70 hours over a 6-day work cycle)\n10-hour on-duty shifts from 12 a.m. to 10 a.m. over 6 consecutive days (60 hours over a 6-day work cycle)\nTo comply with both the two-night provision and the168-hour limit in the 2011 HOS rule, drivers with these schedules must take 2 days off between work cycles instead of one day off as allowed under the prior HOS rule. For example, a driver can work a 10-hour shift between 12 a.m. and 10 a.m. on six consecutive nights but must be off-duty the next two nights. These two consecutive nights off allow this schedule to comply with the two-night provision, which requires two 1 a.m. to 5 a.m. periods in an off-duty period to qualify as a restart. As a result, a driver working 10-hour shifts on six consecutive nights (60 hours in a work cycle) must take an off-duty period of 52 hours. A driver working 10-to-12- hour shifts on six consecutive nights (70 hours in a work cycle) must take an off-duty period of 62 hours. As shown in figures 10 and 11, the peak daily fatigue scores for the schedules in use after the rule went into effect (the schedules with 2 days off) are lower than the peak daily fatigue scores for the schedules in use before the rule went into effect. The peak daily fatigue scores for the schedules shown in figures 10 and 11 are high, above the levels generally considered safe.\nWe also used the FAID model to estimate the risk of driver fatigue based on schedule changes described in our interviews with an industry stakeholder, motor carriers, and drivers. Figures 12 through 15 below show the daily peak-fatigue score for the schedules interviewees adopted in order to comply with the 2011 HOS rule and the daily peak-fatigue score for the schedules they used before the 2011 HOS rule went into effect.", "Representatives of a motor carrier and an industry association we spoke with reported changing the schedules of drivers working over-night or in the early morning hours to ensure that drivers could continue to take the restart and comply with the two-night provision in the 2011 HOS rule. In the first example, drivers worked six consecutive10-hour shifts per week from 12:30 a.m. to 10:30 a.m. before the rule went into effect. Over 7 days, their schedules averaged 61 on-duty hours. These drivers generally began and ended their shifts at the same time each day. After the rule went into effect, the motor carrier reduced the number of shifts per driver from six consecutive shifts per week to five consecutive shifts per week. This change was made to ensure drivers would have two 1 a.m. to 5 a.m. periods during their off-duty period and could still count the off-duty time as a restart. In the second example, drivers worked 10-hour shifts from 3:00 a.m. to 1:00 p.m. over six consecutive days. Similar to the first example, drivers working this schedule averaged 61 hours on-duty over 7 days. To ensure drivers could take a restart that complied with the two- night provision, the motor carrier reduced the total number of shifts per driver from six consecutive days to five consecutive days. As shown in figures 12 and 13, the schedules that comply with the 2011 HOS rule have lower peak-fatigue scores for each day a driver works this schedule. The lower peak-fatigue scores suggest a lower risk of fatigue for a driver working according to the schedule complying with the 2011 HOS rule than the driver working according to the schedule that does not comply with the rule. The peak daily-fatigue scores for the schedules shown in figures 12 and 13 are high, above the levels generally considered safe on many of the days modelled.", "Representatives of other motor carriers we spoke with described schedule changes they made to ensure off-duty time complied with the 168-hour limit. For example, a representative of one motor carrier told us that a driver would typically work a long-haul route over 10 days. The driver would work between 10- and 14-hours per day for 5 days, reach the drop-off destination and go off-duty for 34 hours (a restart). Then the driver would drive home. Once home, the driver would take 3 days off which would count as a restart. To comply with the 168-hour limit and ensure the off-duty period would count as a restart, this schedule would have to change to ensure the off-duty periods began at least 7 days apart (168 hours). To do this, the driver could work 10- to 12-hour days for 6 days, take a 34-hour break on day 7, then drive home and take a shorter break, 2 days in this example. As shown in figure 14, complying with the 168-hour limit results in generally lower peak fatigue scores and therefore a lower risk of driver fatigue.\nIn the second example, representatives of a motor carrier told us about short-haul drivers working overnight shifts whose schedules were changed to comply with the 168-hour limit. Before the rule went into effect, drivers could choose between two possible schedules. The first schedule (schedule A) had drivers working 12-hour shifts for 5 consecutive days, in our simulation from 8 p.m. to 8 a.m. Then drivers took the next 2 days off-duty and counted this time as a restart. The second schedule option (schedule B) had drivers working 13-hour shifts for 4 consecutive days, in our simulation from 8 p.m. to 9 a.m. These drivers then took the next 3 days off-duty and counted this time as a restart. Due to the 168-hour limit, the motor carrier switched drivers to the following schedule (schedule C): 12-hour shifts for 5 consecutive days with 2 days off followed by 12-hour shifts for 5 consecutive days with 3 days off. We compared the two schedules offered before the rule went into effect to the schedule offered after the rule was effective. As shown in figure 15, we found that schedule C, which complied with the 2011 HOS rule, had similar peak fatigue scores to Schedule A with the 5 days on- duty with 2 days off-duty schedule. Schedule C, the 2011 HOS compliant schedule, had slightly higher peak-fatigue scores than Schedule B, the 4 days on duty with 3-days off-duty schedule. This suggests that the schedule changes made by this carrier to comply with the 168-hour limit did not consistently lower the risk of fatigue faced by drivers working this schedule.", "As was discussed in the body of our report, on July 1, 2013, the Federal Motor Carrier Safety Administration (FMCSA) began to enforce the 2011 hours of service (HOS) rule that made several key changes to the number of hours commercial drivers can work and drive per day and week. Specifically, the new rule altered when and how commercial drivers are permitted to “restart” the maximum number of hours they can work over a 7- or 8-day period, and required drivers to take a 30-minute, off-duty break during shifts that last more than 8 hours. FMCSA understood that when it designed this rule, it would result in changes to drivers’ schedules. Specifically, FMCSA believed the rule would reduce driving time for drivers working 65 or more hours per week, but assumed that these hours would be shifted to other drivers or to other workdays rather than being eliminated altogether. While FMCSA asserted that total driving time for some individual drivers was likely to drop slightly due to the HOS rule, no attempt was made to quantify the effects of the rule on congestion. Stakeholders we spoke with were concerned that FMCSA did not adequately assess how the new HOS rule would impact traffic patterns, especially whether the rule would result in increased traffic congestion during morning hours, i.e., between 5 a.m. and 9 a.m.\nTo evaluate changes in commercial vehicle traffic before and after the 2011 HOS rule went into effect on July 1, 2013, we collected and analyzed data from the Federal Highway Administration’s (FHWA) Weigh- in-Motion (WIM) and Classification database. This database includes information on non-commodity-carrying vehicles, including passenger vehicles, and commodity-carrying (i.e., commercial) motor vehicles through data sensors that are installed in roadways. These sensors allow states and FHWA to collect data on time and date, lane, speed, vehicle classification, and vehicle length, among other variables.\nOur analysis of this data was limited to two time periods before and after the rule went into effect. Specifically, we chose to evaluate data from November through December 2012 and November through December 2013 for the following reasons:\nWe wanted to allow sufficient time for carriers to adapt to the new rule, including preparing for the change prior to July 1, 2013 and adapting to the change after July 1, 2013.\nWe wanted to control for any potential seasonal effects within the commercial carrier industry by including the same months prior to and after the HOS rule went into effect.\nWe wanted to control for unusual events that could have impacted the commercial motor vehicle industry. For example, we excluded the time period from January and February 2014, which according to motor carriers and drivers we spoke with, had a large number of winter storms that severely impacted the industry. We also excluded the end of October 2012 to avoid capturing potential impacts on the industry from Superstorm Sandy.\nWe worked with FHWA officials to provide us with WIM data that fell into these timeframes. In order to ensure we were comparing data from similar locations between the two time periods we requested data only from stations that reported data for all days and hours between November through December 2012 and November through December 2013. Because not all stations reported data for every day or hour during these timeframes, our analysis was restricted to 324 stations from 14 states out of 987 total stations across the country (approximately 33 percent). (See figure 16).\nWe also asked FHWA officials to filter the data for us into variables most useful for our analysis. For example, although WIM data include information on direction of travel and specific lane of travel, we were primarily interested in total vehicle counts at each station, to capture traffic volume. As a result we requested vehicle count totals for each station by month, day, and hour. In addition, FHWA grouped the data into two distinct categories: (1) non-commodity-carrying vehicles, and (2) commodity-carrying vehicles.\nWe analyzed these data by combining individual station data and sorting them by hour of day before and after the HOS rule went into effect. We did this analysis for all days of the week, weekdays, and weekends to account for any change in traffic patterns caused by time of week. We also compared traffic patterns for non-commodity-carrying vehicles and commodity-carrying vehicles to determine whether one of those populations was behaving differently than the other and account for possible factors that might be influencing both groups, such as the economy.", "The Federal Motor Carrier Safety Administration (FMCSA) promulgated the 2011 hours of service (HOS) rule on the basis that it would improve safety due to a reduction in fatigue-related crashes. At the same time, however, some industry stakeholders, motor carriers, and drivers that we spoke with believe that the HOS rule has had some unintended effects that may actually lead to a decrease in safety, particularly because they anticipate increased congestion during certain early morning hours when roads tend to be congested. To analyze the safety effects of the 2011 HOS rule, we undertook two separate analyses to (1) assess whether there has been any apparent effect of the 2011 HOS rule on the numbers of motor carrier crashes and (2) whether the rule change appeared to affect the relative number of crashes that occurred after the rule’s implementation between 5 a.m. and 9 a.m. We used monthly crash data from the Motor Carrier Management Information System (MCMIS) from 2008 through 2014, supplied by FMCSA, to address the first question, and individual crash data from the same source to address the second.", "Table 26 shows information for each month from January 2008 to September 2014, on the numbers of total crashes involving motor carriers, as well as the number of crashes with injuries and the numbers of fatal crashes. As can be seen, the numbers of crashes show a good deal of variation over time, but there appears little by way of any patterned variation, or trend. For example, the monthly numbers of total crashes averaged 7,042, but ranged from a low of 5,593 in February 2009 to a high of 9,887 in January 2014. The monthly numbers of crashes with injuries and fatal crashes also showed a good deal of variation.\nMany potential factors can influence the number of crashes over time. For example, as the economy grows, it is reasonable to expect more goods and services are traded, resulting in more freight needing to be transported. Given the size of roads is unlikely to change much in the near term, more traffic may result in more congestion, and more congestion may result in more accidents. To assess whether the implementation of the 2011 HOS rule had an effect on crashes we developed two ordinary least squares regression models that controlled for trucking volume and seasonal variation, and in one case also controlled for the unusual winter weather in December 2013 to February 2014. (See table 27.)\nModel 1, fit separately for each of the three categories of crashes, regressed the numbers of crashes on 1) three quarterly dummy variables to assess for seasonal differences in the numbers of crashes across the four quarters of the year, 2) a dummy variable (denoted “Rule Period”) to contrast the numbers of crashes in the months following the rule change with the numbers of crashes in the months preceding it, and 3) a linear covariate measuring “trucking gross output,” which is a quarterly measure used as a proxy for the numbers of motor carriers on the road and at risk of crashing. The trucking gross output variable had a significant and positive relationship with the monthly numbers of all three groups of crashes (all crashes, injury crashes, and fatal crashes), and seasonal differences, as measured by quarter, were generally significant for total crashes and fatal crashes, but not for crashes with injuries. In model 1, the apparent effect of the rule change on crashes was significant and positive for total crashes, insignificant for crashes with injuries, and significant and negative for fatal crashes. However, our discussions with industry participants indicated that the winter from December 2013 through February 2014 was unusually harsh and made operations very difficult for the industry. These weather conditions may have been a contributing factor, irrespective of the rule change, to a short term rise in crashes during this time period. Because of this issue, we also tested an alternative iteration of this model: Model 2.\nModel 2 estimates all these same effects as the first model for each of the three groups of crashes but includes an additional dummy variable to account for any independent effect on the numbers of crashes due to the unusually disruptive winter weather from December 2013 to February 2014. Adding this dummy variable had no effect on our estimate of the effect of the rule change on crashes with injuries, which remained insignificant, or in fatal injuries, which remained significant and negative. It did, however, reduce the size of the estimated impact of the rule change for total crashes and rendered the effect of the rule change on total crashes insignificant.", "As noted above, we were told by stakeholders that the two-nighttime provision of the HOS rule would potentially result in an increased traffic involving large trucks between 5:00 a.m. and 9 a.m. Presumably, because of this provision, drivers taking a restart would have to wait until at least 5:00 a.m. to begin their day when roads are more congested. Using individual crash data from MCMIS, we also investigated whether, among all crashes, there was any effect of the rule change on the likelihood of crashes occurring between 5 a.m. and 9 a.m. versus any other time of the day. For each of the three sets of crashes, we first examined simple two-way cross-classifications (shown in table 28) and fit a simple bivariate logistic regression model that regressed the logarithm of the odds on crashes occurring between 5 a.m. and 9 a.m. on a dummy variable denoted as “Rule Period” that contrasted crashes that occurred before and after the rule change. Table 28 provides information on the numbers and percentages of total crashes, crashes with injuries, and fatal crashes that occurred between 5 a.m. and 9 a.m., and at all other times of the day, before and after the rule change. As can be seen, between 19 percent and 20 percent of crashes occurred between 5 a.m. and 9 a.m., both before and after the rule change. The value of the likelihood-ratio chi-square, shown at the base of each table, indicates that there was no statistically significant difference in the occurrence of crashes in the 5 a.m. to 9 a.m. time.\nTable 28. Numbers of Total Crashes, Crashes with Injuries, and Fatal Crashes That Occurred between 5 a.m. and 9 a.m. and at Other Times, before and after the Rule Change Time of crash (total crashes)\nLikelihood ratio chi-square = 0.014 with 1df, P - 0.91 Time of crash (crashes with injuries)\nLikelihood ratio chi-square = 0.637 with 1df, P - 0.43 Time of crash (fatal crashes)\nAlso shown in table 28 is an alternative method of estimating the likelihood of crashes occurring between 5 a.m. and 9 a.m. by calculating the differences in the likelihoods of crashes in the 5 a.m. to 9 a.m. time frame and calculating odds and odds ratios, which are shown in the last two columns of table 28. The odds on crashes occurring between 5 a.m. and 9 a.m. are calculated by taking the number (or percentage) of crashes that occurred in that interval and dividing it by the number (or percentage) of crashes that occurred at other times. With respect to total crashes, for example, the odds on crashes occurring between 5 a.m. and 9 a.m. before the rule change were 90,769 ÷ 364,866 = .2488, and the odds of crashes occurring between 5 a.m. and 9 a.m. after the rule change were 22,880 ÷ 91,882 = .2490. While somewhat different and less traditional than percentages, the odds have a fairly direct and simple interpretation—in this case they imply that in both periods there were roughly 25 crashes in that interval for every 100 that occurred at all other times of the day. The odds of crashes occurring between 5 a.m. and 9 a.m. are very similar for crashes with injuries and fatal crashes. The odds ratios in the final column are calculated by taking the odds of crashes occurring in the designated time frame after the rule change and dividing by the odds of crashes at that time before the rule change. For total crashes, for example, the odds ratio is calculated as follows: (.2490 ÷ 0.2488) = 1.001. This ratio is only slightly different than 1, indicating that the likelihood of crashes occurring between 5 a.m. and 9 a.m. was nearly identical before and after the rule. The odds ratios for crashes with injuries and fatal crashes produce similar conclusions.\nOne advantage of odds ratios is that unlike percentage differences, they can be adjusted using multivariate models (logistic regression models) so that they reflect the net effect of the rule change, after adjusting for other characteristics that might have differed, in this case, before and after the rule change. Table 29 shows that results of fitting bivariate (or unadjusted) logistic regression models (in the first row), and the multivariate regression models (in the remaining rows) to estimate the effect of the rule change on the likelihood of crashes occurring between 5 a.m. and 9 a.m. for total crashes, crashes with injuries, and fatal crashes. The bivariate, or unadjusted models, reproduce the same odds ratios we derived from the observed data in the two-way tables in table 28. We then fit multivariate models that regressed those same odds on the rule period variable while simultaneously controlling for a number of potentially confounding factors, including road, weather, and lighting conditions, trucking gross volume, and whether the crash occurred during a weekday or on the weekend. The coefficients for the multivariate model shown in table 29 are exponentiated odds ratios, which indicate the size and significance of the differences in the odds on crashes occurring between 5 a.m. and 9 a.m. as opposed to some other time of the day, both as a result of the rule change and as a result of the factors included in the model. The multivariate models reveal that a number of the control variables affected the likelihood of crashes occurring from 5 a.m. to 9 a.m., including different road, weather, and light conditions. Crashes were more likely to occur between 5 a.m. and 9 a.m., for example, when roads were icy rather than dry (by factors ranging from 2.2 for total crashes to 3.6 for fatal crashes), when conditions were foggy rather than clear (by factors ranging from 4.4 for total crashes to 5.0 for crashes with injuries and fatal crashes), and during dawn rather than daylight hours (by factors exceeding 40 in all cases). However, even with these factors controlled, the rule change appeared to have no significant effect on the likelihood of total crashes occurring between 5 a.m. and 9 a.m. Odds ratios in the multivariate models estimating the differences in the likelihood of crashes occurring before and after the rule change were very nearly 1.0, and ranged from 0.999 for total crashes to 1.025 for fatal crashes.\nAs previously discussed, there are many potential factors that could influence the number of crashes in any given month, including weather and road conditions at the time of a crash. Our analyses take into account some of these factors by controlling or adjusting for seasonal differences and freight volume, but there are undoubtedly other potentially confounding factors, and we would have liked to have had a more direct measure of the numbers of motor carriers on the road in each month and at risk of crashing. Moreover, our dataset only included 15 data points, or months, since the rule went into effect, and neither the significant or insignificant changes we find in this short term are guaranteed in the longer term. Without additional data over a longer period of time, we are unable to robustly determine whether the HOS rule had an impact on crashes.", "", "", "", "In addition to the individual named above, H. Brandon Haller, Assistant Director; Amy Abramowitz; Sarah Arnett; Russell Burnett; Matthew Cook; Melinda Cordero; Leia Dickerson; Colin Fallon; David Hooper; Hannah Laufe; Ethan Levy; Grant Mallie; Joshua Ormond; Anna Maria Ortiz; Jerry Sandau; Doug Sloane; and Jeff Tessin made key contributions to this report." ], "depth": [ 1, 1, 1, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2, 1, 2, 2, 3, 3, 3, 3, 3, 1, 1, 2, 2, 3, 3, 3, 3, 2, 2, 3, 2, 2, 1, 2, 2, 2, 2, 2, 1, 1, 2, 2, 1, 1, 2, 2 ], "alignment": [ "", "h0_full h4_full", "h4_title h2_title h1_title h3_title", "h3_full h1_full", "h4_full h1_full", "h4_full h2_full h1_full", "h0_full h2_full", "", "", "", "h1_title h3_title", "", "h3_full h1_full", "", "", "", "", "", "", "", "", "h3_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h3_full", "h0_full h2_full", "", "", "", "", "", "" ] }

{ "question": [ "What did GAO find regarding the FMSCA's January 2014 study?", "How might this failure to meet research standards undermine the study's results?", "What did FMSCA fail to adopt guidance on?", "What issues might this failure have caused?", "What assumptions did FMSCA make int he regulatory impact analysis?", "Why was FMSCA forced to make assumptions?", "How did GAO's analysis support FMSCA's assumptions?", "How did GAO's analysis conflict with FMSCA's assumptions?", "What limits FMSCA's ability to assess the effects of rules?", "What recent changes have been made to improve the collection of such data?", "What challenges must be addressed before using such data for research?", "How do FMSCA officials plan to circumvent these concerns?", "Why might it be important to address these concerns within Congress?", "What is the FMSCA responsible for?", "How did the FMSCA address HOS concerns in July 2013?", "What was GAO asked to review?", "How does this report accomplish those goals?", "What did GAO identify for this study?", "What did GAO compare these research standards to?", "What data did GAO use for this comparison?" ], "summary": [ "GAO found that the January 2014 study issued by the Federal Motor Carrier Safety Administration (FMCSA) to examine the efficacy of its hours of service (HOS) rule—a regulation that governs how many hours truck drivers transporting freight can work—followed most generally accepted research standards. However, FMCSA did not completely meet certain research standards such as reporting limitations and linking the conclusions to the results.", "For example, by not adhering to these standards, FMCSA's conclusion in the study about the extent to which crash risk is reduced by the HOS rule may be overstated.", "GAO found that FMCSA has not adopted guidance on the most appropriate methods for designing, analyzing, and reporting the results of scientific research.", "Without such guidance, FMCSA may be at risk for excluding critical elements in research it undertakes to evaluate the safety of its rules, leaving itself open to criticism.", "FMCSA made several assumptions and anticipated certain effects of the HOS rule in the regulatory impact analysis. Specifically, to estimate the economic costs of the rule, FMCSA assumed that some drivers would lose a certain amount of driving and on-duty time and then estimated the amount and cost of the work time lost. Further, FMCSA assumed that reduced work time could increase a driver's opportunity to sleep, leading to safety and health benefits.", "Assessing the effectiveness of the HOS rule is difficult because of the limited availability of representative driver schedule data (i.e., records of drivers' work hours).", "Nevertheless, GAO's analysis of a limited sample of available data provides some insight into the rule's effects and the extent to which they aligned with FMCSA's assumptions and estimates. For example, according to GAO's analysis, some drivers at a sample of 16 for-hire carriers who worked the longest hours (over 65 hours per work week) reduced their work hours after the rule went into effect, a finding consistent with FMCSA's assumptions that drivers working over 65 hours were more likely to be affected.", "However, GAO's analysis found that drivers who worked less than 65 hours per work week also changed their schedules after the rule went into effect, a result not anticipated by FMCSA.", "The ability of FMCSA and others to assess the effects of rules, such as the 2011 HOS rule, is impacted by the limited availability of representative driver schedule data. No organization collects or maintains a centralized database with such data that can be generalized to the motor carrier industry as a whole.", "Collecting schedule data has historically been difficult, but a recent statutory change that requires carriers to electronically record and store these data provides a potential data source for the future.", "However, before these data can be used for research purposes several challenges would have to be addressed. First, there are statutory limits on the use of these data for purposes other than enforcing motor carrier safety regulations. Additionally, privacy and cost concerns must be resolved before these data could be made available for analysis.", "According to FMCSA officials, they do not plan to study how to use these data in a way that will address privacy and cost concerns, in part, because of the statutory limits.", "Given the potential value of these data to future regulatory analysis, it may be important to provide Congress with information on how these data can be extracted, stored, and analyzed while addressing any privacy and cost concerns.", "FMCSA—within the Department of Transportation (DOT)—issues rules to address safety concerns of the motor carrier industry, including on truck drivers' HOS.", "In July 2013, FMCSA began to enforce three new provisions of its HOS rule.", "GAO was asked to review a 2014 FMCSA study on the rule, as well as the rule's assumptions and effects.", "This report (1) compares the study to generally accepted research standards, and (2) identifies the assumptions used to estimate the rule's costs and benefits and the rule's driver-operation, economic, safety, and health effects.", "GAO identified research standards that professional associations, academics, and GAO's prior work have used.", "GAO evaluated the 2014 FMCSA study against these standards. GAO also compared FMCSA's assumptions about how drivers would be affected by the HOS rule against actual drivers' schedule data from 16 for-hire carriers that cover the years 2012 through 2014.", "These data include information on over 15,000 drivers per year, but are not generalizable to the motor carrier industry as a whole." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 0, 2, -1, 0, 1, 2, 2, -1, 0, -1, 2, -1, 0, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "Reporting Requirements for Offshore Accounts", "Terms of IRS’s Offshore Programs", "Almost All 2009 OVDP Participants Received the Maximum Offshore Penalty, Almost Half Had Accounts in Switzerland, and About Half of the Revenue Collected Came from a Small Percentage of High Penalty Cases", "Summary of All 2009 OVDP Closed Cases", "Taxpayers Receiving Large Penalties Disclosed a Variety of Reasons for Having Offshore Accounts", "IRS Generally Has Used 2009 OVDP Data Strategically, But Has Not Used the Data to Identify Additional Opportunities to Educate Taxpayers on Offshore Filing Requirements", "IRS Used 2009 OVDP Data to Identify Noncompliance Involving Additional Banks and Countries and to Improve Subsequent Offshore Voluntary Disclosure Programs", "Despite the Successes of IRS’s Overall Strategy, IRS Might Benefit from Additional Information to Better Target Outreach and Education", "IRS May Not Be Identifying a Large Number of Quiet Disclosures or Other Attempts to Circumvent Some of the Taxes, Interest, and Penalties that would be Otherwise Owed by Not Participating in an Offshore Program", "Taxpayer Use of Quiet Disclosures to Avoid Offshore Penalties Involves Significant Risk", "IRS May Not Be Detecting Some Quiet Disclosures", "Increases in Taxpayers Reporting Offshore Accounts May Also Indicate Attempts to Circumvent Some Taxes, Interest, and Penalties that Would Otherwise be Owed", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope and Methodology", "Appendix II: Events that Influenced Participation in IRS’s Offshore Programs", "Appendix III: Sample 2009 and 2012 Offshore Program Application Letters", "Appendix IV: Hypothetical Examples Comparing Account Balances, Length of Account Ownership, and Penalties", "Appendix V: 2009 Offshore Voluntary Disclosure Program Participants with Employer Identification Numbers", "Appendix VI: Additional 2009 Offshore Voluntary Disclosure Program Participant Characteristics", "Appendix VII: Data Collected from a Sample of 30 2009 Offshore Voluntary Disclosure Program Case Files with Large Penalties", "Account Balances and Total Penalties, Taxes, and Interest", "Summary of Data Collection Instrument Results", "Appendix VIII: Quiet Disclosure Analysis Results", "Appendix IX: Comments from the Internal Revenue Service", "Appendix X: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "U.S. taxpayers can hold offshore accounts for a number of non-tax reasons, including access to funds while living or working overseas, asset protection, investment portfolio diversification, enhanced investment opportunities, and to facilitate international business transactions. U.S. taxpayers must report whether they have offshore accounts on Schedule B of IRS Form 1040 and pay taxes on income from the offshore accounts at their individual tax rates. Some taxpayers with large offshore account balances are also required to report additional account information, such as the name and location of their bank, by filing a form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). Failure to report the existence of offshore accounts or pay taxes on these accounts can lead to civil and criminal penalties.\nU.S. financial institutions are required to submit to IRS information returns that report income earned by account holders. IRS uses the information to check whether taxpayers are reporting investment earnings and other income correctly. Unlike the reporting requirements for U.S. financial institutions, there has been no reporting regime for foreign financial institutions, and this lack of information has limited IRS’s ability to ensure taxpayers were reporting offshore income accurately (see fig. 1). IRS has begun implementing provisions of the Foreign Account Tax Compliance Act (FATCA), which requires, beginning in 2015, U.S. financial institutions to withhold a portion of certain payments made to foreign financial institutions that have not entered into a specific agreement with IRS to report information on their U.S. clients. It is expected that IRS will use this information to identify noncompliant taxpayers. While IRS officials do not anticipate that FATCA will replace the offshore programs, they do believe that future programs may shift in focus to identifying promoters of offshore tax schemes that are not associated with the financial institutions that will be subject to FATCA reporting requirements.\nIRS’s offshore programs were designed to encourage taxpayers with undisclosed income from offshore accounts to become current with their tax liabilities. Although the offshore programs differed in details, all four followed a cycle similar to the one illustrated in figure 2. The offshore programs fit into IRS’s larger compliance efforts, which are intended to both detect noncompliance and to encourage voluntary compliance, in part by minimizing the burden for taxpayers to understand their tax obligations and file tax returns every year.\nWhile open and intended to attract all noncompliant taxpayers with offshore accounts, the four offshore programs to date all started with IRS identifying a particular group of taxpayers suspected of having unreported offshore accounts. The group might be account holders at a particular bank or in a particular country. Sometimes IRS obtains such information from whistleblowers. In 2007, a whistleblower provided details to the U.S. government about how his employer, Swiss bank UBS, was actively assisting and facilitating U.S. taxpayers’ concealment of taxable income.(See app. II for more information on the UBS whistleblower.) IRS may also use information gathered through prior offshore programs to identify other banks or countries where U.S. taxpayers may be hiding offshore income.\nThe next step is to learn the identities of some of the taxpayers suspected of noncompliance. One technique is to use John Doe summonses. In 2008, prior to the announcement of the 2009 OVDP, a federal court granted IRS permission to serve a John Doe summons to UBS for information on its U.S. customers. As a result of the summons, and subsequent government negotiation and agreement, UBS turned over information on approximately 4,450 accounts held in Switzerland by U.S. persons. This was a partial list of all U.S. UBS account holders with accounts in Switzerland. In other cases, IRS has been able to get client lists from promoters of offshore tax evasion schemes.\nIn order to encourage program participation, IRS publicizes the fact that it knows, or soon will know, the names of some offshore account holders. IRS also publicizes the terms of its offshore programs, which offer incentives to taxpayers who voluntarily disclose their accounts before IRS learns about them. As described later, the offshore programs offer a reduced risk of criminal prosecution, and lower penalties than taxpayers could receive if unreported offshore accounts were discovered in an audit. In this report we refer to the reduced penalty offered as part of an offshore program as the “offshore penalty.” In the 2009 OVDP the offshore penalty was typically 20 percent of the highest aggregate value of the unreported offshore accounts between 2003 and 2008.\nProvided that they meet certain criteria, taxpayers are accepted into one of IRS’s offshore programs by responding to IRS questions about the nature of their offshore noncompliance in an application letter and filing amended or late tax returns and FBARs. (See app. III for sample application letters.) Investigators from IRS’s Criminal Investigation division generally review applications to verify that taxpayers are not already under investigation, that the offshore income was from legal sources, and that the taxpayer has made a complete and truthful disclosure. Taxpayers’ amended or late returns that are submitted as part of an offshore program are reviewed and certified by IRS examiners who calculate the delinquent taxes, interest, and penalties, and who may request additional documents and information from taxpayers.\nTaxpayers who did not participate in an offshore program but are known to IRS (perhaps because they were on the list of names IRS identified in Step 2) run the risk of being audited outside of an offshore program. These taxpayers could be subject to substantially greater penalties and increased risk of criminal prosecution. Since 2009, IRS and the Department of Justice (DOJ) have publicized more than 40 prosecutions of UBS clients and UBS bankers.\nThrough data mining, or analyzing, information from offshore program application letters, and reviewing the case files of program participants and auditing nonparticipants, IRS is able to identify new groups of taxpayers suspected of hiding income offshore. IRS can then choose to continue offering offshore programs and encourage these newly identified groups of taxpayers, as well as all taxpayers with unreported offshore accounts, to disclose their accounts voluntarily, repeating the cycle illustrated in figure 2. For example, taxpayers that participated in the 2009 OVDP named other Swiss banks and financial advisors who had assisted them with hiding offshore income. As a result, IRS and DOJ took actions to compel other Swiss banks to name their U.S. customers. To date, some Swiss banks have announced that they are cooperating with U.S. government investigations. One Swiss bank ceased operating after it pleaded guilty to helping U.S. taxpayers hide income offshore and agreed to pay approximately $74 million in fines, restitution, and civil forfeiture. IRS and DOJ are also pursuing other banks in Liechtenstein, Israel, and India, which had been named by 2009 OVDP participants.", "Each of IRS’s four offshore programs had a slightly different structure, including a higher standard offshore penalty rate for each subsequent program, as shown in table 1. In the 2009 OVDP, the standard offshore penalty was 20 percent. The offshore programs offer participating taxpayers a lower penalty than they could have been subject to if IRS had discovered their offshore account outside of the program. According to IRS, the offshore penalty is in lieu of all other liabilities for tax, interest, and penalties that IRS would not pursue. Taxpayers that do not participate in an offshore program could potentially face penalties that total more than 100 percent of the value of their unreported offshore accounts. These penalties could include FBAR, accuracy-related and/or delinquency, fraud, and foreign information return penalties.\nMost of the offshore programs also offered taxpayers mitigated penalties at lower rates, generally for taxpayers with small accounts or accounts that were not accessed, also shown in table 1.\nMany offshore accounts were presumably open for decades, something that we confirmed in our review of 2009 OVDP cases, but practical reasons prevented IRS from auditing and collecting unpaid taxes from all of those years. The standard 2009 OVDP 20 percent offshore penalty was calculated based not on additional taxes assessed, but on the highest aggregate value of the offshore accounts. As a result, the penalty has been described by tax practitioners as “rough justice,” in part because the amount in an account might include decades of tax-free buildup. (See app. IV for hypothetical examples illustrating tax-free build up and penalties for accounts of different ages.)\nUnder the 2003, 2009, and 2011 programs, taxpayers had a specified period of time to join a program. The 2012 program is, at present, open ended. In each program, delinquent taxes and interest were assessed and collected for a limited number of prior years, which varied from four to eight tax years. Taxpayers were typically assessed accuracy-related and/or delinquency penalties for the delinquent taxes assessed in an offshore program, in addition to the offshore penalty described earlier.\nDespite the significant risks of not coming forward through one of IRS’s offshore programs, some taxpayers decide to do nothing and remain noncompliant. Other taxpayers have attempted to disclose their offshore accounts without paying all the delinquent taxes, interest, and penalties required by the programs. In a quiet disclosure, taxpayers file amended tax returns for all or some of the tax years covered by an offshore program, and report the income from the previously unreported accounts. The taxpayers would generally pay interest and either accuracy-related or delinquency penalties on the newly reported income, but would avoid the higher offshore penalty. At the same time, taxpayers attempting quiet disclosures would file late FBARs, if they had not previously filed FBARs, or amended FBARs, if they had, to disclose the offshore accounts that they had not previously reported. Taxpayers might also try to circumvent some of the taxes, interest, and penalties that would otherwise be owed in offshore programs by reporting the existence of any offshore accounts and any income from the accounts on their current year’s tax return, without amending prior years’ returns. These taxpayers would also likely disclose the existence of the accounts by filing FBARs for the current calendar year. This filing would appear similar to the opening of a new account. Such a taxpayer would avoid paying any delinquent taxes, interest, or penalties, unless audited. As described earlier, taxpayers who are caught disclosing offshore accounts outside of one of IRS’s offshore programs risk steeper penalties and criminal prosecution, based on the facts and circumstances of their cases.", "", "Participants in IRS’s 2009 OVDP had offshore accounts that varied considerably in size. Of the 10,439 closed 2009 OVDP cases, we estimate based on penalty data that the bottom 10 percent of the participants had account balances of less than $79,000 and the top 10 percent had balances over $4 million, as shown in table 2. The amount of offshore penalties also varied widely, which reflected the range of account balances. Some taxpayers were assessed an offshore penalty of a few thousand dollars while others were assessed several million dollars. The average offshore penalty assessed was about $376,000 while the median was approximately $108,000.\nOf the 10,439 closed cases, most were assessed offshore penalties and 96 percent of those assessed penalties received the standard offshore penalty—20 percent of the highest aggregate value of the offshore accounts, which was also the maximum offshore penalty rate in the 2009 OVDP. The 20 percent penalty was generally levied when the total account value was greater than $75,000 and when taxpayers used the accounts (e.g., made deposits or withdrawals) during the period under review (2003 to 2008). See table 3.\nFewer than 5 percent of 2009 OVDP participants received one of the mitigated offshore penalties, 12.5 percent or 5 percent, also shown in table 3. (See sidebars for representative examples of mitigated penalty cases.)\nConsistent with IRS’s enforcements efforts and the design of the 2009 OVDP, we found that the population of participants was more likely to report offshore accounts in Switzerland than the average foreign account holder who filed an FBAR (see fig. 3). Taxpayers with closed cases also had higher incomes than the average taxpayer, were older, and were more likely to use the married filing jointly status. (See app. VI.)\nAbout half of the revenues collected through the 2009 OVDP, as of March 30, 2012, came from 378 cases where taxpayers received offshore penalties of $1 million or greater, meaning they had account balances of $5 million or greater. This group, which we refer to as “large penalty cases”, accounted for about 6 percent of the closed 2009 OVDP cases, but the penalties they received amounted to 49 percent of the total $1.9 billion in offshore penalties that had been assessed by IRS at that time. Given this group’s high share of penalties assessed, we selected a random sample of 30 of them for further examination and to obtain a better understanding taxpayers’ noncompliance.\nFor large penalty cases, we estimate that more than 50 percent of taxpayers had one or more bank accounts with Swiss bank UBS. app. VII for detailed information on the location of these taxpayer’s offshore accounts, including country and bank names.) Some of these taxpayers with UBS accounts transferred funds from Swiss bank UBS in 2008—the time when the U.S. government was actively trying to compel UBS to name its U.S. account holders. The funds were often transferred to other, smaller Swiss banks that generally did not operate in the United States. A few taxpayers claimed that they transferred funds at the recommendation of their UBS financial advisors. Taxpayers transferring funds to other banks may have been attempting to keep their offshore accounts hidden before deciding to participate in the 2009 OVDP.\nThe 95 percent confidence interval for the estimated 70 percent of taxpayers receiving large penalties with accounts at Swiss bank UBS is 51 percent to 85 percent. See appendix I for more information on our scope and methodology and appendix VII for more counts by case file.", "Many taxpayers in the 30 large penalty cases that we reviewed had resided outside the United States for extended periods of time—either as U.S. citizens or prior to obtaining U.S. citizenship. Many taxpayers who disclosed extended periods of non-U.S. residency reported that they had opened their offshore accounts with income earned outside of the United States. A few of these taxpayers had been living and working overseas as U.S. citizens for decades. Others within this group opened accounts before immigrating to the United States. Although some taxpayers in these cases became U.S. residents decades ago, they maintained their offshore accounts and did not disclose them on tax returns or FBARs. Some taxpayers reported opening bank accounts in Switzerland as a means of protecting family assets during periods of war or instability in their native country. Further, a few taxpayers who immigrated to the United States reported that they had been unaware of their FBAR reporting requirements, that they had to state that they had foreign accounts on the Form 1040, Schedule B, or that the United States taxes the worldwide income of its residents, including overseas investment income. (See sidebars for representative examples from our case file reviews.)\nTaxpayers in some of the cases that we reviewed disclosed that the original source of funds for their offshore accounts came from post-tax U.S. source income. A few of these taxpayers cited family histories or personal fears about the safety of U.S. banks as their reasons for moving savings offshore. Others reasons cited included the need to protect or shelter assets from possible U.S. lawsuits.\nWe estimate that 47 percent of taxpayers receiving large penalties inherited offshore accounts from a parent, spouse, or other relative— some of whom were not U.S. citizens or residents.taxpayers reported inherited accounts that were jointly owned or managed by extended family members, such as siblings and cousins, who also applied to the 2009 OVDP and sometimes split the penalties. Regardless of how taxpayers in the large penalty cases came to own offshore accounts, many maintained but did not disclose offshore account In many instances, balances of several million dollars for many years. Some of these taxpayers did not pay U.S. taxes on income earned from these accounts for decades.\nWe estimate that 40 percent of 2009 OVDP participants receiving large penalties used complex arrangements to indirectly own or manage their offshore accounts. These arrangements involved the use of foreign corporations, foundations, trusts, and other entities in jurisdictions that have been designated as offshore tax havens and financial privacy jurisdictions, some of which were recommended by the taxpayers’ foreign financial advisors. In some cases, the entities were “sham” entities—i.e., entities created to conceal ownership from U.S. tax authorities—which participants in some case files that we reviewed used to conceal the ownership of accounts or disguise the repatriation of offshore funds back to the United States. Another complex arrangement present in several large penalty cases was passive foreign investment companies (PFIC). A PFIC is a type of mutual fund or investment company held outside of the United States. Some foreign bank accounts disclosed through OVDP were in the form of simple interest bearing accounts, but others were foreign mutual funds that would be treated as PFICs under the Internal Revenue Code. PFICs may, in some cases, receive less favorable tax treatment than U.S. entities holding similar assets or earning similar income. Taxpayers who did not disclose PFICs may not have paid the additional taxes on such investments. In many cases, a number of previously unreported investment entities were disclosed through the 2009 OVDP, and IRS decided to accept an alternative tax on all their associated PFIC gains—20 percent of the gain—potentially a much lower tax rate than would otherwise have been available to those taxpayers.", "", "As previously discussed, one of the intended purposes of the 2009 OVDP was mining, or analyzing, data collected from OVDP applications and audits of participants and nonparticipants to identify entities and individuals who promoted or otherwise helped U.S. citizens hide assets and income offshore. We found that IRS collected the names of offshore financial institutions, financial advisors, bankers, attorneys, and other promoters from the 2009 OVDP that were involved in hiding U.S. taxpayers’ offshore income, and used the names to (1) identify patterns of noncompliance, (2) encourage banks and other promoters to cooperate with IRS and provide the names of U.S. taxpayers hiding income overseas, and (3) build cases for John Doe summonses.\nIRS officials from the Offshore Compliance Initiative office told us that publicity from the John Doe summonses has been the most effective tool to increase participation in its offshore programs. They based their conclusion on the correlation between country specific or bank specific John Doe summonses and the locations of 2009 OVDP participants’ accounts. Our case file analysis discussed previously in this report supports IRS’s conclusion.\nHowever, IRS officials also determined that data mining the 2009 OVDP applications would not provide IRS with all of the useful information it could get from participants. For taxpayers accepted into the program, responses on the 2009 OVDP applications varied widely in degree of detail, which we confirmed in our case file review. For example, some application letters included very detailed account information, such as the original source of funds, bank name, banker name, and country name, while other case files we reviewed did not contain any optional letter like the one suggested by IRS in its 2009 OVDP Questions & Answers. As a consequence, IRS sent surveys to 2009 OVDP participants to obtain more details about the offshore accounts. The survey included detailed questions about the taxpayer’s financial institutions, bankers, advisors, attorneys, or other promoters’ involvement in hiding offshore income. IRS program officials stated that the additional information they received from the surveys was useful and that they were using it, along with various analyses of voluntary disclosures, to identify particular banks, promoters, professionals, and others who promote, facilitate, or enable U.S. taxpayers in avoiding or evading payment of required U.S. taxes through the use of offshore accounts. According to IRS, these analyses have also been used to identify the foreign countries where the offshore accounts were maintained as well as the schemes being used and offshore structures.\nBased on data that IRS collected from mining the 2009 OVDP case files and the survey, IRS obtained information on offshore accounts held by U.S. taxpayers at HSBC (India); continued investigations of additional foreign financial institutions in Switzerland, Asia, and the Caribbean; built cases for additional John Doe summonses, should they become expanded its investigations of non-bank entities, such as merchant accounts, which are a type of bank account that allows a business to accept payments by payment cards, such as credit or debit cards;and improved subsequent offshore programs.\nOne lesson that IRS learned from the 2009 OVDP was that the applications sometimes did not contain enough information to allow IRS to understand the nature of the noncompliance. To obtain better information going forward, and as a condition of being accepted into the 2011 and 2012 programs, IRS required applicants to submit additional documents related to their offshore accounts.account information about the original source of funds. In addition, applicants to the 2011 and 2012 programs that had offshore accounts with an aggregate balance of $1 million or more were required to submit a separate statement for each foreign financial institution. These applicants were also required to submit a separate statement for each foreign account or asset listed in their voluntary disclosure. (See app. III for sample 2009 and 2012 application letters and, the new required attachment to the 2012 application letter.) IRS officials from the Offshore Compliance Initiative office told us that they have begun to use data from these additional submissions to improve offshore compliance.\nBased in part on its experience with the 2009 OVDP, IRS introduced streamlined offshore program filing procedures. These were, in part, intended to provide a less burdensome process for taxpayers with unreported offshore accounts that were small. As shown earlier in table 2, for the 10,439 2009 OVDP cases that we had data for, the account value for the 10th percentile was about $78,000. According to IRS, some of these taxpayers with smaller accounts, and thus relatively low unpaid-tax obligations, were U.S. residents residing overseas, including dual citizens, who most likely did not owe substantial amounts of unpaid taxes, and who indicated to IRS that they did not understand their filing requirements. The standard offshore penalty for such taxpayers would likely be disproportionately high. The streamlined filing procedures that began in September 2012 allow taxpayers with “low compliance risk” to become current with their offshore tax obligations without facing offshore penalties or additional enforcement action. IRS defined “low compliance risk” as taxpayers with simple tax returns, owing less than $1,500 in taxes for each of the years covered by the streamlined procedures.", "IRS efforts to publicize the 2009 OVDP included notices published in seven languages and outreach to professional tax practitioners. IRS officials from the Offshore Compliance Initiative office told us that they had not formally evaluated the success of these outreach efforts. We recently reported concerns about the complexity of foreign account reporting requirements, and that tax practitioners and taxpayers are confused about what foreign account information should be reported and how.\nThe offshore programs are part of IRS’s larger compliance efforts, which are intended to both detect noncompliance and to encourage voluntary compliance, in part by minimizing the burden for taxpayers to understand their tax obligations and file tax returns every year. Obtaining information on how taxpayers found out about IRS’s offshore voluntary disclosure programs could help IRS better identify populations that could benefit from additional taxpayer education and outreach and potentially improve voluntary compliance by taxpayers with new offshore accounts. Such information could also help IRS evaluate the success of its current outreach efforts. IRS’s 2009 OVDP application, however, did not contain a question on how the taxpayer became aware of the program. IRS made changes to the applications for subsequent programs, as described earlier, but did not consider adding questions on how participants became aware of the program. IRS officials from the Offshore Compliance Initiative office told us that this information would be useful in terms of allocating future resources, and that they would be open to considering a question on how taxpayers found out about the offshore programs. Presently, IRS has not decided to include this question in the 2012 program application.\nIn our case file review, we found examples of immigrants who stated in their 2009 OVDP applications that they were unaware of their FBAR filing requirements. We found they had often opened banks accounts in their home country prior to immigrating to the United States. IRS officials from the Offshore Compliance Initiative office stated that although there are several FBAR education programs, none are specifically targeted at new immigrants. Furthermore, these IRS officials were unaware of any IRS work with other federal agencies such as the State Department or the Department of Homeland Security to educate recent immigrants about their foreign account filing requirements. These officials stated that one of the challenges that they face in their office, which is part of IRS’s Large Business and International Division, is that taxpayer education and outreach is the responsibility of IRS’s Wage and Investment Division and that issues concerning FBARs fall under IRS’s Small Business/Self- Employed Division.\nIRS officials from the Offshore Compliance Initiative office agree that more could be done to improve taxpayer education and outreach about offshore reporting requirements. They, like us, recognize that multiple outreach efforts could help to draw additional taxpayers into the offshore programs, and that data mining information from the program applications can help identify these groups.", "", "Quiet disclosures matter because if IRS does not identify them, it undermines the incentive to participate in the offshore programs. IRS’s offshore compliance enforcement efforts, including the offshore programs, deter taxpayers with noncompliance related to current offshore accounts, or offshore accounts that might be opened in the future. If taxpayers are able to quietly disclose and pay fewer penalties than they would have in an offshore program, the incentive for other noncompliant taxpayers to participate in a program is reduced. When quiet disclosures remain undetected, they also result in lost revenue for the government. Further, if quiet disclosures remain undetected, then IRS will not have information on the characteristics of these taxpayers and their accounts— characteristics such as bank names, country names, and promoter names—used to build cases against others.", "We identified 10,595 potential quiet disclosures, a number much higher than the potential quiet disclosures identified by IRS. In a series of Questions & Answers that IRS first released on February 8, 2011 to announce the 2011 offshore program, IRS reported that it had identified, and will continue to identify, taxpayers attempting quiet disclosures. In the Questions & Answers, IRS stated that it would be closely reviewing amended tax returns to determine whether enforcement action is appropriate. (See sidebar for one example of a quiet disclosure being detected.)\nIRS officials told us that the Offshore Compliance Initiative office tested several different methodologies to identify quiet disclosures. First, IRS looked at amended returns during tax year 2003 to tax year 2008, the period covered by the 2009 OVDP, and removed any non-offshore related adjustments, such as filings status changes and additional exemptions. IRS also looked at amended returns with increased tax assessments over an established threshold during tax year 2003 to tax year 2010.\nThe effectiveness of a third effort was questioned by IRS. In this effort IRS compared taxpayers with a history of filing FBARs in non-secrecy jurisdictions between tax year 2003 and tax year 2008 who filed delinquent FBARs processed in 2009 involving a secrecy jurisdiction along with an amended return.\nIn 2012, a fourth effort, which was not designed to detect quiet disclosures, but to reroute misaddressed amended returns sent in by participants in the 2011 offshore program, was the most successful effort to find them.\nTogether, these four efforts led to the review of several thousand tax returns. Of those, several hundred returns were identified as quiet disclosures. An IRS official told us that the tax returns that were identified as part of a quiet disclosure will be examined and that cases already examined had penalties assessed. Because they were quiet disclosures, the official said the taxpayers did not receive the reduced offshore penalty.\nGiven the importance of IRS’s ability to detect quiet disclosures and evidence that they exist, we tested a different methodology to identify potential quiet disclosures, and found many more than IRS detected. Unlike IRS, we looked at all taxpayers who, for the tax years covered by the 2009 OVDP filed amended or late returns, and filed amended or late FBARs.\nWe then excluded 2009 OVDP participants from this population. While only an IRS examination can determine whether a potential quiet disclosure is an actual quiet disclosure, the 10,595 taxpayers that we identified have an unlikely combination of characteristics that could indicate that taxpayers are quietly disclosing. IRS agreed with our methodology as reasonable and appropriate. (See app. I for additional details about our methodology and app. VIII for a full breakout of our results.)\nAlthough any of the 10,595 potential quiet disclosures could be actual quiet disclosures, certain subpopulations raised more questions. First, we found 3,386 taxpayers that filed amended or late returns, and filed amended or late FBARs for multiple years. Second, we found that 94 of these taxpayers met the same criteria for all six tax years covered by the 2009 OVDP.\nIRS officials from the Offshore Compliance Initiative office told us that they had no additional work planned to identify potential quiet disclosures and had not yet decided to broaden the methodologies that they had tested, but they expressed strong interest in researching our methodology to identify taxpayers attempting quiet disclosures. We recognize that there are additional costs to using a methodology such as the one we used, but IRS has already committed resources to identifying quiet disclosures. Moreover, without rigorously and systematically searching for potential quiet disclosures, IRS does not have reasonable assurance that it is controlling such disclosures and collecting the delinquent taxes, interest, and penalties due. Exploring different methodologies that include a systematic evaluation of amended returns or late filed returns, along with amended or late filed FBARs, without too narrowly restricting either the amended return or the FBAR populations, and implementing the best option could provide this assurance.", "Data from IRS’s SOI division and from FinCEN show that the number of taxpayers reporting offshore accounts on Form 1040, Schedule B and the number of taxpayers filing FBARs has increased significantly in recent years. From tax year 2007 to tax year 2010 (the most recent data available), IRS estimated that the number of taxpayers reporting offshore accounts on Form 1040, Schedule B nearly doubled to 516,000, as shown in figure 4. From tax year 2003 through tax year 2007, only about 1 percent of all taxpayers filing Form 1040, Schedule B checked a “yes” box in response to the question asking if they owned or controlled a foreign financial account, but that share increased to more than 2.5 percent by tax year 2010. Furthermore, FinCEN has reported that the number of FBARs filed more than doubled, as shown in figure 4. Both the increase in the number of foreign accounts reported on Form 1040, Schedule B and the increase in FBAR filings are significantly larger than the approximately 39,000 taxpayers that came forward in one of IRS’s offshore programs.\nThere could be legitimate reasons for these trends. For example, taxpayers could be reporting new offshore accounts or taxpayers who had always reported income from offshore accounts on their tax returns could be filing FBARs and reporting the accounts on Form 1040, Schedule B for the first time. This could be an indication of more taxpayers coming into compliance as a result of IRS’s efforts to combat offshore tax evasion.\nHowever, such a sharp increase in foreign account reporting amidst the global economic recession and the publicity surrounding IRS’s offshore programs raises the question whether some of these taxpayers may have attempted to circumvent some of the taxes, interest, and penalties that would otherwise be owed in the offshore programs. Unlike taxpayers attempting a quiet disclosure, who would still pay taxes plus interest on previously unreported income covered by the programs, and possibly an accuracy-related or delinquency penalty, these taxpayers would only be paying taxes on the offshore income earned for the year reported.\nAn IRS official from the Offshore Compliance Initiative office told us that although the office has coordinated with IRS’s Planning, Analysis, Inventory, and Research (PAIR) office, they had not discussed Form 1040, Schedule B or FBAR filing trends, and that he was not aware of the sharp increase. As of January 2013, no projects were planned to research Form 1040, Schedule B filing trends. However, the Offshore Compliance Initiative office has asked PAIR to determine whether taxpayers who reported their offshore income properly, but had not filed FBARs, recently started filing delinquent FBARs, as directed by the 2009 OVDP instructions. who are reporting existing offshore accounts as new.\nThis effort may not capture first time FBAR filers Because the increase in recent years in Form 1040, Schedule B and FBAR reporting of foreign accounts is measured in the hundreds of thousands, we recognize that it may be too costly for IRS to audit all of those filings. A less costly approach could involve, for example, IRS drawing a random sample of those cases and auditing them to understand whether taxpayers are trying to circumvent some of the taxes, interest, and penalties that would otherwise be owed in the offshore programs. One of the things that IRS could look for in such an audit is the date that the offshore account was opened. Such a sample could provide an estimate of the magnitude of any problem. As was the case with quiet disclosures, without such information, it will be difficult for IRS to provide reasonable assurance that taxpayers are not reporting, for the first time, offshore accounts that had been open for years to avoid paying delinquent taxes, interest, and penalties.", "See Internal Revenue Service, “Voluntary Disclosure: Questions and Answers,” accessed February 8, 2013, http://www.irs.gov/uac/Voluntary-Disclosure:-Questions-and- Answers, Q9. unreported offshore income. Through these programs, IRS has collected more than $5.5 billion to date, brought tens of thousands of taxpayers into compliance, and gained increased information on offshore noncompliance. It is unclear how many additional U.S. taxpayers have undeclared foreign accounts and how much unreported income is associated with those accounts. However, the number of quiet disclosures IRS was able to find (some by accident), the number of potential quiet disclosures we identified, and the sharp upswing in Form 1040, Schedule B and FBAR filings all suggest that the amount of revenue to be collected from previously undisclosed offshore accounts could be significant.\nWe found two key issues that, if addressed, could make IRS’s offshore programs even more successful.\nIRS has not used program information to identify populations of taxpayers that would benefit from education and outreach regarding their offshore tax reporting obligations. Such information could promote voluntary compliance and reduce the need for enforcement actions. Additionally, IRS does not obtain information on how taxpayers learned about offshore programs. Without this information, IRS cannot fully evaluate its efforts to promote taxpayer participation in offshore programs. IRS may have missed taxpayers attempting to circumvent some of the taxes, interest, and penalties that would otherwise be owed in its offshore programs. Our methodology to identify potential quiet disclosures found many more potential disclosures than IRS detected. IRS may also have missed other attempts at circumvention by not researching the upward trends of taxpayers reporting offshore accounts for the first time. While there would be costs to such efforts, the amount already collected by the offshore programs suggests that considerable additional revenue gains might be possible. By identifying taxpayers attempting to circumvent some of the taxes, interest, and penalties that would otherwise be owed in its offshore programs, and taking appropriate action, IRS could potentially increase revenues, bolster the overall fairness of the program, and have a more informed basis for improving voluntary compliance.", "We recommend that the Acting Commissioner of Internal Revenue take the following four actions:\nUse data gained from offshore programs to identify and educate populations of taxpayers that might not be aware of their tax obligations related to offshore income and FBAR filing requirements.\nObtain information that can help IRS test offshore program promotion strategies and identify new ones by adding a question to current and future programs to determine how participants found out about the program.\nExplore options for employing a methodology for identifying and pursuing potential quiet disclosures to provide more assurance that actual quiet disclosures are not being missed and then implement the best option.\nConduct an analysis designed to measure the extent that taxpayers are reporting existing foreign accounts on the Form 1040, Schedule B or on FBARs for the first time and circumventing some of the taxes, interest, and penalties that would otherwise be owed, and take appropriate action based on the analysis.", "We provided a draft of this report to the Acting Commissioner of Internal Revenue for comment. In written comments, reproduced in appendix IX, IRS agreed with our four recommendations. IRS noted that it was pleased that we recognized the overall success of its offshore strategy and provided steps that they are taking to implement our recommendations and address any identified noncompliance, as warranted. IRS also provided technical comments on our draft report, which we incorporated, as appropriate.\nAs 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 to report to the Chairmen and Ranking Members of other Senate and House committees and subcommittees that have appropriation, authorization, and oversight responsibilities for IRS. We are also sending copies to the Acting Commissioner of Internal Revenue, the Secretary of the Treasury, the Chairman of the IRS Oversight Board, and the Deputy Director for Management of the Office of Management and Budget. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact me at (202) 512-9110 or [email protected]. 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 X.", "The objectives of this report were to (1) describe the nature of the noncompliance of taxpayers participating in the 2009 Offshore Voluntary Disclosure Program (OVDP), (2) determine the extent to which Internal Revenue Service (IRS) used data from the 2009 OVDP in order to better prevent and detect future noncompliance, and (3) assess IRS’s efforts to identify taxpayers who may have attempted quiet disclosures or other ways of circumventing some of the taxes, interest, and penalties that would otherwise be owed in its offshore programs.\nTo describe the characteristics of taxpayers participating in the 2009 OVDP, we relied on data for tax years 2003 through 2008 from four sources: (1) the Criminal Investigation Management Information System (CIMIS) managed by IRS’s Criminal Investigation (CI) division; (2) the Currency and Banking Retrieval System managed by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN); (3) IRS’s Individual Master File and Business Master File; and (4) IRS’s Compliance Data Warehouse (CDW). We used data from four databases in CDW: Enforcement Revenue Information System, Individual Returns Transaction File, Audit Information Management System, Individual, and Business Returns Transaction File. To determine the reliability of IRS’s taxpayer data, we reviewed relevant documentation, conducted interviews with IRS officials knowledgeable of the data, and conducted electronic testing of the data to identify obvious errors or outliers. We determined that these data were sufficiently reliable for our purposes.\nThis population includes 200 participants with an Employer Identification Number (EIN), which IRS uses to identify businesses, instead of an Individual Tax Identification Number or Social Security Number. Since these business entities represented less than 1 percent of the total OVDP participants identified, our use of the term “OVDP participants” in this report generally refers to individual taxpayers participating in the program. one) in situations where only one spouse applied to the 2009 OVDP through CI, but both were liable for the delinquent taxes, interest, and penalties because of their married filing jointly filing status. From the 19,337 participants, we identified 10,439 closed examination cases as of November 29, 2012, which we use in this report for our analysis of penalties.\nTo obtain a better understanding of taxpayer noncompliance, we selected a random sample of 30 2009 OVDP case files for cases that were closed as of March 30, 2012, and that received a 2009 OVDP penalty of $1 million or greater. As part of the 2009 OVDP application, taxpayers were asked to explain their reasons for establishing offshore accounts, the source of funds, the ownership structure, and the history of accounts. Many taxpayers in our sample submitted an IRS optional letter containing this information with their application (referred to in this report as the “application letter.” See appendix III for sample application letters). Some taxpayers were interviewed by IRS investigators, and some responded to IRS follow-up requests for additional information. Additionally, other case file documents that provided key information were: (1) IRS Form 906, Closing Agreement On Final Determination Covering Specific Matters; (2) IRS Form 4549-A, Income Tax Discrepancy Adjustments; (3) OVDP Penalty Computation Workpaper; and (4) form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).\nWe used a standard data collection instrument to review each case file to ensure we consistently captured information about the 2009 OVDP participants, their offshore accounts, and their penalties, interest, and additional taxes owed. To ensure reliability, two analysts separately conducted this analysis, and a third analyst compared and reconciled any inconsistencies regarding the categorizations of 2009 OVDP cases. The analysts then tallied the number of observations for each topic or category and all information was traced and verified. We then analyzed the results of this data collection effort to identify main themes and develop summary findings. We determined that these data were sufficiently reliable for our purposes. (See app. VII for a summary of our data collection instrument results.)\nTo determine the extent to which IRS used data from the 2009 OVDP in order to better prevent and detect future noncompliance, we also interviewed IRS officials from the office of the Offshore Compliance Initiative to determine what data they collected from the 2009 OVDP effort and how, if at all, IRS used that data to create taxpayer profile data to identify additional offshore noncompliance and inform future offshore programs. In addition, we reviewed changes that IRS made to the 2011 and 2012 offshore programs.\nTo assess IRS’s efforts to identify taxpayers who may have attempted quiet disclosures, we used the same datasets that we used to identify the 2009 OVDP population, as described above, plus FBAR data from FinCEN. To determine the reliability of FinCEN’s FBAR data, we reviewed relevant documentation, conducted interviews with FinCEN officials knowledgeable of the data, and conducted electronic testing of the data to identify errors or outliers. We determined that these data were sufficiently reliable for our purposes. To identify potential quiet disclosures we conducted a three-step analysis. First, we used IRS tax return data to identify taxpayers who filed late or amended returns for the applicable 2009 OVDP period. We then used FBAR data to identify taxpayers who filed late or amended FBARs during the same time period to create a combined list of taxpayers. Finally, we removed from this combined list any taxpayers that we had previously identified as 2009 OVDP participants. The remaining taxpayers constitute our population of taxpayers who potentially “quietly disclosed” offshore accounts. From this population, we used data from amended tax returns to identify whether the amended returns had positive adjustments to income, and whether taxpayers filed amended returns for multiple years. We confirmed this methodology with IRS officials. The results of our analyses are shown in appendix VIII. To assess other ways taxpayers might be circumventing some of the taxes, interest, and penalties that would be otherwise owed, we analyzed filing trends in FBAR data from FinCEN and in Schedule B, Interest and Ordinary Dividends, of IRS Form 1040, U.S. Individual Income Tax Return, from IRS’s Statistics of Income Division (SOI). To assess the reliability of the SOI data that we analyzed, we reviewed agency documentation and interviewed officials familiar with the data. We determined that these data were sufficiently reliable for our purposes.", "IRS’s first offshore program started in 2003 as part of an ongoing, multipronged effort to counter offshore tax evasion. Related to the 2003 program was the Offshore Credit Card Program, which stemmed from a series of John Doe summonses issued to a variety of financial and commercial businesses to obtain information on U.S. persons who held credit, debit, or other payment cards issued by offshore banks. IRS used records from the summonses to trace the identities of taxpayers whose use of these payment cards may have been related to hiding taxable income; this drew many other taxpayers to the offshore program.figure 5 for a timeline of key events.)\nThe Internal Revenue Code provides whistleblowers with a significant financial incentive to report noncompliance. It provides for awards up to 30 percent of the collected proceeds that arise from the whistleblower’s information. 26 U.S.C. § 7623. A whistleblower is someone who reports information on potential tax problems, such as fraud, to the IRS. Although not publicly confirmed by IRS, attorneys for the UBS whistleblower reported that he was awarded $104 million. For additional information on tax whistleblowers, see GAO, Tax Whistleblowers: Incomplete Data Hinders IRS’s Ability to Manage Claim Processing Time and Enhance External Communication, GAO-11-683 (Washington, D.C.: Aug. 10, 2011). specific criteria by which the 4,450 accounts would be selected until after the 2009 OVDP deadline passed. This created uncertainty among UBS account holders as to whether their names were on the list to be disclosed. IRS gave taxpayers until October 15, 2009, to enter the program. IRS publicity about the program, and correspondence sent by UBS to all U.S. account holders, emphasized the several criminal and civil penalties applicable to taxpayers who did not make voluntary disclosures before Switzerland turned over the account data.\nThe 2011 and 2012 programs had a similar draw for taxpayers. During the 2011 program, IRS and DOJ were building cases against tax evasion involving foreign banks in several countries, including Switzerland, Liechtenstein, Israel, and India. Many 2011 program participants came forward as a result of criminal enforcement activity and a John Doe summons issued to HSBC, a global banking and financial services firm headquartered in the United Kingdom, with significant business operations in Hong Kong and Asia. The 2012 program, which is still open and as of March 2013 does not have an end date, is expected to draw participants based on further criminal enforcement activity against foreign banks and opportunities for additional John Doe summonses that are being built by IRS and DOJ with information from past offshore programs. Also during this time, as the Foreign Account Tax Compliance Act (FATCA) becomes fully implemented, IRS expects to have increased information reporting from certain taxpayers and from foreign financial institutions on offshore accounts.", "", "The 2009 Offshore Voluntary Disclosure Program (OVDP) penalties follow what some tax practitioners have called “rough justice” because of the relationship between the offshore penalties and the original taxes evaded. Figure 6 illustrates how two hypothetical offshore accounts bearing 5 percent interest might grow over time. One account is owned by a compliant taxpayer who reports the interest income and pays U.S. taxes at a 35 percent rate with earnings from the account. The other account is owned by a noncompliant taxpayer who does not report the interest income. Assuming both taxpayers deposited $1 million in 1986, the compliant taxpayer would accumulate a balance of approximately $2.1 million by 2009 and the noncompliant taxpayer would accumulate $3.1 million. The compliant taxpayer would have paid tax in each year the account was open, totaling about $585,000 in cumulative taxes on the reported account’s interest over 23 years. A noncompliant taxpayer who participated in the 2009 OVDP would, after disclosing the account, make a one-time payment in 2009 of about $993,000 in taxes, interest, and penalties. Although the 2009 OVDP participant would pay more in total taxes and penalties, the final account balances for both taxpayers would be roughly the same.\nUsing the same hypothetical model from figure 6 can help illustrate how taxpayers with newer offshore accounts that have not accumulated decades of untaxed interest income are treated. Assuming the hypothetical accounts in figure 6 were opened in 2004 (instead of 1986), the compliant taxpayer would have paid about $93,000 in taxes on the interest income and accumulated a balance of about $1.2 million by 2009, and the noncompliant taxpayer paying no taxes would have accumulated about $1.3 million. If the noncompliant taxpayer came forward through the 2009 OVDP, the penalties, interest, and delinquent taxes would have totaled about $387,000. The 2009 OVDP participant’s ending account balance would be about $890,000, which is less than the original opening deposit amount.", "We identified 200 2009 OVDP participants with an Employer Identification Number (EIN), which is used by IRS to identify a business entity. We did not have complete information on all of the businesses in our sample. In addition, not all of the businesses had filing requirements in every year covered by the 2009 OVDP. Table 4 shows the tax forms filed by some of the businesses in tax year 2008, and table 5 shows the self-reported North American Industry Classification System (NAICS) code.", "Taxpayers participating in the 2009 OVDP most often used the married filing jointly filing status, were most often age 55 and over, and had an average adjusted gross income of about $528,000, as show in table 6.", "As noted in appendix I, we used a standard data collection instrument to capture information from a sample of 30 2009 OVDP cases in which taxpayers received offshore penalties of $1 million or greater. We then analyzed the results to identify main themes, and develop the summary findings presented in this report. The information in this appendix contains information from our case file reviews.", "We calculated offshore account balances based on penalty information. For our sample of 30 cases, the average account balance was almost $15 million, as shown in table 7 with other key information.\nMost of the 30 cases we reviewed contained some information about the bank names and country locations of the offshore accounts. In some cases, 2009 OVDP participants disclosed dozens of offshore accounts with multiple banks and in multiple countries; in other cases, participants reported only one account. Only those offshore accounts that were open in tax year 2003 through tax year 2008 were included in the calculation of the 20 percent 2009 OVDP penalty. In compiling our profile, we only included information on accounts that were open during the 2009 OVDP applicable period and included in the penalty calculation. (Some participants disclosed additional offshore accounts that were closed prior to 2003 and not part of the 2009 OVDP penalty calculation.) Figure 7 illustrates the most commonly disclosed country locations. A total of 17 different locations were noted in the 28 cases that disclosed locations, with Switzerland being the most commonly reported location.\nFigure 8 illustrates the most commonly disclosed bank names. A total of 42 different banks were reported in the 29 cases that contained bank name information, with UBS by far the most commonly disclosed bank name, followed by Swiss banks Julius Baer, and Credit Suisse.\nTwenty-two of the case files we reviewed contained information about the history of the accounts and the nature of the taxpayer’s noncompliance. Many of the accounts had been opened decades ago. The median period of time that participants had owned but not reported income from these accounts, was 18 years, and the average period was 25 years. In four cases, the participants had owned offshore accounts for 50 years or longer.", "Table 8 summarizes key information from the data collection instrument we used to collect information on the 30 offshore case files we reviewed.", "", "", "", "James R. White, (202) 512-9110 or [email protected].", "In addition to the contact named above, Mark Abraham, Tara Carter (Analyst-In-Charge), Andrew Ching, Leon Green, Mark Kehoe, and Libby Mixon (Assistant Director) made contributions to the report. Jeff Arkin, Chuck Fox, Robert Gebhart, George Guttman, Brian James, Sarah McGrath, Donna Miller, John Mingus, Ed Nannenhorn, Karen O’Conor, Robert Robinson, Cynthia Saunders, Andrew Stephens, Wayne Turowski, Jim Ungvarsky, and John Zombro provide key assistance." ], "depth": [ 1, 2, 2, 1, 2, 3, 1, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h3_title", "h0_full h3_full", "h3_full", "h0_title", "h0_full", "", "h1_title", "", "h1_full", "h2_title", "", "h2_full", "h2_full", "h0_full h3_full h2_full", "", "", "h3_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What have the IRS's four offshore programs resulted in as of December 2012?", "How do these offshore programs attract taxpayers?", "How do these offshore programs penalize the majority of their participants?", "What was the median account balance from the 2009 OVDP?", "How does this differ from participant cases with offshore penalties greater than $1 million?", "What reasons did taxpayers from such cases give for having offshore accounts?", "What steps did the IRS take to pursue additional noncompliance?", "What did GAO find regarding noncompliance from new immigrants?", "How does the IRS encourage compliance from new immigrants?", "How could the IRS help promote compliance in such cases?", "How might IRS be missing some attempts by taxpayers to circumvent paying taxes on offshore accounts?", "How has IRS missed opportunities to ensure compliance?", "Why is it more important to ensure compliance now more than ever?", "How does this failure to ensure compliance negatively affect the IRS?", "Why is tax evasion by individuals with offshore accounts a major issue?", "What steps has the IRS taken to mitigate the financial impact of such tax evasion?", "What was GAO asked to review?", "What does this report assess?", "What data did GAO collect for this report?" ], "summary": [ "As of December 2012, the Internal Revenue Service's (IRS) four offshore programs have resulted in more than 39,000 disclosures by taxpayers and over $5.5 billion in revenues.", "The offshore programs attract taxpayers by offering a reduced risk of criminal prosecution and lower penalties than if the unreported income was discovered by one of IRS's other enforcement programs.", "For the 2009 Offshore Voluntary Disclosure Program (OVDP), nearly all program participants received the standard offshore penalty--20 percent of the highest aggregate value of the accounts--meaning the account value was greater than $75,000 and taxpayers used the accounts (e.g., made deposits or withdrawals) during the period under review.", "The median account balance of the more than 10,000 cases closed so far from the 2009 OVDP was $570,000.", "Participant cases with offshore penalties greater than $1 million represented about 6 percent of all 2009 OVDP cases, but accounted for almost half of all offshore penalties.", "Taxpayers from these cases disclosed a variety of reasons for having offshore accounts, and more than half of them had accounts at Swiss bank UBS.", "Using 2009 OVDP data, IRS identified bank names and account locations that helped it pursue additional noncompliance.", "Based on a review of cases, GAO found examples of immigrants who stated in their 2009 OVDP applications that they were unaware of their offshore reporting requirements.", "IRS officials from the Offshore Compliance Initiative office said they have not targeted outreach efforts to new immigrants.", "Using information from the 2009 OVDP, such as the characteristics of taxpayers who were not aware of their reporting requirements, to increase education and outreach to those populations could promote voluntary compliance.", "IRS has detected some taxpayers with previously undisclosed offshore accounts attempting to circumvent paying the taxes, interest, and penalties that would otherwise be owed, but based on GAO reviews of IRS data, IRS may be missing attempts by other taxpayers attempting to do so. GAO analyzed amended returns filed for tax year 2003 through tax year 2008, matched them to other information available to IRS about taxpayers' possible offshore activities, and found many more potential quiet disclosures than IRS detected.", "Moreover, IRS has not researched whether sharp increases in taxpayers reporting offshore accounts for the first time is due to efforts to circumvent monies owed, thereby missing opportunities to help ensure compliance.", "From tax year 2007 through tax year 2010, IRS estimates that the number of taxpayers reporting foreign accounts nearly doubled to 516,000.", "Taxpayer attempts to circumvent taxes, interest, and penalties by not participating in an offshore program, but instead simply amending past returns or reporting on current returns previously unreported offshore accounts, result in lost revenues and undermine the programs' effectiveness.", "Tax evasion by individuals with unreported offshore financial accounts was estimated by one IRS commissioner to be several tens of billions of dollars, but no precise figure exists.", "IRS has operated four offshore programs since 2003 that offered incentives for taxpayers to disclose their offshore accounts and pay delinquent taxes, interest, and penalties.", "GAO was asked to review IRS’s second offshore program, the 2009 OVDP.", "This report (1) describes the nature of the noncompliance of 2009 OVDP participants, (2) determines the extent IRS used the 2009 OVDP to prevent noncompliance, and (3) assesses IRS’s efforts to detect taxpayers trying to circumvent taxes, interests, and penalties that would otherwise be owed.", "To address these objectives, GAO analyzed tax return data for all 2009 OVDP participants and exam files for a random sample of cases with penalties over $1 million; interviewed IRS Offshore officials; and developed and implemented a methodology to detect taxpayers circumventing monies owed." ], "parent_pair_index": [ -1, 0, 0, 2, 2, 4, -1, 0, 1, 1, -1, 0, 1, 0, -1, 0, -1, -1, 3 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Legislative History Overview", "What Are Fatherhood Initiatives?", "Research and Evaluation", "Parents' Fair Share Demonstration Project", "Partners for Fragile Families Demonstration", "Fragile Families and Child Wellbeing Study", "Office of Child Support Enforcement (OCSE) Fatherhood Demonstration Programs", "Responsible Fatherhood Demonstration Programs", "National Child Support Noncustodial Parent Employment Demonstration (CSPED)", "Responsible Fatherhood, Marriage, and Family Strengthening Grants for Incarcerated and Reentering Fathers and Their Partners", "Other Evaluations", "Potential Issues", "CSE System and Noncustodial Parents May Often Be at Odds", "Noncustodial Father Involvement vs. Promotion of Marriage vs. Maintenance of Fragile Families", "Work-Oriented Strategies for Noncustodial Parents" ], "paragraphs": [ "", "While 69% children in the United States live in homes with two parents, an estimated 27% of children are maintained in one-parent homes. Most children in the latter group are in homes maintained by the mother only. In 2017, 23% of children lived in mother-only households, a statistic that has roughly doubled since 1970 (when it was 11%).\nLong-standing research indicates that children raised in one-parent homes are more likely than children raised in homes with both biological parents to do poorly in school, have emotional and behavioral problems, become teenage parents, and have poverty-level incomes as adults. Nonetheless, it is widely acknowledged that although children with absent fathers are at greater risk of having the aforementioned problems, most do not experience them.\nIn an effort to improve the long-term outlook for children in one-parent homes—particularly those with low-income noncustodial parents—federal, state, and local governments (along with public and private organizations) have supported programs and activities that promote the financial and personal responsibility of noncustodial parents to their children and reduce the incidence of parental absence in the lives of children. These \"fatherhood initiatives\" include campaigns that seek to encourage noncustodial parents to connect with their children; counseling and training on \"soft skills,\" including relationship skills, to help noncustodial parents connect with them; and employment and training services so that they can help financially support them. (Although most people refer to programs that seek to help parents initiate or maintain contact with their children and become emotionally involved in their lives as \"fatherhood\" programs, the programs generally are gender-neutral with regard to who may participate. Their underlying goal is participation of the noncustodial parent in the lives of his or her children.)\nThis report provides an overview of the federal government's financial support of fatherhood initiatives, including through the Responsible Fatherhood (RF) grant program. It begins by providing a legislative history of this financial support and a summary of allowable activities under the RF grant program. This is followed by an explanation of some of the research and evaluations that have occurred via demonstration programs. The report concludes by briefly examining the role of governmental child support enforcement (CSE) agencies in fatherhood programs, initiatives to promote and support father-child interaction outside the parents' relationship, and recent developments with regard to work-oriented programs for noncustodial parents.", "Low-income noncustodial parents historically have had little opportunity to participate in public assistance programs. Most of the policy discussion about low-income children that had occurred as part of the \"welfare reform\" debates between the 1960s to 1990s was focused on single custodial mothers and their children, not on the fathers of those children. This changed to some degree with the enactment of the 1996 welfare reform law ( P.L. 104-193 ), which established the Temporary Assistance for Needy Families (TANF) program. The third finding of that law states: \"Promotion of responsible fatherhood and motherhood is integral to successful child rearing and the well-being of children.\" In addition, three of the four goals of the TANF program included in the law were consistent with the components of most fatherhood programs: ending welfare dependence by employment and marriage, reducing out-of-wedlock pregnancies, and encouraging the formation and maintenance of two-parent families. This meant that states could spend TANF funds on fatherhood programs, and the law further allowed any services aimed at reduced nonmarital births or encouraging two-parent families to be free of income eligibility rules.\nDuring and soon after welfare reform, fatherhood-related changes were made to certain programs. For example, with regard to the CSE program, visitation and child support had historically been treated as legally separate issues, with only enforcement activities being under the purview of the federal government. However, the 1996 welfare reform law appropriated an additional $10 million per fiscal year in CSE funds for states to establish and operate access and visitation programs. In addition, the Balanced Budget Act of 1997 ( P.L. 105-33 ; enacted the year following welfare reform) included a $3 billion \"Welfare to Work\" grant program, which expired in 2000, to fund employment services for mothers leaving cash assistance who were long-term recipients. This grant was also available to fund employment services for unemployed or underemployed fathers of those mothers' children.\nThe next significant legislative development for fatherhood programs occurred during the 109 th Congress with the enactment of the Deficit Reduction Act of 2005 ( P.L. 109-171 ; DRA). The DRA included a provision (in Title IV-A of the Social Security Act) that provided funding for competitive Responsible Fatherhood (RF) grants to public and private entities, and also a Healthy Marriage Promotion (HMP) grants program. The law provided up to $50 million per year (FY2006-FY2010) for RF grants, and up to $100 million per year for HMP grants. Subsequently, the RF grants were awarded to 90 organizations to operate fatherhood programs. In addition, 13 other organizations received reentry program grant funding specifically for incarcerated fathers and formerly incarcerated fathers.\nDuring the 111 th Congress, the Claims Resolution Act of 2010 ( P.L. 111-291 ) extended funding for the HMP and RF grants through FY2011, but altered the split between the programs to $75 million each. Subsequently, RF program grants were for three-year grants to 55 organizations, and an additional 5 organizations received reentry program grants. Beyond FY2011, when the funding in the Claims Resolution Act was set to expire, the HMP and RF grants received a series of short-term funding extensions, usually through provisions in appropriations acts. (See Appendix A for a list of these extension laws.) A third round of RF grant funding was announced during this period on September 30, 2015, which awarded five-year grants to 39 organizations. (Subsequently, two organizations dropped out of this most recent round of RF grant funding, reducing the total number of participating organizations to 37. ) Five other organizations received reentry program grant funding.\nMost recently, on May 5, 2017, funding was extended through the end of FY2018 by the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ). (See Appendix B for a chronological legislative history of the RF program.)\nIn addition to federal funds explicitly provided for RF grants, there are several other potential sources of federal funding for fatherhood programs. These include federal TANF funds and TANF state maintenance of effort (MOE) funding, which are potentially the largest sources of federal funding for fatherhood initiatives. (Other sources are CSE funds and Social Services Block Grant funds.) The TANF block grant to states is currently funded through FY2018, at an annual level of $16.5 billion. In addition, the state funding or MOE requirement (at the 75% level) is about $10.4 billion annually. Due to a 71% reduction in the cash welfare caseload since FY1994, together with the fixed block grant funding, funds that otherwise would have been spent for cash assistance are now available for other purposes. According to the U.S. Department of Health and Human Services (HHS), about half of all states use some TANF funds for responsible fatherhood programs.", "The realization that one parent, especially a low-income parent, often cannot meet the financial needs of her or his children is not new. In 1975, the CSE program was viewed as a way to make noncustodial parents responsible for the financial support of their children and recover the costs of public assistance to children and custodial parents. With the advent of welfare reform in 1996, Congress agreed that many fathers were in the same financial straits as the mothers of their children who were receiving cash welfare. Thus, the 1996 welfare reform law mandated that each state enact laws authorizing that state to issue an order, or request that a court or administrative process issue an order, that requires noncustodial parents who were unable to pay their child support obligation for a child receiving TANF benefits to participate in TANF work activities. Today, while the CSE, TANF, and RF programs remain separate entities, all three interact in a variety of ways with regard to the role of noncustodial parents in the lives of their children.\nSince their inception, fatherhood programs have sought to strengthen positive father-child engagement, improve healthy relationships (including couple and coparenting) and marriage, and improve employment and economic mobility opportunities for noncustodial fathers. For the purposes of the RF grant program, federal law specifies the following four activities.\n(1) Activities to promote marriage or sustain marriage through activities, such as\nproviding information about the benefits of marriage and two-parent involvement for children; enhancing relationship skills; education regarding how to control aggressive behavior; disseminating information on the causes of domestic violence and child abuse; marriage preparation programs and premarital counseling; skills-based marriage education; financial planning seminars; and divorce education and reduction programs, including mediation and counseling.\n(2) Activities to promote responsible parenting, such as\ncounseling, mentoring, and mediation; disseminating information about good parenting practices; teaching parenting skills; and encouraging child support payments.\n(3) Activities to foster economic stability, such as\nhelping fathers improve their economic status by providing activities such as job training, employment services, and career-advancing education; and coordination with existing employment services such as welfare-to-work programs, and referrals to local employment training initiatives.\n(4) Activities to promote responsible fatherhood that are conducted through a national clearinghouse that provides access to curricula, webinars, research products, and other resources to improve the implementation and success of responsible fatherhood programs.\nIn addition to the federal funding through the RF grant program, many states and localities, private organizations, and nonprofit agencies also operate fatherhood programs with their own funds. These programs might differ from those funded by RF grants in terms of their focus and activities, although the general overarching purpose remains the same.\nMost fatherhood programs include media campaigns that emphasize the importance of emotional, physical, psychological, and financial connections of fathers to their children. In addition, to counterbalance some of the procedural, psychological, emotional, and physical barriers to paternal involvement, fatherhood programs often involve courses or other program elements that include many of the following components:\nparenting education—the responsibilities of parents to their children; children's need for affection, gentle guidance, and financial support; the importance of being a proud example and respectful of the other parent; and the need to recognize developmentally appropriate behavior for children of different ages and respond appropriately to children's developmental needs; responsible decisionmaking (with regard to sexuality, establishment of paternity, and financial support); mentoring relationships with successful fathers and successful couples; mediation services (communicating with the other parent, supervised visitation, discipline of children, etc.); understanding the CSE program; conflict resolution, coping with stress, problem-solving skills; developing values in children, appropriate discipline, participation in child-rearing; understanding male-female relationships; peer support; practical tasks to stimulate involvement through parent-child interactions, such as fixing dinner for children, taking children to the park, playing a game, helping children with schoolwork, listening to children's concerns, and setting firm limits on behavior; and job training opportunities (skills development, interviewing skills, job search, job-retention skills, job-advancement skills, etc.).\nOn September 30, 2015, the Office of Family Assistance (OFA) in the Administration for Children and Families (ACF, an HHS agency) announced that it had awarded over $55 million in RF grants, which included 39 New Pathways for Fathers and Families grants and 5 Responsible Fatherhood Opportunities for Reentry and Mobility (ReFORM) grants. (Subsequently, two New Pathways for Fathers and Families grantees dropped out of the program, reducing the total number of participating organizations to 37.) These grants are for the five-year period FY2016-FY2020 (with funding contingent upon the subsequent availability of appropriations). The most recent grant awards represent the third round of such funding since the program's inception in 2006.\nFatherhood programs have offered varied approaches to serving families, resulting in deeper insight into which organizational structures, implementation strategies, and service delivery models might offer promise as effective and replicable strategies. Organizational structures included state and local government agencies, community-based organizations of varying sizes, universities, and faith-based groups. To help fathers and mothers meet their parental responsibilities, many policy analysts and observers support broad-based collaborative strategies that go beyond welfare and child support agencies and include schools, work programs, prison systems, churches, community organizations, and the health care system.", "Research findings indicate that father absence affects outcomes for children in terms of schooling, emotional and behavioral maturity, labor force participation, and nonmarital childbearing. These findings hold when income is taken into account, so the negative effects of father absence are not limited to those created by reduced family income.\nMuch of the research into the efficacy of fatherhood programs examines, at least in part, child support-related issues and outcomes. Both advocates and critics of the CSE program largely agree that parents should be responsible for the economic and emotional well-being of their children. They generally agree that many low-income noncustodial parents are unable to meet their financial responsibility to their children and are barely able, or unable, to support themselves. They also generally agree that some noncustodial parents do not know how to be responsible parents because they were not taught that knowledge or were not exposed to enough positive role models that they could emulate.\nBelow are several examples of research that has been or currently is being conducted related to fatherhood issues and programs. Many of these are demonstration programs with the purpose of helping low-income men become responsible fathers by gaining employment or job mobility and by teaching them life skills so that they might reconnect with their children in a positive sustained manner. Others are long-term studies that, for example, monitor the population that is served by these programs, but do not evaluate the efficacy of possible interventions.", "The Parents' Fair Share (PFS) Demonstration was a large-scale, scientifically designed (with experimental and control groups) national demonstration project conducted from 1994 to 1996 that combined job training and placement, peer support groups, and other services with the goal of increasing the earnings and child support payments of unemployed noncustodial parents (generally fathers) of children on welfare, improving their parenting and communication skills, and providing an opportunity for them to participate more fully and effectively in the lives of their children.\nThe final report on the PFS demonstration concluded that the program did not significantly increase employment or earnings among the full sample of PFS participants during the two years after they entered the program. However, the program did increase earnings among a subgroup of men who were characterized as \"less employable\" (i.e., those without a high school diploma and with little recent work experience).\nOne of the reports noted the following as lessons learned from the PFS demonstration:\nLow-income noncustodial fathers are a disadvantaged group. Many live on the edge of poverty and face severe barriers to finding jobs, while those who can find work typically hold low-wage or temporary jobs. Despite their low, irregular income, many of these fathers are quite involved in their children's lives and, when they can, provide financial and other kinds of support.... Some services, such as peer support proved to be very important and valuable to the men and became the focal point of the program. Other services, such as skill-building, were hard to implement because the providers had little experience working with such a disadvantaged group; it was difficult to find employers willing to hire the men, and the providers were not equipped to deal with the circumstances of men who often were simply trying to make it from one day to the next. Finally, we learned about the challenges of implementing a program like PFS, which involves the partnership of various agencies with different goals, and about the difficulty of recruiting low-income fathers into such a program.\nSome of the recommendations for future programs included structuring the program to encourage longer-term participation and to include job retention services; providing fathers who cannot find private sector employment with community service jobs; earmarking adequate funding for employment services; involving custodial mothers in the program; providing fathers with legal services to help them gain visitation rights; and encouraging partnerships between CSE agencies and fatherhood programs.", "HHS has an ongoing partnership with the private-sector initiative called Partners for Fragile Families (PFF). This project is an initiative of the National Partnership for Community Leadership (NPCL), a nonprofit organization based in Washington, DC. A \"fragile\" family consists of low-income children born outside of marriage whose two natural parents are working together to raise them—either by living together or through frequent visitation.\nThe development of the initial PFF demonstrations began when planning grants were awarded to 16 sites in 1996. In March 2000, HHS approved state waivers of certain federal CSE requirements (under Section 1115 of the Social Security Act) for 13 PFF demonstration projects spread across nine states. The duration of these projects was three years. The purpose of the demonstration projects was to develop new ways for CSE agencies and community-based nonprofit and faith-based organizations to work together to help young noncustodial fathers (ages 16 to 25—who had not yet established paternity and who had little or no involvement with the CSE program) obtain employment, health, and social services; make child support payments to their children; learn parenting skills; and work with the mothers of their children to build stronger parenting partnerships. The demonstration project sites were located in California, Colorado, Indiana, Maryland, Massachusetts, Minnesota, New York, Pennsylvania, and Wisconsin. According to HHS, of the $9.7 million in federal funding budgeted for the projects, $7.1 million was spent. An additional $1.4 million was spent for an evaluation of the projects.\nAn evaluation of the PFF project implementation included the following statement:\nAlthough the concept of PFF was unique when it was developed in 1996, by the time the demonstration was fully implemented, other responsible fatherhood programs had started in many communities nationwide. Independent of PFF, the child support enforcement system was already incorporating more \"father-friendly\" approaches to service delivery at about the same time PFF was in its developmental stages. The child support system had begun to absorb the lessons learned from earlier fatherhood initiatives (such as the Parents' Fair Share project and the Responsible Fatherhood Demonstration). By the time PFF was operational, some may have viewed it as less pioneering than when it was conceived several years earlier. In addition, the number of young fathers who had not established paternity for their children decreased in the mid- to late-1990s as a result of the success of in-hospital paternity establishment initiatives across the country that established paternity at the time of a child's birth. The pool of young fathers without paternity established for their children had diminished in the PFF sites by the time the projects were implemented.\nHHS also sponsored two other evaluations of the PFF demonstration projects. Both of the evaluations were conducted by the Urban Institute. One of the Urban Institute reports includes case studies of selected fathers and their families, and the other report provides an analysis of economic and child support outcomes. A process and outcome evaluation was conducted by interviewing all service providers (including child support enforcement, community-based organizations, and partner agencies) and analyzing client data matched with administrative wage data before and after the PFF program. This evaluation did not have a control group and, thus, did not seek to measure program impacts.\nAccording to the Urban Institute report, employment rates for participants before and after the program generally were low and unchanged. (About 58% of PFF participants were employed 6 months before the demonstration and 59% of PFF participants were employed 6-12 months after enrollment in the demonstration.) Although quarterly earnings of PFF participants increased after enrollment in the demonstration, at the end of 12 months, participants generally had poverty-level incomes.\nIn contrast, the report indicated that there was a substantial increase in child support orders. At enrollment, about 14% of PFF participants had child support orders, whereas two years after enrollment, 35% of PFF participants had child support orders. For those PFF participants who paid child support, the average child support payment was $1,569 for the first year after enrollment and $2,296 for the second year after enrollment. The report also noted that, on average, about five monthly child support payments were made in the first year after enrollment and about seven monthly payments were made in the second year after enrollment.", "The Fragile Families and Child Wellbeing Study followed a group of 4,700 children who were born in 20 large U.S. cities between 1998 and 2000. The parents in the 4,700 families in this sample were 3,600 unmarried couples and 1,100 married couples. The data were intended to be representative of nonmarital births in each of the 20 cities and also representative of all nonmarital births in U.S. cities with populations over 200,000.\nBoth parents were interviewed at the child's birth and again when the child was age one, two, and five. In addition, in-home assessments of the children and their home environments were performed when the children were ages three and five. The parent interviews provided information on attitudes, relationships, parenting behavior, demographic characteristics, health (mental and physical), economic and employment status, neighborhood characteristics, and public welfare program participation. The in-home interview collected information on children's cognitive and emotional development, health, and home environment. The study was expected to provide previously unavailable information on questions such as the following:\nWhat are the conditions and capabilities of new unwed parents, especially fathers? How many of these men hold steady jobs? How many want to be involved in raising their children? What is the nature of the relationship between unwed parents? How many couples are involved in stable, long-term relationships? How many expect to marry? How many experience high levels of conflict or domestic violence? What factors push new unwed parents together? What factors pull them apart? How do public policies affect parents' behaviors and living arrangements? What are the long-term consequences for parents, children, and society of new welfare regulations, stronger paternity establishment, and stricter child support enforcement? What roles do child care and health care policies play? How do these policies play out in different labor market environments?\nA 2007 report that examined data pertaining to the surveyed children at age five found that 16% of participant mothers were married to the father at the time of the five-year interview. Despite not marrying, about 40% of the parents were still romantically involved at the five-year interview. In cases where the couples were no longer romantically involved, 43% of the fathers had seen their children in the month previous to the interview. According to the report:\nFatherhood programs, such as education, training, support services, and content addressing issues of shared parenting, may also be appropriate for many new unmarried fathers. Engaging parents in responsible fatherhood programs (and weaving these programs into marriage promotion curriculums) early in their child's life may also help new fathers develop important parenting skills crucial to their child's healthy development. These programs may help fathers establish and maintain positive connections with their child and encourage their active participation in raising their child.\nA nine-year follow-up study—Fragile Families and Child Wellbeing in Middle Childhood—was funded via a $17 million grant from the National Institute of Child Health and Human Development (NICHD) of HHS. The purpose of this project was to combine the core telephone surveys, in-home study, and teacher surveys into one larger project. Data collection began in 2007 and continued through the spring of 2010. Short summaries, based on data from the Fragile Families and Child Wellbeing Study, have been prepared since that time to highlight recent research findings and suggest policy implications on issues related to child well-being and the social and economic circumstances faced by unwed parents.", "To further the national child support program's mission and goals, the federal Office of Child Support Enforcement (OCSE) operates a number of competitive grant programs that provide federal funds for research and demonstration programs and special projects of regional and national significance for operating state child support programs. These programs and projects are funded through OSCE's grant-making or waiver authority under Section 1115 of the Social Security Act.", "In FY1999, OCSE provided $2.0 million for Responsible Fatherhood demonstration programs. The programs operated in eight states from October 1998 through December 2000. The following eight states received Section 1115 grants or waivers from OCSE/ACF to implement and test responsible fatherhood programs: California, Colorado, Maryland, Massachusetts, Missouri, New Hampshire, Washington, and Wisconsin. These projects attempted to improve the employment and earnings of underemployed and unemployed noncustodial parents, and to motivate them to become more financially and emotionally involved in the lives of their children. Although the projects shared common goals, they varied with respect to service components and service delivery. OCSE also provided about $500,000 for an evaluation of the demonstration projects.\nAn outcome report on the programs found that (1) low-income noncustodial fathers are a difficult population to recruit and serve; (2) many of the participants found jobs with the programs' help, but they were low-paying jobs and relatively few of the participants were able to increase earnings enough to meet their financial needs and those of their children; (3) problems with the noncustodial father's access to his children were hard to define and resolve, and mediation should be used more extensively; (4) child support guidelines result in orders for low-income noncustodial parents that are unrealistically high; (5) CSE agencies should collaborate with fatherhood programs and pursue routine enforcement activities, as well as adopt policies and incentives that are responsive to low-income fathers; and (6) criminal history was the norm rather than the exception among the program participants, many participants faced ongoing alcohol and substance abuse problems, many did not have reliable transportation, and many lacked a court-ordered visitation arrangement.\nThe outcome report also found that employment rates and earnings increased significantly, especially for noncustodial parents who were previously unemployed. In addition, child support compliance rates increased significantly, especially for those who had not been paying previously. Moreover, the report found that 27% of the fathers reported seeing their children more often after completion of the program.", "In FY2012, OCSE established the National Child Support Noncustodial Parent Employment Demonstration (CSPED). The purpose of the demonstration was to increase the reliable payment of child support by noncustodial parents who were willing but unable to pay, and to test the efficacy of CSE agency-led employment strategies. Consequently, OCSE required CSPED grantees to be child support agencies, serving as fiscal agents for the grants and managing day-to-day operations. Eight state CSE programs were selected through a competitive grant process to participate in the five-year demonstration from October 2012 to September 2017. The eight states were California, Colorado, Iowa, Ohio, South Carolina, Tennessee, Texas, and Wisconsin.\nThe first year was a planning year. In October 2013, sites began enrollment and random assignment, which ran through September 2016. During the final year, grantees were expected to continue to serve noncustodial parents as the demonstration wound down. Each grantee was to receive $775,000 in Section 1115 demonstration funds over five years. Once Federal Financial Participation (FFP) was added, the total amount of funding available to each grantee over five years was $2.3 million.\nUnder the demonstration, each grantee attempted to recruit 1,500 eligible noncustodial parents into CSPED. Half of the enrollees were randomly assigned to receive CSPED services; half were assigned to a control group and did not receive the extra services. Each site was required to offer four core services: enhanced child support services, employment assistance, parenting education delivered in a peer support format, and case management. The CSE agency partnered with community service providers for employment and parenting services; case management could be provided by child support or a partner agency. Grantees were also required to work with domestic violence consultants to develop a domestic violence plan. While OCSE provided grantees with guidance on design features and core services, it allowed the grantees to align their efforts with preexisting policies, procedures, and the local social service context.\nThe Institute for Research on Poverty at the University of Wisconsin and Mathematica Policy Research are conducting the evaluation of CSPED. According to the initial implementation report, among the early lessons learned was the need to (1) deploy child support workers who support CSPED's goals to identify and recruit participants; (2) develop services that take into account the challenges faced by the target population; (3) design services to promote sustained participant engagement; and (4) invest in strong partnerships and communication systems.\nAccording to the evaluators, a final implementation report will examine the full implementation period and provide a more comprehensive assessment of the types of services participants received. It is also expected to examine CSPED's impacts on participants' outcomes and include a benefit-cost analysis.", "An HHS-sponsored evaluation of responsible fatherhood programs, called the National Evaluation of the Responsible Fatherhood, Marriage, and Family Strengthening Grants for Incarcerated and Reentering Fathers and Their Partners (MFS-IP), began in 2006. MFS-IP grantees included government (state, local, and tribal) and private (community- and faith-based) organizations. With a funding level of up to $500,000 per year for five years, the programs implemented under the MFS-IP priority area were designed to promote and sustain healthy marriages and strengthen families affected by incarceration.\nThirteen grantees in 12 different states received five-year grants from the OFA to implement multiple activities to support and sustain marriages and families of fathers during and after incarceration. Grantees may also provide support for reentering the family and community from prison, parenting support including visitation during incarceration, and education and employment services during and after incarceration. To evaluate the overall effectiveness of the 13 MFS-IP grantees, the Assistant Secretary for Planning and Evaluation (ASPE) awarded a contract to RTI International to conduct an implementation evaluation as well as a multisite, longitudinal, impact evaluation of selected grantees. The evaluation was a multiyear (quasiexperimental) study that was conducted from 2006 through 2014.\nAccording to an HHS Research Brief:\nThe implementation experiences of the MFS-IP grantees can inform future efforts to build healthy relationship skills among families affected by incarceration. While incarcerated, many individuals are interested in improving themselves and their relationships with their partners, children, and other family members. Although not all incarcerated persons are married or in intimate relationships, healthy relationship skills broadly apply to many types of interpersonal relationships. As observed by several grantees, relationships such as parent-child, correctional officer-inmate, inmate-inmate, and employer-employee could be improved by healthy relationship skills training.\nThe impact study component of the MFS-IP evaluation, concluding in 2015, will determine the effectiveness of relationship education and other MFS-IP program components in strengthening relationship quality and stability and facilitating successful community reentry. Research suggests that healthy relationships contribute to reentry success, yet little is known about how to improve relationship quality for couples affected by incarceration. Relationship education that builds healthy relationship skills could play an important role in relationship quality throughout incarceration and during the critical reentry period. Even for lengthy periods of incarceration, communication and conflict resolution skills could result in more supportive relationships, improved co-parenting, and increased familial contact—all of which could be beneficial upon the individual's eventual release.", "HHS has invested resources in multiple federal evaluations to document successes, challenges, and lessons from fatherhood programs in order to provide useful information to program operators and policymakers. The 2011 application announcement for RF program grants required that grantees operate comprehensive fatherhood programs that integrate robust economic stability services, healthy marriage activities, and activities designed to foster responsible parenting. It also indicated that, as a condition of acceptance of an RF grant, grantees would be required to participate fully in HHS-sponsored evaluations. According to HHS, in September 2011 60 RF grants were awarded for three years. These grants were initially scheduled to run through September 2014, but were extended for an additional year in the form of noncompetitive continuations awards.\nAccording to a 2012 report that provides a review of the fatherhood program and policy arena:\nAt the state and local level, although awareness of the importance of evaluation appears to be high, it does not appear that programs have reached the point of being able to conduct scientifically rigorous evaluations. Moving forward, the field will need to ensure that agencies are equipped with the proper knowledge and tools for conducting meaningful evaluations, including appropriate measures to provide an accurate representation of program outcomes and impacts.\nIn the last several years there has been a spate of fatherhood research and evaluations, some of which are using an experimental design model. The outcomes and findings are expected to provide necessary information on the types of programs and strategies that are most effective in helping noncustodial parents, particularly fathers, better connect with their children. The 2015 round of RF grants (mentioned earlier) are subject to the continued requirement that grantees participate fully in HHS-sponsored evaluations. These grants, which are scheduled to run through FY2020, have also included a new emphasis on key short- and long-term outcomes intended to enhance evaluation and strengthen program design. According to the OFA, it is expected that the fatherhood programs funded by these grants (and their evaluations) will increase the understanding of policymakers and others of what works and why.", "In the late 1990s, when interest in federally funding responsible fatherhood programs first gained national attention, some were concerned that an emphasis on the importance of fathers could lead to unintended consequences for single mothers if too much emphasis was placed on the value of two-parent homes, or on the ability of noncustodial spouses to challenge child custody, child support, and visitation arrangements. Although that underlying tension has not disappeared completely, then and now, it was thought that (in order to be productive and nondivisive) the policy debate on responsible fatherhood initiatives had to be based on the view that the welfare of fathers, mothers, and children are intertwined and interdependent. In addition, over the past 20 years, the results of the research and evaluations discussed earlier in this report have shed additional light on how certain factors, such as economic opportunity, affect the ability of fathers to be involved in the lives of their children. As a result of these and other factors, the policy debate on responsible fatherhood now recognizes that addressing the issues that directly affect the noncustodial parent could potentially strengthen the custodial parent's household as well.\nMany issues are associated with the federal government's support of fatherhood initiatives. A few examples are: Is the goal of federal policy to promote and support the involvement of fathers in their children's lives regardless of the father's relationship with the children's mother? What if the parent has children with more than one person? What is the federal policy with regard to incarcerated parents and parents recently released from prison? Does the federal government support counseling, education, and supervised visitation for abusive parents so that they can reconnect with their children?\nThe discussion below examines three issues that will likely impact the success of congressional fatherhood initiatives. The first deals with the role of the CSE agency in responsible fatherhood programs. Some analysts contend that since many noncustodial parents have a negative view of and/or contentious relationship with the CSE program, the use of the CSE program to recruit fathers does not bode well for the success of such programs. Currently, most federally funded responsible fatherhood programs are provided through competitive grants to community organizations and other groups that have experience in working with low-income men.\nThe second issue examines father involvement in the context of the father's relationship with the child's mother. This issue is based on the premise that formal marital relationships last longer and are more conducive to long-term interaction between fathers and children than other types of relationships.\nThe third issue examines the importance of employment programs and job supports for noncustodial parents. This issue acknowledges that economic pressures and instability, often because of unemployment or low wages, frequently contribute to nonpayment of child support and dysfunctional relationships.", "During the period from FY1978 to FY2016, child support payments collected by the CSE agencies increased from $1 billion to $28.8 billion. Moreover, the program has made significant improvements in other program measures as well, such as the number of parents located, paternities established, and child support orders established. Advocates of the CSE program say that this dramatic program performance is aside from the indirect and intangible benefits of the program, such as increased personal responsibility and welfare cost-avoidance. Critics of the CSE program contend that even with an unprecedented array of \"big brother\" enforcement tools such as license (professional, driver's, recreational) and passport revocation; seizure of banking accounts, retirement funds, and lottery winnings; and automatic income withholding from pay checks, the program still collects only 20% of child support obligations for which it has responsibility and collects payments for only 60% of its caseload.\nInformation obtained from both custodial and noncustodial parents through various surveys and studies consistently tells the same story. Noncustodial parents generally indicate that they (1) want more access to their children, (2) need to learn more relationship skills so they can coparent their children, and (3) need help finding and maintaining employment. In addition, many noncustodial parents maintain that the CSE system is dismissive of their financial condition and continues to pursue child support payments (current support as well as arrearages) even when it knows that many of them can barely support themselves.\nAlthough the CSE program has historically been the policy answer to the challenge of father absence, because its focus until recently was exclusively on financial support, it has had the practical effect of alienating many low-income noncustodial parents who are unable to meet their child support obligations. Some policy analysts maintain that noncustodial parents are, in effect, devalued when their role in their children's lives is based solely on their cash contributions.\nMany observers maintain that noncustodial parents and the CSE program have differences that may be irreconcilable. In light of this challenge, they argue that the most that should be expected is for the noncustodial parent to clearly understand the purposes of the CSE program, the requirements imposed on the custodial parent, and the noncustodial parents' rights to have their child support payments modified if they incur a financial change in circumstances. If the CSE program continues to be one of the ways that noncustodial parents are connected with fatherhood programs, many observers contend that the CSE program must become more effective in gaining the cooperation and trust of noncustodial parents.\nIn contrast, others assert that, more than any other agency of state government, the CSE program has the responsibility and is in the position to reach out to noncustodial parents who need supportive services. They point out that CSE agencies are already involved in forging relationships with these parents through partnerships with community-based organizations. They also note that CSE agencies provide a natural link to coordinate with TANF agencies to help families achieve self-sufficiency.", "The first finding included in the 1996 welfare reform law is that marriage is the foundation of a successful society. The second finding is that marriage is an essential institution of a successful society that promotes the interests of children. However, some child welfare advocates argue that marriage is not necessarily the best alternative for all women and their children. It is generally agreed that one-parent homes are a better alternative for children than living with an abusive parent. Many observers caution that government must be careful about supporting programs that provide cash incentives to induce people to marry or that coerce people into marrying. They note the problems associated with marriages between youths and unions that are formed in response to pregnancy. Others respond that many long-lasting marriages were based on financial alliances (e.g., to increase economic status, family wealth, status in the community, etc.). They also point out that most government programs are sensitive to the issues of domestic violence and include supports to prevent or end such actions.\nMany young children live with parents who are not married but who are cohabiting. Noting this, some analysts argue that policies designed to promote certain types of family structures (e.g., nuclear families) at the expense of others may undermine nontraditional family relationships. They contend that more emphasis should be placed on trying to meet the needs of these fragile families to enable them to stay together for longer periods of time. From their perspective, a single-focus policy, no matter whether it aims to support traditional family relationships or fragile families, can place children in less desirable situations. For instance, promoting the marriage of biological parents could result in supporting situations where a biological parent is absent if all children in the household are not all from the same union.\nIn response, some promarriage analysts point out that about 65% of children born to cohabiting parents will see their parents separate before they reach age 12, compared to about 24% of those born to married parents. In light of these trends, they note that even with supports it is unlikely that fragile families (unmarried couples) will remain together as long as married families. Some observers contend that skills such as how to choose a good partner and how to keep a relationship going should be part of responsible fatherhood programs. They argue that the promotion of marriage should be incorporated into fatherhood programs if the goal is lifetime involvement of fathers in the lives of their children.\nAnother related concern raised by some analysis is that fatherhood initiatives might sometimes be incompatible with initiatives that encourage the formation and maintenance of two-parent families, and with initiatives that promote marriage. As a result, such observers argue that the focus of the program should be the participation of fathers in their children's lives, regardless of the marital status of the parents. As part of the 1996 welfare reform effort, a fourth purpose of the TANF block grant was included, to \"encourage the formation and maintenance of two-parent families.\" At that time, there was some discussion about whether the fourth purpose means married-couple families or just two parents who are involved in their children's lives, regardless of whether they are married or even living together. In late 1999, the Clinton Administration issued A Guide on Funding for Children and Families through the TANF program, which broadly interpreted two-parent families to mean not only married-couple families, but also never-married, separated, and divorced parents, whether living together or not. Thus, many states classify their fatherhood programs and programs that encourage visitation by noncustodial parents under the rubric of fulfilling the purposes of the TANF program.", "It is generally agreed that many low-income fathers, like low-income mothers, lack the education and training they need to get jobs that pay enough to sustain them and their families. The 1996 welfare reform law placed work requirements on TANF recipients, mainly custodial mothers. It also required states, as part of their collection tools, to require state child support officials to have the authority to seek a judicial or administrative order that directs any noncustodial parent owing past-due support to a child receiving TANF benefits to pay that child support in accordance with a plan approved by the court or to participate in appropriate work activities.\nAfter welfare reform, Representative Nancy Johnson, the chair of the Ways and Means Subcommittee on Human Resources during the 106 th Congress, stated, \"To take the next step in welfare reform we must find a way to help children by providing them with more than a working mother and sporadic child support.\" She noted that many low-income fathers have problems similar to those of mothers on welfare—namely, they are likely to have dropped out of high school, to have little work experience, and to have significant barriers that lessen their ability to find and/or keep a job. She also asserted that in many cases these men are \"dead broke\" rather than \"dead beats,\" and that the federal government should help these noncustodial fathers meet both their financial and emotional obligations to their children.\nAs mentioned earlier, \"Activities to foster economic stability\" are a part of the purpose of responsible fatherhood programs. Federal law lists some examples of activities that foster economic stability, namely job search, job training, subsidized employment, job retention, job enhancement, and education including career-advancing education; coordination with existing employment services; and referrals to local employment training initiatives.\nIn addition, as was noted in the earlier section of this report on evaluations, many of the responsible fatherhood evaluations that included an impact analysis indicated that programs that included work-oriented strategies showed a significant increase in child support payments made by the participants. According to a 2015 report that summarizes information gained from in-depth interviews with participants of responsible fatherhood programs:\nWhile fathers generally provided positive feedback about the job readiness and job search skills they obtained through the RF programs, the employment challenges these men typically face are significant. Most were still struggling to find steady employment, earn enough to make ends meet, and meet their child support obligations. Although these fathers faced a myriad of barriers to gaining and maintaining employment, the most commonly cited obstacle was fathers' past incarceration and criminal records. These findings suggest that the economic stability component of RF programs may need to be strengthened to improve the chances that fathers will be successful at securing good jobs with steady and adequate wages. Any employment approach should include assistance in expunging or sealing criminal records when possible.\nAs of February 2014, 30 states and the District of Columbia were operating 77 work-oriented programs for noncustodial parents with active CSE agency involvement. Although most of the programs were not statewide, Georgia, Maryland, and North Dakota were identified as operating statewide programs, and many other states were operating programs in multiple counties. OCSE estimated that roughly 30,000 noncustodial parents were served by these programs in 2013. In many of these states, the work-oriented programs discussed in the report were available to all noncustodial parents who are unable to make their child support payments in a timely manner, not just those noncustodial parents who have a child enrolled in the TANF program.\nCurrent job training and workforce programs generally are not targeted to noncustodial parents, and only some focus on low-income individuals. Some observers note that while the CSE agency and responsible fatherhood programs are making some inroads, a lot more needs to be done on a much broader scale. They contend that in these times of federal and state budget constraints, the TANF program is an untapped resource. They maintain that states should use TANF and MOE funds to provide work opportunities and work supports for noncustodial parents.\nIn November 2014, a Notice of Proposed Rulemaking (NPRM) was released that proposed revisions to CSE program operations and enforcement procedures. These revisions included a proposal to provide the CSE program with the ability to directly fund job services for noncustodial parents at the regular CSE matching rate (66%). Advocates commented that, given that employment services have been seriously underfunded for many years, allowing states to be reimbursed at an open-ended 66% federal matching rate could make a significant difference for noncustodial parents who are unable to comply with their child support obligations because of unemployment or low wages. Although there are many supporters of the idea of providing CSE federal matching funds for work-oriented programs for noncustodial parents, there was concern among both supporters and opponents of the provision that the Obama Administration may have overstepped its authority (i.e., they say the Administration was legislating through its regulations). When the final rule was issued on December 19, 2016, the job service-related provisions were omitted. In its commentary on the final rule, OCSE explained,\nThis proposed provision received overwhelming support from states, Members of Congress, and the public, but it also was opposed by some Members of Congress who did not think the provision should be included in the final rule. While we appreciate the support the commenters expressed, we think allowing for federal IV-D reimbursement for job services needs further study and would be ripe for implementation at a later time. Therefore, we are not proceeding with finalizing the proposed provisions....\nAppendix A. Temporary Extensions of the Healthy Marriage Promotion and Responsible Fatherhood Grant Program\nAppendix B. Legislative History of Federally Funded Responsible Federal Fatherhood Programs\nBeginning with the 106 th Congress and with each subsequent Congress, responsible fatherhood programs have received both presidential and congressional attention.\n106 th Congress (1999-2000)\nThrough the FY2001 appropriations process, $3 million was set aside for a nongovernmental national fatherhood organization named the National Fatherhood Initiative ( P.L. 106-553 ), $500,000 for the National Fatherhood Initiative, and $500,000 for the Institute for Responsible Fatherhood and Family Revitalization ( P.L. 106-554 ).\nPresident Clinton's FY2001 budget included $255 million for the first year of a proposed \"Fathers Work/Families Win\" initiative to help low-income noncustodial parents and low-income working families work and support their children. The \"Fathers Work/Families Win\" initiative would have been administered by the Department of Labor (DOL). The \"Fathers Work\" component ($125 million) would have been limited to noncustodial parents (primarily fathers) and the \"Families Win\" component ($130 million) would have been targeted more generally to low-income families. Neither the House nor the Senate versions of the FY2001 appropriations bill ( H.R. 4577 , 106 th Congress) for the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS) included funding for the Fathers Work/Families Win proposal.\nIn addition, legislation that included funding for a nationwide responsible fatherhood grants program was twice passed by the House (but not acted on by the Senate). H.R. 3073 , the proposed Fathers Count Act of 1999, and H.R. 4678 , the proposed Child Support Distribution Act of 2000, would have authorized funding ($140 million over two years in H.R. 3073 and $140 million over four years in H.R. 4678 ) to establish a program (usually referred to as fatherhood initiatives) to make grants to public or private entities for projects designed to promote marriage, promote successful parenting and the involvement of fathers in the lives of their children, and help fathers improve their economic status by providing job-related services to them.\n107 th Congress (2001-2002)\nFrom the beginning of his presidency, President George W. Bush indicated his support for responsible fatherhood initiatives. President Bush's FY2002 budget proposed $64 million in 2002 (and $315 million over five years) to strengthen the role of fathers in the lives of families. This initiative would have provided competitive grants to faith-based and community organizations that help unemployed or low-income fathers and their families avoid or leave cash welfare, as well as to programs that promote successful parenting and strengthen marriage.\nHis FY2003 budget proposed $20 million (for FY2003) for competitive grants to community and faith-based organizations for programs that help noncustodial fathers support their families to avoid or leave cash welfare, become more involved in their children's lives, and promote successful parenting and encourage and support healthy marriages and married fatherhood.\nSeveral bills ( H.R. 1300 / S. 653 , H.R. 1471 , S. 685 , S. 940 / H.R. 1990 , H.R. 2893 , H.R. 3625 , H.R. 4090 , S. 2524 , and H.R. 4737 ) that included fatherhood initiatives were introduced, but none were enacted. The purposes of the fatherhood programs in the bills introduced generally were the same: fatherhood programs must be designed to promote marriage through counseling, mentoring, and other activities; promote successful parenting through counseling, providing information about good parenting practices including payment of child support, and other activities; and help noncustodial parents and their families avoid or leave cash welfare by providing work-first services, job training, subsidized employment, career-advancing education, and other activities. However, the structure of the fatherhood programs differed.\nAlthough H.R. 4737 , as amended, was passed by the House on May 16, 2002 ( H.Rept. 107-460 , Part 1), and reported favorably in the nature of a substitute by the Senate Finance Committee ( S.Rept. 107-221 ) on July 25, 2002, it was not passed by the full Senate.\n108 th Congress (2003-2004)\nPresident Bush's FY2004 budget proposed $20 million annually (for FY2004-FY2008) for promotion and support of responsible fatherhood and healthy marriage. The FY2004 budget proposal also would have gradually increased the annual funding of the CSE access and visitation grant program from $10 million annually, to $20 million annually by FY2007.\nHis FY2005 budget proposed $50 million (for FY2005) for 75 competitive grants to faith-based and community organizations, together with Indian tribes and tribal organizations, to encourage and help fathers to support their families, avoid welfare, and improve their ability to manage family business affairs, and to support healthy marriages and married fatherhood.\nSeveral bills that included responsible fatherhood provisions ( S. 5 , S. 448 , S. 604 , S. 657 , S. 1443 , and S. 2830 ; H.R. 4 and H.R. 936 ) were introduced, none of which became law.\nOn February 13, 2003, the House passed H.R. 4 , a welfare reauthorization bill that would have provided $20 million per year for each of FY2004-FY2008 for a responsible fatherhood grant program. This bill was essentially identical to H.R. 4737 as passed by the House in 2002.\nOn September 10, 2003, the Senate Finance Committee approved its version of H.R. 4 ( S.Rept. 108-162 ), which would have established a $75 million responsible fatherhood program composed of four components for each of FY2004-FY2008: (1) a $20 million grant program for up to 10 eligible states to conduct demonstration programs; (2) a $30 million grant for eligible entities to conduct demonstration programs; (3) $5 million for a nationally recognized nonprofit fatherhood promotion organization to develop and promote a responsible fatherhood media campaign; and (4) a $20 million block grant for states to conduct responsible fatherhood media campaigns. Although H.R. 4 was debated on the Senate floor during the period March 29-April 1, 2004, consideration of the bill was not completed when a motion to limit debate on the bill failed to garner the necessary 60 votes. The Senate did not bring the bill back to the floor before the end of the session.\n109 th Congress (2005-2006)\nPresident Bush's FY2006 budget proposed $40 million (for FY2006) for a responsible fatherhood competitive grant program.\nThe FY2007 budget proposed $100 million for competitive matching grants to states for marriage promotion. It also included the $150 million for HMP and RF grants that was enacted in the DRA during the prior Congress.\nSeveral bills that included responsible fatherhood provisions were introduced. Two of the bills were standalone bills that had been introduced in a previous Congress ( S. 3607 and S. 3803 ) and four were welfare reauthorization bills that included some responsible fatherhood provisions ( H.R. 240 / S. 105 , S. 6 , and S. 667 ).\nThe Deficit Reduction Act of 2005 ( S. 1932 ; DRA), which also included a provision that provided competitive grants for responsible fatherhood activities, was enacted into law. Among other things, the DRA reauthorized the TANF block grant at $16.5 billion annually through FY2010 and included a provision that provided $150 million in funding for the new HMP and RF competitive grants programs for each of the fiscal years, FY2006 through FY2010. Of the $150 million, up to $50 million per year in grants was to be provided to states, territories, Indian tribes and tribal organizations, and public and nonprofit community organizations, including religious organizations, for responsible fatherhood initiatives.\nUnder the DRA, RF grant funds could be spent on activities to promote responsible fatherhood through (1) marriage promotion (through counseling, mentoring, disseminating information about the advantages of marriage and two-parent involvement for children, etc.), (2) parenting activities (through counseling, mentoring, mediation, disseminating information about good parenting practices, etc.), (3) fostering economic stability of fathers (through work first services, job search, job training, subsidized employment, education, etc.), or (4) contracting with a nationally recognized nonprofit fatherhood promotion organization to develop, promote, or distribute a media campaign to encourage the appropriate involvement of parents in the lives of their children, focusing particularly on responsible fatherhood; and/or to develop a national clearinghouse to help states and communities in their efforts to promote and support marriage and responsible fatherhood.\n110 th Congress (2007-2008)\nPresident Bush's FY2008 and FY2009 budget included the $150 million for HMP and RF programs that was included in the DRA as part of welfare reauthorization. As noted, pursuant to the DRA, $50 million was specifically allocated for responsible fatherhood programs for each of FY2006-FY2010.\nTwo bills that included responsible fatherhood provisions were introduced, S. 1626 , and a House companion bill, H.R. 3395 . Among other things, S. 1626 / H.R. 3395 , would have increased funding for the RF grants (authorized by the DRA) to $100 million per year for each of FY2008-FY2010. (The total for the HMP and RF grants would have increased from $150 million to $200 million per year for each of FY2008-FY2010.) The bills were not reported out of committee.\n111 th Congress (2009-2010)\nThe Obama Administration's FY2011 budget included a new proposal to redirect funds from the HMP and RF Grant Programs to the proposed $500 million Fatherhood, Marriage, and Families Innovation Fund. The proposed Fatherhood, Marriage, and Families Innovation Fund would have been available for one year (FY2011) to provide three-year competitive grants to states. According to one budget document, \"The Fatherhood, Marriage, and Families Innovation Fund will serve as a catalyst for innovative service models that integrate a variety of service streams. The results from these demonstrations could form the basis for possible future TANF and CSE program changes at the federal or state level based on a multidimensional picture of the dynamics of family functioning and material self-sufficiency and child well-being.\" The Fatherhood, Marriage, and Families Innovation Fund proposal was not acted on by either the House or the Senate.\nThree bills that included responsible fatherhood provisions were introduced, all three of which had been introduced in a previous Congress. None of the bills received congressional action.\nThe first two bills were companion proposals that were almost identical to bills that were introduced in the 110 th Congress. The Senate proposal, S. 1309 , was referred to as the Responsible Fatherhood and Healthy Families Act of 2009. The House proposal, H.R. 2979 , was referred to as the Julia Carson Responsible Fatherhood and Healthy Families Act of 2009. The bills would have (1) increased funding for RF grant programs from $50 million per year to $100 million per year (for each of FY2008-FY2010); (2) expanded procedures to address domestic violence; (3) expanded activities promoting responsible fatherhood; (4) provided grants to healthy family partnerships for domestic violence prevention, for services for families and individuals affected by domestic violence, and for developing and implementing best practices to prevent domestic violence; and (5) eliminated the separate TANF work participation rate for two-parent families. The bills would have also made several changes to the CSE program and addressed the issue of employment for noncustodial and disadvantaged parents. The HHS Secretary would have been directed to award grants to states for an employment demonstration project involving a court- or state child support agency-supervised program for noncustodial parents so they can pay child support obligations. In addition, the Secretary of Labor would have been required to award grants for transitional jobs programs and for public-private career pathways partnerships to help disadvantaged parents obtain employment.\nThe third proposal, S. 939 , was the Protecting Adoption and Promoting Responsible Fatherhood Act of 2009. The bill would have required the HHS Secretary to establish an automated National Putative Father Registry. Among other things, S. 939 would have directed the Secretary to establish a nationwide responsible fatherhood and putative father registry educational campaign designed to (1) inform men about the National Putative Father Registry, the advantages of registering with a State Putative Father Registry, and the rights and responsibilities of putative fathers; and (2) inform women about the National Registry and its potential role in a pending or planned adoption or a termination of a putative father's rights. In addition, it would have required each state that desired to receive such a grant to develop and implement a state plan for promoting responsible fatherhood and permanency for children.\nThe Claims Resolution Act of 2010, enacted December 8, 2010 ( P.L. 111-291 ), extended the RF grant program through FY2011 and its funding was increased from $50 million to $75 million. Funding for the HMP grants was reduced to $75 million.\n112 th Congress (2011-2012)\nThe Obama Administration's FY2012 and FY2013 budget proposed continued funding of $150 million to support HMP and RF grant programs for FY2012. This budget proposal also would have made changes to the purpose clause of the CSE program to include access and visitation and other fatherhood involvement activities. These activities would have become core parts of the CSE program and thereby states would have been reimbursed by the federal government for expenditures on such activities at an open-ended 66% matching rate. The budget proposal would have required states to establish access and visitation responsibilities in all initial child support orders. It would have encouraged states to undertake activities that support access and visitation, implementing domestic violence safeguards as a critical component of this new state responsibility. (The estimated cost of the proposal was $570 million over 10 years.)\nThe Julia Carson Responsible Fatherhood and Healthy Families Act of 2011, was reintroduced as H.R. 2193 . Similar to the bill introduced in the 111 th Congress, H.R. 2193 , among other things, would have reauthorized and provided $75 million per year for the RF grant program for each of the years FY2011 through FY2015. This measure did not receive congressional action. Instead, the programs were extended temporarily at their FY2012 levels ($150 million per year on a pro rata basis, divided equally between the two programs), through three laws:\nP.L. 112-78 , the Temporary Payroll Tax Cut Continuation Act of 2011 (enacted December 23, 2011), provided funding for the HMP and RF grant programs through February 29, 2012.\nP.L. 112-96 , the Middle Class Tax Relief and Job Creation Act of 2012 (enacted February 22, 2012), provided funding for the HMP and RF grant programs through September 30, 2012.\nP.L. 112-175 (the government-wide continuing resolution enacted on September 28, 2012) extended funding for the HMP and RF grant programs through March 2013 (i.e., the first six months of FY2013).\n113 th Congress (2013-2014)\nThe Obama Administration's FY2014 and FY2015 budgets proposed continued funding of $150 million to support HMP and RF grant programs each of those fiscal years. These funds would have been split equally among HMP and RF activities. These budget proposals were very similar to the FY2012 and FY2013 proposals with regard to fatherhood programs. (However, the FY2013 budget would have provided $580 million over 10 years to support the increased access and visitation services while the FY2014 and FY2015 budgets would have provided $448 million over 10 years for such services.)\nDuring the 113 th Congress, the HMP and RF grant programs were extended and funded thorough a number of appropriations acts. All of these appropriations acts provided $150 million per year (either through a full year of funding or on an annualized basis), divided equally between the programs.\nFor FY2013, a full-year continuing resolution ( P.L. 113-6 , enacted on March 26, 2013) extended funding for the HMP and RF grant programs through September 30, 2013. For FY2014, the programs were initially extended and funded through an interim continuing resolution ( P.L. 113-46 , enacted on October 17, 2013), and subsequently provided full-year appropriations through September 30, 2014 ( P.L. 113-76 , enacted on January 17, 2014). For FY2015, the programs were initially extended and funded through three continuing appropriations acts: (1) P.L. 113-164 , enacted on September 19, 2014; (2) P.L. 113-202 , enacted on December 12, 2014; and (3) P.L. 113-203 , enacted on December 13, 2014). Later in the fiscal year, full-year appropriations were provided through September 30, 2015 ( P.L. 113-235 , enacted on December 16, 2014).\nOther pieces of legislation affecting the HMP and RF programs were introduced during the 113 th Congress, though none received congressional action. H.R. 2359 , the Julia Carson Responsible Fatherhood and Healthy Families Act of 2013, was reintroduced. Similar to the bill ( H.R. 2193 ) introduced in the 112 th Congress, H.R. 2359 , among other things, would have reauthorized and provided $75 million per year for RF programs for each of the years FY2014 through FY2018.\n114 th Congress (2015-2016)\nThe Obama Administration's FY2016 and FY2017 budgets proposed continuing funding of $150 million to support HMP and RF grant programs for each of those fiscal years. These funds would have been split equally among Healthy Marriage and Responsible Fatherhood activities. These budget requests also continued to propose $448 million over 10 years to support increased access and visitation services and integrating those services into the core CSE program.\nThe HMP and RF programs were extended and funded through a number of appropriations acts. All of these appropriations acts provided $150 million per year (either through a full year of funding or on an annualized basis), divided equally between the programs.\nFor FY2016, the programs were initially funded through three interim continuing resolutions: (1) P.L. 114-53 , enacted September 30, 2015; (2) P.L. 114-96 , enacted December 11, 2015; and (3) P.L. 114-100 , enacted December 16, 2015. Full-year funding for FY2016 was provided via P.L. 114-113 (enacted December 18, 2015). For FY2017, the programs did not receive full-year appropriations during the 114 th Congress, and instead were funded through two continuing resolutions: (1) P.L. 114-223 , enacted on September 29, 2016; and (2) P.L. 114-254 , enacted on December 10, 2017. The continuing appropriations in P.L. 114-254 were scheduled to expire on April 28, 2017.\nOther pieces of legislation affecting the Healthy Marriages and Responsible Fatherhood programs were introduced during the 114 th Congress, though none received congressional action. H.R. 3005 , the Julia Carson Responsible Fatherhood and Healthy Families Act of 2015, was reintroduced. Similar to the bill ( H.R. 2359 ) introduced in the 113 th Congress, H.R. 3005 , among other things, would have reauthorized and provided $75 million per year for responsible fatherhood programs for each of five fiscal years (FY2016 through FY2020). Also during the 114 th Congress, two pieces of legislation were introduced that specify that HHS may not take any action to finalize, implement, enforce, or otherwise give effect to the proposed rule entitled \"Flexibility, Efficiency, and Modernization in Child Support Enforcement Programs\" or any proposal set forth in the proposed rule ( S. 1525 and H.R. 2688 ). Neither of those pieces of legislation received congressional action. (The final rule was issued on December 19, 2016.)\n115 th Congress (2017-2018)\nThe Trump Administration's FY2018 budget proposed that funding for the HMP and RF grants be continued through FY2018 at current law levels ($75 million for each program).\nThe HMP and RF grant programs were temporarily extended by two appropriations laws. The first, enacted on April 29, 2017, extended the program through May 5, 2017 ( P.L. 115-30 ). The second, enacted on May 5, 2017, extended the program for a comparatively longer time period, through September 30, 2018 ( P.L. 115-31 ).\nThe Julia Carson Responsible Fatherhood and Healthy Families Act of 2017 ( H.R. 3465 ) was reintroduced, which would, among other things, reauthorize the program through FY2023. No legislative action on that proposal has occurred." ], "depth": [ 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 2, 2, 1, 2, 2, 2 ], "alignment": [ "h0_title h1_title", "", "h0_full", "h1_full", "", "", "", "", "", "", "", "", "", "h0_title h1_title", "", "", "h0_full h1_full" ] }

{ "question": [ "How has the government provided funding for fatherhood programs?", "How was the need for funding for such programs acknowledged by the Bush Administration?", "How did the Deficit Reduction Act of 2005 provide funding for such programs?", "How has this stream of funding been maintained since 2005?", "What do media campaigns of fatherhood programs emphasize?", "How do such programs support participants?", "How are such programs financed?" ], "summary": [ "Over the years, sources of federal funding for fatherhood programs have included the Temporary Assistance for Needy Families (TANF) program, TANF state Maintenance-of-Effort (MOE) funding, Child Support Enforcement (CSE) funds, and Social Services Block Grant (Title XX) funds.", "However, the need for a specific funding stream for the program was identified in legislation as early as the 106th Congress, and President George W. Bush included funding for such programs in each of his budgets.", "Ultimately, funding for a competitive Healthy Marriage Promotion (HMP) and Responsible Fatherhood (RF) grants program was enacted as part of the Deficit Reduction Act of 2005 (P.L. 109-171). Between FY2006 and FY2010, the act provided up to $50 million per year for the RF grants and about $100 million per year for the HMP grants, but the Claims Resolution Act of 2010 (P.L. 111-291) subsequently altered the split between the programs to $75 million each.", "Funding for these programs has been extended on multiple occasions since that time, usually through provisions in appropriations acts. Most recently, on May 5, 2017, funding was extended through the end of FY2018 by the Consolidated Appropriations Act, 2017 (P.L. 115-31).", "Most fatherhood programs include media campaigns that emphasize the importance of emotional, physical, psychological, and financial connections of fathers to their children.", "They also include elements such as parenting education; responsible decisionmaking; mediation services for both parents; information on the CSE program; skills development related to conflict resolution, coping with stress, and problem-solving; peer support; and job-training opportunities.", "RF grantees include states, territories, Indian tribes and tribal organizations, and public and nonprofit community groups (including religious organizations)." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2 ] }

{ "title": [ "Background", "Treasury Continues to Make Progress in Winding Down the CPP Program", "Impact of Increasing Dividend or Interest Rate on CPP Securities Varies", "Remaining Capital Purchase Program Investment Concentrated in a Few Institutions", "Treasury Continues to Utilize Auctions as a Means of Winding Down the Program", "Remaining CPP Institutions Are Generally Less Financially Healthy Than Those That Have Exited", "Most Remaining CPP Participants Have Missed Dividend or Interest Payments", "The Number of Remaining CPP Institutions on FDIC’s Problem Bank List Has Declined", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Office of Financial Stability", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Created in 2008, CPP was the primary initiative under TARP to help stabilize the financial markets and banking system by providing capital to qualifying regulated financial institutions through the purchase of senior preferred shares and subordinated debt. Rather than purchasing troubled mortgage-backed securities and whole loans, as initially envisioned under TARP, Treasury used CPP investments to strengthen financial institutions’ capital levels. Treasury determined that strengthening capital levels was the more effective mechanism to help stabilize financial markets, encourage interbank lending, and increase confidence in lenders and investors. Treasury believed that strengthening the capital positions of viable financial institutions would enhance confidence in the institutions themselves and the financial system overall and increase the institutions’ capacity to undertake new lending and support the economy. On October 14, 2008, Treasury allocated $250 billion of the original $700 billion in overall TARP funds for CPP. The allocation was subsequently reduced in March 2009 to reflect lower estimated funding needs, as evidenced by actual participation rates, and the program was closed to new investments on December 31, 2009.\nUnder CPP, qualified financial institutions were eligible to receive an investment of between 1 and 3 percent of their risk-weighted assets, up to a maximum of $25 billion. In exchange for the investment, Treasury generally received senior preferred shares that would pay dividends at a rate of 5 percent annually for the first 5 years and 9 percent annually CPP investments made in late 2008 began paying the higher thereafter.dividend or interest rate in late 2013 whereas the remaining investments will see the increase begin sometime in 2014. EESA required that Treasury also receive warrants to purchase shares of common or preferred stock or a senior debt instrument to further protect taxpayers and help ensure returns on the investments. Institutions are allowed to repay CPP investments with the approval of their primary federal bank regulator and afterward to repurchase warrants.", "As of January 31, 2014, a total of 624 of the 707 institutions that originally participated in CPP, about 88 percent, had exited the program. Of the 624 institutions that exited CPP, 239 institutions repurchased their preferred shares or subordinated debentures in full (see fig. 1). Another 165 institutions refinanced their shares through other federal programs: 28 through the Community Development Capital Initiative (CDCI) and 137 An additional 162 through the Small Business Lending Fund (SBLF).institutions had their investments sold through auction and 29 institutions went into bankruptcy or receivership. The remaining 29 had their investments sold by Treasury (25), or merged with another institution (4).\nRepayments and income from dividends, interest, and warrants from CPP investments have exceeded the amounts originally disbursed. Treasury disbursed $204.9 billion to 707 financial institutions nationwide from October 2008 through December 2009. As of January 31, 2014, Treasury had received $225 billion in repayments and income from its CPP investments, exceeding the amount originally disbursed by $20.1 billion (see fig. 2).in repayments and $2.8 billion in auction sales of original CPP investments as well as $18.9 billion in dividends, interest, and other income and $8.0 billion in warrants sold. After accounting for write-offs and realized losses totaling $4.7 billion, CPP had $2.1 billion in The repayments and income amount include $195.3 billion outstanding investments as of January 31, 2014. Treasury estimated a lifetime gain of $16.1 billion for CPP as of November 30, 2013.", "About half of the institutions (37 of 72) that responded to our questionnaire about the impact of the upcoming or recent increase in the dividend or interest rate on CPP securities stated that it impacted or is impacting their efforts to exit the CPP program and/or retire any outstanding CPP securities.that the institutions are taking a range of actions. Some institutions indicated that the increase led them to raise alternative capital. For example, one institution completed a public offering of common stock and used the proceeds to redeem its CPP shares. Others indicated that they are working with Treasury to participate in a future auction or attempting to negotiate with Treasury to restructure the CPP debt. Still others commented that the increase in the interest or dividend rate will increase the burden on the institution, make it more difficult to raise alternative capital, and further reduce their ability to exit the program. Thirty-three institutions responded that the increase did not or is not impacting their efforts to exit the program or retire CPP securities.", "As of January 31, 2014, the 83 remaining institutions accounted for the $2.1 billion in outstanding investments or about 1 percent of the original investment. The outstanding investments were concentrated in a relatively small number of institutions. Specifically, the 10 largest remaining CPP investments accounted for $1.5 billion (73 percent) of outstanding investments and 2 institutions accounted for more than half of this amount (see fig. 3). In contrast, the remaining $557 million (24 percent) was spread among the other 73 institutions.\nAs of January 31, 2014, the number of states with at least one institution with CPP investments outstanding was 28, and the number of states with at least 5 such institutions was 7 (see fig. 4). California had the highest number of remaining CPP institutions with 8, followed by Illinois with 7. In terms of total CPP investments outstanding, Puerto Rico had the largest amount ($1.2 billion), followed by North Carolina ($108 million), Virginia ($91 million), and Florida ($74 million).", "Treasury began selling its investments in banks through auctions beginning in March 2012 as a way to balance the speed of exiting the investments with maximizing returns for taxpayers. As of January 31, 2014, Treasury had conducted a total of 23 auctions and received a total of about 80 percent of the principal amount (see fig. 5). As figure 5 shows, the total proceeds from selling securities do not include any income received from repurchases, dividends, or other sources or any missed dividend or interest payments, the rights to which are sold with the securities. For example, if an institution whose securities were being sold by Treasury at auction had missed $100,000 worth of dividend payments, the purchaser of the securities would own the right to receive those past- due dividends if the institution can pay them. As of January 31, 2014, Treasury has sold all or part of its investments in 162 institutions, through the auction process, including the rights to approximately $207 million in missed dividends and interest payments.\nIn 2013, we reported that according to Treasury officials, the auction results reflected the potential risk associated with the liquidity of the investments, the credit quality of the financial institutions (including their ability to make future dividend or interest payments), and the prospect of receiving previous missed payments that had accrued. For example, later auctions have tended to include smaller institutions with more cumulative missed payments. In a few cases, the prospect of recouping these missed payments made the institutions particularly attractive to investors and helped raise the sale price of those securities above their par value. Although Treasury has not generally recouped its full investment in individual institutions through the auctions, in 2013, Treasury officials told us that accepting a discount and transferring ownership of these institutions to the private sector was in the best interest of the taxpayer. Because of the inherent risk factors of these institutions, Treasury officials did not anticipate that they would be able to make full repayments in the near future. The officials added that had they chosen not to auction these positions, their values could have decreased later. Treasury officials also said that while auctions were generally priced at a discount to the principal amount, the prices were generally equal to or above Treasury’s internal valuations.", "Institutions that remain in CPP tend to be financially weaker than institutions that have exited the program and institutions that did not receive CPP capital. Our analysis considered various measures that describe banking institutions’ profitability, asset quality, capital adequacy, and ability to cover losses. We analyzed financial data on the 83 institutions remaining in CPP as of January 31, 2014, and 482 former CPP institutions, which we split into three groups: (1) those that repaid their investments, (2) those that exited through an auction, and (3) those that refinanced their investments through SBLF. The current and former CPP institutions in our analysis accounted for 565 of the 707 institutions that participated in CPP. We compared the 565 institutions to a non-CPP group (i.e., institutions that have not participated in CPP) of 7,177 active financial institutions for which financial information was available. All financial information generally reflects quarterly regulatory filings on December 31, 2013.\nTable 1 provides the results of our analysis of these measures, including the following.\nMostly smaller institutions remain in the program and larger institutions tended to exit through repayment. For example, institutions that exited through repayment had a median asset size of $1.7 billion, compared with $548 million for those that refinanced through SBLF and $385 million for those that exited through an auction.\nIn the aggregate, the remaining institutions were noticeably less financially healthy than each of the groups of former CPP participants.\nAs a group, institutions that exited through auctions were significantly less financially healthy than the group of institutions that repaid their investments or refinanced through SBLF.\nOverall, the institutions that remain in CPP are less financially healthy than both the group of institutions that never participated in CPP and the aggregate group that had exited CPP.\nIn particular, remaining CPP institutions had noticeably higher median Texas Ratios than each group of former CPP institutions as well as the non-CPP group. The Texas Ratio helps determine a bank’s likelihood of failure by comparing its troubled loans to its capital. The higher the ratio, the more likely the institution is to fail. As of December 31, 2013, remaining CPP institutions had a median Texas Ratio of 53.21, compared with 19.58 for former CPP institutions and 12.37 for the non-CPP group. Further, of the institutions that exited CPP, those that exited through auctions had the highest median Texas Ratio (33.90), compared with those that exited through full repayments (17.18) or by refinancing to SBLF (15.03).\nProfitability measures for remaining CPP institutions were lower than those for former CPP participants and the non-CPP group. For example, the median return on average assets measure shows how profitable a company is relative to its total assets and how efficient management is at using its assets to generate earnings. For the quarter ending December 31, 2013, remaining CPP institutions had a median return on average assets of 0.30, compared with 0.77 for former CPP institutions and 0.75 for the non-CPP group. Further, among the institutions that had exited CPP, those that participated in Treasury’s auctions had the lowest return on average assets at 0.56, compared with 0.86 for those that repaid their investments and 0.76 for those that refinanced to SBLF.\nRemaining CPP institutions also held relatively more poorly performing assets. For example, remaining CPP institutions had a higher median percentage of noncurrent loans than former CPP institutions and the non- CPP group. As of December 31, 2013, a median of 2.83 percent of loans for remaining CPP institutions were noncurrent, compared with 1.33 percent for former CPP institutions and 1.05 percent for the non-CPP group. Remaining CPP institutions had a median ratio of net charge-offs to average loans (0.18) about equal to that of former CPP institutions (0.20), but a higher median ratio than the non-CPP group (0.09), as of December 31, 2013.had higher values than institutions that made full repayments or refinanced to SBLF.\nFor both of these ratios, the auction participants Compared with former CPP institutions and the non-CPP group, remaining CPP institutions held less regulatory capital as a percentage of assets. Regulators require minimum amounts of capital to lessen an institution’s risk of default and improve its ability to sustain operating losses. Regulatory capital can be measured in several ways, but we focused on Tier 1 capital, which includes both a common-equity capital ratio and a Tier 1 capital ratio, because it is the most stable form of regulatory capital.capital as a share of risk-weighted assets, and the common equity Tier 1 ratio measures common equity Tier 1 as a share of risk-weighted assets, which generally does not include TARP funds. Using these measures, the remaining CPP institutions had lower median Tier 1 capital levels than former CPP institutions and the non-CPP group. The remaining CPP institutions also had a median common equity Tier 1 capital ratio below that of the former CPP institutions and the non-CPP group. As of December 31, 2013, the median common equity Tier 1 capital ratio for remaining CPP institutions was 10.48 percent of risk-weighted assets, compared with 11.76 percent for former CPP institutions and 15.48 percent for the non-CPP group.\nThe Tier 1 risk-based capital ratio measures Tier 1 Finally, remaining CPP institutions had significantly lower reserves for covering losses compared with former CPP institutions and the non-CPP group. As of December 31, 2013, the median ratio of reserves to nonperforming loans was lower for remaining CPP institutions (41.92) than for former CPP participants (70.37) and the non-CPP group (76.16). Of those institutions that have exited the program, auction participants had the lowest ratio (55.35), compared with 77.34 for those that repaid their investments and 84.06 for those that refinanced to SBLF.", "The number of CPP participating institutions missing dividend or interest payments in a given quarter increased steadily from 8 in February 2009 to 159 in August 2011 and has since declined each quarter to 60 in November 2013 (see fig. 6). Almost 84 percent, or 75 of the 89 financial institutions remaining in CPP as of November 30, 2013, have missed a dividend payment. Most of the institutions with missed payments have missed them in several quarters. In particular, all but one of the institutions that missed payments in November 2013 had also missed payments in each of the previous three quarters. Moreover, the 60 institutions that missed payments in November 2013 had an average of 13 missed payments.\nInstitutions can elect whether to pay dividends and may choose not to pay for a variety of reasons, including decisions that they or their federal and state regulators make to conserve cash and maintain (or increase) capital levels. Institutions are required to pay dividends only if they declare dividends, although unpaid cumulative dividends generally accrue and the institution must pay them before making payments to other types of shareholders, such as holders of common stock. However, investors view a company’s ability to pay dividends as an indicator of its financial strength and may see failure to pay full dividends as a sign of financial weakness.", "Showing a similar trend to missed dividend or interest payments, the number of CPP institutions on the Federal Deposit Insurance Corporation’s (FDIC) “problem bank list” has decreased in recent months after months of steady increases. This list is a compilation of banks with demonstrated financial, operational, or managerial weaknesses that threaten their continued financial viability and is publicly reported on a quarterly basis. As of December 31, 2013, 47 CPP institutions were on the problem bank list (see fig. 7). The number of these institutions increased every quarter beginning in March 2009, hitting a high of 134 in June 2011, even as the number of institutions participating in CPP declined. As figure 7 shows, the number of problem banks fell slightly for the first time in the third quarter of 2011 and has declined to 47 as of December 31, 2013. Federal and state bank regulators may not allow institutions on the problem bank list to make dividend payments in an effort to preserve their capital and promote safety and soundness.\nThese observations are consistent with the analysis in our May 2013 and March 2012 reports, which also showed that the remaining CPP institutions were financially weaker than institutions that had exited the program and institutions that did not receive CPP capital.", "We provided a draft of this report to Treasury for its review and comment. Treasury provided written comments that we have reprinted in appendix II. In its written comments, Treasury generally concurred with our findings. Treasury noted that it had realized a positive return of $20.19 billion as of April1, 2014, and that 71 institutions remained in the program representing a remaining investment of $1.96 billion. Treasury also emphasized its commitment to keeping the public informed of its progress in winding down CPP.\nWe are sending copies of this report to the Special Inspector General for TARP, interested congressional committees and members, and Treasury. The report also is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact A. Nicole Clowers at (202) 512-8678 or [email protected]. 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 III.", "The objectives of our report were to examine (1) the status of the Capital Purchase Program (CPP), including repayments and other proceeds, as well as investments outstanding; and (2) the financial condition of institutions remaining in CPP. To assess the status of CPP at the program level, we analyzed data from the Department of the Treasury (Treasury). In particular, we used Treasury’s January 2014 Monthly Report to Congress to determine the dollar amounts of outstanding investments, the number of remaining and former participants, and the geographical distribution of each as of January 31, 2014.\nTo assess the financial condition of institutions that received investments under CPP, we used data from Treasury’s Dividends and Interest reports from February 2009 through November 2013 to determine the extent to which participants had missed payments throughout the life of the program. To assess whether the upcoming 2014 increase in the dividend or interest rate on CPP securities was impacting CPP participants’ efforts to exit the program and/or retire CPP securities, we sent an email containing two questions to all current CPP participants (89) and any past CPP participants that raised capital in calendar year 2013. The first question asked if the increase had impacted them (Yes or No) and, if yes, to describe actions taken. We sent the questionnaire to 104 institutions and received responses from 72. We used the “actions taken” responses to provide examples of how the increase in the dividend or interest rate on CPP securities is impacting CPP participants. We defined current CPP participants to be those institutions that Treasury classifies as “full investment outstanding; warrants outstanding,” “full investment outstanding; warrants not outstanding,” and “sold in part, warrants outstanding” in its November 20, 2013 TARP transaction report. We identified those CPP participants that raised capital in calendar year 2013 using the SNL database.\nWe also obtained from the Federal Deposit Insurance Corporation (FDIC) summary information on its quarterly problem bank list to show the trend of CPP institutions appearing on the list from December 2008 through December 2013. We used financial measures for depository institutions that we had identified in our previous reporting on CPP. These measures help demonstrate an institution’s financial health as it relates to a number of categories, including profitability, asset quality, capital adequacy, and loss coverage. We obtained such financial data for depository institutions using a private financial database provided by SNL Financial that contains publicly filed regulatory and financial reports. We merged the data with SNL Financial’s CPP participant list to create the three comparison groups—remaining CPP institutions, former CPP institutions, and a non-CPP group comprised of all institutions that did not participate in CPP.\nWe analyzed financial data on the 83 institutions remaining in CPP as of January 31, 2014, and 482 former CPP institutions that exited CPP through full repayments, conversion to the Small Business Lending Fund, or Treasury’s sale of its investments through an auction, accounting for 565 of the 707 CPP participants. We identified the 83 institutions remaining in CPP as of January 31, 2014, using Treasury’s January 2014 Monthly Report to Congress. The 142 CPP institutions our analysis excluded had no data available in SNL Financial, had been acquired, or were defunct. We compared the remaining and former CPP institutions to a non-CPP group of 7,177 active financial institutions for which financial information was available. We chose to present median values. Financial data were available from SNL Financial for 440 of the 565 CPP institutions, and we accounted for the remaining 125 institutions using SNL Financial information for the holding company or its largest subsidiary. Although this approach has limitations such as excluding other financial subsidiaries, we deemed it to be sufficient for the purpose of our work. All financial information reflects quarterly regulatory filings on December 31, 2013, unless otherwise noted. We downloaded all financial data from SNL Financial on March 4, 2014. Finally, we leveraged our past reporting on the Troubled Asset Relief Program (TARP), as well as that of the Special Inspector General for TARP, as appropriate.\nWe determined that the financial information used in this report, including CPP program data from Treasury and financial data on institutions from SNL Financial, was sufficiently reliable to assess the condition and status of CPP and institutions that participated in the program. For example, we tested the Office of Financial Stability’s internal controls over financial reporting as they relate to our annual audit of the office’s financial statements and found the information to be sufficiently reliable based on the results of our audits of fiscal years 2009, 2010, 2011, and 2012 financial statements for TARP. We have assessed the reliability of SNL Financial data—which are obtained from financial statements submitted to the banking regulators—as part of previous studies and found the data to be reliable for the purposes of our review. We verified that no changes had been made that would affect the data’s reliability.\nWe conducted this performance audit from December 2013 to April 2014 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, Karen Tremba (Assistant Director), Emily Chalmers, William Chatlos, Chris Forys, Matthew Keeler, Risto Laboski, Marc Molino, and Patricia Moye made significant contributions to this report." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_full h3_full h2_full", "", "h0_full", "h0_full", "h3_full h1_full", "h1_full", "h1_full", "h2_full", "h0_full h3_full h2_full", "", "", "", "" ] }

{ "question": [ "What progress has the Treasury made in winding down the CPP?", "How did most institutions exit the CPP?", "How does the Treasury deal with shares that have not been repurchased?", "How are these outstanding investments distributed amongst the remaining institutions?", "How profitable was the CPP?", "What did GAO's analysis of financial data reveal about the institutions remaining in CPP?", "How was this demonstrated by these institutions' ability to distribute dividend payments?", "How were these findings corroborated by the Federal Deposit Insurance Corporation's problem bank list?", "Why is this an indicator of difficulty in repaying CPP investments?", "Why was CPP established?", "How did CPP help restore stability to the financial system?", "What does TARP require of GAO?", "What does this report examine?", "What steps did GAO take to assess the program's status?", "How did GAO obtain information from CPP participants?", "How effective was the questionnaire in collecting data?" ], "summary": [ "The Department of Treasury (Treasury) continues to make progress in winding down the Capital Purchase Program (CPP). As of January 31, 2014, Treasury's data showed that 624 of the original 707 institutions, or about 88 percent, had exited CPP.", "Treasury had received about $225 billion from its CPP investments, exceeding the approximately $205 billion it had disbursed. Most institutions exited by repurchasing their preferred shares in full or by refinancing their investments through other federal programs.", "Treasury also continues to sell its investments in the institutions through auctions; a strategy first implemented in March 2012 to expedite the exit of a number of CPP participants. As of January 31, 2014, Treasury has sold all or part of its CPP investment in 162 institutions through auctions, receiving a total of about 80 percent of the principal amount.", "A relatively small number of the remaining 83 institutions accounted for most of the outstanding investments. Specifically, 10 institutions accounted for $1.5 billion or about 73 percent of the $2.1 billion in outstanding investments.", "Treasury estimated a lifetime gain of $16.1 billion for CPP as of November 30, 2013.", "GAO's analysis of financial data found that the institutions remaining in CPP were generally less financially healthy than those that have exited or that never participated. In particular, the remaining CPP institutions tended to be less profitable, hold riskier assets, and have lower capital levels and reserves.", "Most remaining participants also have missed scheduled dividend or interest payments, with 60 missing their November 2013 payment.", "Further, 47 of the remaining CPP institutions were on the Federal Deposit Insurance Corporation's problem bank list in December 2013—that is, they demonstrated financial, operational, or managerial weaknesses that threatened their continued financial viability.", "Institutions that continue to miss dividend payments or find themselves on the problem bank list may have difficulty fully repaying their CPP investments because federal and state bank regulators may not allow these institutions to make dividend payments or repurchase outstanding CPP shares in an effort to preserve their capital and promote safety and soundness.", "CPP was established as the primary means of restoring stability to the financial system under the Troubled Asset Relief Program (TARP).", "Under CPP, Treasury invested almost $205 billion in 707 eligible financial institutions between October 2008 and December 2009. CPP recipients have made dividend and interest payments to Treasury on the investments.", "TARP's authorizing legislation requires GAO to report every 60 days on TARP activities.", "This report examines (1) the status of CPP and (2) the financial condition of institutions remaining in the program.", "To assess the program's status, GAO reviewed Treasury reports on the status of CPP. GAO also used financial and regulatory data to compare the financial condition of institutions remaining in CPP with those that had exited the program and those that did not participate.", "GAO also obtained information through a questionnaire from CPP participants as of November 20, 2013, and former CPP participants that raised capital in calendar year 2013.", "GAO received completed questionnaires from 72 of the 104 institutions." ], "parent_pair_index": [ -1, 0, 0, 2, 0, -1, 0, 0, 2, -1, 0, 0, -1, -1, 0, 1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "Air Force Assessed the Feasibility of GEO Satellites 5 and 6 Technology Insertion, but Earlier Assessment and Investment in Technology Development and Planning Could Have Improved the Effort", "The Air Force Met Congressional Requirements to Assess New Focal Plane Technology for GEO Satellites 5 and 6", "Limited Prior Investment in Technology Development and Planning Efforts Reduced Technology Insertion Options", "Limited Planning May Hinder the Air Force’s Ability to Fully Address Technology Insertion Risks in Future Systems", "Current Technology Insertion for SBIRS Lacks a Defined Plan", "Timing Constraints Could Limit the Effectiveness of Ongoing Efforts", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Comments from the Department of Defense", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "SBIRS is intended to be a more capable successor to DSP and provide initial warning of a ballistic missile attack on the United States, its Once complete, the nominal SBIRS deployed forces, or its allies.constellation is to consist of two hosted HEO sensors and four GEO satellites. The GEO satellite constellation provides midlatitude coverage and the hosted HEO sensors provide polar coverage for missile warning and defense and other missions. Figure 1 shows the field of view of a single GEO satellite.\nLarge, complex satellite systems like SBIRS can take a long time to develop and construct. As a result, they can contain technologies that have become obsolete by the time they are launched. Although two GEO satellites were launched in recent years—the first in May 2011 and the second in March 2013—they had been designed in the late 1990s and primarily use technology from that period. The third and fourth GEO satellites, which have some updates to address parts obsolescence issues, are in production and expected to be initially available for launch in May 2016 for GEO satellite 4, and September 2017 for GEO satellite 3, which will first be stored. Figure 2 depicts a nominal constellation of SBIRS GEO satellites and HEO sensors once SBIRS GEO satellites 3 and 4 are launched and operational, augmented by DSP satellites.\nSBIRS GEO satellites 5 and 6 are needed in 2020 and 2021, respectively, to replenish the first two SBIRS GEO satellites and maintain the SBIRS constellation. In February 2013, the Air Force awarded a fixed- price incentive (firm target) contract for nonrecurring engineering activities and procurement of long lead spacecraft parts for GEO satellites 5 and 6.June 2014, 1 month after the Air Force’s assessment on inserting newer technologies.\nThe Air Force procured the production of GEO satellites 5 and 6 in In accordance with the acquisition strategy and to reduce risk in meeting need dates, GEO satellites 5 and 6 are to be derivatives of GEO satellite 4, with limited design changes to capitalize on the use of previously procured engineering and parts. According to the Air Force, it plans for limited technology refresh improvements. GEO satellites 5 and 6, including some on the sensors, are being upgraded to address parts obsolescence and essential technology updates. They will also include updates that were incorporated into GEO satellites 3 and 4—approximately 30 percent of these satellites’ parts were updated, according to the Air Force’s report. Figure 3 depicts the key components of the SBIRS GEO satellite.\nDOD’s definition of technology refresh is the periodic replacement of both custom-built and commercial-off-the-shelf system components, within a larger DOD weapon system, to ensure continued supportability throughout the weapon system’s life cycle.", "The Air Force assessed the feasibility and cost of incorporating a newer infrared focal plane into the SBIRS GEO satellites 5 and 6 and found that inserting a new focal plane would incur significant cost and schedule increases. The assessment came too late to be useful to GEO satellites 5 and 6, but that might not have been the case if the Air Force had invested in technology development and insertion planning earlier in the program to provide more options for consideration.", "As directed in the Senate report, the Air Force assessed the feasibility and costs of inserting newer infrared focal plane technologies—sensors that can detect heat from missile launches, for example—into GEO satellites 5 and 6. The Air Force considered one digital focal plane, a staring sensor, in lieu of the current analog focal plane. It identified two plausible options for insertion, and though technically feasible, neither was deemed affordable or deliverable within the replenishment need dates of 2020 and 2021. According to the Air Force report:\nThe first option would develop and replace the current analog focal plane assembly with more a modern digital focal plane while minimizing changes to the electronic interfaces. This would not increase system performance; however, the cost would be about $424 million and incur a schedule delay of 23 to 32 months.\nThe second option would also include replacement of the analog focal plane with a digital focal plane; however, the most significant difference between this option and the first option is the redesign of the signal processor assembly. According to the Air Force, this redesign could maximize the capability of the new digital focal plane by at least 20 percent beyond the current system’s requirements by increasing, among other items, target resolution. However, this option—at $859 million—would more than double the cost of the first option, and bring with it a 35- to 44-month schedule delay.\nThe timing of the Air Force’s assessment occurred after the Air Force had already approved the GEO satellites 5 and 6 acquisition strategy and awarded the advance procurement contract to complete nonrecurring engineering activities and procurement of critical parts with long lead times—on February 26, 2012, and February 19, 2013, respectively. In its assessment, the Air Force reported that to implement changes to the infrared focal planes at this stage, the current advanced procurement GEO satellites 5 and 6 contract would have to be modified, which would require renegotiations. In addition, the Air Force noted that at the time of the assessment, the fix-priced production modification had not yet been executed and changes could also have affected the related negotiations. Furthermore, any changes to the design of the satellites at this juncture would most likely have incurred additional cost with resulting schedule slips. For example, Air Force officials stated additional nonrecurring engineering would likely be required to design, build, test, and qualify a new focal plane design and to mitigate impacts to other subsystems on the satellite.", "Because of limited prior investment in research and development and technology insertion planning leading up to the acquisition of GEO satellites 5 and 6, there was only one viable alternative focal plane to be considered. As a result, the Air Force was limited in the number of feasible options for adding new technology to GEO satellites 5 and 6.\nEffectively planning and managing technology development—including specifying when, how, and why to insert technologies into a deployed system—can help to increase readiness and improve the potential for reduced costs. We have found that leading commercial companies plan for technology insertion prior to the start of a program, which provides managers time to gain additional knowledge about a technology. DOD policy and guidance indicate that planning for technology insertion and refresh is also important throughout a system’s life cycle. Specifically, DOD Instruction 5000.02, January 7, 2015, requires program managers to prepare a Life Cycle Sustainment Plan, and notes that technology advances and plans for follow-on systems may warrant revisions to the plan. In addition, DOD’s Defense Acquisition Guidebook advises the use of trade studies to inform system modifications, such as technology insertion or refresh, and the development and implementation of technology refresh schedules.\nVery little technology insertion or refresh planning was completed early on in the SBIRS program to address potential obsolescence and find opportunities to insert newer technologies in later stages of the program’s life cycle. The SBIRS program was unable to plan for technology upgrades and refresh, according to program officials, because of other issues with the satellites being built. Officials said it was difficult to obtain funding for exploring future technologies at a time when the program was experiencing satellite development problems. As we have reported, the SBIRS program has experienced significant cost growth and schedule delays since its inception, in part because of development challenges, For example, in 2014 we reported a test failures, and technical issues. total cost growth of $14.1 billion over the original program cost estimate, and a delay of roughly 9 years for the first satellite launch. Hence, funding that could have been used for technology development and planning for parts obsolescence or technology insertion to reduce risk was, instead, used to address significant cost and schedule breaches as they arose. Though the SBIRS program started in 1996, efforts to begin studying options for transitioning to the next system did not start until 2007. The program also began to invest in technology development in 2007 with the Third Generation Infrared Surveillance program, which was intended to reduce risk for the development of new sensor technology. The Air Force later incorporated the technology into the Commercially Hosted Infrared Payload (CHIRP), which received funding for an on-orbit demonstration beginning in fiscal year 2011, though it was not used operationally for SBIRS missions. Funding for SMI started in fiscal year 2013. Figure 4 depicts a timeline of key SBIRS program events and efforts to study options for the next system, including technology development investments.\nBeyond assessing the two options—of replacing the current analog focal plane with a more modern digital focal plane, either with or without changes to the electronic interfaces—the Air Force was not in a position to incorporate changes and still maintain the efficiencies planned by buying GEO satellites 5 and 6 together.", "The current approach to technology insertion for SBIRS is not consistent with the best practice of establishing a plan prior to the start of a program that identifies specific technologies to be developed and inserted to achieve a desired end state. The efforts that are under way are limited by lack of direction and time constraints in informing an acquisition decision and technology insertion plan for the follow-on to the current SBIRS program. While the Air Force is working to develop a technology road map for the next system, the effort is still hampered by the lack of a clear vision for the path forward, requiring the Air Force to plan for multiple potential systems. Further, it is too soon to tell whether the road map will be sufficiently developed in time to address future technology insertion needs.", "Technology insertion decisions for SBIRS do not systematically follow an established plan. Instead, efforts are more near-term oriented to solve known problems or to take advantage of isolated technologies. A technology insertion plan ideally envisions desired capabilities for a system and then directs investments to develop those capabilities. In its Systems Engineering Guide, the MITRE Corporation—a not-for-profit research and development company—highlights the importance of technology planning to provide guidance for evolving and maturing technologies to address future mission needs. As mentioned above, we have also found that leading commercial companies conduct strategic planning before technology development and plan for technology insertion before a program begins. Such practices enable managers to identify needs and technologies, prioritize resources, and validate that a technology can be integrated.\nCurrently, technology insertion for SBIRS is largely driven by the need to replace obsolescent parts, that is, parts that are no longer available and need to be rebuilt or redesigned and qualified for the space environment. For example, when a contractor was having difficulty delivering an encoder and decoder system—which assists with pointing control of the sensor—on time, the program office sought another source for the system. In place of a technology insertion plan, Air Force officials have cited SMI as a means for demonstrating developed technologies that could be inserted into future systems. One of the areas under the SMI plan, Evolved SBIRS, focuses on reducing cost and technical risk for replenishments of the current SBIRS satellites and future SBIRS systems, including addressing obsolescence. By simplifying designs and studying ways to reduce the risk of obsolescence, the effort aims to significantly reduce costs if the decision is made to procure a seventh and eighth GEO satellite.\nBeyond replacing obsolescent parts, technology insertion efforts for SBIRS are generally ad hoc and focus on isolated technologies. Although Air Force Space Command’s (AFSPC) annual integrated planning process identifies technology concepts that could be a part of a future system, it is the program’s responsibility to decide which concepts to Program managers generally pursue further, according to officials.initiate technology development ideas and propose them to AFSPC as they arise, at which point they develop into science and technology projects. Air Force officials noted that ongoing technology development efforts are relatively narrow in scope because of resource constraints. For example, another SMI effort, Wide Field of View Testbeds, is focused on demonstrating a prototype wide field of view staring payload that could be inserted either into an evolved program of record or an alternate system, such as a host satellite. Officials said this effort has been limited to testing one focal plane in a relevant space environment, although it would have been beneficial to test others that were available. The Data Exploitation effort, another SMI effort, is focused on ways to further exploit data collected from existing sensors on orbit by advancing on-orbit data collection and analysis and developing algorithms to process data. Given that these efforts aim for varying goals, they are not together intended to plan for a single end system and are not set up to identify the specific technologies required for such a system. Officials acknowledge that the SMI efforts cover different directions to keep options open for the various potential approaches to a future system but anticipate that efforts will become more focused once the SBIRS Follow-on analysis of alternatives (AOA) is completed and a decision is made on the way forward.", "SMI efforts are also hampered by time constraints that could limit their usefulness in informing technology insertion decisions for the follow-on system. Air Force officials have stated that an acquisition decision for the follow-on to SBIRS—whether a continuation of the program with next- generation satellites or a different system—will need to be made within the fiscal year 2017-2018 time frame. To inform that decision, any new technologies required for the follow-on will need to be developed enough that the Air Force can be certain they will be ready to transition in time. For example, if the follow-on uses a wide field of view sensor, the Air Force will need to complete significant work—including data exploitation, testing, and demonstrations—to ensure that the sensor is capable of performing the necessary function. Officials said the relevant Wide Field of View Testbeds effort, expected to be active by fiscal year 2017, could potentially meet the decision time frame if it stays on track, though a delay in the AOA or funding decisions could affect the program’s ability to keep the effort on schedule. Given the short history of SMI, which started in fiscal year 2013, the SBIRS program has had limited time to develop and demonstrate new technologies that could be inserted into a follow-on.\nGoing forward, program officials said they are developing a technology road map for each of the different options being considered in the AOA. As the results of the AOA are pending, officials must develop plans for multiple potential paths forward, including those that may involve less mature technology currently. This road map will be modified based on the option selected from the AOA to identify the technologies available and determine when they may be inserted into the follow-on, officials said. Though specific timelines for the final road map are not yet determined, once finalized, the program plans to use it to guide SMI investment plans and to work with the science and technology community on development efforts. It is too early to determine how successful the road map will be in providing a timely plan for inserting technology into the next system. Delays in previous efforts to analyze alternatives and plan for a follow-on suggest similar delays could occur for the ongoing SBIRS Follow-on AOA. Such delays would make it difficult to develop a thorough road map for technology insertion if the program does not know the system for which to plan. In addition, some officials have cited concerns that all segments of the system—particularly the ground system, which provides command and control of the satellites and is already delayed behind the satellites currently on orbit—may not be fully assessed in ongoing analyses and that potential risks could be marginalized or overlooked in a technology insertion plan.", "Large and complex satellites like SBIRS take a long time to develop and build, which can make the technology aboard outdated compared to what might be available when the satellites are launched and operated. The Air Force has been focused on building the satellites versus developing new capabilities and, in doing so, has missed opportunities to pursue viable technology options. Establishing a plan for when, how, and why technology improvements should be inserted into a system can be essential to providing capabilities when needed and reducing life cycle costs. Without an early technology insertion plan for SBIRS and the associated technology development, the Air Force was limited to assessing few new technologies, which were too late to be incorporated into GEO satellites 5 and 6 without significant cost and schedule increases. Given the time it took to develop, produce, and launch the SBIRS satellites, spanning over 18 years, a forward-looking approach that develops and inserts technologies within planned schedule windows could be more effective in satisfying mission needs and anticipating future requirements.\nGoing forward, the Air Force is at risk of being in the same position for the next system that follows the current SBIRS program. Plans to establish more specific technology insertion strategies for potential alternatives could encourage earlier technology development, though these cannot yet be assessed because they are still in development. Without a clear vision of the path forward and a corresponding plan that lays out specific points for addressing potential obsolescence issues, assessing technology readiness, and determining when it is appropriate to insert technology for all segments of the program, the Air Force could be limited in its ability to mitigate technology insertion risk. Further, as the deadline approaches for deciding on a follow-on to SBIRS, the Air Force continues to lose valuable time to develop, demonstrate, and assess new technologies. As a result, it may be forced to continue with the current design for subsequent satellites, potentially requiring more attention to obsolete components and continuing the cycle of limited technology insertion.", "To improve technology planning and ensure planning efforts are clearly aligned with the SBIRS follow-on, we recommend that the Secretary of the Air Force establish a technology insertion plan as part of the SBIRS follow-on acquisition strategy that identifies obsolescence needs as well as specific potential technologies and insertion points.", "We provided a draft of this report to DOD for comment. In its written comments, which are reprinted in appendix I, DOD concurred with our recommendation. DOD also provided technical comments which were incorporated as appropriate.\nWe are sending copies of this report to the appropriate congressional committees and the Secretary of Defense. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff any have questions about this report, please contact me at (202) 512-4841 or at [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff members who made key contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact named above, key contributors to this report were Art Gallegos (Assistant Director), Maricela Cherveny, Brenna Guarneros, Bob Swierczek, Hai Tran, Oziel Trevino, and Alyssa Weir." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h1_full", "h0_full h1_title", "", "h0_full h1_full", "h0_full", "h0_full", "", "h0_full h1_full", "", "", "", "", "", "" ] }

{ "question": [ "Why is the program at risk for challenges in the future?", "According to GAO and the MITRE Corporation, why is technology planning an important practice?", "How does this differ from the practices technology insertion decisions follow?", "How are current efforts to develop new technologies limited?", "What progress has the Air Force made despite these limitations?", "What challenges does the Air Force's initiative face?", "What is SBIRS important to the DOD?", "What does the Air Force plan to do to maintain SBIRS?", "What challenges does this initiative face?", "What did a Senate Armed Services Committee report ask of GAO?" ], "summary": [ "The current approach to technology insertion for the system or satellites after SBIRS GEO satellites 5 and 6 could leave the program with similar challenges in the future.", "GAO's work on best practices has found that leading companies conduct strategic planning before technology development begins to help identify needs and technologies. Similarly, the MITRE Corporation—a not-for-profit research and development organization—has highlighted the importance of technology planning to provide guidance for evolving and maturing technologies to address future mission needs.", "Technology insertion decisions for the future system or satellites are not guided by such planning. Instead, decisions are largely driven by the need to replace obsolete parts as issues arise.", "Current efforts—such as individual science and technology projects, including those in the Space Modernization Initiative—are limited by lack of direction, focusing on isolated technologies, and therefore are not set up to identify specific insertion points for a desired future system. In addition, the SBIRS program has had little time to develop and demonstrate new technologies that could be inserted into a SBIRS follow-on system.", "The Air Force is working to develop a technology road map for the next system, according to officials.", "Given the lack of a clear vision for the path forward and the road map's early development status, it is too soon to determine whether it will be able to identify specific technology and obsolescence needs and insertion points in time for the next system.", "SBIRS is a key part of DOD's missile warning and defense systems.", "To replace the first two satellites currently on orbit, the Air Force plans to build two more with the same design as previous satellites.", "The basic SBIRS design is years old and some of its technology has become obsolete. To address obsolescence issues in the next satellites, the program must replace old technologies with new ones, a process that may be referred to as technology insertion or refresh.", "A Senate Armed Services Committee report included a provision for GAO to review an Air Force assessment of the feasibility of inserting newer technologies into the planned replacement satellites, SBIRS GEO satellites 5 and 6, and how it intends to address technology insertion issues for future satellite systems." ], "parent_pair_index": [ -1, -1, 1, -1, 3, 4, -1, 0, 1, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 3, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Definition of a Consumer Product", "Overview of GAO’s Fragmentation, Overlap, and Duplication Work", "Multiple Agencies Oversee Various Aspects of Consumer Product Safety", "Eight Agencies Have Direct Oversight Responsibility for Consumer Product Safety", "At Least 12 Agencies Play an Indirect Role in Consumer Product Safety Oversight", "Fragmented and Overlapping Oversight Can Help Agencies Leverage Expertise but Also Creates Inefficiencies", "Oversight Is Fragmented, and Jurisdictions Overlap When Multiple Agencies Regulate the Same Product, Its Components, or Its Uses", "Current Structure Helps Provide More Comprehensive Oversight but Also Creates Some Inefficiencies", "Communication and Coordination Can Be Difficult When Oversight Involves Multiple Agencies", "Fragmentation and Overlap Can Create Challenges Related to Jurisdiction", "Multiple Standards May Create Inefficiencies for Industry and Confusion for Consumers", "Multiple Agencies Purchase the Same Data but Are Considering Options to Improve Efficiency through Data Sharing", "NIST’s Role as Regulator for the Markings of Toy and Imitation Firearms May Be an Inefficient Use of Resources", "Jurisdiction for the Regulation of Some Recreational Boating Equipment May Be Unclear", "Agencies Report Coordinating on Specific Activities but Lack a Mechanism to Facilitate Comprehensive Oversight", "Agencies Report Coordinating through Various Mechanisms to Address Specific Activities", "Collaborative Structure within the Executive Office of the President", "National Strategies and Initiatives", "Interagency Group Led by Agency and Department Heads", "Agencies Cite Challenges in Coordinating and Lack a Comprehensive Coordinating Mechanism for Product Safety Issues", "Conclusions", "Matters for Congressional Consideration", "Recommendation", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Inventory of Agencies That Conduct Consumer Product Safety Oversight Activities", "Examining the Extent of Fragmentation, Overlap, and Duplication", "Agency Collaboration and Negative Effects of Fragmentation, Overlap, and Duplication", "Appendix II: Consumer Product Safety Oversight Questionnaire", "Appendix III: Agencies That Indirectly Support Consumer Product Safety Oversight", "Appendix IV: Full Text for Figure 2 Presentation of Examples of Consumer Products Regulated by More Than One Agency", "Appendix V: Comments from the Consumer Product Safety Commission", "Appendix VI: Comments from the Department of Homeland Security", "Appendix VII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "The existing system for consumer product safety, like many other federal programs and policies, has evolved in a piecemeal fashion. New laws and agencies have been established over time, resulting in a patchwork system with different agencies having different regulatory and enforcement authorities for different consumer products. Consumer product safety activities can include setting standards and conducting enforcement, product recalls, rulemaking, and risk assessment. Below is a brief overview of some of the key laws that provide agencies with the authority to conduct consumer product safety oversight.\nPre-Consumer Product Safety Act (CPSA) laws:\nFederal Food, Drug, and Cosmetic Act, first enacted in 1938 to replace the Pure Food and Drug Act of 1906, provides FDA with various public health responsibilities, including to ensure the safety and effectiveness of medical products—drugs, biologics, and medical devices—and safety of cosmetics marketed in the United States. The Federal Food, Drug, and Cosmetic Act, as amended, mandates FDA to, among other things, conduct pre-market reviews of the safety of all new drugs, as well as pre-market approval of some medical devices.\nFederal Insecticide, Fungicide, and Rodenticide Act provides for the federal regulation of pesticides. While various versions of a federal pesticide statute have been in place since 1910, Congress enacted substantial amendments to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) in 1972. Under the current version of FIFRA, pesticides must generally be registered (licensed) by EPA before they may be sold or distributed in the United States. EPA may register a pesticide if it finds, among other things, that use of the pesticide will not generally cause unreasonable adverse effects on the environment. When EPA registers a pesticide, it approves directions for use of the pesticide, which must appear on the product label and be followed by users of the pesticide.\nThe National Traffic and Motor Vehicle Safety Act of 1966 established an agency which, under the Highway Safety Act of 1970, later became the National Highway Traffic Safety Administration (NHTSA).The National Traffic and Motor Vehicle Safety Act authorizes NHTSA to, among other things, promulgate federal safety standards for motor vehicles and equipment.\nThe Federal Boat Safety Act of 1971 authorizes the Coast Guard (within the Department of Homeland Security) to, among other things, establish minimum safety standards for recreational vessels and associated equipment and to require the installation or use of such equipment. The act was created to improve boating safety, to authorize the establishment of national construction and performance standards for boats and associated equipment, and to encourage greater uniformity of boating laws and regulations among states and the federal government.\nCPSA and post-CPSA laws: The CPSA, first enacted in 1972, establishes CPSC and consolidates federal safety regulatory activity relating to consumer products within the agency. CPSC is authorized to protect the public against unreasonable risks of injury associated with consumer products in general, and also to administer other laws such as those governing fabric flammability, hazardous substances, child-resistant packaging, refrigerators, pool and spa safety, and toy safety. Congress enacted the Consumer Product Safety Improvement Act (CPSIA) in 2008 to strengthen CPSC’s authority to enforce safety standards and provide greater public access to product safety information.\nThe Toxic Substances Control Act, first enacted in 1976, authorizes EPA to obtain more information on chemicals and to regulate those chemicals that EPA determines pose unreasonable risks to human health or the environment. chemicals already in commerce as well as chemicals yet to enter commerce. In addition, under the Toxic Substances Control Act, EPA can regulate the manufacture (including import), processing, distribution in commerce, use, or disposal of “chemical substances” and “mixtures,” including for use as or as part of a consumer product.\nToxic Substances Control Act, Pub. L. No. 94-469, 90 Stat. 2003 (1976).", "CPSA defines a consumer product, for purposes of CPSC’s jurisdiction, as “any article, or component part thereof, produced or distributed (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise,” subject to a number of exclusions. By statute, certain categories of products that are regulated by other agencies are excluded from the definition of “consumer product,” and therefore CPSC does not have jurisdiction over them. For purposes of our report, because we are looking at consumer products broadly rather than solely those in CPSC’s jurisdiction, we use the broader definition of “consumer product,” without the statutory exclusions. We include in our purview motor vehicles, pesticides, cosmetics, and some other products that CPSA excludes from its definition of a consumer product.", "In 2010, Congress directed us to identify programs, agencies, offices, and initiatives with duplicative goals and activities within departments and government-wide and report to Congress annually. Since March 2011, we have issued annual reports to Congress in response to this requirement.evidence of fragmentation, overlap, or duplication among federal programs. The annual reports define fragmentation, overlap, and duplication as shown in figure 1.", "We identified 8 agencies that have direct oversight responsibility for various aspects of consumer product safety, based on our analyses of data collected from our questionnaire and interviews with agency officials. In addition, we identified at least 12 other agencies that have an indirect role in consumer product safety oversight. We distinguished agencies with direct versus indirect responsibility by whether they perform certain regulatory activities, as well as by how the agencies self-identified in their interviews.", "Eight agencies reported that they have direct oversight responsibilities for consumer product safety: the Coast Guard; CPSC; Department of Housing and Urban Development (HUD); EPA; FDA; NHTSA; Nuclear Regulatory Commission (NRC); and Pipeline and Hazardous Materials Safety Administration (PHMSA). We considered an agency to have a direct oversight role if it met two criteria: (1) in its response to our questionnaire, the agency noted having statutory authority over consumer product safety through one or more of five regulatory activities— rulemaking, standard setting, enforcement, risk assessment, and product recalls; and (2) in subsequent interviews and follow-up discussions, the agency confirmed that it views itself as having a role in overseeing the We describe the oversight roles of these safety of consumer products.agencies in table 1. Some of these agencies oversee products, whereas others oversee components that might be found within a product (e.g., chemical substances or radioactive materials).\nThese eight agencies conduct a range of regulatory activities related to consumer product safety, including rulemaking, standard setting, enforcement, risk assessment, and product recalls.\nRulemaking, standard setting, and enforcement. All eight agencies reported conducting rulemaking, standard-setting, and enforcement activities. As an example of rulemaking, CPSC recently issued a final rule establishing a safety standard for strollers and infant carriages. CPSC issued the rule in response to a provision of the Consumer Product Safety Improvement Act, which required CPSC to promulgate consumer product safety standards for durable infant or toddler products. The rule incorporates by reference the most recent voluntary standard developed by ASTM International, a standard- setting organization. The standard includes requirements for improved test methods of various parts (e.g., brakes, wheels) and warning label clarifications. In an example of enforcement, PHMSA inspects consumer commodity shipments. PHMSA staff stated that they coordinate with other agencies to identify where hazardous substances are coming from and where they are going. In another enforcement example, under the Toxic Substances Control Act, EPA can initiate civil actions to seize an imminently hazardous substance, mixture, or any article containing such a substance or mixture.\nRisk assessment. Six of the eight agencies reported conducting risk assessments, whereas PHMSA did not and the Coast Guard reported that its authority in this area is unclear. As an example of risk assessment, EPA recently conducted an assessment for a flea and tick pet collar using the insecticide propoxur. EPA’s risk assessment found, in some but not all use scenarios, unacceptable risks to children from exposure to propoxur pet collars. EPA noted that small children may ingest pesticide residues when they touch a treated cat or dog and subsequently put their hands in their mouths. EPA and the manufacturers agreed to do a voluntary cancellation of the product based on concerns that the residue on animals can be dangerous for children. The Coast Guard noted that its authority to conduct risk assessments is unclear. A Coast Guard official explained that statutory authority allows the Coast Guard to establish whether, according to their reasonable and prudent judgment, a defect creates a substantial risk of personal injury.\nProduct recalls. Six of the eight agencies reported having regulatory authority to recall certain products under their jurisdiction, whereas NRC and PHMSA did not. As an example of a product recall, an official from the Coast Guard noted that the agency works with manufacturers and conducts between 10 and 20 recall campaigns annually of recreational boats, equipment originally installed on boats, and limited equipment installed after purchase. The Coast Guard officials recently worked with Honda, which has stopped manufacturing personal watercraft, when the company found it had a problem with boats it manufactured from 2002 through 2008. The manufacturer is now recalling these boats for possible fuel tank failure. The Coast Guard stated that it does not actually conduct the recalls but records the recalls and monitors the progress that the manufacturer completes in the performance of the recalls. According to the agency, once regulatory noncompliance or a substantial risk defect is discovered, the manufacturer normally voluntarily registers the recall campaign with the Coast Guard and performs the recall in accordance with statutory requirements and the Coast Guard regulations regarding recall notification. By statute, the manufacturer is required to notify the first purchaser, subsequent purchasers if known to the manufacturer, and the dealers and distributors. Based on the progress reports submitted to the Coast Guard by the manufacturer, the Coast Guard decides when it is practical to close the recall campaign. According to the agency, the Coast Guard has the authority to require a manufacturer to perform a recall, but this authority has rarely been used.\nIn addition to the regulatory activities listed earlier, agencies reported other oversight activities they undertake. Specifically, CPSC noted that it can also collect data and conduct informational campaigns. NHTSA also stated that it can conduct consumer informational programs. For example, NHTSA noted the New Car Assessment Program, under which it conducts vehicle crash and rollover tests to encourage manufacturers to make safety improvements to new vehicles and provide the public with information on the relative safety of vehicles (e.g., through a safety rating using a five-star scale). Additionally, EPA noted its statutory authority to conduct licensing of pesticides under the Federal Insecticide, Fungicide, and Rodenticide Act, as amended.", "Based on our analyses of information obtained through the questionnaires and interviews with agency officials, we identified at least 12 agencies that play an indirect role in the oversight of consumer product safety. We categorized an agency as having an indirect role if it met one of two criteria: (1) it did not conduct any of the five regulatory activities described in the previous section, but described other activities that supported consumer product safety oversight; or (2) it initially described a role in regulating consumer products, but in subsequent interviews, did not self-identify as a consumer product safety oversight agency. An indirect role can include such activities as conducting underlying research to support regulatory activities and providing public health expertise, among others. We describe the overall work of these agencies and the specific roles that they play in relation to consumer product safety in detail in appendix III. The 12 agencies are the National Institute of Standards and Technology (NIST); Federal Communications Commission (FCC); Federal Emergency Management Agency (FEMA); National Institutes of Health (NIH); Health Resources and Services Administration (HRSA); Centers for Disease Control and Prevention (CDC); Federal Aviation Administration (FAA); National Transportation Safety Board (NTSB); Occupational Safety and Health Administration (OSHA); U.S. Customs and Border Protection (CBP); Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); and Federal Trade Commission (FTC).\nThese 12 agencies supported product safety in at least one of the following areas: (1) public health expertise; (2) law enforcement; (3) workplace safety; (4) transportation safety; and (5) other activities.\nPublic health expertise. NIH, HRSA, and CDC reported providing public health expertise. For example, the National Institute of Environmental Health Sciences (NIEHS), within NIH, manages the National Toxicology Program, which studies substances in the environment, including substances used in personal care products, household products, foods, and dietary supplements, to identify any potential harm they might cause to human health. One example of a substance over which NIH and CPSC have coordinated is diisononyl phthalate (DINP). Phthalates are a group of chemicals used to make plastics more flexible and more difficult to break. The National Toxicology Program has provided CPSC with access to its scientific expertise and research on DINP. It also served on and provided DINP-related analysis to the Chronic Hazard Advisory Panel on DINP. This panel advised CPSC on whether DINP in consumer products poses a chronic hazard.\nLaw enforcement. CBP, ATF, and FTC reported involvement in law enforcement. For example, FTC investigates and can take action against companies that engage in unfair or deceptive acts or practices in or affecting commerce, which can include making deceptive safety claims. One example where FTC has played a role in consumer product safety is through an administrative action it took against a manufacturer that falsely claimed that football mouth guards prevent concussions. FTC’s settlement order with the manufacturer prohibits the company and its owner from, among other things, misrepresenting the health benefits of any mouth guard or other athletic equipment designed to protect the brain from injury. FTC has also taken other actions related to the safety of consumer products. For example, it has challenged several after-market braking devices that called themselves antilock brake systems (ABS) but that did not, in fact, function as well as factory-installed antilock brakes.\nWorkplace Safety. CDC’s National Institute for Occupational Safety and Health (NIOSH) and OSHA reported responsibilities for workplace safety. For example, NIOSH conducts and publishes research on the occupational hazards associated with the use of tools (such as nail guns) and materials (such as spray foam insulation and methylene chloride). NIOSH’s research focuses on worker safety, but consumers may benefit because they may purchase the same products for use in and around the home. In the case of nail guns, NIOSH stated that it had identified causes of worker injuries, developed recommendations to improve worker safety, and published the information in a variety of media and formats, including a joint publication with OSHA, to make it widely available. Sometimes, a manufacturer may end up making improvements to a product as a result of NIOSH’s research, which may enhance consumer safety. NIOSH also conducts rulemaking, standard setting, and product recalls of respirators for use by workers, which also may be purchased by consumers.\nTransportation safety. FAA and NTSB reported responsibilities for transportation safety. For example, NTSB investigates every civil aviation accident in the United States and significant accidents in other modes of transportation—railroad, highway, marine, and pipeline. As part of its investigations, NTSB makes safety recommendations to other federal agencies on a variety of topics, including their oversight of any specific consumer products involved in the accidents. In the past, NTSB has made recommendations to NHTSA to improve the visibility of brake and turn lights and to modify performance and testing requirements for passenger-side air bags. More recently, NTSB has made recommendations to FAA to improve the safety of amateur-built aircraft.\nOther activities. NIST, FCC, and FEMA’s U.S. Fire Administration reported involvement in other activities that support consumer product safety oversight. For example, with the increasing use of nanomaterials, NIST stated that it has collaborated with CPSC to measure and better understand the release of nanotechnology-based products and exposure pathways. According to NIST, in these collaborations, it has provided unique measurement expertise, for example, for determining the quantities and properties of nanoparticles released from flooring finishes and interior paints and their subsequent airborne concentrations.", "We found that oversight of consumer product safety is fragmented across multiple agencies with some overlap occurring—for example, when agencies regulate different uses of the same product. We did not find specific cases of duplication in oversight. Fragmentation and overlap can help provide more comprehensive oversight by allowing agencies to leverage one another’s expertise, resources, and authorities, but they can also create inefficiencies. In particular, NIST’s role as regulator for the markings of toy and imitation firearms may be an inefficient use of resources because it may not leverage the agency’s primary mission and expertise, which are related to scientific measurement. In addition, because of potential jurisdictional uncertainty regarding whether some recreational boating equipment should be regulated by the Coast Guard or CPSC, the potential exists for some hazards to not be adequately addressed.", "Federal regulatory oversight of consumer product safety is fragmented across multiple agencies, and some overlap occurs among these agencies based on their statutory authorities for certain products. The agencies we surveyed and interviewed provided several examples of regulatory oversight involving multiple agencies, including scenarios in which agencies regulate different components of the same product, regulate different uses of a product, or administer different regulatory oversight activities for the same product. We did not find specific cases of duplication in oversight. Figure 2 contains examples of consumer products regulated by more than one agency. (See app. IV for a full-text presentation of the examples in fig. 2).\nIn the following examples, agencies regulate different components of a product, which can result in fragmentation and overlap.\nArticles or equipment that come into contact with food (CPSC, FDA): FDA regulates substances making up the surfaces of products, such as spoons, drinking glasses, and lunch boxes, that come into contact with and can potentially leach into food. In contrast, CPSC regulates the parts of food containers or preparation articles that do not come into contact with food, as well as certain chemical substances. An example of a product with overlapping regulation is spoons intended for use by infants. The substances making up the portion of the spoon that comes into contact with the food would generally be regulated by FDA to ensure the safety of substances in the spoon that may migrate into the food. However, if the spoon had a plastic coating, it could also be subject to CPSC’s limits on the use of certain phthalates in children’s products. In another example, in 2010, CPSC issued a voluntary recall of about 12 million drinking glasses because the designs on the outside of the glasses contained cadmium, a substance that can cause adverse health effects.\n21 U.S.C. §§ 360hh-360ss. lead content of the paint is below the required threshold. Examples of toy laser products include “light sabers,” toy guns with mounted lasers for taking aim, and tops that project laser beams while they spin. In June 2013, FDA proposed laser safety regulations specific to toy laser products marketed to children that would restrict the amount of radiation emitted by toy lasers to the lowest laser class limits. FDA and CPSC indicated that they did not coordinate on the proposed rule for toy laser products, but according to FDA officials, the agencies collaborated on a draft guidance document concerning this rule that was issued in August 2013. FDA also noted that the agency has organized a multiagency Laser Communications Working Group to educate consumers about laser safety.\nRegulatory jurisdiction for some products changes depending on where or how the product is used, which can result in overlapping oversight, as in the following examples.\nInfant car seats/hand-held infant carriers (CPSC, NHTSA): Infant car seats can be used to protect a child inside a moving vehicle, but some (which are also called hand-held infant carriers) can also be used to carry an infant outside of a vehicle and can attach to strollers. CPSC regulates hazards associated with the use of infant carriers outside of a motor vehicle, including soft infant carriers, framed carriers worn on caregivers’ backs, and hand-held infant carriers, as part of their jurisdiction over durable infant and toddler products. Overlap with NHTSA occurs with hand-held infant carriers that are also used as car seats and are therefore considered “motor vehicle equipment” for the purpose of NHTSA’s jurisdiction. For example, infant car seats sold for purposes that include motor vehicle use are considered child-restraint systems and must be certified as meeting federal motor vehicle safety standards. In December 2013, CPSC issued a final rule, which incorporated an existing voluntary standard for hand-held infant carriers. For example, this standard includes warning label requirements to address suffocation and restraint- related hazards, as well as testing procedures to ensure that the carrier handle automatically locks. NHTSA and CPSC indicated that they had coordinated on the rulemaking. For example, CPSC said that the agency had worked with NHTSA to assess the effectiveness of existing standards for hand-held infant carriers and to ensure that the warning label to address strangulation hazards does not interfere with NHTSA’s label for air bags.\nAdult portable bed rails (CPSC, FDA): CPSC and FDA regulate portable bed rails for adult use. These are rails that are not part of a bed’s original design, but can be installed against or adjacent to adult beds to protect people from falling and to assist them as they get in and out of bed. Jurisdiction depends on whether the adult portable bed rails constitute medical devices.portable bed rails considered to be medical devices, and CPSC regulates adult portable bed rails that do not meet the definition of such devices. FDA noted that for consumers, there is little difference between the adult portable bed rails regulated by FDA or CPSC in terms of the physical product. FDA and CPSC have been working with manufacturers, health care practitioners, and consumer representatives since 2013, to develop a voluntary consensus standard for adult portable bed rails through an organization that develops standards (ASTM International). This voluntary standard would apply to all portable adult bed rails whether they are regulated by FDA or CPSC and should help ensure that there are no gaps in oversight of the safety of portable bed rails for adult use. The effort to establish a voluntary standard for bed rails was ongoing as of September 2014. CPSC and FDA also noted that they maintain an interagency working group that addresses the issues associated with adult portable bed rails. While this working group’s primary focus is the development of the voluntary standard, CPSC and FDA said the group also exchanges technical information and compliance challenges to improve regulatory oversight.\nFDA has jurisdiction over adult\nSoaps, cleaners, and other household products (CPSC, EPA, FDA): Jurisdiction over soaps, cleaners, and other household products depends on whether the product is formulated and marketed as a soap, cosmetic, drug, or pesticide, resulting in jurisdictional fragmentation and overlap. FDA regulates cosmetics and drugs; CPSC regulates household products, such as household cleaners, (including soap but excluding certain items, such as drugs, cosmetics, and pesticides); and EPA regulates pesticides and certain chemicals that may also be contained in soaps, cleaners, and other household products. Body-cleansing products that do not meet FDA’s definition of “soap” but contain detergents and are used for cosmetic purposes are typically considered cosmetics under FDA’s jurisdiction. FDA considers antibacterial or antimicrobial cleansing products to be drugs under its jurisdiction, even though they contain the chemical Triclosan, which is also regulated by EPA when used as a pesticide in other products. CPSC has authority over products that are labeled and sold only as soap and that have specified chemical properties that exclude them from FDA’s jurisdiction. With respect to other household cleaners, while FDA regulates the detergents used in cosmetics, CPSC has authority over cleansers that are not cosmetics or pesticides, such as laundry or dishwashing detergents. In addition, EPA staff noted that its jurisdiction overlaps with CPSC’s with respect to some household cleaners, such as window cleaners. Even if the cleaners are not marketed as pesticides, EPA may still regulate certain chemicals contained in them. EPA also noted that they work with CPSC and other agencies when their jurisdictions overlap to share information and determine how to address a particular product hazard.\nIn addition, agencies can conduct different regulatory oversight activities for the same product, but requirements can overlap.\nFireworks (ATF, CPSC, PHMSA): CPSC oversees fireworks that are used by consumers, which includes examining the length of the fuse to determine how quickly and how long it will ignite, among other things. PHMSA regulates the approval, importation, and transport of fireworks based on its authority to regulate the transportation of hazardous materials. PHMSA staff noted that some overlap exists between CPSC’s and PHMSA’s manufacturing requirements for fireworks. They explained that both sets of requirements have been incorporated into industry standards (standard 87-1 of the American Pyrotechnic Association), which PHMSA in turn has incorporated into its regulations governing the approval and transport of fireworks. Additionally, ATF enforces explosives laws and licenses manufacturers to use explosives, including in consumer fireworks.\nMobile phones and other wireless devices (FCC, FDA): FCC and FDA share regulatory responsibilities for mobile phones and other wireless devices. Although FCC does not directly regulate the safety of mobile phones and wireless devices, it sets limits on the amount of radiofrequency energy these devices can emit and certifies that devices sold in the United States comply with FCC requirements. According to FDA, the agency, as part of its oversight of radiation- emitting products, ensures that mobile phones and other wireless devices do not emit radiofrequency energy at a level that is hazardous to the user. FDA also stated that as a health expert agency, its expertise was significant in developing the radiofrequency exposure limits from which the FCC radiofrequency emission limits are derived, and it is FDA that would have the jurisdiction to determine whether a product is unsafe. For example, while FDA does not review the safety of mobile phone devices before they are marketed, it can require manufacturers to replace or recall mobile phones that are shown to emit radiofrequency energy at a level that is hazardous. As we previously reported, FCC said it relies heavily on the guidance and recommendations of federal health and safety agencies when determining the appropriate exposure limit for radiofrequency energy. As we discuss in the next section of this report, FDA, FCC, and other agencies are part of the Radiofrequency Interagency Work Group, which works to share information and research on radiofrequency energy-related issues.", "Agency officials, as well as a consumer group and industry expert, told us that the involvement of multiple agencies with various areas of expertise can help ensure more comprehensive oversight of a product. Consumer product safety encompasses complex topics and often requires a range of expertise to address the breadth of products and potential safety hazards (e.g., manufacturing, transport, effects on the environment, or use in different settings). As a result, it may be impractical for any single agency to oversee consumer product safety alone. For example, CPSC staff noted that in the area of nanomaterials, no single agency has the resources to tackle the potential human health and environmental risks. Moreover, some agencies noted that each agency brings a different mission or focus to addressing consumer product safety problems. For example, CPSC staff noted that while CPSC and EPA both conduct risk assessments as part of their oversight of generators, EPA’s focus is on how much pollution a generator emits into the environment, while CPSC focuses on the safety implications of how consumers use generators around their homes. CPSC staff noted that risk assessments from other agencies can serve as an additional check on their own safety assessments.\nAs part of providing more comprehensive oversight of consumer product safety within a fragmented and overlapping regulatory structure, agencies noted that they leverage one another’s expertise, resources, and statutory authorities. For example, we previously reported that in 2009, CPSC led a task force to address hazards associated with high hydrogen sulfide emissions from imported defective drywall (i.e., sheetrock used in construction), which crossed the jurisdiction of several federal agencies. Members of this task force brought their areas of expertise to this effort. For example, CPSC coordinated with EPA to conduct an elemental analysis of the drywall components; HUD’s role was to develop guidance for the identification and remediation of problem drywall in homes; CDC’s role was to assess the health effects and develop a public awareness campaign; and CBP’s role was to help identify imports of defective drywall.\nBecause agencies have different missions and areas of expertise, they also have access to different data and information sources, and some agencies noted that sharing this information can increase their knowledge of product safety issues. For example, NHTSA noted that they share complaint and injury data associated with the use of hand-held infant carriers in motor vehicles with CPSC during joint investigations to inform CPSC’s oversight of these products when used outside of motor vehicles. Some agencies stated that given their current regulatory authorities, they may need to rely on other agencies’ authorities to address certain problems with unsafe products. For example, PHMSA noted that they do not have the authority to recall a product once it is in the possession of consumers, so they would rely on an agency such as CPSC or FDA to remove products from commerce that are under their respective jurisdictions.\nWhile agencies noted some benefits to the current regulatory structure for consumer product safety, fragmentation also creates some inefficiencies, including challenges related to communication among federal agencies and with industry and consumers and to the ability to identify and respond to new and emerging product hazards.", "Some agencies indicated that it can be difficult to find the right people with whom to coordinate if agencies or their staff have no pre-existing working relationships, if relationships change (such as through staff turnover), or if the agencies are large. For instance, program staff in EPA’s Office of Pesticide Programs stated that it can be difficult to find the right people with whom to coordinate if they are not familiar with an agency’s organization.\nMoreover, agencies might not be aware of the regulatory activities of other agencies that relate to their oversight. For example, CPSC had issued a rule on child-resistant packaging for over-the-counter and prescription drug products containing specified levels of the drug imidazoline in 2012. FDA officials said that the agency had not received adequate notification of the content of the rulemaking as it progressed, although CPSC initially made requests to FDA for data related to the issues covered by the rulemaking. FDA had concerns about certain provisions in the imidazoline packaging rule and felt that the final rule could have benefited from direct input from FDA. FDA staff noted that one way in which agencies learn about other agencies’ rulemaking activities is through a planning and review process for draft rules led by the Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA). This planning and review process can also be a way to resolve disputes among agencies. However, independent agencies, such as CPSC, are not subject to OIRA’s interagency planning and review process. As a result, entities other than independent agencies, such as FDA would not see rules proposed by CPSC as part of this process. However, CPSC noted that while it does receive draft rules from some agencies (mostly from EPA) during the OIRA planning and review process, the timing of the review would probably be too late to address major issues. FDA stated that agencies may consult with one another outside of the OIRA planning and review process.\nIn another example, FDA expressed concern that CPSC’s 2010 rule establishing requirements for cribs might eliminate cribs with drop-side rails that are necessary for medical purposes outside of hospital settings. In response to CPSC’s crib requirements, FDA is developing a proposed rule to regulate the safety and effectiveness of pediatric cribs, while allowing for the use of drop-side rails. FDA said they expect to issue the proposed rule in fall 2014. According to FDA staff, the agency has been coordinating with CPSC on how to publicly communicate their crib requirements. CPSC also noted in subsequent guidance that medical cribs are regulated by FDA and are not subject to CPSC’s crib standards.", "When consumer products fall under more than one agency’s jurisdiction, it may be unclear which agencies have primary oversight responsibility for them. As we previously discussed, products such as body-cleansing products may be regulated by different agencies depending on how they are used or marketed. Additionally, multiple agencies have regulatory jurisdiction for the packaging of certain household substances to ensure that children cannot easily open them. Under the Poison Prevention Packaging Act, CPSC oversees child-resistant packaging for household substances, including cosmetics and drugs, except for substances that are defined as pesticides by the Federal Insecticide, Fungicide, and Rodenticide Act (e.g., antimicrobial or antibacterial products). EPA regulates the child-resistant packaging of pesticides used in residential settings. EPA’s standards for child-resistant packaging are required by law to be consistent with CPSC’s requirements under the Poison Prevention Packaging Act and according to EPA’s website, EPA and CPSC worked together to develop reference guides for the public on their respective child-resistant packaging requirements. However, oversight over child-resistant packaging for antibacterial or antimicrobial body- cleansing products is unclear. EPA indicated that they do not regulate child-resistant packaging for antibacterial or antimicrobial body-cleansing products that contain the chemical Triclosan, which is also found in pesticides, because these products are regulated by FDA as over-the- counter drugs and not as pesticides by EPA. According to CPSC officials, the agency has not had occasion to consider whether it has jurisdiction over child-resistant packaging for antibacterial or antimicrobial body-cleansing products containing Triclosan even though CPSC’s authorities under the Poison Prevention Packaging Act include over-the- counter drugs.\nMoreover, as new products enter the consumer marketplace or when new uses or users arise for existing products, agencies face questions of jurisdiction. For example, CPSC staff noted that there are potential jurisdictional questions about products that could be used in both workplace and home settings, particularly as consumers have greater access to products that were previously limited to industrial settings, such as certain lawnmowers and power tools. According to CPSC, if an industrial product is used by consumers on more than an occasional basis, the agency may have the authority to regulate it as a consumer product. To make this determination, CPSC said it would have to consider—on a case-by-case basis—a variety of factors, including the use of the product by consumers and the associated hazards, as well as how the product is marketed, priced, and distributed. While OSHA typically regulates the use of products in workplace settings, CPSC can recall consumer products if OSHA standards do not adequately address a product’s hazards. We also previously reported on nanotechnology as an emerging field and found that nanomaterials can be used in a wide range of consumer products that involve multiple agencies’ jurisdictions. For example, we reported that consumer products that incorporate nanotechnology are as diverse as clothing, cosmetics, household appliances, and sporting goods.", "Some agencies noted that when oversight responsibilities are shared by multiple agencies, manufacturers may have to meet multiple regulatory requirements, which can increase time and costs for manufacturers. For example, senior program officials in CDC’s National Institute for Occupational Safety and Health (NIOSH) told us that NIOSH and FDA both regulate a certain type of respiratory protective device and that this overlap increases time and costs for manufacturers in having to meet different requirements. NIOSH certifies respirators as meeting certain requirements for use in workplace settings, such as construction sites, to protect workers from dust and small particles; these respirators can also be sold to consumers. FDA regulates respirators for use in health care settings as medical devices (i.e., surgical N95 respirators). FDA regulation of surgical N95 respirators includes premarket clearance requirements. FDA indicated that its clearance involves two steps: (1) First, FDA recommends that respirators be certified by NIOSH for use in occupational settings. (2) Second, once NIOSH has certified the respirators, FDA then begins its process for clearing them to be marketed in the United States as surgical N95 respirators. According to NIOSH, the impact on manufacturers includes the delay for the introduction of new products intended to provide respiratory protection, as well as barrier protection for health care workers, due to the time involved to apply to NIOSH for certification and then to FDA for clearance. According to NIOSH, manufacturers also incur costs for each application submitted to FDA and NIOSH, which includes processing fees imposed by the agencies as well as the commitment of personnel and other resources to assemble and monitor the applications and interface with the agency reviewers. In a request for information, NIOSH stated that it is considering incorporating requirements from FDA’s clearance process for respirators, such as those pertaining to fluid resistance and flammability, into the NIOSH certification process.\nIn another example, program officials from EPA’s Office of Pesticide Programs told us that a manufacturer approached the agency with concerns over having to sell two separate antimicrobial fruit and vegetable treatment products that met either EPA or FDA use EPA has requirements even though the product formula was the same.jurisdiction if the product is used to rinse whole fruits or vegetables, while FDA has jurisdiction if the product is used to rinse processed (e.g., cut) fruits or vegetables. EPA noted that the manufacturer wanted a single product that could be used for either whole or processed fruits or vegetables. To address this concern, EPA said it coordinated with FDA to incorporate FDA’s approval of the product for use on processed fruit and vegetables onto EPA’s pesticide label for the product. As a result, the manufacturer was able to sell this product under a single label.\nAdditionally, consumer groups and some agencies and industry experts with whom we spoke said consumers could be confused about which agency to contact to report problems. FDA officials said that even informed consumers may not know which agency to contact to report product-related incidents. With fragmented and overlapping oversight, consumers may have to visit multiple websites to report or search for safety information on consumer products. For example, CPSC and NHTSA have websites for consumers to report and search for safety concerns related to the use of hand-held infant carriers and car seats, respectively. FDA also posts phone numbers on its website for consumers to report safety concerns with FDA-regulated products in each state. However, FDA said that their staff are trained to refer consumers to the appropriate agencies for concerns about products that are not under FDA’s jurisdiction. In other cases, consumers may not be familiar with the agencies involved in the oversight of consumer products or their websites. For example, we previously examined consumers’ awareness of CPSC’s public consumer product safety information database SaferProducts.gov and found that none of the participants in consumer focus groups we conducted had heard of the website, and few had heard of CPSC.", "Some agencies purchase the same data, resulting in multiple contracts for the same information, but are considering options that would help them better share these data. Deaths in the United States are reported to the CDC’s National Center for Health Statistics’ (NCHS) Division of Vital Statistics through contracts between NCHS and the various state and local jurisdictions that are responsible for maintaining death certificates and other vital records. NCHS publicly releases limited information from the death certificate data they receive, but the public file does not contain any written narratives, which would provide greater detail on the circumstances of the deaths. NCHS staff told us that these narratives can contain personally identifiable information and their contracts limit their ability to share data involving such information, including with other federal agencies. Additionally, CPSC told us they purchase death certificate information from states for select narrative information on cause of death, which is used to help identify consumer product-related deaths.\nNCHS staff told us that they have been working with CPSC to identify ways to share information that do not compromise their contractual agreements. For example, NCHS told us that other agencies that examine cause-of-death narratives, such as NHTSA and FDA, have had staff work on-site at NCHS to review these data and develop programming that would allow NCHS to extract the information the agencies need. NCHS indicated they are considering development of a computer program that would automatically remove personally identifiable information from the death certificate records. CPSC suggested that it would be more efficient and cost-effective to have either a government- wide contract for purchasing these data or to have interagency agreements signed by other federal agencies with NCHS giving limited access to the full death certificate data. Additionally, they said that these agreements would have to contain strict data user clauses detailing restrictions on the use of the data containing personally identifiable information. For example, CPSC noted that for the National Electronic Injury Surveillance System, which CPSC administers, CPSC pays individual hospitals to code injury information specific to other federal agencies’ missions through interagency agreements. However, NCHS staff noted that under their contractual agreements with states and localities, the data they maintain can only be used for statistical or research purposes and not for administrative or enforcement purposes.According to NCHS staff, its current contracts for death certificate data will expire in 2017; however, access to these data in any renegotiated agreements would still be determined by states and localities.", "The National Institute of Standards and Technology (NIST) currently regulates the markings of toy and imitation firearms to distinguish them from real firearms. However, during the course of our review, we found that NIST’s oversight of toy and imitation firearm markings may not be efficient as it does not align with the agency’s primary mission and area of expertise. According to NIST, this authority was delegated to NIST following the deauthorization of the Technology Administration of the Commerce Department under the America COMPETES Act of 2007.However, NIST stated that the agency is a nonregulatory federal research laboratory and its mission is to promote U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve our quality of life. For example, as noted earlier, NIST has collaborated with CPSC to measure and better understand the release of nanotechnology- based products and exposure pathways. In another example related to measurement and protocol development, NIST stated it designed an apparatus to measure the visible power of laser pointers, which was consistent with NIST’s experience in providing industry, research, and military agencies with laser power measurements traceable to international standards. As these examples indicate, the regulation of the markings of toy and imitation firearms does not align with NIST’s mission nor its activities and expertise related to scientific measurement.\nNIST staff stated that for imported imitation firearms, the review and compliance determination process for toy and imitation firearms can be cumbersome and time-consuming. NIST staff also noted that because there are few, if any, domestic manufacturers of toy and imitation firearms and because most are imported, Commerce regulations on the markings for toy and imitation firearms are enforced almost entirely by CBP. NIST explained that upon request from law enforcement (usually CBP), NIST issues informal or formal opinions on whether a toy or imitation firearm complies with markings regulations. However, NIST stated it can issue formal opinions only after physically inspecting the items in question at its headquarters in Gaithersburg, Maryland. According to NIST, because NIST has no presence at any ports of entry, CBP has to ship samples to NIST to be analyzed and then NIST has to return the samples. NIST also stated that a formal opinion may result in the toy or imitation firearm and corresponding shipment being subject to CBP seizure.\nBecause the regulation of toy and imitation firearms falls outside the scope of NIST’s primary mission and functions and because NIST has no physical presence at ports of entry, NIST staff stated that the regulation and oversight of toy and imitation firearm markings may better be administered by another federal agency, such as CPSC, which also oversees other consumer products and toys and has a presence at ports of entry. NIST also explained that over the years, NIST has had discussions with CPSC on transferring the oversight responsibility for imitation firearms but it would require a statutory change. Although CPSC collaborates with CBP on enforcement activities such as import surveillance at ports of entry, CPSC staff agreed that it would be reasonable for CPSC to assume oversight for toy guns because the agency already regulates the safety and performance of toys. Although neither NIST nor CPSC has conducted formal cost estimates for carrying out the oversight of the markings of toy and imitation firearms, continued regulation of the marking of toy and imitation firearms by NIST rather than CPSC does not leverage each agency’s expertise and therefore may not be the most efficient use of scarce federal resources.", "Oversight of products that can be used on recreational boats is fragmented between the Coast Guard and CPSC, and the jurisdiction for some products can be unclear. As a result, we found that the potential exists for confusion regarding which agency has responsibility for addressing product safety hazards. Coast Guard staff told us that they regulate recreational boats and all originally installed associated equipment (i.e., equipment that was installed on boats by the original manufacturer). Coast Guard staff also stated that because of limited staff resources, the Coast Guard through regulation has chosen to limit the scope of its recall activities related to equipment not originally installed on boats (i.e., after-market equipment, or equipment not installed by the original equipment manufacturer) to four items: inboard engines, outboard engines, stern drive units, and inflatable life jackets.result, the Coast Guard relies on voluntary recalls from the manufacturer for all other associated equipment items other than the four types of items for which the Coast Guard has issued regulations.\nWhile by law CPSC does not have jurisdiction over recreational boats and associated equipment, CPSC officials stated that they have authority over some products that can be used either on or off of a boat—such as boating gloves, a camping stove, or a refrigerator. However, CPSA excludes from CPSC’s jurisdiction recreational boats and associated equipment which could be subject to regulation under the Coast Guard’s statutory authority. As excluded from CPSC’s jurisdiction, associated equipment is defined by statute as a system, accessory, component, or appurtenance of a recreational vessel or a marine safety article intended for use on board a recreational vessel. However, the Coast Guard’s definition of associated equipment for defect notification purposes includes only inboard engines, outboard engines, stern drive units, and inflatable life jackets. The different definitions of associated equipment for different purposes could create jurisdictional uncertainty for many items of associated equipment aboard recreational boats. Coast Guard and CPSC both acknowledged a potential regulatory gap for certain boating equipment based on the Coast Guard’s limited scope of oversight over after-market associated equipment and CPSC’s lack of authority to regulate associated equipment.\nQuestions of jurisdiction were raised in an accident involving the use of a recreational vehicle. Specifically, Coast Guard staff told us that CPSC and the Coast Guard held meetings to determine jurisdiction when a fatality occurred involving an all-terrain vehicle (ATV)—which would typically be regulated by CPSC—that was used as a water vessel (some ATVs can be used for flotation due to very large tires along with the addition of an outboard motor). According to Coast Guard officials, the agencies ultimately determined that CPSC had jurisdiction in this case. In another case, questions arose about the Coast Guard’s and CPSC’s jurisdiction in addressing accidents involving kite tubes (inflatable rafts that are towed behind power boats and become airborne). Coast Guard staff noted that because this product was intended for use off the vessel instead of installed on the vessel, it did not fall under the Coast Guard’s jurisdiction. However, according to Coast Guard staff, CPSC was not sure whether this product fell under its jurisdiction. Ultimately, CPSC concluded that it had jurisdiction and conducted a recall of the product. Although CPSC does not have jurisdiction over recreational boats and associated equipment, consumer products used in recreation do fall within its jurisdiction.\nAlthough no formal mechanism, such as an MOU, exists between the Coast Guard and CPSC, Coast Guard staff told us the informal and periodic coordination between the two agencies works well. However, our work on collaboration, which we discuss in greater detail in the next section, suggests that collaborating agencies should clarify roles and responsibilities and, if appropriate, document their agreement on how they will be collaborating. Moreover, given the potential for lack of clarity regarding jurisdiction, ensuring strong communication channels is important. Coast Guard staff said that their ad hoc, informal coordination with CPSC works well but this coordination has been infrequent—one or two times a year at most—and at times Coast Guard goes for years without coordinating with CPSC.\nIn the example of kite tubes, the Coast Guard said that it received the initial accident reports from state boating administrators, who are required to report boating accidents to the Coast Guard. In this instance, the Coast Guard stated that it shared the accident reports with CPSC after it decided this product was outside the Coast Guard’s jurisdiction. As stated previously, Coast Guard told us that through regulation it has chosen to limit the scope of its recall activities for associated equipment. However, because no formal mechanism exists between the Coast Guard and CPSC, there is a potential risk that hazards related to products for which jurisdiction is unclear may not be regulated. In addition, because of the potential gap in jurisdiction, it may at times be unclear which agency has regulatory responsibility for some products that may present safety risks, which underscores the need for strong communication between the two agencies.", "In responses to our questionnaires, all eight agencies that have direct oversight responsibilities for consumer product safety identified a number of mechanisms they use to coordinate with at least two other agencies on specific issues. However, no coordinating mechanism exists to address federal consumer product safety efforts comprehensively. Consumer product safety agencies have different areas of expertise and functions, and no single agency can address oversight alone. Moreover, some oversight agencies are independent and not subject to OMB’s planning and review process for executive agencies. As a result, there is no single entity or mechanism to help the agencies that collectively oversee consumer product safety address the challenges raised in this report, such as staying informed of the regulatory activities of other agencies, jurisdictional issues related to multiple agencies overseeing the same product, or data sharing issues. In addition, agencies may be missing opportunities to better leverage resources and address challenges, including those related to fragmentation and overlap identified in this report.", "In their questionnaire responses, interviews and other documents, agencies reported collaborating on specific topics using various mechanisms. Collaboration mechanisms identified include (1) memorandums of understanding (MOU) or memorandums of agreement (MOA); (2) interagency agreements; and (3) working groups. Several agencies stated that coordination with other agencies was positive and generally working well. For instance, EPA stated that their relationships with FDA and USDA were particularly positive because they have so much commonality in their work. CPSC stated that they have strong collaboration and cooperation with a number of agencies related to enforcement (CBP and the Department of Justice) and science and technical issues (Department of Health and Human Services (HHS), CDC, NIH, NIOSH, and the National Toxicology Program). Additionally, agencies coordinate informally on a variety of topics. For instance, NHTSA reported that it has an informal working relationship with EPA on the importation of motor vehicles that are subject to both the federal motor vehicle safety standards and to emission standards administered by EPA under the Clean Air Act. PHMSA officials stated that they have an informal working group with CPSC and ATF that meets annually to discuss issues related to fireworks. They added that these meetings often include industry groups, such as the National Fireworks Association. All eight agencies with direct oversight responsibilities reported having coordinated with at least two or more other regulatory agencies. Moreover, agencies most frequently reported coordinating with CPSC and EPA (see fig. 3).\nAdditionally, the 12 federal agencies that we identified as providing indirect consumer product safety support also reported collaborating with at least 1 or more of the 8 agencies with direct regulatory responsibilities. For example, CDC reported collaborating with HUD to identify and remedy repeat properties involving multiple cases of children identified with elevated blood levels, and OSHA reported that it meets with FDA as needed to discuss medical equipment used in the workplace. As previously discussed, these 12 agencies support product safety through activities such as public health expertise; law enforcement; workplace safety; transportation safety; and other activities.\nWe discuss some examples of interagency collaborative mechanisms that we identified in previous work on collaboration across federal agencies. Table 2 shows four mechanisms identified in our prior work.", "Presidential Task Force on Environmental Health and Safety Risks to Children. According to EPA, the purpose of this task force is to identify environmental health and safety risks to children that can be best addressed through interagency efforts; recommend and implement interagency actions; and communicate to federal, state, and local decision makers information to protect children from risks. EPA stated that both EPA and HHS are the chairs of the task force. EPA also stated it has members on the asthma disparities, healthy settings, and climate change subcommittees who provide expertise and technical assistance for the subcommittees’ activities. The task force is comprised of 17 federal departments and White House offices. CPSC also told us that their staff participates in the senior steering committee of the task force, such as the chemical exposures working group and the asthma working group.", "National Nanotechnology Initiative/Nanotechnology Environmental & Health Implications Working Group. CPSC and EPA reported coordinating on nanotechnology. For instance, EPA commented that EPA researchers participate in the U.S. National Nanotechnology Initiative/Nanotechnology Environmental Health Implications Working Group to share information on nanomaterials research. EPA is investigating how nanomaterials behave in the environment and how nanomaterial properties may be modified or exposure controls implemented to minimize and manage potential risks from products containing nanomaterials. According to a December 2012 news release, EPA and CPSC are collaborating in a worldwide research effort to assess any potential impacts of nanomaterials on people’s health and the environment. The news release also states that this research is part of the U.S. government’s efforts to assess the potential risks of nanomaterials and is coordinated by the National Nanotechnology Initiative. The nano.gov website states that the National Nanotechnology Initiative consists of the individual and cooperative nanotechnology-related activities of federal agencies with a range of research and regulatory roles and responsibilities.\nHealthy Homes Initiative/Federal Healthy Homes Work Group. HUD and EPA reported that they participate in healthy homes activities. According to a 2013 healthy homes report, the Federal Interagency Healthy Homes Work Group (HHWG) consists of the Departments of Housing and Urban Development, Energy, Labor, and Agriculture; organizations within the Department of Health and Human Services, including CDC and the National Institutes of Health/National Institute of Environmental Health Sciences (NIEHS); EPA; and NIST. The work group was established to strengthen coordination among federal agencies to advance and implement the healthy homes model, including to (1) establish a comprehensive federal strategy to promote healthy homes, (2) identify and eliminate barriers that impede collaboration and complicate assisting those in need of federal technical assistance or funding, and (3) collaborate with key federal and nonfederal stakeholders to implement a healthy homes agenda at the community level.", "Radiofrequency Interagency Work Group. FDA commented that they exchange information with FCC on the current state of research, standards activity, and health effects of cell phone radiation and that most interactions are facilitated by FDA and FCC participation in the Radiofrequency Interagency Working Group. For example, FDA worked on the interference between consumer products and active medical implants, such as the interference between MP3 players and pacemakers. FDA responded that they have worked collaboratively (with FCC) to develop communications on wireless devices. According to FDA’s website, the federal agencies in the working group include NIOSH, EPA, FCC, OSHA, and the National Telecommunications and Information Administration. The website also states that the federal agencies in this workgroup have responsibility for different aspects of radiofrequency safety and work to coordinate efforts at the federal level. Additionally, FCC staff told us that the working group meets every 2 months to share information. For instance, one topic discussed has been the development and eventual adoption of the FCC notice of inquiry regarding the propriety of its current radiofrequency emissions limits.\nFederal Interagency Lead-Based Paint Task Force. According to HUD, the federal Lead-Based Paint Task Force is co-chaired by HUD and EPA and meets several times a year to exchange information on issues related to lead-based paint; lead poisoning (both childhood and adult); lead exposures from paint, dust, soil, and, at times, additional media; hazard and risk control methods; and other topics. HUD and EPA have an MOU in place that was established in 1989. The task force is composed of about a dozen agencies, including CPSC. According to the MOU, the work of the task force is complex and requires familiarity with health effects and exposure to lead and practical considerations including costs, implementation issues, and technical feasibility of abatement methodologies. The MOU states that in addition to HUD and EPA, necessary expertise resides in other federal agencies such as CDC, CPSC, OSHA, and NIEHS, as well as state and local governments and private organizations. According to the MOU, HUD and EPA will consult with these groups to ensure the broadest possible input into the lead hazard research process.", "Although agencies collaborate on a variety of issues, they also reported that they face challenges when they work collaboratively. In our discussions and follow-up with agencies, agency staff cited challenges such as resource constraints, training port personnel on regulatory standards related to imported products, and using different terminology. For instance, EPA noted that working with other agencies to gain agreement required time and energy. NHTSA explained that because it has no personnel assigned to the various ports of entry, the agency is dependent on CBP personnel to ensure that imported motor vehicle equipment complies with applicable standards. NHTSA stated that it has a close working relationship with CBP and provides periodic training to CBP personnel both in-person at the ports and electronically. However, NHTSA noted that due to the variety of automotive products offered for importation and the turnover of CBP port personnel, NHTSA repeats training at ports that handle the highest volume of products it regulates. FDA staff stated that agencies may use different terminology, making communication difficult. In addition, earlier we discussed challenges related to fragmentation and overlap that also relate to coordination and collaboration. These challenges include staying informed about the regulatory activities of other agencies related to, for example, child- resistant packaging for over-the-counter and prescription drug products; coordinating on jurisdictional issues, for example, those related to packaging for certain household substances, including cosmetics and drugs; and considering options to share data rather than purchasing the same data under multiple contracts.\nIn past work, we have noted that interagency mechanisms or strategies to coordinate programs that address crosscutting issues may reduce potentially duplicative, overlapping, and fragmented efforts. In October 2005, we identified practices that can help enhance and sustain collaboration among federal agencies, and in September 2012, we identified key considerations for implementing collaborative mechanisms. More specifically, we concluded that while collaborative mechanisms differ in complexity and scope, they all benefit from certain key features such as having clear roles and responsibilities and involving all relevant participants. Additionally, our prior work found that agencies that articulate their agreements in formal documents can strengthen their commitment to working collaboratively and that written agreements are most effective when they are regularly updated and monitored. We noted that not all collaborative arrangements need to be documented through written guidance and agreements, particularly those that are informal. However, we have found that at times it can be helpful to document key agreements related to the collaboration.\nAdditionally, the Government Performance and Results Act (GPRA) Modernization Act of 2010 (GPRAMA) establishes a framework aimed at taking a more crosscutting and integrated approach to focusing on long- term outcome-oriented goals and improving government performance.\nGAO-12-1022 and GAO, Managing For Results: GPRA Modernization Act Pub. L. No. 111-352, 124 Stat. 3866 (2011). GPRAMA amends the Government Performance and Results Act of 1993, Pub. L. No. 103-62, 107 Stat. 285 (1993). every 4 years, elements of this framework could be useful for oversight agencies in collaborating more comprehensively. For instance, federal agencies can use their strategic and annual performance plans as tools to drive collaboration with other agencies and other partners and establish complementary goals and strategies for achieving results. Moreover, there are requirements that agencies discuss collaborative efforts in their strategic and performance plans. In both documents, agencies must describe how they are working with other agencies to achieve their own goals as well as cross-agency priority goals. Additionally, in the performance plan, agencies are to identify the various organizations, program activities, regulations, policies, and other activities that contribute to each of their goals, both within and external to the agencies. Agencies’ priority goals and agency involvement in federal government priority goals provide additional opportunities to articulate the goals of collaborative efforts.\nWhile we identified a number of collaborative efforts among agencies aimed at addressing specific issues, we did not identify a collaborative effort aimed at facilitating comprehensive coordination among the many agencies with responsibility for consumer product safety oversight. A number of agencies have an oversight role, but no single entity has the expertise or authority to address the full scope of product safety activities. Although we previously noted that OMB’s Office of Information and Regulatory Affairs (OIRA) has an interagency process for planning and reviewing draft rules within the executive branch, this process does not include independent regulatory agencies such as CPSC. Moreover, some independent regulatory agencies have stated their opposition to greater involvement by the President in setting their rulemaking requirements, such as the preparation of cost-benefit analyses and submission of rulemakings to OIRA for prior review. Without a collaborative mechanism to facilitate communication across the relevant agencies and to help enable them to collectively address crosscutting issues, the agencies responsible for consumer product safety oversight may continue to be challenged by inefficiencies associated with fragmentation and overlap, including those we identified in this report.", "Consumer product safety oversight is a broad area involving the expertise of many agencies with diverse missions. Fragmented and overlapping oversight among various agencies results in a number of challenges for the oversight of consumer product safety, including communication difficulties, inefficient use of resources, and unclear roles resulting in potential regulatory gaps. In particular, the role of NIST as regulator for the markings of toy and imitation firearms in section 5001 of title 15 of the U.S. Code (15 U.S.C. § 5001) is inefficient because such a role may not leverage the agency’s primary mission and expertise in the area of scientific measurement. Transferring this authority to another agency would require a statutory change. In another example of a challenge associated with fragmented oversight, it is unclear whether some boating products fall under the jurisdiction of the Coast Guard or CPSC. In the absence of a formal mechanism to facilitate coordination and clarify roles and responsibilities, as indicated in our work on collaboration, some products that may present a safety risk may go unregulated.\nIn addition, while agencies reported collaborating using a variety of mechanisms to address specific topics, we did not identify a mechanism to facilitate more comprehensive collaboration. The inefficiencies we identified in this report suggest the need for greater collaboration, which in turn could help reduce some negative effects of fragmentation and overlap. Also, there may be instances where more formal arrangements would be beneficial. Due to the range of oversight areas and activities, no single agency is able to address a problem alone. Additionally, independent agencies such as CPSC are not subject to the executive branch planning and review process under OMB. Our body of work on collaborative practices and GPRAMA suggests that agencies need to consider taking a more crosscutting and integrated approach to addressing consumer product safety oversight. A broad interagency collaborative mechanism could help the agencies that are collectively responsible for the oversight of consumer product safety to address some of the key issues identified in our work on collaborative practices, such as clarifying agency roles and responsibilities, ensuring that all relevant participants have been included, and appropriately documenting key agreements on collaboration. Formal collaboration—both between two agencies to address a specific issue and across multiple agencies to provide comprehensive oversight—can be useful in strengthening agency commitments in working together. Without taking these actions, agencies may not be able to fully leverage government resources and may not be able to regulate consumer products in the most efficient and effective manner.", "To achieve greater efficiency and effectiveness, Congress should consider transferring the oversight of the markings of toy and imitation firearms in 15 U.S.C. § 5001 from the National Institute of Standards and Technology (within the Department of Commerce) to the Consumer Product Safety Commission.\nTo improve existing coordination of oversight for consumer product safety, Congress should consider establishing a formal comprehensive oversight mechanism for consumer product safety agencies to address crosscutting issues as well as inefficiencies related to fragmentation and overlap such as communication and coordination challenges and jurisdictional questions between agencies. Different types of formal mechanisms could include, for example, creating a memorandum of understanding to formalize relationships and agreements or establishing a task force or interagency work group. As a starting point, Congress may wish to obtain agency input on options for establishing more formal coordination.", "To clarify roles and facilitate greater communication and strengthen oversight of associated equipment related to recreational boats, we recommend that the U.S. Coast Guard and Consumer Product Safety Commission establish a formal approach to coordination (such as a memorandum of understanding) to facilitate information sharing and better leveraging of resources.", "We provided a draft of this report to the 20 agencies for their review and comment. CPSC, the Department of Homeland Security (DHS), and NIST agreed with GAO’s matters and recommendation; other agencies neither agreed nor disagreed. We received comment letters from CPSC and the Department of Homeland Security that are reproduced in appendixes V and VI. We received technical comments from CPSC; Department of Commerce (NIST); Department of Health and Human Services (CDC, FDA, HRSA, NIH); DHS (CBP); HUD; Department of Justice (ATF); Department of Labor (OSHA); EPA, FCC and NRC that we incorporated, as appropriate.\nIn commenting on the draft report, CPSC and NIST made the following comments related to the report’s matters to Congress. Specifically, concerning the matter that Congress consider transferring certain oversight responsibilities from NIST to CPSC, CPSC suggested that we clarify that we are referring to requirements under 15 U.S.C. § 5001 and stated that it would be willing to accept responsibility for oversight of the markings of toy and imitation firearms provided that the transfer of authority from NIST includes a corresponding increase in appropriations. To clarify the matter, we added a reference to 15 U.S.C. § 5001 to the conclusions and matter. NIST stated in its technical comments that it supports the transfer of the oversight of the markings of toy, look-alike, and imitation firearms from NIST to CPSC and that the report was consistent with NIST’s position regarding oversight of toy guns and imitation firearms. CPSC also stated that it would be comfortable with the establishment of a formal collaboration mechanism to address oversight in areas of shared or fragmented jurisdiction provided that such an approach does not compromise the agency’s independence. With regard to the recommendation that the U.S. Coast Guard and CPSC establish a formal approach to coordination (such as a memorandum of understanding) to strengthen the oversight of associated equipment related to recreational boats, CPSC indicated that they support, and plan to pursue, this recommendation. The Department of Homeland Security also agreed with our recommendation and stated that the U.S. Coast Guard will work with CPSC to develop a formal memorandum of understanding to facilitate communication between agencies on oversight of items of associated equipment installed on recreational boats with an estimated completion date of April 30, 2015.\nWe are sending copies of this report to appropriate congressional committees, the Chairman and Commissioners of CPSC, and the Secretary of the Department of Homeland Security. The report also 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 [email protected]. 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 VII.", "The objectives of this review were to examine (1) which federal agencies oversee consumer product safety and their roles and responsibilities; (2) the extent and effects of fragmentation, overlap, or duplication, if any, in the oversight of consumer products; and (3) how consumer product safety oversight agencies coordinate their activities and to what extent does that address any identified negative effects of fragmentation, overlap, or duplication.\nFor all three objectives, we reviewed relevant laws and regulations, as well as literature and our past reports on consumer product safety; fragmentation, overlap, and duplication; and mechanisms for interagency collaboration (see list of related products at the end of this report). We developed an inventory of agencies involved in consumer product safety oversight activities, the methodology for which is described in greater detail below. We also interviewed federal agency officials and industry groups to gather information on the extent of fragmentation, overlap, and duplication, their benefits and advantages, and options to address them. We analyzed agency and other documentation as available.", "To initially identify agencies that conduct consumer product safety oversight and to delineate their roles and responsibilities, we reviewed the following sources: (1) laws and regulations related to consumer product safety, as well as Federal Register notices for proposed and final rulemaking from August 2008 to October 2013; (2) the Consumer Product Safety Commission’s (CPSC) web link to other federal agencies with jurisdiction over consumer products; (3) our past reports; and (4) agency members of CPSC-identified interagency working groups. We disseminated a questionnaire to the 33 agencies we identified to (1) confirm their roles and responsibilities and (2) identify any other agencies with whom they coordinate.\nTo verify agency roles and responsibilities, we developed a questionnaire that included a request for each agency to verify its oversight areas and relevant authorities. We also asked questions about the types of statutory authority the agency has; its mission; other agencies with which it coordinates; barriers to coordination; and knowledge of potential fragmentation, overlap, or duplication. To minimize errors arising from differences in how the questions might be interpreted and to ensure we had provided sufficient background and clarity of our scope, we conducted pretests with two different agencies in December 2013. We obtained feedback during the pretests and revised the questionnaire to improve organization and clarity.\nWe sent the questionnaire to the relevant agency contacts in February 2014 as attachments to an e-mail message, in which we provided an introduction, contact information for GAO staff, and the time frame for completion. Many of the questions were open-ended, allowing officials to provide more in-depth information on oversight areas; interagency initiatives; and examples of fragmentation, overlap, and duplication. We disseminated 33 questionnaires in total and received at least one response from each of the 33 entities for a 100 percent response rate. We received multiple responses from some agencies, which we aggregated for reporting purposes at the agency or subagency level, as laid out in the U.S. Government Manual. For example, we received multiple responses from various centers within FDA, which we aggregated to report out for FDA as a whole.\nRespondents returned completed questionnaires by e-mail, and we reviewed each program’s questionnaire to ensure agency staff had provided complete and consistent responses. From March 2014 through April 2014, we made telephone calls to agency staff and sent e-mails to follow up as necessary to clarify responses. We edited the questionnaire responses as necessary.\nWe used an independent contractor to keypunch the questionnaire data and provide us with a comprehensive data file. We verified all of our keypunched records with their corresponding questionnaires. We also performed data checks to identify incorrectly skipped questions, and followed up with agency staff as necessary.\nFinally, we categorized the agencies to determine whether they have a direct, an indirect, or no role in consumer product safety oversight. We determined this categorization based on questionnaire responses and subsequent interviews with agencies. We categorized agencies as having a direct role if they answered in their questionnaire or in interviews that they have regulatory authority for consumer product safety oversight— specifically that they conduct rulemaking, standard setting, enforcement, risk assessment, or product recalls. We then confirmed in interviews and follow-up discussions that the agency views itself as having a role in overseeing the safety of consumer products. We categorized an agency as having an indirect role if it met one of two criteria: (1) it did not conduct any of the five regulatory activities described in the previous section, but described other activities that supported consumer product safety oversight; or (2) it initially described a role in regulating consumer products, but in subsequent interviews, did not self-identify as a consumer product safety oversight agency. Of the 33 questionnaires we received, we categorized 8 as having a direct oversight role, 12 as having an indirect oversight role, and 13 as having no role.", "To examine the extent of fragmentation, overlap, and duplication in oversight for consumer product safety, we asked agencies in the questionnaire to identify potential examples of consumer products, product categories, or other areas where there may be fragmentation, overlap, and duplication in oversight across federal agencies. We summarized the responses and obtained additional details about agencies’ oversight roles in these examples through interviews with and requests for written information from federal agency officials, as well as by reviewing relevant laws, regulations, agency websites, and other documentation. We also interviewed consumer groups and industry representatives about potential examples of fragmentation, overlap, and duplication in oversight.\nWe used the following definitions to determine whether the examples provided by the agencies constituted fragmentation, overlap, or duplication:\nFragmentation occurs when more than one federal agency (or more than one organization within an agency) is involved in the same broad area of national interest.\nOverlap occurs when multiple programs have similar goals and activities or offer similar services to similar target populations.\nDuplication occurs when two or more agencies or programs engage in the same activities or provide the same services to the same beneficiaries.\nWe determined whether the broad policy area of consumer product safety is fragmented based on more than one agency being directly involved in regulations related to consumer product safety. To determine the extent of regulatory overlap among the product or issue area examples provided by federal agencies and other groups, we examined whether multiple agencies share regulatory responsibility over the same product, including having regulatory requirements for the same product.\nIn addition to identifying the examples above, we interviewed several of the agencies about the potential advantages and challenges of having fragmented, overlapping, or duplicative oversight for consumer product safety. We also interviewed consumer groups and industry representatives about the effects of fragmentation, overlap, and duplication on consumers and industry. Based on the discussions with federal officials, consumer groups, and industry representatives, we identified potential inefficiencies involving fragmented, overlapping, or duplicative oversight.", "We also used the questionnaire to address our third objective about how consumer product safety agencies collaborate. For instance, in the questionnaire, the agencies were asked whether they coordinate with other agencies on consumer product safety oversight. The questionnaire also asked agencies to identify what products or oversight areas they coordinated on and which mechanisms their agencies used, including (1) memorandums of understanding or agreement; (2) interagency agreements; (3) working groups; and (4) other. Additionally, in the questionnaire, we asked agencies to describe any specific interagency initiatives their agency participates in related to consumer product safety and what their agency’s roles are in these initiatives. We also obtained additional agency information, where available, on examples of interagency collaboration and reviewed documentation describing these efforts and obtained input from agency staff.\nTo examine how consumer product safety oversight agencies collaborate and the extent that addresses any negative effects of fragmentation, overlap, or duplication, we reviewed our prior reports on interagency collaboration and the Government Performance and Results Act (GPRA), as amended by the GPRA Modernization Act (GPRAMA) (see bibliography). For example, we reviewed GAO’s interagency collaboration reports, which discuss key practices and considerations for implementing interagency collaborative mechanisms and the GPRAMA, which establishes a framework aimed at taking a more crosscutting and integrated approach to focusing on results and improving government performance. Additionally, we obtained information on challenges and barriers to coordination through the questionnaire and agency discussions. For instance, the questionnaire asked agencies to what extent, if at all, specific barriers affected their ability to coordinate with other agencies on consumer product safety oversight. Examples of barriers include (1) unclear roles and responsibilities of participating agencies, (2) lack of leadership, (3) lack of resources, (4) lack of statutory authority, and (5) lack of written guidance and agreements. We also obtained input from agencies on barriers associated with coordination identified in the questionnaire.\nWe conducted this performance audit from July 2013 to November 2014, 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.", "Below is a reprint of the questionnaire that we sent to 33 federal agencies to identify agencies that have an oversight role in consumer product safety and to examine the extent to which fragmentation, overlap or potential duplication exists among their activities.", "We identified 12 agencies that indirectly support consumer product safety oversight. Table 3 provides an overview of each agency and its responsibilities. These agencies support product safety in areas such as public health expertise, law enforcement, and workplace safety.", "", "", "", "", "Alicia Puente Cackley, (202) 512-8678 or [email protected].", "In addition to the contact name above, Debra Johnson (Assistant Director), Janet Fong (Analyst-in-Charge), Meghana Acharya, JoAnna Berry, William Chatlos, David Dornisch, Catherine Hurley, Jill Lacey, Marc Molino, Patricia Moye, Jennifer Schwartz, and Srinidhi Vijaykumar made key contributions to this report. Other contributors include Timothy Bober, Christine Broderick, Benjamin Licht, Steven Putansu, and Michelle Sager.", "Consumer Product Safety Commission: Challenges and Options for Responding to New and Emerging Risks. GAO-15-17. Washington, D.C.: October 14, 2014. 2014 Annual Report: Additional Opportunities to Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits. GAO-14-343SP. Washington, D.C.: April 8, 2014.\nNanomanufacturing: Emergence and Implications for U.S. Competitiveness, the Environment, and Human Health. GAO-14-181SP. Washington, D.C.: January 31, 2014.\nInformation on Defective Drywall. GAO-13-735R. Washington, D.C.: July 31, 2013. 2013 Annual Report: Actions Needed to Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits. GAO-13-279SP. Washington, D.C.: April 9, 2013.\nConsumer Product Safety Commission: Awareness, Use, and Usefulness of SaferProducts.gov. GAO-13-306. Washington, D.C.: March 11, 2013.\nConsumer Product Safety Commission: Agency Faces Challenges in Responding to New Product Risks. GAO-13-150. Washington D.C.: December 20, 2012.\nManaging For Results: Key Considerations for Implementing Interagency Collaborative Mechanisms. GAO-12-1022. Washington, D.C.: September 27, 2012.\nConsumer Product Safety Commission: A More Active Role in Voluntary Standards Development Should Be Considered. GAO-12-582. Washington, D.C.: May 21, 2012. 2012 Annual Report: Opportunities to Reduce Duplication, Overlap and Fragmentation, Achieve Savings, and Enhance Revenue. GAO-12-342SP. Washington, D.C.: February 28, 2012.\nManaging For Results: GPRA Modernization Act Implementation Provides Important Opportunities to Address Government Challenges. GAO-11-617T. Washington D.C.: May 10, 2011.\nFederal Food Safety Oversight: Food Safety Working Group Is a Positive First Step but Governmentwide Planning Is Needed to Address Fragmentation. GAO-11-289. Washington, D.C.: March 18, 2011.\nOpportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue. GAO-11-318SP. Washington, D.C.: March 1, 2011.\nConsumer Safety: Better Information and Planning Would Strengthen CPSC’s Oversight of Imported Products. GAO-09-803. Washington, D.C.: August 14, 2009.\nResults-Oriented Government: Practices That Can Help Enhance and Sustain Collaboration among Federal Agencies. GAO-06-15. Washington, D.C.: October 21, 2005." ], "depth": [ 1, 2, 2, 1, 2, 2, 1, 2, 2, 3, 3, 3, 3, 2, 2, 1, 2, 3, 3, 3, 2, 1, 1, 1, 1, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "", "", "", "", "", "", "h0_title h2_title", "h0_full", "h0_full", "", "", "", "", "h0_full", "h0_full h2_full", "h1_full", "", "", "", "", "h1_full", "h1_full", "", "", "h2_full", "h1_title", "", "", "h1_full", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How is consumer product safety regulated across agencies?", "What are the benefits and downsides of involving multiple agencies to regulate consumer product safety?", "How can cooperation between multiple agencies be difficult?", "Why is the marking of toy and imitation firearms by NIST inefficient?", "What is NIST's recommendation to remedy this issue?", "What issue did the GAO have with collaboration between agencies?", "How might the GAO's lack of formal mechanism affect agencies' ability to address problems?", "What are some oversights that the GAO has not addressed?", "What has the GAO done to encourage agency collaboration?", "What should Congress do regarding inefficiencies related to overlap?", "What actions does the GAO recommend?", "What were the reactions of CPSC and NIST to GAO's recommendations?" ], "summary": [ "Oversight of consumer product safety is fragmented across agencies, and jurisdiction overlaps or is unclear for certain products. In some cases, agencies regulate different components of or carry out different regulatory activities for the same product, or jurisdiction for a product can change depending on where or how it is used.", "Agencies reported that the involvement of multiple agencies with various expertise can help ensure more comprehensive oversight by addressing a range of safety concerns. However, agencies also noted some inefficiencies, including the challenges of sharing information across agencies and challenges related to jurisdiction.", "For example, GAO found that the jurisdiction for some recreational boating products can be unclear and the potential exists for confusion regarding agency responsibility for addressing product safety hazards. Coast Guard officials said they work informally with CPSC when the need arises but that these interactions are infrequent. Without a more formal coordination mechanism to address jurisdictional uncertainties some potential safety hazards may go unregulated.", "In addition, the Department of Commerce's National Institute of Standards and Technology (NIST) oversees the markings of toy and imitation firearms to distinguish them from real firearms, which may be an inefficient use of resources because it does not leverage NIST's primary expertise related to scientific measurement.", "According to NIST, this function may be better administered by CPSC, which oversees the safety and performance of toys. However, this would require a statutory change.", "Agencies reported that they collaborate to address specific consumer product safety topics, but GAO did not identify a formal mechanism for addressing such issues more comprehensively.", "Because no mechanism exists to help agencies collectively address crosscutting issues, agencies may miss opportunities to leverage resources and address challenges, including those related to fragmentation and overlap identified in this report.", "Independent agencies, such as CPSC, are not subject to the Office of Management and Budget's planning and review process for executive agencies. Additionally, no single entity or mechanism exists to help the agencies that collectively oversee consumer product safety.", "GAO has identified issues for agencies to consider in collaborating, such as clarifying roles and including all relevant participants.", "Congress should consider (1) transferring oversight of the markings of toy, look-alike, and imitation firearms from NIST to CPSC, and (2) establishing a formal collaboration mechanism to address comprehensive oversight and inefficiencies related to fragmentation and overlap.", "Also, GAO recommends that the Coast Guard and CPSC establish a formal coordination mechanism.", "CPSC, the Department of Homeland Security, and NIST agreed with GAO's matters and recommendation; other agencies neither agreed nor disagreed." ], "parent_pair_index": [ -1, -1, -1, -1, 3, -1, 0, -1, -1, -1, -1, 1 ], "summary_paragraph_index": [ 4, 4, 4, 4, 4, 5, 5, 5, 5, 6, 6, 6 ] }

{ "title": [ "", "Introduction", "Current Tax Benefits", "Charitable Contributions", "Tax Exemption of Earnings", "Expanding Benefits for Charitable Contributions and Organizations", "Provisions Considered But Not Adopted", "Deduction for Non-Itemizers", "Reducing the Foundation Investment Income Excise Tax", "Raising the Corporate Charitable Deductions Cap", "Unrelated Business Income of Charitable Remainder Trusts", "Disaster Provisions Enacted on a Temporary Basis", "Provisions Now Part of the Extenders25", "Contributions of Conservation Property", "IRA Rollover Provision", "Extending the Deduction for Food Inventory to all Businesses", "Contributions of Computer Equipment", "Contributions of Book Inventory", "Basis of S Corporation Stock for Charitable Contributions", "Unrelated Business Income: Related Party Payments", "Permanent Reduction in Excise Tax Reduction for Blood Collector Organizations", "Recent Restrictions on Charitable Donations and Organizations", "Restrictions on Charitable Contributions", "Vehicle Donations and Gifts of Intellectual Property", "Contributions of Historical Conservation Easements", "Contributions of Taxidermy Property", "Recapture of Tax Benefit if Not Used for Exempt Purpose", "Deductions for Contributions of Clothing and Household Items", "Recordkeeping Requirements", "Contributions of Fractional Interests", "Penalties on Overstatements of Valuations", "Restrictions on Tax-Exempt Organizations", "Terrorist Activities", "Leasing Activities", "Penalties for Tax-Exempt Organizations in Prohibited Tax Shelters", "Life Insurance", "Penalties and Penalty Taxes", "Credit Counseling Agencies", "Expanding the Base for Imposing Foundation Excise Taxes", "Defining Conventions or Association of Churches", "Information Reporting: Organizations Not Filing Annual Returns", "Disclosure to State Officials", "Disclosure of the Unrelated Business Income Tax Return", "Donor-Advised Funds and Supporting Organizations", "Current Issues Surrounding Charitable Deductions and Organizations", "The Extenders", "Limiting Itemized Deductions", "Nonprofit Hospitals", "University and College Endowments", "Donor-Advised Funds and Supporting Organizations", "Reporting Requirements and Exempt Status Revocation", "Specific Sectors Including Media-Based Ministries" ], "paragraphs": [ "", "Historically, the value of tax benefits for charitable contributions and organizations was estimated to be around $100 billion per year. This figure fell in recent years due to the economic recession and slow recovery. Although revisions to the treatment of charitable contributions and tax-exempt organizations that receive these contributions have been made in recent years, a number of issues remain unresolved. A number of provisions related to charitable contributions have been enacted on a temporary basis as part of the \"tax extenders,\" including an individual retirement account (IRA) rollover, liberalized treatment of certain gifts of inventory, and some other provisions. The Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) extended these provisions through 2011. The American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) extended most, but not all, of these provisions through 2013. The future of various charitable tax provisions beyond 2013 is uncertain.\nThis report also addresses a number of current policy issues relevant for various types of charitable organizations. Issues relating to donor-advised funds and supporting organizations, such as distribution requirements, remain relevant. Similar concerns about whether funds were being paid out at a high enough rate have also been directed at university and college endowments, where a combination of high returns and relatively low payout rates has led to rapid growth. Issues have also been raised about whether nonprofit hospitals provide enough charity care. The Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 ) attempted to address some of these concerns by imposing new requirements on nonprofit hospitals while requiring the Secretary of the Treasury in conjunction with the Secretary of Health and Human Services to report to Congress on charity care provided by tax-exempt hospitals.\nThe President's budgets proposed limiting the value of itemized deductions (which would include charitable contributions) to 28% of each dollar. The final report of the Fiscal Commission also recommended limiting the value of tax benefits associated with charitable contributions. A number of other proposals for caps or floors have also been made as a part of tax reform.\nIn addition to addressing the issues mentioned above, this report discusses the current tax benefits for tax-exempt and charitable organizations, reviews legislative changes that have taken place in recent years, and discusses potential future legislative issues. It focuses on deductions for charitable contributions, and on institutions that are generally eligible for deductible charitable contributions, such as social welfare organizations, educational institutions, nonprofit hospitals, and churches, along with conduits to those institutions such as private foundations, donor-advised funds, and supporting organizations.", "The tax system provides a series of benefits for tax-exempt and charitable organizations. The most widely estimated and discussed is the deduction for charitable contributions, which is estimated in FY2014 to reduce federal revenue by $46.4 billion. This amount has declined compared with previous projects when most of the 2001 tax rates were made permanent.\nAnother important benefit is the exemption of earnings on assets from the income tax. As discussed below, although this benefit is difficult to estimate, it appears to be as large, and historically has been in the neighborhood of $50 billion per year. For universities and colleges, these benefits are several times as large as the savings by donors from deducting charitable contributions. The value, however, fell temporarily given the reduction in earnings yields during the recent economic slowdown, had largely recovered, but fell again in 2012.", "Not all tax-exempt organizations can receive tax deductible donations, but religious, educational, social welfare, health, animal protection, and similar organizations are eligible. In recent years, several revisions to the treatment of charitable deductions have been made, both to expand benefits and address potential abuses. Some of the provisions that expand benefits have become part of the \"extenders,\" provisions that are currently set to expire at the end of 2013.\nAlthough charitable deductions are available to all taxpayers, individuals who take the standard deduction do not have a marginal tax incentive to give. Slightly over one-third of taxpayers itemize; about 30% deduct charitable contributions. Individuals' contributions are, in general, limited to 50% of income for most charities, but are restricted to 30% for certain nonprofits, including non-operating foundations and institutions set up for the benefit of members (such as fraternal lodges). Individuals can contribute property as well as cash, and the contribution of appreciated assets has particularly beneficial treatment, since the value of most appreciated assets can be deducted without including the capital gains in income. (Some contributions of property are limited to the smaller of basis or fair market value, such as business inventory.) For that reason, gifts of appreciated property are limited to 30% of income for most general charitable organizations, and to 20% for organizations with more restricted giving limits, such as non-operating private foundations. Corporate contributions are limited to 10% of taxable income. Individuals can also deduct costs of volunteering for charitable purposes, including out-of-pocket expenditures, costs of using a vehicle, and travel costs when there is no significant personal element.\nThe treatment of charitable contributions has been of legislative interest. A series of proposals to expand charitable benefits were made in the past, beginning with President Bush's 2000 presidential campaign, and followed by a series of bills introduced in Congress (referred to as the Community Solutions Act and the CARE Act). The centerpiece of the initial proposal was to allow charitable deductions for non-itemizers. This provision, which was relatively costly compared to other proposals, was scaled back with ceilings and floors, and ultimately not adopted. A number of more limited proposals were considered and some were adopted, largely on a temporary basis (part of temporary provisions referred to as the \"extenders\" that are continually reauthorized). Proposals and enacted legislation placing restrictions on charitable contributions were largely motivated by potential abuses, which led to some changes in the law. These included the lack of documentation of cash contributions, but largely focused on gifts of property, where the valuation of the property or even the existence of a true gift may be questioned.\nBroad reform proposals have also suggested restricting charitable deductions to make incentives more efficient, both from an economic and administrative perspective, by only allowing charitable deductions in excess of a floor. More recently, charitable contributions may be affected by overall limitations on itemized deductions through general tax reform.", "A less visible, but nevertheless important, benefit is that tax exemption allows organizations to accumulate assets without paying tax on earnings. Estimates discussed below suggest that the revenue loss from this tax benefit may be larger than that associated with charitable contributions deductions. If charitable contributions were spent quickly, this benefit would be minimal. If contributions are held as assets and invested, the tax exemption may confer significant benefits. There are several ways in which donations are invested rather than spent. Some types of active tax-exempt organizations maintain assets in the form of endowments, particularly educational institutions. Private foundations are often originally funded with a large donation and pay out a small share of assets (required to be at least 5%, however). Two other types of institutions are similar to private foundations in that they do not directly engage in activities and accumulate assets from which they make payments: supporting organizations and donor-advised funds. All of these types of asset accumulating institutions have been the subject of legislative interest.\nPrior to the recent recession, revenue losses associated with allowing organizations to accumulate assets tax-free had increased substantially with the growth of educational institution endowments. At some institutions, earnings were substantial relative to payout rates. During FY2007 (which ended in June 2007 for most institutions), approximately $25 billion would have been raised if endowment earnings alone were subject to the corporate tax. This is more than three times as large as the revenue loss for charitable donations to all educational institutions, which was approximately $7 billion in 2007. The ratio of revenue cost of the asset earnings to charitable contributions is probably smaller for other types of nonprofits. Nonetheless, the revenue cost of exempting asset earnings for all charitable organizations was likely as high as $50 billion prior to the recession, about the same size as the cost of the charitable deduction.\nReturns on educational endowments were -18.7% in FY2009 and -2.5% over the 2007 through 2009 three-year period. Over the 10-year period, endowments earned a net return of approximately 4%. The recent economic downturn highlights how revenue losses associated with the tax-free accumulation of assets are susceptible to economic conditions. Revenue loss will fluctuate as returns to assets fluctuate.\nFor FY2011, however, endowment returns had largely recovered, and the lost revenue for endowment earnings for educational institutions was projected at $22 billion, with overall costs were close to their FY2007 values. Returns, however, fell to virtually zero (-0.3%), due in part to large losses on international equities and small gains on domestic equities. These markets should eventually recover, however.\nCongress also addressed some issues associated with tax-exempt organizations themselves. Some of this concern was directed at circumstances where tax deductible donations are made to organizations that act as conduits and do not have charitable activities. Private non-operating foundations, recipients of donations that make grants to active organizations, are required to pay out 5% of assets. Donor advised funds and supporting organizations, however, had no payout requirements. These organizations were the subject of legislative interest, not only because of concerns about payout rates, but also about the possibilities of using these organizations, which were not subject to self-dealing rules as restrictive as foundations, for private benefit. Some changes for these organizations were adopted, but major changes, such as payout requirements, were not in all cases; instead, Congress authorized Treasury studies and decisions in the aftermath of those studies is uncertain.", "Although numerous legislative proposals have been introduced since 2001 directly relevant to the charitable sector, few of these proposals have become public law. The American Taxpayer Relief Act of 2012 ( P.L. 112-24 ) was the latest to continue most of the charitable extenders (through 2013). The 111 th Congress extended through 2021 these charitable provisions that had been allowed to expire as part of the extenders package in the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). The charitable extenders, which had been allowed to expire at the end of 2009, had last been extended by the 110 th Congress as part of the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ). The 111 th Congress also enacted legislation to accelerate tax deductions for charitable contributions made to Haiti's earthquake victims.\nThe 109 th Congress enacted a number of pieces of legislation with provisions to promote charitable giving. Much of this legislation was aimed at disaster relief. The Pension Protection Act of 2006 ( P.L. 109-280 ) contained a number of provisions that restricted charitable giving, including new reporting requirements for tax-exempt organizations; new requirements on donor-advised funds, supporting organizations, and credit counseling organizations; and enhanced incentives for charitable giving, such as the tax-free distributions from IRA accounts for charitable purposes.\nThis section summarizes the tax proposals liberalizing charitable contributions and briefly reviews the issues in most cases. It is followed by a section summarizing the tax proposals restricting charitable contributions and organizations. Each proposal considered in this section is identified as not adopted, temporary (adopted as a temporary provision without expectation of extension), extender (adopted with an expiration date as part of the extenders proposals), or permanent. Note that further details of provisions enacted are contained in the Joint Tax Committee's \"Blue Books,\" that summarize legislation.", "In recent years, a number of provisions have been included in various proposals, but ultimately have not been adopted. These include a deduction for non-itemizers, a reduction in the foundation excise tax, and an increase in the income limit on corporate deductions. However, a proposal to replace the disallowance of tax-exempt status for unrelated business income in a charitable remainder trust with an excise tax was adopted in 2006.", "The most significant charitable contributions proposal, in scope and revenue, considered in recent Congresses was a deduction for non-itemizers. Under current law a taxpayer can either itemize deductions (the major deductions are charitable contributions, excess medical expenses, mortgage interest, and state and local income and property taxes) or choose the standard deduction. The standard deduction is advantageous if the amount of the standard deduction is larger than total itemized deductions.\nWhen President George W. Bush first proposed extending the deduction for charitable contributions to non-itemizers in 2001 no restrictions were imposed. Most legislative proposals contained some limitation on this deduction, either in the form of a cap (a limit on the amount that could be deducted) or a floor (where only contributions above a certain threshold could be deducted). Although a number of proposals were contained in legislation introduced in recent years, extending the deduction for charitable giving to non-itemizers has not been enacted. Although the 2006 Pension Protection Act ( P.L. 109-280 ) did include a number of charitable giving incentives, a deduction for non-itemizers was not included in this piece of legislation.\nModifications to the charitable deduction have been proposed as part of broader tax reform or deficit reduction strategies. President Obama's Fiscal Commission recommended replacing the charitable deduction with a 12% nonrefundable tax credit available to all taxpayers. Under this proposal, the credit would only be available for donations above a 2% of adjusted gross income (AGI) floor. The 2005 President's Advisory Panel on Federal Tax Reform proposal on overall tax reform also included in its plans an extension of the deduction to non-itemizers, but added a floor of 1% of AGI, for both itemizers and non-itemizers.\nThe Congressional Budget Office (CBO) has also discussed proposals to curtail the charitable giving deduction. A proposal that would limit deductions to donations above 2% of AGI for itemizers would generate an estimated $219 billion in additional revenues over 10 years.\nThe CBO has also looked at extending the charitable deduction to non-itemizers. A non-itemizer's deduction with a $200 cap for married couples filing jointly ($100 for individual filers) would cost $8.2 billion over 10 years. A $500/$250 cap is estimated to cost $31.3 billion over 10 years.\nThe main objective of extending the charitable deduction to non-itemizers was to increase charitable giving. Charitable provisions were, however, considered after the 2001 tax cuts which involved considerable revenue costs. Caps were seen as a means to constrain the revenue loss. At the same time, while the deduction for non-itemizers may increase giving, its effects would be limited because of the cap, and the dollars of charitable giving induced per dollar of revenue loss would be smaller, particularly with a small cap. In addition, the provision would increase complexity for taxpayers who do not itemize.\nFloors also limit the revenue cost, but increase effectiveness per dollar of revenue lost (relative to a provision without a floor) and simplify the tax code because taxpayers with small amounts of contributions would not qualify. Even without a cap, the deduction may not induce additional giving as large as the revenue loss because the responsiveness of taxpayers, particularly lower and moderate income taxpayers, to incentives may be small.", "Current law imposes a 1% tax on investment income of foundations, and an additional 1% if the foundation does not make a certain minimum distribution (based on average distribution rate over the previous five years), or has been subject to a tax for failure to distribute in the previous five years. Past legislative action has sought to remove the additional 1% tax. Legislation introduced in the 111 th Congress, H.R. 4090 and S. 676 , would have set a single tax rate of 1.32% on the investment income of foundations.\nPrivate foundations, whose contributors (or their families) retain the right to direct the distribution of funds, have been subject to greater scrutiny, in part because of the possibility of the donor (or family) obtaining a private benefit. Foundations are required to distribute 5% of their assets each year (or pay a penalty), but the tax is credited against that distribution.\nIf the foundation is just making the minimum distribution, every dollar of tax reduction should be funneled into distributions because the tax is credited against the deduction. Since the tax and the actual distribution sum to a fixed amount, a fall in the tax will result in a rise in the amount distributed to other organizations. Moreover, the moving average rule that imposes the additional 1% tax if the foundation does not distribute at the average rate of the last five years discourages a large contribution in a particular year because it increases the hurdle for future avoidance of the tax. Proponents of current proposals to impose a fixed 1.32% tax rate on the investment income of foundations highlight that doing so would remove the disincentive for foundations to make large one-time payouts, often necessary to address natural disasters and other crises. The reduction in the investment tax should also make private foundations more attractive to givers in general, although that increased attractiveness might in part induce more contributions, and in part replace contributions that might have gone to other charities. The effects should be small, however, because the tax is small.\nProponents of reducing the tax also argued that it should be reduced because it brings in revenue that is in excess of IRS audit costs, which they indicate was the original purpose of the tax (which was introduced in 1969). The revenue stream from this tax has, however, been quite variable recently because it is heavily affected by the stock market. In any case, a reading of the legislative history indicates that while the Senate characterized the tax as an audit fee, the House referred more generally to the notion that private foundations should bear part of the cost of government generally because of their ability to pay (as well as viewing it in part as a user fee), and both objectives were cited in the bill's final explanation. It was reduced twice (in 1978 and 1984) based on the argument regarding costs of audit versus revenue.\nAnother argument made for eliminating the additional tax is the additional complication arising from it. At the same time, simplification does not require reduction in the tax; it could be converted to a larger flat fee.", "Under current law corporations can deduct charitable contributions of up to 10% of income. Proposals introduced in the House in 2003 would have gradually raised the cap to 20% (by one percentage point each year beginning in 2004, reaching 15% in 2008-11, and 20% thereafter). The initial (107 th Congress) provision would have raised the limit to 15%. This provision is relatively small, and most corporate giving already falls well under the cap; average giving is less than 2% of income.\nSome question the appropriateness of corporate charity, since shareholders could make their own decisions about charitable giving. Allowing the deduction at the firm level is, however, more beneficial to the donor because both the corporate and individual taxes are eliminated. In some views, charitable giving by corporations is another management perk that might be excessive because of monitoring problems by shareholders (this problem is also called an agency cost problem). Others argue that corporations should be encouraged to give to charity and to be socially responsible. Economists have studied models in which charitable giving is part of the firm's profit maximizing behavior (e.g., by gaining the firm good will). Evidence on the effectiveness of the deduction is mixed, with time series studies showing a positive effect and cross section results not finding an effect.", "Current law provides tax deductions for some portion of a trust and income tax exemption on the earnings, if a remainder of the assets is left to charity (while paying income to a non-charitable donee, usually a spouse or other relative during an interim period). The trust's income, however, was no longer exempt from tax if the trust had unrelated business income. An alternative to liberalize the rule by providing for a 100% excise tax on any unrelated business income rather than loss of all tax exemption was adopted in 2006.", "Several provisions were enacted in 2005 in response to disasters. The Tsunami Relief Act of 2005 ( P.L. 109-1 ) allowed contributions made in January 2005 to be treated as made in the previous year (and therefore deductible on 2004 tax returns) to encourage giving for relief from the Tsunami that struck in 2004. The Hurricane Katrina Emergency Relief Act of 2005 ( P.L. 109-73 ) adopted several provisions, effective through 2005, to encourage giving to Katrina victims. It allowed unlimited cash contributions for individuals (normally restricted to 50% of income). It also allowed unlimited contributions for corporations (normally restricted to 10% of taxable income) if contributions were made to aid Katrina victims. Charitable contributions made after the disaster were not subject to the phase out of itemized deductions. Mileage rates for deducting costs of using a vehicle for charitable purposes to aid Katrina victims were increased from 14 cents to 70% of the business rate of 48.5 cents. Reimbursements for these costs in excess of the mileage allowance were not included in income if the activity was for the aid of Katrina victims. The Gulf Opportunity Zone Act ( P.L. 109-135 ) extended the benefits of higher limits to contributions to Hurricanes Rita and Wilma.\nIn 2010, Congress passed the Haiti Assistance Income Tax Incentive Act (HAITI Act; P.L. 111-126 ). This legislation contained provisions similar to those enacted following the Tsunami in 2004, allowing taxpayers to claim tax deductions for giving on the previous years' tax returns.", "A number of charitable provisions have been enacted on a temporary basis, and are now part of the tax extenders. The American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) extended five of the seven provisions through 2013, reinstating them retroactively for 2012. Previously, the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) retroactively extended all of the provisions, which had been allowed to expire at the end of 2009, through 2011. Prior to the most recent extension, the provision relating to donation of conservation property was last extended by the Food and Energy Security Act of 2007 ( P.L. 110-234 ). Six others, including the IRA rollover provision, three provisions relating to donations of business inventory, a provision regarding the effect of a charitable donation on the basis of stock of small corporations that elect to be taxed as partnerships, and a provision eliminating the unrelated business income tax on arms-length rental payments to tax-exempt organizations from a related entity were extended by the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ). The two provisions not extended by P.L. 112-240 were those for business donations of computer equipment and books.", "Another important set of provisions, originated in the Senate, expanded benefits for contributions for conservation purposes by lifting the cap on contributions as a percent of income. Gifts of appreciated property are deductible at the fair market value, but, for individuals, have lower limits (30% of income) than ordinary gifts such as cash (50% of income). The Pension Protection Act ( P.L. 109-280 ) increased the limit for appreciated property contributed for conservation purposes to 50% for individuals. The provision increased the limit to 100% for farmers and ranchers, including individuals and for corporations that are not publicly traded. To qualify, land used or available to be used for agricultural or livestock production must remain available for such purposes. This provision expired at the end of 2007, but was extended for an additional two years in the Food, Conservation, and Energy Act of 2008 ( P.L. 110-234 ) and for another two years by the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). The latest legislation, the American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) extended this provision through 2013, at an estimated cost of $254 million. As noted above, lower income limits for gifts of appreciated property reflect concerns about the overstatement of fair market value and the deduction of amounts that have not been included in income.", "Currently, individuals aged 70½ and older are allowed to make tax free distributions from individual retirement accounts to charities. This provision was adopted on a temporary basis in the Pension Protection Act in 2006 but expired at the end of 2007, and is now extended through 2011. The treatment benefits non-itemizers, who would not otherwise be able to take a deduction.\nAlthough this treatment may appear no different, for itemizers, from simply including the amounts in adjusted gross income and then deducting them as itemized deductions, it can provide several types of benefits even to those who itemize. This treatment reduces adjusted gross income, which can trigger a variety of phase-outs and phase-ins, including the phase-in of taxation of Social Security benefits. There are also income limits on charitable contributions: individuals can contribute no more than 50% of income in cash and no more than 30% in appreciated property. Because IRAs tend to be held by higher income individuals, the taxpayers might be somewhat more sensitive to the incentive to give; however, the law does not specify why this particular group of taxpayers was targeted for an expansion of charitable giving provisions. This provision was adopted in P.L. 109-280 with a $100,000 annual limit. It was originally projected to cost $238 million in the first year and $856 million over 10 years. The latest two year extension in P.L. 112-240 has an estimated 10-year cost of $1.28 billion.", "Corporations that donate inventory to charity in general get a deduction for the cost (not the market value). A special rule allows businesses paying the corporate tax to also exclude half the appreciation (half the difference between market value and cost of production) if the inventory is given to an organization that directly passes it on to the ill, the needy, or infants, as long as the total deduction is no more than twice the cost. An important category of donations is food. There have been disputes between taxpayers and the IRS about how to measure the fair market value of food. The charitable contributions proposals would have allowed unincorporated businesses (or businesses that are incorporated but do not pay the corporate tax) the additional deduction, and the fair market value of wholesome food would be considered the price at which the firm is currently selling the item (or sold it in the past), although this deduction would be limited to the corporate percentage cap on deductions in general. This provision's cost was relatively small.\nThe provision's objective was to create more equity among different types of taxpayers and resolve disputes (largely in the taxpayer's favor). However, as with the deduction of appreciated property, these rules allow firms to deduct amounts that have not been included in income. Although the provision is limited by allowing only one-half the appreciation, these products, if sold, would be taxed at full rates (rather than the lower rates imposed on individual capital gains). In addition, as with gifts of capital gain property, an important concern is the potential overstatement of market value. Firms may only be able to sell donated inventory at a much lower price because the product is damaged in appearance, is older, or has other characteristics that would require deep discounting to sell. Moreover, a firm with market power may not wish to sell all of its inventory because increasing supply will drive the price down more for a sale than a donation. It is possible that a provision that is extended to non-corporate businesses, which are smaller and more numerous, will be more difficult to monitor for compliance.\nFor inventory that cannot be practically sold, the barrier to a donation by the firm is the extra costs encountered in distributing the product. Thus, there is a tradeoff between creating an incentive and providing a windfall for the firm.\nThe Katrina Emergency Relief Act of 2005 ( P.L. 109-73 ) provided treatment to unincorporated firms (not to exceed 10% of business income) through 2005 but did not make the other changes. The Pension Protection Act of 2006 ( P.L. 109-280 ) extended the provision through 2007, and the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ) extended it through 2009. The Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) extended this provision through 2011. P.L. 112-240 extended it for an additional two years with an estimated cost of $314 million over 10 years.", "C corporations that donate computer technology or equipment to educational organizations or tax-exempt charities that support elementary and secondary education are eligible for a deduction. In concrete terms, this rule requires that no more than 50% of the cost is due to parts purchased elsewhere. The issues surrounding this provision are the same as those related to other contributions of inventory, such as food inventory.\nThe Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ) extended the provision for two years. Most recently, the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ) extended the provision through 2009. The Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) extended this provision through 2011, with an estimated cost of $350 million over 10 years. This provision was not extended by P.L. 112-240 .", "A provision that originated in the Senate extended the treatment of food inventories to book inventories for C corporations that donated to public elementary and secondary schools. As with all contributions of property, valuation may be an issue. Book publishers who have printed too many books may only be able to sell them at a discount, and perhaps a potentially deep one. This provision was enacted in the Katrina Emergency Relief Act of 2005 ( P.L. 109-73 ) through 2005. The Pension Protection Act of 2006 ( P.L. 109-280 ) extended the provision through 2007, and the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ) extended it through 2009. The Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) extended this provision through 2011, with an estimated cost of $53 million over 10 years. This provision was not extended by P.L. 112-240 .", "Under current law, a shareholder in a Subchapter S corporation (a corporation treated as a partnership) is allowed to deduct his or her pro rata share of any corporate contribution. At the same time, the taxpayer must decrease the basis of stock by that amount (which is a way of reflecting the effect on the shareholder's asset position). The Congressional proposals on charitable contributions provided that the taxpayer would not have to reduce basis in the stock to the extent a deduction is taken in excess of adjusted basis of the donated property (e.g., cost). This provision appears to be consistent with allowing a deduction for the market value of appreciated property without including the appreciation in income (a special benefit generally available to taxpayers). This provision's cost was relatively small. The Pension Protection Act of 2006 ( P.L. 109-280 ) included this provision effective through 2007, and the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ) extended it through 2009. The Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) extended this provision through 2011. P.L. 112-240 extended this provision through 2013, with an estimated cost of $225 million over 10 years.", "Charities are subject to a tax on unrelated business income. Rents, royalties and annuities are excluded from income subject to the tax except when received by a majority owned subsidiary. Among provisions included in the 108 th Congress version of charity proposals was one to exclude certain items (such as rent) received by a subsidiary from a tax on unrelated business income except for the excess over an arms-length price. As with other provisions, however, the determination of arms-length rents is not always straightforward when there are not closely comparable properties. This provision was adopted in the Pension Protection Act ( P.L. 109-280 ), and applied to payments through 2007. The Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ) extended it through 2009. The Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) extended this provision through 2011. P.L. 112-240 extended this provision through 2013, with an estimated cost of $40 million over 10 years.", "The Pension Protection Act of 2006 ( P.L. 109-280 ) included a provision exempting qualified blood collectors from a variety of excise taxes, including communications taxes and taxes relating to fuels and vehicles. This provision is directed at the Red Cross.", "Congress has considered many provisions in recent years aimed at preventing potential abuse, with many problematic areas identified by the Internal Revenue Service. The Senate Finance Committee has investigated many compliance issues. In 2004 and 2005, the Senate Finance Committee held hearings on the subject. Also, early in 2005, the Joint Committee on Taxation published a study on options to improve tax compliance that included a number of provisions relating to charitable contributions and tax-exempt organizations.\nThe concerns expressed in these hearings and studies focused on potential abuses of charitable organizations, on the valuation of gifts of property, and on certain types of organizations, including donor-advised funds and supporting organizations. These two types of organizations, like private foundations, permit contributions to build up an account without necessarily making a contribution. Private foundations, however, are subject to a 5% payout requirement and a number of special restrictions to prevent funds from being used for the benefit of the donor. Donor-advised funds are funds where the donor contributes to an account in an institution and the institution subsequently makes contributions, advised by the donor. Supporting organizations do not have a direct charitable purpose, but support organizations that do.\nMore broad ranging proposals to make the charitable contributions deduction more effective and less subject to claims of small undocumented deductions would have introduced a floor. Earlier proposals associated with expansions of the deductions to non-itemizers proposed dollar floors, but these proposals tended to focus on floors as a percent of income. As noted above, the Deficit Commission's proposal would create a charitable credit available to all taxpayers, subject to a floor of 2% of income. The 2005 President's Advisory Panel on Tax Reform proposed a floor equal to 1% of income. The Congressional Budget Office included a budget option for a floor of 2%.\nSome changes were enacted in 2003 and 2004, but most of the restrictive provisions that were adjusted were part of the Pension Protection Act of 2006.", "A series of restrictions on charitable donations, aimed at reducing abuse, were adopted in 2006. Most of these provisions related to gifts of appreciated property, where the gift is deducted at fair market value. These gifts account for about 25% of all donations, and for much larger shares of donations of higher income taxpayers. For taxpayers with incomes above $10 million, gifts of property account for 50% of contributions. Taxpayers with incomes above $1 million account for 18% of cash gifts, but 40% of property gifts. This provision is especially beneficial to the donor because a deduction is allowed for the full value, while the appreciation is not taxed. While the valuation of contributions such as publicly traded stock is straightforward, the valuation of gifts where value is not easily assigned presents some issues for tax compliance. If the taxpayer can value donated property at an excessive value, it is even possible to benefit privately from making a contribution rather than by selling the property.\nThe President's Advisory Commission on Tax Reform proposed in 2005 that individuals be allowed to sell appreciated property and donate the proceeds without paying the capital gains tax, to address the valuation problem.\nDuring the debate on the treatment of gifts of appreciated property, some broad changes were discussed. For example, the Joint Committee on Taxation presented an option in its study to allow only the basis to be deducted for gifts of property that were not publicly traded. A Senate staff discussion paper, among a broad array of options discussed, considered \"baseball arbitration,\" where the court can only find for the taxpayer's original value or the IRS value, which would create an incentive to limit any overstatement of value. Although these provisions were not adopted, a number of changes were, as detailed below.", "Growing concerns about the abuse of donations of used vehicles and of patents and other intellectual property led to several revisions in the American Jobs Creation Act of 2004 ( P.L. 108-357 ). According to IRS data, in 2003, $2.3 billion of deductions associated with vehicles was deducted, for those taxpayers who had non-cash contributions of $500 or more. Often charities resold vehicles at a much smaller value than the value deducted by the taxpayer. The revision required that, for vehicles with a value of $500 or more, the deduction is restricted to the value of resale, if the vehicle is resold rather than used or refurbished by the charity. The act also extended to corporations the requirement of an appraisal for a donation of property (other than readily valued property such as cash, inventory, and publicly traded securities) of $5,000. This appraisal is not required in the case of resale of a vehicle by an organization. It also required appraisals to be attached to tax returns for gifts valued at $500,000 or more. Finally the law restricted the donation of intellectual property, which could be valued at fair market value, to the lesser of basis (roughly cost of developing or purchasing) or market value.", "As a general rule, a taxpayer cannot take a deduction for a partial interest in a property. However, gifts of conservation or historical easements (where the taxpayer restricts the use of property) may be made. Their value is the reduction in the value of the property due to the easement. One concern that arose was that taxpayers were making gifts of easements on historical facades (the front of the building), which involve an agreement not to change the facade, when the regulations in the historical district already imposed this restriction. Thus there could be no effect on property values. A provision in the Pension Protection Act required these easement to be limited to buildings but to apply to the entire exterior (not just the facade), and that an appraisal be supplied.", "Press reports suggested that individuals involved in big game hunting were receiving deductions for contributing their mounted trophies at inflated prices which were often resold at a lower price. In addition to the revenue effects, concern was expressed by environmental and animal rights groups. The Pension Protection Act restricted the deduction to the cost of mounting the trophy; thus, cost does not include the cost of hunting trips.", "The Pension Protection Act requires individuals who give gifts of appreciated property to be subject to a recapture tax if the property is not used by the organization for its exempt purposes and is sold within three years. If the property is sold in the same year, the donor generally deducts basis (cost); if sold after that year, the donor must include in income the difference between fair market value claimed and the basis.", "Contributions of used clothing and household items present difficulties because these items are difficult and time intensive to value and audit. They are significant in value, however. In 2003, these contributions were estimated at $8.6 billion for those with $500 or more of non-cash contributions; clothing accounted for two thirds of the total. The amounts would be larger if taxpayers with contributions of less than $500 in cash were included. The Pension Protection Act disallows the deduction for items not in good used condition or better and provides the Internal Revenue Service with broad authority to disallow deductions. Items valued more than $500 may be deducted if not in good used condition or better if accompanied by an appraisal. Household items do not include items such food, art, antiques, jewels and gems, and collections.", "The Pension Protection Act changed the rule that allowed substantiation of small cash contributions by a written record or log. All cash contributions must be substantiated by a bank record (e.g., cancelled check) or receipt from the organization.", "Taxpayers could deduct contributions of fractional interests in art although they could not deduct a contribution of a future right to the art. For example the taxpayer could contribute a 10% interest in an art work to a museum, and receive a deduction for 10% of the value of the art. The museum would have the right to possess the art for 10% of the year. There were several concerns about this tax treatment. First, a court decision ( Winokur v. Commissioner ) settled in 1988 found that physical possession was not required to make a fractional interest donation, only the right to physical possession. The Internal Revenue Service challenged this case, but the court found for the taxpayer. As a result, individuals could keep art work in their possession, perhaps through their lifetimes, or even pass the property on to their heirs, while still securing a charitable contribution deduction. The second is a concern that the possession or display of the art by the museum itself enhances the market value of the work, effectively increasing the value of the art work, and the value of future deductions or sales compared to an outright gift. Another set of issues relates to estate taxes. Estate taxes can be reduced by a reduction in value due to minority discounts—the view taken by the courts that an ownership of a minority interest in an asset loses some value because of lack of control. The minority ownership does not, however, affect the value of the charitable deduction for income or estate tax purposes. The Pension Protection Act requires physical possession by the donee; requires the gift to be completed within 10 years or at the donor's death, whichever comes first; disallows fractional donation of a property that is not wholly owned by the donor, or the donor and donee for later gifts (the Secretary of the Treasury can make an exception if multiple owners donate similar fractional shares); and requires that subsequent fractional shares are limited to market value at the time of the original donation. If these restrictions are not met the tax savings from the deduction are recaptured with interest and a 10% penalty.", "This provision lowered the thresholds for imposing penalties for overstatements of value for the income tax and understatement for the estate tax. It also established a separate penalty structure for appraisers.", "A few provisions were enacted during the 108 th Congress that applied to tax-exempt organizations, but most provisions were enacted in the 109 th Congress, primarily in the Pension Protection Act in 2006. Some of these provisions affect organizations that are tax exempt but are not charitable organizations.", "The Military Family Tax Relief Act of 2003 ( P.L. 108-121 ) provided for automatic suspension of the tax-exempt status of organizations placed on the designated list of terrorist organizations or supporters of terrorism. Normally, suspension of tax-exempt status requires or permits administrative and judicial proceedings.", "In a provision not directly affecting contributions or tax-exempt status, but which nevertheless might have consequences for tax-exempt organizations, the American Jobs Creation Act of 2004 also restricted the ability of parties leasing arrangements to obtain favorable tax treatment.", "Some tax shelter operations require participation of a tax-exempt entity. This provision imposed penalties on exempt organizations that are a party in a prohibited tax shelter transaction. It was enacted in the Tax Increase Prevention and Reconciliation Act ( P.L. 109-222 ) in 2006.", "Investments in life insurance are subject to beneficial tax treatment, including exemptions when assets are paid at death and deferral of tax on investment earnings. State laws restrict the holding of an interest in life insurance if there is no insurable interest (e.g., a relationship with the insured). Some states exempt charities from the insurable interest and some allow insurable interests for private investors if there is also a charitable organization involved. The Pension Protection Act does not directly affect these relationships but requires temporary reporting on life insurance arrangements by exempt organizations (for two years) and mandates a study of this issue by the Treasury Department.", "A series of penalties applies to certain actions of charitable and tax-exempt organizations. The most punitive penalty for an inappropriate action, in general, is to revoke the exempt status. There are a series of intermediate sanctions that generally impose monetary penalties. An excess benefit tax applies to transactions of charitable welfare organizations (other than private foundations) and social welfare organizations. Private foundations are subject to taxes or penalties for self-dealing, failure to distribute income, on excess business holdings, for investments that jeopardize the charitable purposes, and for taxable expenditures (such as lobbying or making open-ended grants to institutions other than charities). The Pension Protection Act increased those taxes and penalties.", "Nonprofit credit counseling agencies obtained tax-exempt status because their purpose was largely to educate and counsel consumers, and perhaps offer some tailored debt management plans as well. A rapid growth of tax-exempt credit counseling agencies occurred in the 1990s. Press reports and investigations suggested that there was widespread abuse and that these new firms were not primarily being used for educational purposes but were used to enroll individuals into payment plans. The Internal Revenue Service performed audits and revoked tax-exempt status for some agencies. The Pension Protection Act established a series of standards and requirements for exempt credit counseling agencies and treated debt management plans as an unrelated business, with earnings subject to the unrelated business income tax.", "As discussed above, foundations are subject to excise taxes on investment income. The Pension Protection Act expanded the base to include additional types of income—such as income from financial contracts, annuities, and certain capital gains.", "A convention or association of churches is not required to file an information return and is subject to provisions generally applicable to churches. The Pension Protection Act specified that a convention or association of churches would not fail to qualify because there are individual members.", "Although exempt organizations are generally required to file information returns, certain organizations are exempt (these include small organizations, certain religious organizations and certain government related organizations). The Pension Protection Act, requires these organizations to report contact information to the Internal Revenue Service (i.e., organizational title, address) using the Form 990-N, also known as the e-postcard. Organizations failing to file for three years will have their tax-exempt status revoked.", "The Secretary of the Treasury is required to notify the appropriate State officer of a refusal to recognize an organization as a charitable one that may receive tax deductible contributions, revocation of that status, and the mailing of a notice of deficiency for certain taxes. Returns and records relating to this disclosure must be made available for inspection. This provision in the Pension Protection Act revises the rules for disclosure of tax information to state authorities, including the disclosure, upon request, of a notice of proposed refusal to recognize, revoke, or issue a deficiency, names and addresses of applicants, and associated returns.", "Organizations are required to make information and application materials available for public inspection. The Pension Protection Act requires disclosure to be applied to the return reporting unrelated business income.", "The Pension Protection Act authorized Treasury Department studies of donor advised funds and supporting organizations and made other changes to their status. Donor advised funds are funds where donors make contributions and the institution holding the accounts makes contributions to charitable organizations with the advice of the donor. Although the donor has no legal control, in practice the donor's wishes are likely to be respected. Supporting organizations do not actively engage in charitable activities but support organizations that do by contributing funds to them. Supporting organizations fall into three types: Type I controlled by the charitable organizations, Type II, controlled by the same entity controlling the charitable organization and Type III, related to the charitable organization. Type III organizations may support many charitable organizations.\nThese types of organizations had many features in common with private foundations, but were not subject to self-dealing rules and other restrictions (meant to prevent the donor from receiving a private benefit) or payout requires (meant to keep the organization from accumulating funds without paying out some amount for charitable purposes). There was some evidence that abuses were occurring and that, in some cases, little was being paid out. In addition to the mandated studies, other changes, including the following, were made.\nDonor-advised funds eligible for charitable contributions were specifically defined in the law. They were prohibited from providing benefits to the donors, they were required to have a governance structure if grants were made to individuals (such as a scholarship fund), and contributions of closely held businesses had to be sold within a short period of time.\nSupporting organizations must indicate which type they are and certain Type III organizations will eventually be subject to a minimum payout (with the Treasury Secretary making such a determination through issuance of regulations). In August 2007, the Treasury issued proposed regulations and invited comment, indicating the same minimum distribution rule applying to foundations (5% of assets) is expected to be applied.\nIn general, the Pension Protection Act prohibits supporting organizations from making grants or loans, or paying compensation, to substantial contributors. Supporting organizations cannot receive contributions from persons who control the organization and from private foundations if the supporting organization is controlled by significant persons at the foundation. They are not eligible for the rollover treatment for individual retirement accounts (IRAs). Type III organizations must also file additional information and cannot support foreign nonprofits.", "There are a number of tax issues regarding charitable deductions and tax-exempt organizations that may be of interest in the 113 th Congress. The charitable extenders discussed above are set to expire at the end of 2013. The President's Fiscal Commission suggested modifying the charitable deduction as part of comprehensive tax reform to address the deficit and fiscal sustainability. President's Obama's budgets have proposed to limit the value of itemized deductions, including charitable contributions, to 28%. Limits on itemized deductions may be considered as part of income tax reforms.\nIn addition, there has been interest, as indicated by hearings and by activities of the Senate Finance Committee in the tax-exempt status of nonprofit hospitals and in university endowments. The Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 ) imposed a number of new requirements on 501(c)(3) tax-exempt hospitals. The Finance Committee has also shown interest in specific tax-exempt organizations, such as media related ministries.\nProvisions enacted under the Pension Protection Act continue to raise issues of interest to the tax-exempt sector. The findings of Treasury studies on donor-advised funds and supporting organizations may have broader implications for the charitable sector generally. In 2010, a number of small tax-exempt organizations had their tax-exempt status revoked after failing to meet information reporting requirements enacted as part of the Pension Protection Act. These issues are discussed in greater detail in the sections below.", "Table 1 reports the expected revenue cost of extending each of the charitable provisions contained in the American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) There are two issues associated with these charitable benefits \"extenders\": whether they are effective or appropriate provisions, and, if so, whether they should be temporary when most of the provisions of the tax code are permanent. The specific issues associated with each of these provisions were discussed earlier.\nOne criticism that could be made of using temporary provisions for charitable purposes is that although the budgetary cost is smaller for a provision extended only a year at a time, the intention is to continue the provision. This practice causes the official projected budget deficits to be smaller than they will likely be, takes up the time of the Congress with considering the extenders, and creates some uncertainty for taxpayers.\nOn the other hand, an argument that could be made in favor of temporary provisions is that a temporary provision makes reconsideration of the merits and design of the provisions more likely. Evidence suggests, however, that relatively few temporary provisions have been revised. One exception is the R&D tax credit, which has been the subject of some major revisions. Nevertheless, it could be argued that the temporary nature of these provisions is conducive to better tax policy because provisions are reconsidered even though they are rarely revised.", "Various proposals have been put forth that would limit the tax benefits associated with charitable contributions. The Fiscal Commission recommended replacing the charitable deduction with a 12% nonrefundable tax credit, available only for contributions above 2% of income. President Obama's budgets have proposed limiting the value of itemized deductions (which would include charitable contributions) to 28% of each dollar. Thus, under the proposal, taxpayers in the top brackets (33%, 35%, and 39.6%) would have each dollar of deductions reduced by 28 cents on the dollar rather than a reduction based on their marginal tax rate (for example, 33 cents).\nAlthough there has been concern expressed about the effect on charitable giving, especially during difficult economic times, the provision would not affect giving today if it does not go into effect immediately. In fact, enactment today of a future change would be expected to increase contributions as taxpayers seek to make contributions before the cap is imposed. Estimates of permanent effects on charitable giving from the 28% limitation suggest the effects would be relatively small, generally around 1%.\nThe itemized deduction cap overall was projected to raise $584 billion over 10 years (FY2013-FY2022). This estimate assumed that 33% would rise to 36% and the 35% tax rate would rise to 39.6% whereas the permanent rates adopted in the American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) only changed part of the 35% rate to 39.6%, so the gain would be smaller. Internal Revenue Service statistics suggest that charitable contributions account for about a quarter of itemized deductions at higher income levels.\nOther potential limits on total itemized deductions or other tax expenditures that could become a part of tax reform, such as a dollar cap or a percentage of income cap. In general, if the desire is to encourage charitable contributions, a floor would retain much of the incentive effect while a cap would eliminate it.", "The Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 ) imposed a number of new requirements on 501(c)(3) tax-exempt hospitals. Prior to the enactment of PPACA, the tax writing committees, and especially Senator Grassley, had shown interest in nonprofit hospitals. A major concern was the degree of charity care and whether nonprofit hospitals are providing benefits that justify their charitable and tax-exempt status. The Congressional Budget Office released a study in 2006 that found that nonprofit hospitals overall provided only slightly more charity care than for profit hospitals. The Senate Finance Committee held hearings on the topic \"Taking the Pulse of Charitable Care and Community Benefits at Non-Profit Hospitals,\" on September 13, 2006, and the House Ways and Means Committee held hearings on \"The Tax Exempt Hospital Sector,\" on May 26, 2005.\nIn a staff discussion draft released July 18, 2007, by Senator Grassley, the following concerns were raised about nonprofit hospitals: establishing and publicizing charity care, the amount of charity care and community benefits provided, conversion of nonprofit assets for use by for-profits, ensuring an exempt purpose for joint ventures with for-profits, governance, and billing and collection practices. Subsequently, on October 24, 2007, Senator Grassley authorized a round-table to discuss the draft. Also in July 2007, the IRS released an interim report on nonprofit hospitals, where they found that the median share of revenues spent on charity care was 3.9% and almost half of hospitals spent 3% or less. The average was 7.4%.\nUnder PPACA, tax-exempt hospitals are subject to four new requirements. First, hospitals will be required to conduct a \"community health needs assessment\" and adopt an implementation strategy to meet those needs. Second, hospitals are required to written financial assistance and emergency care policies. Third, hospitals may not charge individuals eligible under the financial assistance policy more than the lowest amount charged to those with insurance coverage. Finally, hospitals are required to make reasonable efforts to determine if an individual is eligible for financial assistance before beginning extraordinary collections actions.\nPPACA also requires the Treasury Secretary to review the community benefit activities of tax-exempt hospitals. Additionally, the Treasury Secretary, in consultation with the Secretary of Health and Human Services (HHS) will be required to report annually to Congress information on charity care, bad debt expenses, unreimbursed costs for services, and community benefit activities.", "Universities and colleges are classified as charitable organizations eligible to receive deductible contributions, and, also, as tax-exempt entities, do not pay tax on their investments. As indicated above, prior to the financial crises and subsequent recession, the benefit of exempting endowment income of colleges and universities from taxes was estimated at around $25 billion. At $25 billion, this exemption was worth more than three times the benefit of charitable deductions to all educational institutions. Historically, these high yields were coupled with relatively low payout rates. For the fiscal year that ended June 2007, endowments were $411 billion and the average rate of return was 21.5%. The payout rate was 4.6%. As a result of those relationships along with contributions, endowments grew 18.4% between FY2006 and FY2007 (about thee and a half times the growth rate of the economy), continuing an ongoing trend from recent years.\nThe losses in college and university endowment funds experienced during the recession have raised new issues of concern. In FY2009, losses were 18.7% on average. Prior to the onset of the recession, Senator Grassley, ranking member of the Finance Committee, discussed concern that colleges were not using enough of their endowments funds to provide an affordable education. Tuition rates remain an issue of interest. In 2010, following the release of data on college and university endowment losses, Senator Grassley noted:\nI hope colleges won't rely on double-digit losses as a reason to raise tuition or freeze student aid. Many of them relied on some risky investments, like hedge funds, to get big gains in recent years, and now those strategies are causing losses. … Pay-out rates over the last decade rarely topped 5 percent, even when investment returns were in double digits.", "The two basic issues associated with donor-advised funds and supporting organizations were possibilities of receiving private benefit by donors and payout rates. As noted above, while some changes were enacted, others remain possible. Although payout requirements are planned (administratively) for Type III supporting organizations, there are no payout requirements for donor-advised funds and for other supporting organizations. These issues might be revisited when Treasury completes its studies.\nThe Treasury was directed to study specific issues: whether deductions for contributions to donor-advised funds and supporting organizations are appropriate given the use of the assets or benefits to the donor, whether donor-advised funds should have a distribution requirement, whether the retention of rights by donors means that the gift is not completed, and whether these issues apply to other charities or charitable donors.\nThis Treasury study provided considerable data but it is not clear what policy implications should be. A CRS report that reviewed the study and updated the data in the case of donor-advised funds indicated that aggregate payout requirements for the overall fund would not have much effect, and that an effective payout requirement would need to be applied to each individual account. It also suggested, although the data are limited, that many accounts do not pay out contributions.", "The Pension Protection Act of 2006 implemented new reporting requirements for tax-exempt organizations with revenues of less than $25,000. Entities failing to file required information returns (Form 990-N, also known as the e-postcard) with the IRS for three consecutive years will have their tax-exempt status revoked. Thus, revocations took place for the first time in 2010.\nThere are more than 714,000 tax-exempt organizations registered with the IRS that would be subject to new reporting requirements. As of July 2010, 41% of these organizations had yet to file. There are various reasons why registered tax-exempt organizations may not file the required information returns. Some of these organizations may no longer exist. The required filings will help the IRS determine which organizations remain active. On the other hand, active organizations may not file if they are not aware of the new filing requirements. The IRS extended the filing deadline to October 15, 2010 to give charities that would have been required to file earlier in the year more time to comply with this new law. Further, the IRS has posted a list of organizations in danger of losing their tax-exempt status on their website.", "Over a period of time the Senate Finance Committee has examined specific charitable organizations or groups as well as specific charitable donation practices. Some of these investigations were spurred by media reports and some by IRS studies; they have led to both legislation and self-correction by entities involved.\nIn 2007, Senator Grassley sent inquiries to several media-based ministries for information on their finances. Religious organizations do not have to file the information (990) forms that other tax-exempt organizations have to file, so generally it is difficult to obtain information on the activities of these tax-exempt entities. The results of this inquiry were announced on January 6, 2011. While not all ministries provided the requested information, enough information was gathered for Senator Grassley to determine that internal reforms were taking place." ], "depth": [ 0, 1, 1, 2, 2, 1, 2, 3, 3, 3, 2, 2, 2, 3, 3, 3, 3, 3, 3, 3, 2, 1, 2, 3, 3, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 1, 2, 2, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "h0_title h2_title", "", "h0_full h2_full", "h0_title h1_full", "", "", "", "", "", "", "h0_title h1_full", "", "", "h0_full", "", "", "", "", "", "h2_title h1_full", "", "", "", "", "", "", "", "", "", "h2_title", "", "", "", "", "", "", "", "", "", "", "", "h2_full", "h0_title h2_full", "h0_full", "", "", "", "", "", "" ] }

{ "question": [ "How were tax benefits valued prior to the financial crises?", "How did the value of tax benefits come to be around $100 billion per year?", "What revenue losses did the federal government experience?", "What are returns on endowments likely to do in the future?", "How did the American Taxpayer Relief Act of 2012 affect charitable contribution provisions?", "How have charitable extenders been introduced across the past decade?", "What do these extenders do?", "What are issues surrounding donor-advised funds and supporting organizations and endowments?", "How might changes to reporting requirements cause new issues for organizations?", "What concerns have been raised as a possible effect of such declines?" ], "summary": [ "Prior to the financial crises and subsequent recession, the value of tax benefits for charitable contributions and organizations was estimated to be around $100 billion per year.", "About half of this cost arose from the deductions for charitable contributions with the other half from exemptions of earnings of nonprofits.", "In 2010, the deduction for charitable contributions resulted in an estimated $40 billion in federal revenue losses. On average, endowment investments in 2009 experienced losses, meaning that the federal government did not lose revenues from exempting asset returns from taxation. By 2011, these returns on endowments almost recovered to their prior levels, although they fell to approximately zero for 2012.", "Over the longer run, however, they are likely to earn a substantial return.", "A number of provisions related to charitable contributions were extended temporarily as part of the tax extenders in the American Taxpayer Relief Act of 2012 (P.L. 112-240).", "Most of the charitable extenders were contained in legislation first introduced in 2001. Some provisions were enacted temporarily in 2005; further provisions and extensions occurred in 2006, in the Pension Protection Act.", "These extenders include an individual retirement account (IRA) rollover, liberalized treatment of gifts of food inventory and conservation property, and two more technical provisions.", "Other issues that may arise reflect concerns about donor-advised funds and supporting organizations and educational institutions' endowments. For donor-advised funds and supporting organizations, the main issue is whether and how minimum distribution requirements should be imposed, alongside other new regulations.", "New reporting requirements for small tax-exempt organizations, enacted under the Pension Protection Act (P.L. 109-280) may cause a number of noncompliant tax-exempt entities to lose their tax-exempt status.", "The decline in educational institutions' endowments had raised concerns that such declines may lead to tuition increases, although these assets have largely recovered." ], "parent_pair_index": [ -1, 0, -1, 2, -1, -1, 1, -1, 0, 1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 2, 2, 2, 5, 5, 5 ] }

{ "title": [ "Background", "Administrative Costs", "Guidance on Cost Principles", "Selected Agencies and Programs", "Agencies Reviewed Have Mechanisms in Place to Collect Data on Federal Grant Administrative Costs, but These Data May Not Reflect Actual Cost of Administration", "Variations in Administrative Cost Caps and Definitions Hinder Meaningful Comparisons of Grant Administrative Cost Data across Programs", "Concluding Observations", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Selected Grant Programs, Administrative Costs Caps, and Administrative Cost Definitions", "Administrative cost cap 10%", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The federal government provides grants to a variety of recipients as a form of financial assistance to accomplish a particular public purpose authorized by law. Grant recipients include for-profit and nonprofit entities; public and private universities; and state, local, and tribal governments. Some grant programs also permit the granting of funds from primary grant recipient to subawardees. While there is substantial variation among grant types, competitively awarded federal grants generally follow a life cycle comprising various stages—pre-award (announcement and application), award, implementation, and closeout—as shown in figure 1.\nGrant programs are established through legislation that may specify particular objectives, eligibility requirements, and other conditions, and grant-making agencies may impose additional requirements on recipients. Additionally, grant programs are typically subject to a wide range of accountability requirements under their authorizing or appropriations statutes and implementing regulations. Congress may also impose increased reporting and oversight requirements at the agency or recipient level. Grant-making agencies and their programs are also subject to crosscutting requirements applicable to most assistance programs.", "Administrative activities such as managing finances and facilities, ensuring quality, and reporting project status are essential to the operation of grant programs. These administrative costs may be charged directly or indirectly to a grant depending on individual program guidelines and whether the grantee has an approved indirect rate agreement. A direct cost is one that can be specifically identified with the individual grant objective and is charged to that specific grant. Direct costs include, for example, a researcher’s salary and equipment. Indirect costs represent a grantee’s general support expenses that cannot be specifically identified with an individual grant project. Indirect costs include, for example, building utilities and administrative staff salaries (see figure 2). To determine the proportion of indirect costs that may be charged to federally funded awards, grantees use a mechanism called the indirect cost rate. The procedure for requesting an indirect cost rate varies based on the type of grantee organization. In the case of higher educational institutions, the rate is established based on a historical fiscal year of cost data from a school and is applied to each of its individual research awards.\nAs we have previously reported, there is no government-wide definition of what constitutes an administrative cost. Programs have different missions, priorities, services, and clients, and jurisdiction for the programs are spread among numerous congressional committees; therefore federal agencies’ definitions of allowable (or prohibited) administrative costs vary from program to program. We have also previously concluded that funding gaps for grant indirect costs which, depending on the program, may represent a large portion of administrative costs, may compromise the nonprofit sector’s ability to partner with the federal government to provide services and may ultimately risk the viability of the sector. In a 2013 study, the Urban Institute found that limits on administrative costs are concerning for nonprofits because they must find other ways to cover these expenses. This study also stated that trying to minimize overhead costs could lead nonprofits to offer low pay for administrative positions, which could make it difficult to recruit and retain skilled and experienced staff.", "OMB is responsible for developing government-wide guidance to ensure that grants are managed properly and that grant funds are spent in accordance with applicable laws and regulations.guidance on administrative requirements, cost principles, and audit requirements for federal awards. Until recently, OMB guidance came in the form of circulars for specific grants management areas to different types of grantees. For example, OMB Circular No. A-21 provided the principles for determining the types of direct and indirect costs that may be claimed and the methods for allocating such costs to federally funded projects at educational institutions. OMB had similar guidance on cost principles for state and local governments, Indian tribal governments, and nonprofit organizations. In December 2013, OMB consolidated its grants management circulars into a single document, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), to streamline its guidance, promote consistency among grantees, and reduce administrative burden on OMB provides nonfederal entities. OMB staff told us that although the new Uniform Guidance is intended to create a framework for the allocation of grant costs, decisions about how these costs are allocated are made at the award level. The new Uniform Guidance is scheduled to go into effect for grantees on December 26, 2014, and officials at both HHS and HUD told us they were evaluating the changes and its effects on their programs and regulations.", "To provide examples for this review, we selected six grant programs at two federal grant-making agencies (see table 1). These programs are managed by a variety of subagencies and reflect different program objectives.\nObjectives To expand the supply of affordable housing, particularly rental housing, for low and very low income Americans.\nTo develop viable urban communities by providing decent housing, a suitable living environment, and expanding economic opportunities, principally for persons of low and moderate income.\nTo link elderly, especially frail and disabled, or disabled nonelderly assisted housing and neighborhood residents to supportive services in the general community.\nTo promote family economic self-sufficiency and to help children succeed in school and life through affordable, high-quality early care and afterschool programs.\nTo promote school readiness by enhancing the social and cognitive development of low-income children.\nTo assist public and private nonprofit institutions and individuals to establish, expand, and improve biomedical research and research training in allergic and immunologic diseases and related areas to assist public, private, and commercial institutions to conduct developmental research.", "Although grant-making agencies are not required to track grant administrative cost data specifically, all six of the grant programs we reviewed collect grant administrative cost data in some form. Each of the grant programs we reviewed had mechanisms in place to capture the administrative costs charged to their grant programs, via either a computerized system or paper reporting.collection system varied, as follows: However, each program’s data\nHHS’s On-Line Data Collection System used for the CCDF grant and HUD’s Integrated Disbursement & Information System used for both HOME and CDBG are computerized data collection systems available to the grantee and agency that capture grant program budgetary information and actual post-award expenditure reporting.\nThe Head Start Enterprise System collects grant budget estimates electronically during the program’s grant application process.\nReporting of actual expenses incurred is captured in paper form at the regional office level.\nThe Multifamily Housing Service Coordinators program uses the Line of Credit Control System to disburse and track payment of grant funds. The system may be accessed through a voice-response system or a computerized system. In addition to these systems, documentation is provided in paper form to the regional office where the grant is managed.\nElectronic Research Administration Commons is a web-based interface where National Institutes of Health (NIH) grantees share administrative information about grants. It also collects AITR grantees’ Federal Financial Reports.\nOfficials for all of the selected programs reported that they use these systems to review their grantees’ costs for appropriateness. Such reviews also help to ensure that the data collected are accurate if they are used for evaluating the programs’ effectiveness. With the exception of the AITR program, which is managed at headquarters, all of the programs we reviewed performed compliance checks on fiscal reporting at the regional office level where the grants are managed. For five of the six programs in our review, officials said their analysis of administrative costs was focused on ensuring compliance with the grants’ administrative cost caps and approved indirect rate agreements. Agency officials also told us that when a grantee’s total federal expenditures exceed an audit threshold, all six programs rely on the single audit process to identify deficiencies in grantee accounting, internal controls, and financial management. Two of the six programs we reviewed—CDBG and CCDF—make their grant administrative cost data available to the public via their websites.\nThe six programs we reviewed track grant expenses in different ways, which can make it challenging to identify aggregate administrative costs. For some of these programs, administrative costs and program costs may be included in the same line items and program officials told us that separating these costs would be labor intensive. For example, program officials explained that for the AITR program they do not specifically track grant administrative costs. Instead, grant program costs are reported as either direct or indirect costs because recipients are required to use the Federal Financial Report to report on grant expenditures and that report captures indirect costs. NIH officials explained that administrative costs are normally charged as indirect costs but if the administrative services are integral to a major project and the administrative costs can be specifically attributed to the project, they may be charged as direct costs to the grant. Therefore, interpreting indirect costs as administrative costs could miss administrative costs charged as direct costs to the grant.\nFurther complicating this issue, NIH officials explained that primary grant recipients report their subgrantee’s direct and indirect expenses under the primary recipient’s total costs on the Federal Financial Report. There is no requirement to specifically track grant administrative cost data for a grant’s subgrantee and the current federal financial reporting mechanism for the AITR grant does not facilitate identifying all administrative costs. According to NIH officials, identifying administrative costs reported under the total cost line item would be onerous under the current financial information collection method since this would entail additional auditing at both the primary grantee and subgrantee levels. Additionally, consistent with OMB guidance, indirect cost rates are to be based on historical costs incurred by an institution and applied to all grants received by that institution for a set period. While using such a rate may prove efficient for reporting purposes, these rates are a blunt instrument by which to determine actual administrative costs for any one grant program.\nFor the grant programs we reviewed, financial reporting systems varied in their ability to aggregate program-wide administrative cost information. HUD’s Integrated Disbursement & Information System—a nationwide database that provides HUD with current information on CDBG and HOME program activities—includes grant administrative cost information. In contrast, the Head Start program does not currently have a system in place that allows it to aggregate grant administrative cost information across grantees. Instead, Head Start grantees report their expenses after they are incurred on a SF-425 paper form retained at the regional office level. HHS officials are planning to collect the SF-425 electronically on the GrantSolutions platform beginning in late 2015 and should be able to display these data electronically in the Head Start Enterprise System. According to HHS officials, the new method of data collection and management should enable Head Start staff to aggregate actual expenditure data—categorized as programmatic or administrative costs— for analysis and reporting at the headquarters level, which would potentially facilitate reporting these costs. This mechanism should facilitate program-wide aggregation of administrative costs and is a necessary first step to obtain an overall understanding of a program’s administrative costs.\nJust as the mechanisms to collect information differ across the grant programs we reviewed, there is also variation in guidance and training regarding the reporting of grant administrative costs. The six programs we reviewed provide some form of written guidance or instruction regarding the allocation of administrative and program costs. Head Start provides program-specific resources, written guides, and interactive training modules on its website—the Early Childhood Learning and Knowledge Center. The AITR, CCDF, CDBG, and HOME programs also provide resources and guidance online. Applicable administrative cost definitions for MHSC are not included in the management handbook for the grant program. However, officials explained that a list of allowable administrative costs does exist in the grant’s Notice of Funding Availability. With regard to training, program officials with Head Start, CDBG, HOME, and CCDF told us they provide grantees across the country with training on a wide variety of program-specific and fiscal management issues. For example, HUD officials explained that they offer training on identifying allowable administrative costs and that they plan to provide training in financial management via interactive modules online.\nNIH officials told us they provide written guidance and offer special training upon request, but NIH does not provide training to all of its grantees for the AITR grant program. NIH officials said that grantees tend to hire external consultants to assist them with preparing indirect cost rate proposals. MHSC officials said that they do not provide centralized training on administrative costs to grantees, but training is provided by some field offices that determine a need for such training. In addition to written guidance on fiscal information, all six of the programs we reviewed described processes for providing technical support to grantees on request.\nGrant recipients of all the programs we reviewed told us that since administrative costs are not always reimbursed by their federal grants they must cover some administrative expenses themselves. The Urban Institute made the same point in a survey of nonprofits that receive government grants. This review found that half of survey respondents said their government grants and contracts expressly excluded or limited reimbursements for their program and organizational administrative costs.\nUnreimbursed administrative costs in the programs we reviewed ranged from costs related to the grant managers who oversaw the grant program to costs that covered centralized business services such as accounting or human resources. Functions like these support the administration of the grant but are not directly related to its aims or purposes. We found examples of grantees absorbing part of the costs to administer a grant. An official at a state department of health receiving a CCDF grant explained that she analyzes administrative costs and when her organization approaches its federal cost cap she pays these expenses from the state’s general fund. Another CCDF state grantee told us that he relies on state appropriations to cover the majority of administrative costs, and therefore his organization’s federally reported administrative costs remain well under the cap set by the program. Since state funds were available to cover a portion of the administrative expenses, he explained that the organization did not have to claim from the federal government all the administrative expenses to which they were entitled. To the extent that only administrative costs charged to the grant are reported, these reports may understate the actual administrative costs.\nThe actual cost to administer a grant may also be affected by whether oversight responsibilities are extended over long periods, as is required by some federal grant programs. If a grantee has oversight responsibilities for an ongoing portfolio of work it may incur greater administrative costs than a grantee with a shorter-term project with defined beginning and end dates. For example, primary grant recipients of the HOME program are required to oversee HOME-funded rental properties for up to 20 years after construction. According to a HOME grantee, as the portfolio of properties grows the HOME oversight requirements cause the grantee’s oversight costs to increase year after year. However, the HOME grant administrative cost cap does not increase to cover these increased oversight costs associated with a grantee’s growing portfolio of properties over time. Because of this, a HOME grantee told us that as these costs increase over time she will need to absorb these costs, covering them with resources from both HOME administrative funds and state funds. In some cases, the grantee has reviewed HOME grant amounts and actual HOME administrative costs and chosen to allocate funds to fewer units and to fewer projects because of the oversight costs that will be incurred over time.", "Two challenges to comparing administrative costs across grant programs are the variation in cost caps and differences in administrative cost definitions. These two issues are different, but they intersect. The variation in administrative cost caps—the limit to the amount of the grant that may be charged as administrative costs to the federal government— presents challenges to comparing costs across programs. Of the six grant programs we reviewed, administrative cost caps ranged from 5 percent for CCDF to a 26 percent administrative cost cap for education institutions receiving AITR grants. The Multifamily Housing Service Coordinators grant program has no cap. As a result of this variation, the administrative costs of some programs may appear more expensive than others. For example, CDBG’s 20 percent cost cap could result in higher administrative charges to the grant than the CCDF’s 5 percent cost cap. According to HUD data, CDBG administrative and planning expenses in fiscal year 2012 were approximately 16 percent and, according to HHS data, CCDF administrative expenses in fiscal year 2012 were approximately 3 percent. As we have previously concluded, because there are differences in which activities are defined as administrative costs for financial reporting purposes, a program with high administrative spending is not necessarily less efficient than a program with low Programs with higher administrative cost caps administrative spending.may be assumed—incorrectly—to have higher administrative costs; so it is important to have an understanding of individual caps in place before any cross program comparisons are made.\nThere is no government-wide definition of what constitutes an administrative cost. Programs have different missions, priorities, services, and clients, and jurisdiction for the programs are often spread among numerous congressional committees; federal agencies’ definitions of allowable (or prohibited) administrative costs vary from program to program. Additionally, the definition of administrative costs varies across different federal grant programs even though many of the same activities are performed. For example, the salary of an enrollment specialist at Head Start, who enrolls children in the program, is considered a program- related cost. However, the salary of similar position as an intake specialist for the Low Income Home Energy Assistance Program, who determines the eligibility and benefit level for participants, may be an administrative cost in some states where the program is administered. When the same expenses are treated differently across programs, this results in different administrative cost totals for similar functions. Regardless of the reasons for variation in definitions of these costs, the existence of differences in definitions limits their comparability. Monitoring programs entails collection and use of program-related operational and financial data, but for information to be effective for decision making, it has to be pertinent to the individual program. OMB staff we spoke with stated that collecting grant administrative cost information government-wide would not identify whether funds for administrative costs are being spent effectively. Specifically, they told us that analysis of administrative costs and the identification of potential administrative cost savings should occur at the program level. They said that when comparing administrative costs across programs it is important to remember that some programs are inherently more expensive to administer than others.\nComparing unlike costs across different programs would lead to erroneous comparisons. However, comparisons of costs may be more appropriate when comparing programs that fulfill similar missions or provide similar services. Additionally, different definitions for administrative costs could present a challenge in situations when multiple grant programs are consolidated into one program.", "Administrative activities—such as reporting on project status, managing finances, and ensuring quality—are an essential part of the grant process. Selected programs track administrative costs in different ways and not all of the grant programs we reviewed have systems in place that could readily aggregate these costs from their grant recipients. Additionally, the actual cost of administering a given program may be paid by sources other than the federal government and the current collection of grant administrative cost data only reflects the federally reimbursed portion of these costs. Efficient and effective use of federal grant funds has always been important, but attention to the balance between program costs and administrative costs grows as budgets come under increasing pressures and the resources available for achieving federal grants’ goals become further constrained. Although looking at administrative costs may seem like a logical first step when identifying opportunities to reduce expenses in such a budgetary environment, our review identified a number of factors that hinder the comparability of administrative costs across grant programs. Differences in cost caps and definitions are among the most important of these factors and make comparisons across grant programs very challenging, particularly when comparing programs with diverse missions and objectives. Comparing dissimilar costs leads to inappropriate conclusions that may have a perverse impact on federal policy making.\nComparisons of costs may be appropriate when reviewing programs that fulfill similar missions or provide similar service. However, comparisons of administrative costs across grant programs that provide different services should be made with caution. Any comparisons of administrative cost data should consider variation in administrative cost caps and cost definitions.", "We provided a draft of this report to the Secretary of the Department of Health and Human Services and the Secretary of the Department of Housing and Urban Development. The Department of Health and Human Services had technical comments, which we incorporated as appropriate. The Department of Housing and Urban Development did not provide comments. We also provided an informational copy to the Director of the Office of Management and Budget.\nWe are sending this report to interested congressional committees, the Secretary of the Department of Health and Human Services, the Secretary of the Department of Housing and Urban Development, the Director of the Office of Management and Budget, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-6806 or [email protected]. 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.", "This report examines (1) the extent to which selected federal agencies and grantees have mechanisms and guidance in place to distinguish between administrative and program costs and to facilitate the availability of these data to Congress and the public; and (2) the extent to which there are challenges that hinder the comparability of grant administrative cost data. To address these objectives, we selected two agencies for our review—the Departments of Health and Human Services (HHS) and Housing and Urban Development (HUD). HHS manages the largest share of federal grant making both in terms of grant obligation amount and the number of grant programs. We included HUD to obtain management Collectively, the perspectives on a different set of programs and issues.selected agencies provide diversity in the number of grant programs and grant obligations and management perspectives on administrative and program costs.\nAt each selected agency, we identified three programs that provided a combination of the high dollar grant obligation in fiscal year 2012 and different grant types, such as project and formula, as well as grantee type, including state and local government and nonprofit and for-profit entities.and Development Fund; (2) Head Start; and (3) Allergy, Immunology and Transplantation Research. At HUD we selected the following grant programs: (1) HOME Investment Partnerships Program; (2) Community Development Block Grant; and (3) Multifamily Housing Service Coordinators. There were certain programs that met the criterion of high grant obligation at each selected agency but we did not consider them for selection for one or more reasons, including: administrative features of the grant program that made them unique and distinctly atypical of the grants at these agencies or planned consolidation of the program that made the review less relevant.\nAt HHS we selected the following grant programs: (1) Child Care To determine the extent to which selected federal agencies and grantees have mechanisms and guidance in place to distinguish between administrative and program costs, we reviewed each program’s authorizing statutes and regulations, where applicable, program guidance, and grant documents. We interviewed agency officials responsible for each of the selected grant programs to understand how these programs collect grant administrative cost data, the type of guidance, training, and technical assistance they provide grantees, and their requirements and experiences with determining and reporting administrative costs. To inform our work on government-wide efforts to collect grant administrative cost information, we interviewed staff at the Office of Management and Budget’s (OMB) Office of Federal Financial Management, which oversees the financial management policy of the federal government.\nTo examine the extent to which there are challenges that hinder the comparability of grant administrative cost data we performed work at the primary recipient level. Based on fiscal year 2012 grant obligation data for selected grant programs to state and local governments from OMB’s Analytical Perspectives, we selected two states—Massachusetts, which receives a relatively high amount of federal grant funds and was in the top quarter of fiscal year 2012 federal grant obligations, and New Hampshire, which receives a relatively low amount of federal grant funds and was in the bottom quarter of fiscal year 2012 federal grant obligations. We then selected primary grant recipients within those states with the highest grant obligation for each selected grant program. We next confirmed USASpending grant obligation amounts with HHS and HUD officials. We subsequently replaced certain primary grant recipients that had met the criteria of highest grant obligation for each selected grant program within the selected states because we determined that USASpending did not fully or correctly identify the grantee. Although the results of our review are not generalizable to other grant programs in other agencies, they are indicative of the wide variation associated with the mechanisms and guidance for tracking grant administrative costs and the utility of these costs for program management.\nWe conducted a literature review to identify issues raised, including those in our previous reports as well as the Congressional Research Service and the Congressional Budget Office, related to grant administrative costs, grants management, and cost principles. Additionally, we reviewed research reports from research groups and state representative organizations that discuss grant administrative costs from the perspective of grantees. We reviewed relevant HHS and HUD websites and related agency documents to understand grant administrative costs guidance for selected grant programs.\nWe conducted this performance audit from January 2014 to December 2014 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.", "", "Types of expenses included in administrative cost caps Includes program planning costs and salaries of participating jurisdiction’s staff who perform activities, including compliance, developing interagency agreements, monitoring of HOME-assisted housing, reporting to HUD, program evaluation, audit resolution, providing public information, and travel costs; third- party audit, legal and accounting services; rental and purchase of equipment, insurance, utilities, office supplies and office space; the costs of administering tenant-based rental assistance programs; and indirect costs.\nIncludes program planning costs and salaries of staff who perform activities, including providing information to the public, preparing budgets, monitoring and compliance, developing interagency agreements, preparing reports for HUD, audit resolution, program evaluation and supervising employees engaged in the same; travel costs incurred for official business; third-party legal, accounting and audit services; rental or purchase of equipment, insurance, utilities; office supplies and office space; and indirect costs.\nNo applicable regulatory or statutory definitions.\n5% (15% for Indian tribes)\nIncludes salaries of administrative and implementation agency staff; costs related to planning, developing, and designing the program; public outreach and hearings; preparing the application; monitoring and reporting on program activities; coordinating with federal, state and local officials; official travel; accounting and audit services; rental and purchase of equipment, utilities, and office supplies; and indirect costs.\nIncludes costs related to overall management, including salaries of the executive director, personnel officer, fiscal officer/bookkeeper, payroll/insurance/property clerk, and janitor for administrative office space, and costs associated with volunteers carrying out administrative functions; fringe benefits, travel, transportation and training; expenses related to bookkeeping and payroll services, audits, and bonding; administrative office insurance, supplies, copy machines, postage, and utilities; and occupying, operating and maintaining space for administrative activities.\nIndirect charges that typically include depreciation on buildings and equipment; costs of operating such facilities; salaries of executive officers attributable to administrative functions; salaries of clerical staff; office supplies; and library expenses.\nAITR grantees do not have statutory or individual program administrative cost caps. However, OMB Circular No. A-21 (now codified in Title 2 of the Code of Federal Regulations) imposes a 26 percent cap on administrative (but not facilities) expenses for universities. Costs for administration are limited to 26 percent of total direct costs.", "", "", "In addition to the contact named above, Peter Del Toro (Assistant Director), Keith O’Brien (Analyst-in-Charge), Gerard S. Burke, Stanley J. Czerwinski, Catherine Myrick, Carol L. Patey, and George H. Schadler III made key contributions. Also contributing to this report were Thomas M. Beall, Amy R. Bowser, Robert L. Gebhart, Josephine Perez, and Robert Robinson." ], "depth": [ 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 1, 2, 2 ], "alignment": [ "h3_full h4_full h1_title", "h3_full h1_full", "", "", "h0_full", "h2_full h1_full", "h0_full h3_full h2_full h1_full", "h4_full", "h4_full h1_full", "h1_title", "h1_full", "", "", "" ] }

{ "question": [ "How did the reviewed grant programs capture administrative costs charged to them?", "What are the differences in how grant programs track administrative costs?", "How do reported costs differ from actual costs reported to the federal government?", "What did GAO find that supports the existence of this?", "What are cost caps?", "How did cost caps vary between the programs GAO reviewed?", "What factors make it difficult to compare administrative costs between programs?", "How can the definition of administrative costs make it a challenge to compare costs across programs?", "What does the variation in definitions mean for a program with high administrative costs?", "What should be done when collecting comparable information for different grant programs?", "Under what circumstances might comparisons of costs be appropriate?", "What should be done differently when comparing different types of grant programs?", "Why does the federal government spend money on grants?", "What makes up the cost of a grant?", "Why are administrative costs included in a grant program?", "What was GAO asked to do?", "What did GAO do to accomplish this review?", "What criteria did GAO use to select which grant programs it reviewed?", "How did the GAO go about reviewing each program?", "What results can be drawn from GAO's findings?" ], "summary": [ "All six of the grant programs GAO reviewed had mechanisms in place to capture the administrative costs charged to their grant programs, either via a computerized system or paper reporting. All the programs reported that they reviewed their grantees' costs for appropriateness. Two of the programs make administrative cost data available online.", "The programs GAO reviewed track administrative costs in different ways. For some programs administrative and program costs are reported separately, while for others they are included in the same line items.", "Administrative costs reported to the federal government may understate the actual cost to administer a grant program.", "GAO found examples of grantees absorbing part of the costs to administer a grant. Some primary grant recipients stated that when such costs were not reimbursed by the federal grant, they would cover those expenses themselves. Another grantee said he relies on state appropriations to cover the majority of administrative costs.", "These caps limit the amount of the grant that may be charged as administrative costs, and thereby affect what is reported to the federal government as administrative costs.", "For the programs GAO reviewed caps ranged from 5 to 26 percent, with one program having no cap.", "This variation can make some programs look more administratively expensive than others. Second, differences in what is defined as an administrative cost can present an even greater challenge to comparing costs across programs.", "Programs have different missions, priorities, services, and clients; as a result definitions of administrative costs vary from program to program. Therefore, different programs may treat similar costs differently. A cost that may be classified as administrative in one program may be considered a direct program delivery cost by another. For example, the salary of an employee who enrolls participants in one Department of Health and Human Services (HHS) program is considered a program cost but an employee who holds a similar position determining the eligibility of participants in another HHS program may be considered an administrative cost depending on the state where it is administered.", "This variation in definitions means that a program with high administrative costs may not be less efficient than a program with low administrative costs.", "Given these issues, it is challenging to collect comparable information for different grant programs. Any use of information on administrative costs needs to recognize these concerns particularly when comparing programs with different types of objectives, projects, or services.", "Comparisons of costs may be appropriate when reviewing programs that fulfill similar missions or provide similar services.", "However, comparisons across different types of grant programs should be made with caution.", "The federal government spends billions of dollars on various grants to achieve diverse purposes.", "The total cost of a grant includes both program costs that directly support the grant's mission and services and administrative costs to run the program.", "These administrative activities, such as managing finances, are essential. It is important for agencies to track the cost of these activities to provide accountability for efficient use of federal resources.", "GAO was asked to review how costs associated with the administration of grants are tracked and the availability of this information.", "GAO examined (1) the extent to which selected federal agencies and grantees have mechanisms and guidance in place to distinguish between administrative and program costs and to facilitate the availability of these data to Congress and the public; and (2) the extent to which there are challenges that hinder the comparability of grant administrative cost data.", "Agencies and grant programs were selected in part based on obligation amounts and grant types.", "GAO reviewed each program's statutes, regulations, guidance, and grant documents, as applicable, and interviewed agency officials.", "Although GAO's findings are not generalizable, they are indicative of the wide variation associated with the mechanisms and guidance for tracking grant administrative costs." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, 2, -1, -1, -1, 1, -1, -1, 1, -1, 0, -1, 2, 2 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 4, 5, 5, 5, 0, 0, 0, 1, 1, 1, 1, 1 ] }

{ "title": [ "", "Regular and Special Elections of the Speaker", "Size of the House and Majority Required to Elect", "Third and Additional Candidates" ], "paragraphs": [ "", "The traditional practice of the House is to elect a Speaker by roll call vote upon first convening after a general election of Representatives. Customarily, the conference of each major party in the House selects a candidate whose name is formally placed in nomination before the roll call. A Member may vote for one of these nominated candidates or for another individual. In the great majority of cases, Members vote for the candidate nominated by their own party conferences, since the outcome of this vote in effect establishes which party has the majority and therefore will organize the House.\nTable 1 presents data on the votes cast for candidates for Speaker of the House of Representatives in each Congress from 1913 (63 rd Congress) through 2019 (116 th Congress). It shows the votes cast for the nominees of the two major parties, other candidates nominated from the floor, and individuals not formally nominated.\nIncluded in the table are not only the elections held regularly at the outset of each Congress but also those held during the course of a Congress as a result of the death or resignation of a sitting Speaker. Such elections have occurred five times during the period examined:\nin 1936 (74 th Congress) upon the death of Speaker Joseph Byrns; in 1940 (76 th Congress) upon the death of Speaker William Bankhead; in 1962 (87 th Congress) upon the death of Speaker Sam Rayburn; in 1989 (101 st Congress) upon the resignation of Speaker Jim Wright; and in 2015 (114 th Congress) upon the resignation of Speaker John Boehner.\nOn the two earlier occasions among these five, the election was by resolution rather than by roll call vote. On the more recent three, the same procedure was followed as at the start of a Congress.", "The data presented here cover the period during which the permanent size of the House has been set at 435 Members. This period corresponds to that since the admission of Arizona and New Mexico as the 47 th and 48 th states in 1912. The actual size of the House was 436, and then 437, for a brief period between the admission of Alaska and Hawaii (in 1958 and 1959) and the reapportionment of Representatives following the 1960 census.\nBy practice of the House going back to its earliest days, an absolute majority of the Members present and voting is required in order to elect a Speaker. A majority of the full membership of the House (218, in a House of 435) is not required. Precedents emphasize that the requirement is for a majority of \"the total number of votes cast for a person by name.\" A candidate for Speaker may receive a majority of the votes cast, and be elected, while failing to obtain a majority of the full membership because some Members either are not present to vote or instead answer \"present\" rather than voting for a candidate. During the period examined, this kind of result has occurred five times:\nin 1917 (65 th Congress), \"Champ\" Clark was elected with 217 votes; in 1923 (68 th Congress), Frederick Gillett was elected with 215 votes; in 1943 (78 th Congress), Sam Rayburn was elected with 217 votes; in 1997 (105 th Congress), Newt Gingrich was elected with 216 votes; and in 2015 (114 th Congress), John Boehner was elected with 216 votes.\nIn addition, in 1931 (72 nd Congress), the candidate of the new Democratic majority, John Nance Garner (later Vice President), received 218 votes, a bare majority of the membership. The table does not take into account the number of vacancies existing in the House at the time of the election; it therefore cannot show whether any Speaker may have been elected lacking a majority of the then qualified membership of the House.\nIf no candidate obtains the requisite majority, the roll call is repeated. On these subsequent ballots, Members may still vote for any individual; no restrictions have ever been imposed, such as that the lowest candidate on each ballot must drop out, or that no new candidate may enter. Because of the predominance of the two established national parties during the period examined, only once in the period did the House fail to elect on the first roll call. In 1923 (68 th Congress), in a closely divided House, both major party nominees initially failed to gain a majority because of votes cast for other candidates by Members from the Progressive Party or from the \"progressive\" wing of the Republican Party. Many of these Members agreed to vote for the Republican candidate only on the ninth ballot, after the Republican leadership had agreed to accept a number of procedural reforms these Members favored. Thus the Republican was ultimately elected, although (as noted earlier) still with less than a majority of the full membership.", "In the first portion of the period covered by Table 1 , it was common for candidates other than those of the two major parties to receive votes. Such action occurred in 11 of the 16 Congresses (63 rd -78 th ) that convened from 1913 through 1943. On 7 of those 11 occasions, candidates other than those of the two major parties were formally nominated. These events reflect chiefly the influence in Congress, during those three decades, of the progressive movement. The additional nominations were offered in the name of that movement, and the votes cast for Members other than the major party nominees also generally represent an expression of progressive sentiments.\nDuring this period, the occurrence of additional nominations (displayed in the table) reflects changing views of Members identifying themselves as \"progressives\" about whether to constitute themselves in the House as a separate Progressive Party caucus or as a wing of the Republican Party. So does the pattern of shifts in the party labels by which these nominees and others receiving votes chose to designate themselves. The last formal Progressive Party nominee appeared in 1937 (75 th Congress). After defeats in the following election, the only two remaining Members representing the Progressive Party were reduced to voting for each other for Speaker, and beginning in 1947 (80 th Congress), the last standard-bearer of the tendency accepted the Republican label. The demise of this movement in the House represented the final stage in the establishment of a two-party system at the national level.\nFrom 1945 through 1995 (79 th -104 th Congresses), only the official nominees of the two major parties received votes for Speaker. This pattern, in other words, persisted from the end of World War II and the advent of the \"modern Congress\" until after the Republicans had regained the majority in the 104 th Congress (1995-1996) after four decades as the minority party. During this period, the presumption became firmly established that a Member's vote for Speaker will reliably reflect his or her party membership.\nThe opening of the 105 th Congress in 1997, accordingly, marked the first time since 1943 that anyone other than the two major party candidates received votes for Speaker. In 10 of the 13 speakership elections since then (1997-2019), at least one Member has voted for a candidate other than ones formally nominated by the major party conferences. Early in this period, votes cast for other candidates seem to have usually reflected specific circumstances and events, but in the most recent instances, some of them may be regarded as reflecting action by identifiable political factions or groupings. During this period, only in the initial election of 2015 have the names of any candidates other than those of the party conferences been formally placed in nomination.\nThe ballots in 1997, 2013, 2015 (both instances), and 2019 were also notable because votes were cast for candidates who were not Members of the House at the time. In the initial election in 2015, two of the votes cast were for sitting Members of the Senate; in 2019, one such ballot was cast. Although the Constitution does not require the Speaker (or any other officer of either chamber) to be a Member, the Speaker has always been so; it is not known that any votes for individuals other than Members to be Speaker had ever previously been cast in the history of the House.\nNotably, in 2001, a Member who bore the designation of one major party voted for the nominee of the other. Although the table below does not indicate the party affiliation of the Members voting for each candidate, examination of other available records confirms that no such action had occurred at least for the previous half century." ], "depth": [ 0, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h0_full", "h2_full h1_full" ] }

{ "question": [ "What does each new House do when it first convenes?", "Who is nominated to become a Speaker?", "How does the voting process work to elect a Speaker?", "What happened in the time period from 1913 through 1943?", "What candidates did Members vote for during this time period?", "What changed during the time period from 1945 to 1995?", "What unique event happened in the House in 2015?", "What would usually happen during an election?", "Is it possible for a candidate who is not a Member of the House to be voted for?", "Is it a requirement that the Speaker is a member of the House?" ], "summary": [ "Each new House elects a Speaker by roll call vote when it first convenes.", "Customarily, the conference of each major party nominates a candidate whose name is placed in nomination.", "A Member normally votes for the candidate of his or her own party conference but may vote for any individual, whether nominated or not. To be elected, a candidate must receive an absolute majority of all the votes cast for individuals. This number may be less than a majority (now 218) of the full membership of the House because of vacancies, absentees, or Members answering \"present.\"", "From 1913 through 1943, more often than not, some Members voted for candidates other than those of the two major parties.", "The candidates in question were usually those representing the \"progressive\" group (reformers originally associated with the Republican Party), and in some Congresses, their names were formally placed in nomination on behalf of that group.", "From 1945 through 1995, only the nominated Republican and Democratic candidates received votes, reflecting the establishment of an exclusively two-party system at the national level.", "In 10 of the 13 elections since 1997, however, some Members have voted for candidates other than the official nominees of their parties. Only in the initial election in 2015, however, were any such candidates formally placed in nomination.", "Usually, the additional candidates receiving votes have been other Members of the voter's own party, but in one instance, in 2001, a Member voted for the official nominee of the other party.", "In the 1997, 2013, 2015 (both instances), and 2019 elections, votes were cast for candidates who were not then Members of the House, including, in the initial 2015 election and the 2019 election, sitting Senators.", "Although the Constitution does not so require, the Speaker has always been a Member of the House." ], "parent_pair_index": [ -1, 0, -1, -1, 0, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 4, 4, 4, 5, 5, 5, 5 ] }

{ "title": [ "", "Introduction", "DOD Aviation Fuel Use", "Studies on DOD Fuel Use", "2001 Defense Science Board Task Force", "JASON Report", "DOD Energy Security Task Force", "LMI Study", "Reducing the Use of Petroleum-Based Aviation Fuel", "Increasing Alternative Fuel Use", "Synthetic Fuel", "Pros", "Cons", "Biofuel", "Pros", "Cons", "Hydrogen Fuel Cells", "Pros", "Cons", "\"Trash to Gas\"", "Pros", "Cons", "Solar Power", "Pros", "Cons", "Decreasing Petroleum-based Demand", "Light-weighting", "Pros", "Cons", "Increase Landing Weights", "Pros", "Cons", "More Direct Flights", "Pros", "Cons", "Relocate Aircraft", "Pros", "Cons", "Decrease Aircraft Rotations", "Pros", "Cons", "Increase Simulator Use", "Pros", "Cons", "Install Winglets", "Pros", "Cons", "Other", "Pros", "Cons", "Issues", "DOD Organizational Structure", "Funding", "External Expectations", "Options for Congress", "Mandate the Establishment of an DOD Office of Energy Security", "Mandate Fuel Efficiency in Aircraft", "Mandate Fuel Efficiency as a Consideration in New DOD Acquisitions", "Amend Title 10 to Allow DOD to Enter Into Contracts for Synthetic Fuel Beyond Five Years", "Direct DOD to Devote More Funding to Research and Development of Long-term Alternative Energy Sources for Aviation", "Mandate Alternative Fuel Use", "Appendix. Legislative Activity in FY2007" ], "paragraphs": [ "", "This report examines the Department of Defense (DOD) use of aviation fuel and possibilities to reduce that use by examining related issues and presenting options Congress may choose to consider.\nDOD, the largest single consumer of energy in the United States, recognizes the need to reduce its reliance on fossil fuel. For a number of years, the department has been making steady progress at decreasing their use of fossil fuels on their installations and in their facilities but following the sharp rise in oil prices after Hurricane Katrina in August 2005, DOD stepped-up its examination of fuel use in weapon systems.\nThe largest portion of fossil fuel used by DOD is in the form of aviation fuel. Although formulated for use in aircraft, aviation fuel is also used in other, land-based, platforms such as tanks and generators to reduce DOD's logistics requirements. Reducing DOD's consumption of aviation fuel could, by itself, significantly reduce the department's overall use of and reliance on fossil fuel. In Fiscal Year 2005, DOD consumed roughly 125 million barrels of oil—approximately 1.2% of the nation's total. About 74% of DOD's energy powers its mobility vehicles—Air Force aircraft, Navy ships, and Army ground vehicles. Over half—roughly 52%—is aviation fuel.\nThere are several options available to DOD for reducing its use of fossil-based aviation fuel. Each has advantages and disadvantages and no single option provides the perfect solution. Advanced technologies such as synthetic fuels offer potential sources of alternate fuel but further development and study are required before DOD can employ them on a large scale. DOD can also take measures to decrease its use of fuel. Possible options include upgrading aircraft engines and modifying operational procedures. Many of these measures, however, are costly and must compete for funding with other operational priorities.", "The Department of Defense has a unique fuel-use pattern. Approximately 74% of its energy powers its mobility vehicles and over half—roughly 52% of the total—is comprised of aviation fuel. By comparison, aviation accounts for only about 4% of the energy used in the United States.\nFuel costs, although less than 3% of the total DOD budget, have a significant impact on the department's operating costs. For every $10 increase in the price of a barrel of oil, DOD's operating costs increase by approximately $1.3 billion. DOD budgets for fuel a year or more in advance of its purchase, therefore and sudden large increases in fuel costs must be paid for with emergency funds or by shifting funds from other programs. The Air Force, which operates most of DOD's fixed-wing aircraft, spends the largest share of DOD's fuel budget. Every $10 increase in a barrel of oil increases the Air Forces' already sizable annual fuel costs by $600 million.\nFuel use varies significantly among the different types of aircraft. For example, the B-52H, one of the oldest aircraft in the service's inventory, has a maximum takeoff weight of 488,000 pounds, runs on eight TF-33 turbine engines, and burns approximately 3500 gallons per flight hour. That is 138 pounds of aircraft for each gallon per hour. By contrast, the C-5B, designed with 1980s technology, is a larger aircraft with four engines, has a maximum takeoff weight of 769,000 pounds, and also burns about 3500 gallons per flight hour. That is 219 pounds of aircraft for each gallon per hour-an increase of 59% over the B-52 capabilities. The T-38, a high-performance jet-engine aircraft used for training, has a maximum takeoff weight of 12,000 pounds and burns only about 395 gallons per flight hour. That is only 30 pounds of aircraft for each gallon per hour-much less than either of the above. The lower fuel efficiency of the T-38 compared to either the B-52H or the C-5B is a reflection of the smaller aircraft's aerodynamic design, afterburning engines, and much shorter sortie length rather than the efficiency of its engines. Fuel consumption rates for a representative selection of Air Force aircraft is provided in Table 1 .\nDelivering fuel to the operational user can add substantially to its cost. The \"fully burdened\" cost of fuel refers to the price of fuel with the costs of delivery added in. Costs of delivery include the acquisition, maintenance, and operating costs of an aerial refueling tanker and the crew that flies it. The cost of a gallon of fuel delivered to an aircraft on a flight line is a relatively straight-forward computation and generally ranges between $2 and $3 per gallon. On the other hand, the fully burdened cost of a gallon of fuel delivered to an aircraft in flight is estimated to be around $20 per gallon. / The complexity of measuring fuel use and costs for aircraft is one of the many challenges DOD has to becoming a more efficient user or making other changes in its fuel use, such as using alternative fuels.", "As fuel costs rose, DOD recognized the need to understand factors that contribute to the department's heavy usage and examine ways to mitigate them. Consequently, DOD has conducted or sponsored a number of studies in recent years to examine DOD's fuel use, determine the extent to which that use is problematic, and recommend actions to decrease its use. Two general conclusions seem to emerge from various government studies. The first is that there does not appear to be one ideal alternative fuel with which to replace or augment the fossil fuel already although different technologies are being pursued to varying degrees. The second is that there appears to be several methods currently available to DOD with which it can decrease fuel consumption.\nThe earliest comprehensive DOD study on fuel use, conducted by the Defense Science Board in 2001, focused on the fuel efficiency of weapon systems and was the first to suggest that the true cost of fuel—the fully burdened rate—was not sufficiently understood by decision-makers. Two other comprehensive studies were completed more recently, in September 2006. The JASON report, Reducing DOD Fossil Fuel Dependence , asserted that an energy shortage was unlikely in the near term to hinder DOD operations and emphasized the value of optimizing the energy efficiency of weapon systems over pursuing alternative fuels at this time. The Defense Task Force on Energy Security was an internal cross-functional group that looked at energy use throughout the department. It presented three recommendations: 1) increase the energy efficiency of weapon systems, 2) accelerate energy-saving initiatives for facilities, and 3) establish an alternative fuels programs. The most recent government sponsored report, completed in April 2007 by LMI Government Consulting, Inc. (LMI), identified areas in which DOD's energy goals are not synchronized with their current practices and recommended actions to address the misalignment. Each of these studies is more fully examined below.", "In 2000, the Under Secretary of Defense (Acquisition, Technology and Logistics) directed the Defense Science Board (DSB) to form a task force to examine how DOD could improve the fuel efficiency of their weapons systems. The task force would also identify institutional barriers that impeded the department's understanding of and ability to capture the full advantages of more fuel efficient systems. The task force was not asked to look at possible sources of alternative fuel and they did not address that topic in their report. They reported five significant findings.\nFinding #1: Although significant warfighting, logistics and cost benefits occur when weapons systems are more fuel-efficient, these benefits are not valued or emphasized in the DOD requirements and acquisition processes. When buying new weapons, DOD placed performance as its highest priority and seemed to overlook how fuel efficiency could result in improved performance. Furthermore, when developing new systems the department did not seem to take into account how the fuel use of a particular system could have far-reaching effects on the total force (e.g., a system's logistical requirements may create a vulnerable delivery chain).\nFinding #2: The DOD currently prices fuel based on the wholesale refinery price and does not include the cost of delivery to its customers. This prevents a comprehensive view of fuel utilization in DOD's decision-making, does not reflect the DOD's true fuel costs, masks energy efficiency benefits, and distorts platform design choices. The DSB pointed out that overlooking the true cost of fuel also masks the real benefits of fuel efficiency. As a consequence, fuel efficiency is not regarded as a relevant factor in the acquisition of weapon systems or in other logistics related decisions. For example, in 1997, using an average fuel price of 97 cents, the Air Force estimated that re-engining the B-52H would generate a savings of just under $400 million over 40 years. Based on that calculation, the service concluded that retrofitting was not cost-effective. The DSB reworked the equation using an average fuel cost of $1.50 per gallon (the board estimated that 10% of the fuel would be delivered via aerial refueling at a cost of $17.50 per gallon) and calculated a savings of $1.7 billion.\nFinding #3: DOD resource allocation and accounting processes (the Planning, Programming, and Budgeting System (PPBS), DOD Comptroller) do not reward fuel efficiency or penalize inefficiency. The task force found that DOD interest in fuel efficiency had been mainly limited to meeting goals established by legislation or executive order. Since those goals mainly applied to installations, including their non-warfighting vehicles, there was little incentive to improve the fuel efficiency of weapon systems. Additionally, the department had no way to quantify—and therefore value—the benefits of conserving fuel.\nFinding #4: Operational and logistics wargaming involving fuel requirements are not cross-linked to the Service requirements development or acquisition program processes. The task force found that in DOD combat simulation exercises, each military service emphasized mission execution while adequate fuel supplies were considered a constant. DSB asserted that doing so left DOD unaware of the potential effects of fuel efficiency on combat operations and of the vulnerability of the fuel supply chain. Furthermore, with no model of efficient or inefficient fuel use, DOD could not analyze fuel related logistical requirements as part of the acquisition process.\nFinding #5: High payoff, fuel-efficient technologies are available now to improve warfighting effectiveness in current weapon systems through retrofit and in new systems acquisition. The task force found that there were existing technologies that could increase weapon systems' fuel efficiency. However, without the tools to analyze the collective benefits of fuel efficiency to warfighting capability, the value of improvements could be misjudged and not fully appreciated.", "JASON, an independent scientific advisory group for DOD, was asked by the Director, Defense Research and Engineering (DDR&E) to assess ways in which DOD could reduce its demand for fossil fuel using advanced technology, including alternative energy sources. The group was asked specifically not to conduct a detailed analysis of U.S. Air Force fuel use.\nThe JASON report contained three relevant findings:\nFinding #1: DOD fuel costs, though high, represent only about 2.5-3% of the DOD budget and should not be a \"primary decision driver at present.\" JASON determined that other fuel related issues such as life-cycle costs of weapon systems and the supply chain (in terms of both money and human life) were more significant and compelling factors but that the cost of fuel may become a significant issue in the future. They further noted that the number of Air Force aircraft, the largest source of fuel consumption in DOD, is expected to decline significantly in the next several decades, which should result in a corresponding decrease in fuel use.\nFinding #2: Although revolutionary options in weapon system design exist in their early stages, the technologies that currently promise the most significant fuel savings are light -weighting and modernizing diesel engines. JASON saw little use at the present for most alternative ground vehicle designs such as hybrids, all-electric, or fuel-cell vehicles. In the case of the first two, military use patterns would not allow optimal use of the technologies. In the case of fuel-cells, JASON found that the technology was not sufficiently mature and that there was not a good way to transport hydrogen to theater. JASON suggested light-weighting vehicles by decreasing the weight of manned vehicles and using more unmanned vehicles.\nJASON recommended upgrading the gas turbine engine in the Army M-1 Abrams tanks to a modern diesel and that the Army, in particular, install fuel consumption tracking devices in vehicles. The resulting data will allow DOD to gauge use patterns and provide data with which to make informed decisions on engine selections and optimal efficiency.\nFinding #3: The Department of Defense uses less than 2% of the oil consumed in the United States and is therefore not a large enough consumer to drive the market for conventional or alternative fuels. JASON and others have suggested that finding substitutes for fossil fuels must be a national endeavor.\nAccording to DOD it uses roughly 340,000 barrels of oil a day whereas the daily consumption rate for the United States is approximately 21 million barrels. DOD agrees that it plays a significant role in testing, certification, and demonstrating the use of synthetic jet fuel but is not a large enough consumer to drive the market.\nJASON contended that in the search for alternative fuels, the most economical and environmentally sound method is to use Fischer-Tropsch technology to produce liquid fuel from \"stranded\" natural gas. They further reported that ethanol was not suitable as a DOD fuel due to its low energy density and high flammability.", "In Spring 2006, former Secretary of Defense Donald Rumsfeld formed a DOD task force with a four-part charter: 1) Examine the issue of energy security; 2) Devise a plan for lowering DOD's fossil fuel requirements; 3) Identify alternate energy sources; and 4) Examine past and ongoing studies to help define DOD's options. The Director of Defense Research and Engineering (DDR&E) led the effort. Task force representation included a cross-section of skills within the military departments, the staff of the Chairman of the Joint Chiefs of Staff, and other defense agencies. Unlike the other studies discussed, the DOD task force did not produce a written report but presented its findings in a slide format that contained little explanation or background. Their three recommendations were:\nRecommendation #1: Increase weapon platform fuel efficiency.\nIncorporate the component of energy efficiency into acquisition policy decisions Develop more efficient propulsion systems, power generators, and machinery Develop more light-weight military vehicles Strive for efficient operations and increased use of simulators (primarily affects the aviation community)\nRecommendation #2: Accelerate energy efficiency initiatives for military installations.\nMeet or accelerate present energy efficiency goals for military installations. Consider and address the energy efficiency of installation-based non-tactical vehicles. Expand Energy Conservation Investment Program/Energy Saving Performance Contracts.\nRecommendation #3: Establish an alternate fuels program.\nFurther develop and test synthetic/alternative fuels for military weapon systems. Measure and assess DOD's progress in alternate fuel use. Develop incentives programs for alternate fuel industry.", "The Pentagon's Office of Force Transformation and Resources contracted LMI to develop an approach for the creation of a new DOD energy strategy. LMI identified three areas where DOD's current practices were not aligned with its stated energy goals, recommended three main actions that DOD needed to take in order to address the misalignments, and provided other energy related options that could enable DOD to improve their corporate energy related processes.\nThe three areas of strategic, operational, and fiscal considerations LMI identified where DOD's practices and stated energy goals produced some friction and limitations were as follow.\n1. Strategic: DOD's dependence on foreign supplies of fuel limits its flexibility in dealing with certain producer nations;\n2. Operational: DOD seeks greater mobility, persistence, and agility for its forces but the energy requirements of its forces limits the department's ability to attain those things; and\n3. Fiscal: DOD seeks to reduce the operating costs of its forces and of future procurements but increased energy consumption and increased prices are causing energy associated operating costs to grow.\nThe three actions LMI recommended DOD take to address the areas noted above were as follow.\n1. Incorporate energy considerations (energy use and energy logistics support requirements ) in the department's key corporate decision making: strategic planning, analytic agenda, joint concept and joint capability development, acquisition, and planning, programming, budgeting, and execution (PPBE);\n2. Establish a corporate governance structure with policy and resource oversight to focus the department's energy efforts; and\n3. Apply a new framework to promote energy efficiency, including alternate energy sources, to those areas consuming the most fuel (aviation forces), requiring the most logistics support (forward land forces and mobile electric power), or having the most negative effect on the warfighter (individual warfighter burden).\nOther options LMI proposed for DOD to consider included the following.\n1. Incorporate energy considerations (energy use and energy logistics support requirements) in all future concept development, capability development, and acquisition actions;\n2. Make energy a top research and development priority;\n3. Increase global efforts to enhance the stability and security of oil infrastructure, transit lanes, and markets through military-to-military and state-to-state cooperation; and\n4. Make reducing energy vulnerability a focus area of the next strategic planning cycle and Quadrennial Defense Review.", "The government sponsored reports seem to indicate, with limited exceptions, that DOD should consider various options for reducing its reliance on fossil fuels. Aviation fuel in particular is viewed as a primary target of that reduction as it accounts for the largest share of fuel consumed by the department. Generally, DOD has several available methods for decreasing its use of petroleum-based aviation fuel. They can be placed in two categories: 1) increasing the use and supply of alternative fuels and 2) decreasing the demand for petroleum-based fuel.\nIn the first category, options include producing synthetic fuel from coal, natural gas, and biomass, as well as hydrogen fuel cells. In the second category, DOD can use various existing technologies to increase the fuel-efficiency of weapon systems and modify operating procedures and polices to use less fuel. All the options have limitations and none provide a perfect solution.\nWhether it is more prudent to aggressively pursue alternative fuels or concentrate resources on decreasing the department's fuel demand is a matter of debate. There are many who suggest that DOD can spur the development of a viable domestic Coal-To-Liquid industry. Others suggest that developing such an industry would contribute to carbon emissions and divert funds from the development of alternative fuels produced from renewable sources as well as from efforts to increase the fuel-efficiency of weapon systems. The following is a discussion of the most frequently cited options.", "Alternative fuels are often divided into two categories: \"synthetic\" fuels derived from non-renewable sources such as coal and natural gas; and \"biofuels,\" produced from renewable feedstocks such as corn, sugar cane, and prairie grasses. Both offer advantages and disadvantages as substitutes for petroleum-based fuel.\nAn issue that may affect DOD's search for alternative fuels is the department's desire for a \"Single Battlespace Fuel.\" Currently there are seven to nine different types of fuel used in theater. Ultimately, DOD would like there to be just one in part to decrease risks associated with the elaborate and vulnerable fuel delivery system now in place. However, that may be several years away. Although DOD has been exploring the use of synthetic fuel for aircraft, there is no indication that DOD is actively pursuing alternative fuels for battlefield ground vehicles. There is speculation that this is due to the difficulty of altering the current logistical system and also to the fact that research and development in alternative ground fuel are still in the early stages.", "The technology used to produce synthetic liquid fuel from coal, natural gas, or other solid carbon-containing feedstocks has existed since around 1923 when two German researchers, Franz Fischer and Hans Tropsch, found a way to turn carbon-based materials into useable petroleum products. Their discovery—the \"Fischer-Tropsch\" process—forms the basis of the technology in use today. Synthetic fuel can also be extracted from oil shale and tar sands (also referred to as oil sands), forms of organic-rich sedimentary rock abundant in North America.", "There are many positive qualities associated with Coal-To-Liquid (CTL) and Gas-To-Liquid (GTL) fuels produced via the Fischer-Tropsch (F-T) process. The most frequently cited advantage is that it burns cleaner producing fewer carbon emissions as a result of its consumption in the aircraft. F-T fuels produce approximately 2.4% less carbon dioxide, 50%-90% less particulate matter, and 100% less sulphur than traditional petroleum-based fuels. Other positive attributes of F-T fuels include excellent low temperature properties that improve high altitude operations and low temperature starting; and \"superior\" thermal stability, which makes possible the development of highly fuel efficient engines.\nAnother oft cited advantage of F-T fuel for DOD is that it can be produced using resources available within the United States. Coal and natural gas, two common feedstocks , are relatively abundant in the United States. The Energy Information Administration estimated in a 1995 report that the United States has an approximately 250 year supply of coal. It should be noted that an increased demand for coal driven by a growing F-T industry may affect that estimate.\nThe Air Force has already conducted testing of F-T GTL fuel with positive results. In September, 2006, at Edwards Air Force Base in California, the Air Force tested a 50/50 mix of F-T synthetic fuel and Jet Propellant 8 (JP-8) in one engine of a B-52 Stratofortress. No detrimental effects were noted as a result of the flight. In December, 2006, the Air Force tested the synthetic fuel mixture in all eight of the B-52's engines and again, no detrimental effects were noticed. The last set of tests—cold weather engine starting—took place in January, 2007, at Minot Air Force Base in North Dakota. Detailed data analysis and further inspections of the aircraft and its engines are ongoing.", "Challenges involved with the large-scale production of F-T fuel may make its long-term use by DOD problematic. Notwithstanding the low carbon emissions produced by burning F-T fuel in engines, total carbon emissions generated through the fuel's production and use are estimated to be twice that of petroleum-based fuel. Although advocates of F-T argue that the carbon emissions generated during fuel manufacture can be sequestered, U.S. Department of Energy (DOE) officials and other experts have stated that large-scale carbon sequestration is several years away.\nEmissions from F-T fuels seems to be of general concern as examination of the technology continues. The Air Force acknowledges that capturing carbon emissions is the \"big issue\" as they move ahead with the exploration of F-T fuels. According to an Air Force spokesperson, DOD is working with the Department of Energy, the Defense Logistics Agency, and the Task Force on Strategic Unconventional Fuels to explore ways to mitigate the problems that may be associated with F-T fuel production. Furthermore, legislation proposed in January 2007 ( S. 154 , S. 155 , and H.R. 370 . See Appendix for relevant legislative language.) calls for the Secretary of Energy, in cooperation with the Administrator of the Environmental Protection Agency, the Administrator of the Federal Aviation Administration, the Secretary of Health and Human Services, and the Secretary of Defense, to report on emissions from F-T products used as transportation fuel.\nAlthough F-T fuel burns cleaner in aircraft engines, the fuel's lack of sulphur presents two problems for the engines. One is that it reduces the fuel's ability to provide lubrication causing stress on the engine's moving parts. The other problem is that less sulphur results in fewer aromatic hydrocarbons, which, in traditional petroleum-based fuels, have the desirous effect of causing engine seals to swell and prevent leakage.\nCritics of F-T fuel also point to the potential environmental hazards posed by increased coal mining as an additional drawback. Some fear a \"mining boom\" that could lead to the strip mining of public lands, degraded water quality in some locations, and additional miners put at risk. They question whether a relatively small dent in oil imports is worth what they predict as a 40% increase of coal production. Instead a need for increased fuel efficiency and cleaner energy alternatives is often cited.\nRecent efforts at constructing F-T plants in the United States have proven challenging. In September 2006, after supplying DOD 100,000 gallons of synthetic fuel to test in the B-52, Syntroleum, a company that produces synthetic fuel, closed its demonstration plant in Tulsa, Oklahoma, its revenue falling after completion of its contracts with DOD and the Department of Transportation. In a February 2007 hearing before the House Energy and Commerce Committee, Secretary of Energy Samuel W. Bodman, in response to questions about why the Department of Energy proposed halting funding for a CTL diesel fuel plant in Pennsylvania, stated that the \"financial viability\" of the project was questionable. Cost estimates had grown from an original $612 million in 2003 to approximately $800 million. On the other hand, potential developers may be encouraged by DOD's interest in synthetic fuels. In May 2006, when the Defense Energy Support Center, the agency within the Defense Logistics Agency that purchases fuel for DOD, asked companies to submit proposals for the production of 200,000 gallons of F-T fuels for testing by the Air Force and Navy in 2008 and 2009, it received over 20 responses.\nThe Air Force has set a goal of using a domestically produced synthetic fuel blend for 50 percent of its aviation fuel by 2016. At current usage rates, that would require approximately 325 million gallons of mixed fuel a year. The number of plants that would be required to reach this capacity have been reported at five and ten. Establishing plants in the United States would reportedly take several years and a significant amount of capital. Estimates for the cost of construction vary between $1 billion for a plant with a daily output of 10,000 barrels a day to $5-10 billion for a plant with a daily output of 80,000 barrels a day. According to GAO, DOE estimates that a CTL plant would cost up to $3.5 billion and require 5-6 years to build.\nCompounding the difficulties posed by the high cost of constructing a F-T plant are restrictions on DOD's ability to enter into long-term contracts for fuel. Currently the department may only enter into contracts for fuel up to five years—not long enough, in the opinion of some, to provide potential suppliers with the economic assurance necessary to justify the up-front costs of building a plant. The five-year limitation is based on language in 10 U.S.C. 2306b, which outlines the circumstances under which the department may sign a \"multiyear contract.\" The statute defines a multiyear contract as \"a contract for the purchase of property for more than one, but not more than five, program years.\"\nProposed legislation is intended in part to alleviate this contracting restriction and thus eliminate a perceived barrier to increased F-T synthetic fuel production. The bills— Coal-To-Liquid Fuel Energy Act of 2007 ( S. 154 ), Coal-to-Liquid Fuel Act of 2007 ( S. 155 ), and Coal-To-Liquid Fuel Promotion Act of 2007 ( H.R. 370 )—propose permitting the Department of Defense to enter into contracts for synthetic fuel for up to 25 years. Critics of the legislation express concern that encouraging increased CTL production before large-scale carbon sequestration is available will significantly increase carbon emissions.", "Biofuels are a number of synthetic fuel products that use biological matter as a feedstock: ethanol, produced mainly from corn; cellulosic biofuel, ethanol made from cellulosic plants such as fast-growing trees, prairie grass, and agricultural waste; and biodiesel. /", "Many cite as one of the advantages of biofuel that the feedstocks are renewable. Also, unlike synthetic fuel from coal and natural gas, biofuel can theoretically be \"carbon neutral.\" That is the carbon dioxide emitted during the burning of biofuel is offset by the carbon dioxide consumed during the feedstocks' growth. However, current production methods involve the use of some carbon emitting sources, which detracts from the claim of carbon neutrality.", "In its present state of technological development, the energy density of biofuel is too low to make it a suitable substitute for jet fuel. Ethanol's energy density is approximately 25% lower than that of conventional aviation fuel and is therefore not suitable for jets' turbine engines. Furthermore, ethanol cannot operate at the extreme temperatures—both high and low—at which military aviation fuel is needed to perform. However, in 2006, the Defense Advanced Research Projects Agency (DARPA) awarded a contract for the development of a synthetic fuel from \"oil-rich crops produced by either agriculture or aquaculture (including but not limited to plants, algae, fungi, and bacteria) and which ultimately can be an affordable alternative to petroleum-derived JP-8\" Delivery of the product for government testing is expected in 2008.", "Hydrogen powered fuel cells are a potential alternative power source for DOD and have received considerable attention and study over the past few years. Fuel cells—thin, flat, and stackable—generate electricity through an electrochemical process that combines hydrogen and oxygen and produces water and heat as waste products. One fuel cell generates a modest amount of energy but several can be stacked together for increased power production.", "Hydrogen fuel cells have many positive attributes. They are more efficient than combustion engines and do not produce carbon emissions. They do not run down or need to be recharged but can continue operating with the addition of more fuel. For the military, hydrogen fuel cells provide the added benefits of near silent operation and reduced infrared exposure. Furthermore, for portable applications, hydrogen fuel cells weigh less than batteries and retain power longer. Finally, since hydrogen can be obtained from many sources including water, hydrogen fuel could, theoretically, be manufactured on the battlefield.\nFuel cells are already used on several DOD installations mostly in stationary applications such as back-up generators. At Hickam Air Force Base in Hawaii, a hydrogen station produces enough hydrogen every day to power a 30-foot long, 24-passenger fuel cell shuttle bus with a range of approximately 100 miles.\nDOD is also exploring the use of fuel cells for ground vehicles and small portable applications. In September 2006, the Army began testing a fuel cell vehicle manufactured by General Motors, Corp.", "A number of obstacles prohibit the wide-spread use of hydrogen fuel cells by DOD. Cost, durability, and the transport, storage and delivery of hydrogen fuel are the three largest.\nAt this stage in their development, fuel cells and hydrogen fuel are quite costly. According to DOE, a fuel cell with a generating capacity of 80 kilowatts lasts approximately 1000 hours and the energy it produces costs approximately $110 per kilowatt hour. DOE's goal is to reduce the cost to $30 per kilowatt hour and extend the fuel cell's life to 5000 hours by 2015. Finally, neither DOD nor the nation has a comprehensive system at this time to transport, store, or deliver hydrogen fuel.\nIn 2004, DESC issued a report that assessed hydrogen as a potential future fuel for DOD. The report concluded that hydrogen may be a viable source of fuel for small-scale power generation and portable devices within the next 10-30 years however, based on the current state of its development, employing hydrogen fuel cells in weapons systems will not be feasible for 30-40 years. The volume of liquid hydrogen required to power a Navy ship, for example, is four times the volume of conventional fuel. Either carrying capacity on the ship for hydrogen fuel would need to be expanded four times—especially difficult on ships that are already space-restricted—or the ship would have to refuel four times as often. Also, since hydrogen is highly flammable, there is no practical way at the present time to carry it aboard a ship. Similar obstacles preclude its use as an aviation fuel.", "Current research indicates a potential way to convert solid waste at deployed DOD locations into a fuel source. Power demands of today's military base-camps have risen sharply over the past several years requiring more fuel deliveries to power generators. Various technologies exist to turn some of the solid waste generated at the camps into fuel. The technologies vary in efficiency rates and range from incineration—the least efficient conversion method—to pyrolysis, which is the chemical decomposition of organic matter and has an efficiency rate of approximately 70-90%.", "Turning a camp's waste into a source of energy could benefit DOD in two ways: 1) by decreasing the amount of fuel that must be transported to the camp and 2) by reducing the amount of waste that must be taken out. According to a study conducted by the Army, approximately 79% of waste generated in the field is a potential source of energy. Meals Ready to Eat (MRE) are a prime source for much of it.", "One of the challenges of \"trash-to-gas\" technologies will be making them easy to operate for service members. Additionally, although seven pounds of plastic waste theoretically equates to about one pound of JP-8, there is not enough plastic waste generated in-theater to make on-site production of aviation fuel feasible. DOD is also looking into other \"trash-to-gas\" options. In early 2007, DARPA awarded a contract for the further exploration of a technology that produces plastics from plant oils, which can then be broken down into biodiesel in the field.", "Solar power has been successfully used to fly unmanned aerial vehicles as well as manned vehicles in a limited capacity. The Helios Prototype, an unmanned drone built by AeroVironment, Inc., under the National Aeronautics and Space Administration's (NASA) Environmental Research Aircraft and Sensor Technology Program successfully demonstrated high-altitude, long-duration solar-powered flight in August 2001 when it achieved an altitude of over 96,000 feet and stayed airborne for almost 17 hours. Helios was ultra-light at just over 1,300 pounds empty and its wings, which span 247 feet, were covered with over 62,000 solar cells. During daylight, sunlight powered the aircraft while excess energy went into an on-board fuel cell energy storage system for night operations. The aircraft, along with an experimental fuel cell package, was lost in June 2003 when it experienced control difficulties during a checkout flight near the Hawaiian islands.\nSince that time, other solar powered aircraft have flown successfully including a manned sailplane that remained in flight for over 48 hours and another unmanned drone developed by AeroVironment that used a fuel cell fueled with liquid hydrogen. A group of pilots aided by the European Space Agency is developing a manned solar powered aircraft that they intend to fly around the world by 2010.", "The advantages of solar powered aircraft include the potential for long-duration flights perhaps lasting months, no emissions, and quiet operation. At their current rate of development, solar powered aircraft may carry relatively small payloads such as cameras or other surveillance equipment. It is possible that solar aircraft may eventually be equipped with armaments as well. Currently, the unmanned MQ-1 Predator and MQ-9 Predator B can carry relatively light-weight armaments: The MQ-1 can carry Air-to-Ground Missile (AGM)-114 Hellfire laser-guided missiles (about 100 pounds each) and the MQ-9 Predator can carry several Guided Bomb Unit (GBU)-12 laser-guided bombs (about 500 pounds each).", "A disadvantage of solar powered aircraft, given the current state of solar technology, is that they must be light-weight with a specialized design that maximizes wing-span and minimizes drag. Their small size and light weight restricts the size of the payload they may carry. Payload capacity for Helios, for example, was only about 700 pounds. Furthermore, both solar cell and the fuel cell technology used to store the sun's power for night operations are expensive. DARPA is soliciting industry to identify and develop improved technologies for inexpensive, very high efficiency solar cells for high altitude, long-endurance solar aircraft.", "Increasing fuel efficiency and eliminating areas of waste are the most expedient ways DOD can reduce its reliance on petroleum-based fuel. Just as military facilities abound with potential ways by which DOD can save energy such as replacing old heating and cooling systems with more energy efficient models, there are ways in which DOD's weapon systems and operations can be made more fuel-efficient. The Air Force, has modified some operational practices and systems to improve energy efficiency and is considering others.", "Light weight composite materials could greatly increase the fuel efficiency of all DOD platforms. Lighter vehicles can travel faster on less fuel. In one effort to light-weight, DOD is striving for a low-cost titanium alloy to replace the heavy steel used in many weapon systems. Titanium is valued for military applications because of its high strength-to-weight ratio and its resistance to corrosion. At approximately $30 per pound, titanium alloys are too costly for large-scale military applications and are generally reserved for select aviation and space applications. DARPA, is sponsoring a program to develop an environmentally friendly production capability for a titanium alloy under $4 per pound.\nAnother way to reduce fuel consumption is to use more unmanned aerial vehicles (UAV), which are inherently lighter than manned vehicles. The absence of an operator precludes the necessity of including on an aircraft many elements that increase its weight including added protective armor, seating, communications and other life-sustaining equipment.", "UAVs are becoming increasingly sought after by DOD for surveillance activities since they preclude having to put a service member in danger and are low-cost relative to the manned systems.", "UAV provide DOD with several advanced capabilities; however, they are less than universally applicable as many operations still call for the judgement and flexibility of on-scene human operators.", "DOD policy dictates a maximum take-off and landing weight for all aircraft based on their individual structural limitations. The weight for take-off and landing may be the same or an aircraft's landing weight may be less than that with which it may take off. The KC-135 refueling tanker has one of the most restrictive landing weight requirements in the Air Force fleet. If a KC-135 approaches a landing too heavy, the crew must rid the aircraft of excess fuel by either continuing to fly or by releasing it from the aircraft while in-flight. The Air Force recently, by changing their policy, increased the safe landing weight of a KC-135 thus allowing it to keep more fuel onboard when it lands. However, changing the landing weight is only an available options for some aircraft. The C-5, for example, one of the heavier fuel users in the Air Force fleet, has the same take off and landing weight negating the need to get rid of excess fuel weight.", "Simply changing a policy to negate the need to discard excess fuel is an expedient way to save. There may be other weapon systems for which a similar re-evaluation can be made.", "By simply changing a policy to allow an aircraft to land with more weight, the Air Force has accepted greater risk to the aircraft and its crew. The service has evidently made the decision that the greater risk is within acceptable limits, however, the long-term affects of the added wear and tear to the aircraft are unknown at this time.", "Using the most direct routes between points means flying shorter distances and burning less fuel. However, conditions such as military overflight restrictions imposed by some foreign governments may prevent DOD from using the most direct route between destinations. The Air Force is reviewing flight paths and re-evaluating where it may be able to use more direct routes. The service has claimed that by doing so it saved $46 million in Fiscal Year 2006.", "Saving fuel by eliminating unnecessary miles seems to one of the more simple efficiency measures: it requires no modification to the aircraft and can be put in place wherever applicable, regardless of the weapon system involved. It therefore makes sense to employ this method of cost-saving wherever possible.", "Routing aircraft on more direct flights may seem uncomplicated in theory but in practice other factors may make shortening routes less than optimally efficient. Circuitous routes may use more fuel than direct ones but circuitous flights may take advantage of other efficiencies. For example, a particular route structure, though perhaps circuitous, may exist to transport people and materiel between military locations and thus negate the need for multiple direct routes between points. Furthermore, direct routes may not always be possible due to weather and changes in diplomatic relations between the United States and other governments.", "Aircraft stationed close to the front lines require less fuel to reach the battlefield than those stationed at a distance. With fuel savings as a consideration, the Air Force repositioned B-1 Bombers supporting military operations in Iraq from a base in Diego Garcia to Al Udeid Air Base in Saudi Arabia. Assuming an approximate flying distance saved as 2400 nautical miles, an approximate cruising rate of 450 nautical miles per hour, and a fuel usage rate of 3,874 gallons per flying hour, the move saves over 40,000 gallons of fuel per sortie.", "Moving aircraft closer to the front lines is another way to decrease fuel use with out the expense of modifying aircraft and may be applied to a number of weapon systems. Fewer miles flown may also eliminate the need for refueling thus saving the cost of fuel and flying hours involved in the tanker refueling mission.", "In some cases, relocating aircraft may be costly. It may require changes to basing infrastructure and movement of personnel and accompanying support structure. Additionally, the cost to lease space may increase. Other, less tangible factors may also come into play such as the diplomatic and strategic value of maintaining a military installation in a particular country or region despite its distance from the front line.", "Rotating aircraft between the United States and bases supporting operations overseas takes a great deal of fuel—approximately 150,000-450,000 gallons of fuel per aircraft per rotation. The Air Force re-assessed the number of time certain Air Force Wings needed to rotate and concluded that fewer rotations would not adversely their ability to support combat operations.", "For some Air Force Wings, keeping the aircraft in theater longer while rotating personnel is an expedient way to conserve fuel and aircraft flying hours.", "One of the reasons aircraft get rotated back to the United States is for scheduled maintenance at large logistics centers located here. In a rapidly aging fleet, routine maintenance becomes increasingly important. Furthermore, the climate and environmental factors present in the current theater of operations causes intense wear and tear, increasing their need for upkeep. It is also worth pointing out that for some flying disciplines, flights between the forward bases and the permanent bases in the United States is not all wasted time. Those flights may, in some cases, be used to accumulate flight training hours needed by pilots to remain proficient in their aircraft.", "Many gallons of fuel are consumed by the necessary task of training new pilots and maintaining the proficiency of experienced ones. Although simulators have been used to train aviators for many years, actual cockpit training has always been preferred. The DOD Fiscal Year 2007 budget request included funding to study the extent to which flight simulators can and should substitute for training in the actual aircraft. The department estimates that increasing simulator use could save $1 billion a year.\nLanguage contained in the John Warner National Defense Authorization Act for Fiscal Year 2007 ( P.L. 109-364 ) may limit DOD's ability to aggressively pursue increased use of simulators. A September 2006 GAO study found that DOD use of its simulators fell short of what the department paid for under their service contracts. Congress subsequently passed legislation prohibiting DOD from entering into a service contract for military flight simulators, which will require DOD to acquire and operate simulators using in-house resources. DOD contends that contractors' ability to maintain and quickly update simulators results in better training and cautions that department-run simulators may not be as effective.", "Saving fuel and wear and tear on aircraft are the two advantages of using simulators. Simulators are also safer. They also, in theory, provide more flexible scheduling. Naturally factors such as availability of qualified simulator operators or working status of the equipment affect a simulators' availability.", "Air Force leaders have legitimate concerns over how much simulator training is the right amount. Although the quality of simulator software is constantly improving, the experience gained by sitting in a box in a room is significantly different from the experience gained in a real aircraft thousands of feet in the air with real dangers and real consequences. At present, the point at which too much simulator training reduces the operational effectiveness of a pilot is unknown.", "Winglets, relatively small vertical extensions attached to the end of an aircraft's wingtips, reduce drag and can increase an aircraft's fuel efficiency. The House Committee on Armed Services, in their report on the National Defense Authorization Act for Fiscal Year 2007 ( H.Rept. 109-452 of May 5, 2006. See Appendix for relevant legislative language.), discussed the merits of winglets and directed the Secretary of the Air Force to examine the feasibility of adding them to Air Force aircraft. As a result, the Air Force sponsored a study to assess the feasibility of applying winglets to large aircraft: refuelers, airlift, and intelligence, surveillance, and reconnaissance. The study was intended to determine the price of fuel at which applying winglets becomes cost-effective, their impact on maintenance and flight operations, and a possible investment strategy.", "Winglets may be a relatively inexpensive way to improve the fuel efficiency of even some of the larger aircraft in the Air Force fleet.", "Any time aircraft are taken out of the fleet for retrofitting, it is an additional expense and takes an aircraft out of commission for a period of time. Furthermore, it is possible that the cost of the research and development of winglets combined with their installation may be more than the actual savings.", "Other strategies may further reduce fuel use. One, borrowed from the commercial aviation industry, is to remove extraneous weight such as unnecessary or redundant gear and provisions. Another strategy is to instill awareness in the operational community of the necessity of using fuel smartly. In fall 2006, Air Force leadership communicated to its flying units the importance of adopting a fuel-saving culture and the service's goal of reducing aviation fuel consumption by 10% over the next five years.", "Removing excess items from aircraft and promoting fuel-saving within the department are cost-effective measures that are relatively easy to implement.", "Redundancy in potentially dangerous situations is not by itself negative. Commercial airlines have taken efforts to minimize the weight of their aircraft in order to conserve fuel and increase profits. The military is not concerned with profits but with ensuring the safety of its crew members. Maintaining a healthy supply of safety and other equipment onboard aircraft may reduce risk and increase the survivability of the crew. And although instilling fuel-saving awareness in DOD personnel is a worthy endeavor, the extent to which individual operators will make a difference in DOD fuel consumption remains to be seen and will be difficult to measure.", "DOD's efforts to explore greater use of alternative aviation fuel and to reduce its overall consumption of petroleum-based fuel have been lauded by many. However, the department's ability to follow through with its initiatives may be adversely affected by a number of factors. They include DOD organizational structure, funding, and external expectations for DOD in the nation's search for alternative fuel sources.", "The perception among many in DOD and others in the federal government seems to be that there are no clear organizational lines of responsibility to lead and manage the department's energy reduction efforts. This may adversely affect its ability to complete long-term projects that are underway and to fund or implement new ones.\nMany offices within DOD have responsibility for individual energy-related initiatives but the growing number and complexity of activities seem to have grown beyond the current capabilities of the organizational structure. The USD (AT&L) has been directed to ensure the implementation of President's Bush 2007 Executive Order and to \"continue efforts of the Energy Security Task Force by implementing the findings and monitoring implementation\" However, there does not appear to be a designated individual in that office to oversee a comprehensive department-wide energy strategy—to prioritize, coordinate, and advocate for the various ongoing projects.\nThere are a number of other DOD offices that play an energy role to varying degrees. The Office of the Deputy Under Secretary of Defense for Installations & Environment (DUSD (I&E)) has traditionally had oversight of energy issues related to utilities and facilities, but does not have any oversight of fuel savings initiatives in the operational community. The office of DDR&E oversees research and engineering efforts for the department and its director, the Honorable John J. Young, Jr., frequently speaks for DOD's on its fuel reduction efforts. DARPA sponsors active research that turns new discoveries into useful military applications but does not develop policy for the department. And although these offices all fall under USD (AT&L), other relevant agencies that do not, including the individual military services, have ongoing projects that must also compete for a share of the DOD budget.", "Some believe the Air Force seems reluctant to use some additional operational funds for energy-efficiency improvements at this time. Government studies seem to indicate that the most cost-effective way to reduce reliance on petroleum-based fuel—absent leaps in technology that make synthetic fuel abundant and affordable—is to increase the energy-efficiency of current weapon systems. The Defense Science Task Force 2001 study specifically noted that the engines in the B-52H would be profitable candidates for upgrades. The DSB submitted that upgrading its engines would not only reduce fuel usage on the B-52H but that studies suggested it would also reduce tanker force structure requirements. However, amid debates over which and how many aircraft the Air Force should retire, the service seems reluctant to spend money upgrading aging aircraft. For example, in March 2007, media sources reported that the Air Force declined a proposal by engine manufacturer Pratt&Whitney to upgrade the B-52H bomber's TF-33 engines, some of the oldest in the service's inventory. (The B-52H is reportedly expected to remain in service until 2040. )\nDOD's funding strategy for energy initiatives likely reflects the department's placement of energy in its priorities. According to DDR&E, $1.8 billion of DOD's FY2007-FY2011 budget is intended for energy related projects. Some may argue that $1.8 billion over five years is a small portion of a Research, Development, Test and Evaluation budget that received approximately $75.5 billion in just the FY2007 Defense Appropriations Act ( P.L. 109-289 ). However, others might contend that in the currently tight defense budget environment, limiting the amount spent on future concepts is a prudent decision. As a result, funding for energy efficiency and alternative fuel initiatives may continue to fall behind other priorities without a department-wide strategy that outlines goals and places energy within a larger set of DOD priorities.\nIf DOD chooses not to allocate funding to energy-related research, Congress may elect to legislate certain funding strategies. For example, legislation proposed in January 2007( S. 154 , S. 155 , and H.R. 370 . See Appendix for relevant legislative language.) would provide $10,000,000 to the Air Force Research Laboratory to continue the testing, qualification, and procurement of synthetic jet aviation fuel from coal.", "Another issue is the degree to which DOD can take on an energy leadership role in the federal government. Uncertainly regarding DOD's role in a government energy strategy may contribute to the department's seeming reluctance to lay out its own strategy, and committing the necessary resources and organizational structure to carrying it out. Some outside DOD seem to view it as a potential leader in the effort to develop and use alternative forms of energy, particularly synthetic fuel. Although DOD's fuel purchasing power is small relative to the collective purchasing power of the commercial aviation industry, the department's tradition of being technologically forward-thinking is frequently cited as a basis for expecting leadership in the energy arena as well.\nHowever, DOD seems to eschew attempts to impose upon it a role beyond facilitator—a catalyst for the development of new technologies; a test-bed and potential market. When questioned by the House Armed Subcommittees on Terrorism, Unconventional Threats, and Capabilities and Readiness regarding DOD's role in developing new technologies for alternative fuels, DOD witnesses consistently responded in language that drew clear boundaries around DOD's role:\nMr. John Young, DDR&E: So, across the board, I think the department is a partner with other agencies in the government and the commercial industry, which is helping to drive this space, and push the technology forward both on revolutionary spaces and then in areas where we see—or evolutionary spaces and then places where we see chances at a revolution...\nMr. Philip Grone, DUSD (I&E): So I do think there's a synergy between activities of the department, activities of the broader federal family and industry, both in research and development and the actual application of the technologies, the vehicles, where we can have an effect on understanding and ultimately of markets in terms of demonstrating the viability of certain technologies.\nMr. Michael Aimone, Deputy Chief of Staff, Air Force Installations, Logistics, and Mission Support: [The Air Force has] the ability to certify fuel for aviation airworthiness.\nMr. Richard Connelly, Director, DESC: ...I think it's the role of the services and the department, DOD, to give us [DESC] the go ahead and the operational supply chain manager, to go ahead and move forward in these markets. You did mention, Mr. Chairman, earlier the percentage of domestic consumption. Internationally, that translates to something less than one-half of one percent of total fuel consumed. So while we are probably the biggest single purchaser of fuel in the world and certainly a voice to be heard in the marketplace, we're not going to move the market, but we can try to exhibit some leadership.\nWithin DOD, the Air Force is viewed as being on the front-line in the development of alternative aviation fuel. The service has received much attention for its initiative to test and certify a synthetic fuel blend in its B-52 but even as it continues to announce its intention to acquire 50% of its domestically purchased fuel as a synthetic blend by 2016, the service remains steadfast that it needs the support of the commercial aviation industry.\nIt is unclear to what extent the commercial aviation industry is prepared to expand its own role in developing synthetic aviation fuel. In her remarks to the 2007 Air Force Energy Forum, Ms. Marion Blakey, Administrator of the Federal Aviation Administration, stated, \"It's clear that the military's energy security mission is something we're all going to have to be a part of.\" and later, acknowledging DOD's 2016 goal added, \"And I want Secretary Wynne and all of you to know that the commercial side will be right there with you.\"", "Considering the issues discussed, there appear to be at least six options for Congress. These potential options may be mutually reinforcing and not \"either/or\" options.", "DOD's progress in energy security may be enhanced with clearer lines of authority. Currently, different offices within DOD share responsibility for the department's various energy related initiatives. The office of the Director, Defense Research and Engineering seems to have taken on something of a leadership role but, notwithstanding its leadership of the DOD Task Force on Energy Security, DDR&E's mission is to \"ensure that the warfighters today and tomorrow have superior and affordable technology to support their missions, and to give them revolutionary war-winning capabilities.\" It's mission does not encompass many other possible aspects of energy strategy such as acquisitions, installations, finances, and operations. On the other hand, it may be argued that adding another layer of \"bureaucracy\" is unnecessary when functions are already in place to handle individual issues.\nThere are also those who express concern that enthusiasm for recent energy initiatives will wane once a sense of urgency regarding energy availability and prices has subsided. Without a dedicated DOD focal point to ensure consistent progress of the various energy related activities within the department, this concern may have some merit. In light of the financial demands put on DOD by ongoing operations, it is possible that without a dedicated advocate, funding for energy related initiatives may be discontinued or postponed indefinitely. Conversely, others argue that the nature of today's energy \"crisis\" is unlike that which faced the nation in the 1970s and 1980s. Information available today regarding the contributions to greenhouse gas emissions made by fossil fuels and concerns about when world oil reserves may \"peak,\" may keep attention focused on improving the energy efficiency of weapons and alternative energy.", "A second option for Congress would be to mandate improvements in energy efficiency for existing DOD aircraft. Precedent for this exists in requirements established for DOD facilities and that have existed for many years and were recently made more stringent with President Bush's 2005 Energy Policy Act. Furthermore, language in the Senate passed version of the FY2007 defense authorization bill ( S. 2766 ) and conference report ( H.Rept. 109-702 of September 29, 2006. See Appendix for relevant legislative language.) Calls for a DOD policy to improve the fuel efficiency of weapons systems and established the requirement for a report to Congress on the department's progress toward that goal. Guidance concerning specific weapon systems was not provided allowing DOD to implement the language at their discretion.\nA possible complication to this may be the continual deliberations over the most cost-effective way to spread a finite defense acquisition budget. Some contend that updating the oldest and largest of the Air Force inventory, such as the B-52, would save the most fuel. According to the Rocky Mountain Institute, re-engining one of the bombers would make it 35% more efficient. Others assert that modernizing more heavily used aircraft such as the C-5 transporters makes more sense. In reality, neither the B-52 nor the C-5 are likely to be upgraded soon. Pratt&Whitney, manufacturer of the B-52H's TF33 engines, has proposed engine upgrades to the Air Force but the service has thus far declined the offer. C-5 aircraft are currently the center of a debate over the relative cost-effectiveness of upgrading the large transporter versus purchasing smaller but more versatile C-17s. The Air Force has expressed a desire to retire some older C-5s while others feel that the need for a large transporter compels the service to modernize the aircraft and maintain it in the inventory. Modernization of the C-5 centers on overall aircraft reliability and not specifically energy efficiency.", "A third option for Congress is to mandate fuel efficiency as a key performance parameter (KPP) in all new DOD acquisitions. As discussed earlier in this report, a review of the contract proposal for DOD's most recent large new aircraft, the KC-X, disclosed a relatively non-specific requirement for \"maximum fuel efficiency using current aviation technology.\" There are some reports that DOD has already altered its acquisition policies to include energy efficiency. According to DOD officials, a modified policy has not yet been created, but is in the planning stages.\nOn April 10, 2007, the Honorable Kenneth Krieg, USD (AT&L), signed a memo directing the evaluation of fuel costs in the designs of three new DOD weapon systems: the Air Force's new long-range strike aircraft, the Army and Marine Corps Joint Light Tactical Vehicle, and the Navy's CG-X, its newest cruiser. In keeping with the recommendations of the Defense Science Board and the department's Energy Security Task Force, DOD will consider the \"fully burdened\" cost of fuel on the design of these systems figuring the costs of the entire fuel delivery system. This may be a first step to modifying acquisition guidelines. If DOD modifies its acquisition policies in such a manner, future evaluations of aircraft proposals could be based on the \"fully burdened\" cost of fuel leading to a closer examination of aspects of the aircraft, e.g. maintenance costs, weight, in addition to engine efficiency.", "A sixth option for Congress is to pass legislation that would grant DOD the authority to enter into a contract for fuel for more than five years. Recent proposed congressional legislation ( S. 154 , S. 155 , and H.R. 370 ) would allow DOD to enter into contracts for synthetic fuels for up to 25 years. This option may make it possible for DOD, through lengthy contracts, to provide potential synthetic fuel developers an incentive to invest in this capital intensive venture. On the other hand, the proposed legislation would not mandate that DOD use this contracting option and the department may not elect to do so.", "Solar powered aircraft are in the early stages of development. DOD through DARPA and the Air Force Research Laboratory at Wright-Patterson Air Force Base, Dayton, OH, has some solar-related research ongoing but, observers note, more could be done. Hydrogen fuel and fuel cells are two other areas where, observers suggest, DOD could fund further research.", "And finally, another option for Congress may be to mandate some amount of alternative aviation fuel that DOD will buy and the fuel's origin. The Air Force has already expressed the goal of using 50% synthetic fuel by 2016 but the service has not specified what kind of synthetic fuel it intends to use. Recent tests with Fischer-Tropsch Gas-To-Liquid (GTL) fuel might lead one to believe DOD is targeting coal- or gas-based synthetic fuel for its future purchases, an approach that would likely invite opposition from those who object to CTL and GTL plants because of their carbon emissions. However, DOD has also awarded a contract for the development of a synthetic aviation biofuel, which may eventually prove successful enough to make a mandate for the use of fuel from renewable sources a viable option.\nA possible drawback to a synthetic fuel mandate is that domestically produced alternative fuels may not be available for several years. The high cost of constructing the plants and the unresolved issue of how to address carbon emissions from them are two possible limitations. The fact that biofuels are not currently compatible with jet aircraft engines is another issue. Further, it is unclear that sufficient quantities of biofuel could be produced.", "The following is a list of provisions in FY2007 DOD authorization and appropriation legislation which contribute to DOD efforts to increase its efficient use of petroleum-based fuels and increases funding for DOD to develop possibilities for using alternative forms of energy.\nJohn Warner National Defense Authorization Act for Fiscal Year 2007 ( P.L. 109-364 )\nSenate\nSection 354 of the Senate-passed version of the FY2007 defense authorization bill ( S. 2766 ) stated:\nSEC. 354. REPORT ON ACTIONS TO REDUCE DEPARTMENT OF DEFENSE CONSUMPTION OF PETROLEUM-BASED FUEL.\n(a) Report Required- Not later than one year after the date of the enactment of this Act, the Secretary of Defense shall submit to the Committees on Armed Services of the Senate and the House of Representatives a report on the actions taken, and to be taken, by the Department of Defense to reduce the consumption by the Department of petroleum-based fuel.\n(b) Elements- The report shall include the status of implementation by the Department of the requirements of the following:\n(1) The Energy Policy Act of 2005 ( P.L. 109-58 ).\n(2) The Energy Policy Act of 1992. ( P.L. 102-486 )\n(3) Executive Order 13123.\n(4) Executive Order 13149.\n(5) Any other law, regulation, or directive relating to the consumption by the Department of petroleum-based fuel.\nSection 375 of the Senate-passed version of S. 2766 stated:\nSEC. 375. ENERGY EFFICIENCY IN WEAPONS PLATFORMS.\n(a) Policy- It shall be the policy of the Department of Defense to improve the fuel efficiency of weapons platforms, consistent with mission requirements, in order to—\n(1) enhance platform performance;\n(2) reduce the size of the fuel logistics systems;\n(3) reduce the burden high fuel consumption places on agility;\n(4) reduce operating costs; and\n(5) dampen the financial impact of volatile oil prices.\n(b) Report Required-\n(1) IN GENERAL- Not later than one year after the date of the enactment of this Act, the Secretary of Defense shall submit to the congressional defense committees a report on the progress of the Department of Defense in implementing the policy established by subsection (a).\n(2) ELEMENTS- The report shall include the following:\n(A) An assessment of the feasibility of designating a senior Department of Defense official to be responsible for implementing the policy established by subsection (a).\n(B) A summary of the recommendations made as of the time of the report by\n(i) the Energy Security Integrated Product Team established by the Secretary of Defense in April 2006;\n(ii) the Defense Science Board Task Force on Department of Defense Energy Strategy established by the Under Secretary of Defense for Acquisition, Technology and Logistics on May 2, 2006; and\n(iii) the January 2001 Defense Science Board Task Force report on Improving Fuel Efficiency of Weapons Platforms.\n(C) For each recommendation summarized under subparagraph (B)—\n(i) the steps that the Department has taken to implement such recommendation;\n(ii) any additional steps the Department plans to take to implement such recommendation; and\n(iii) for any recommendation that the Department does not plan to implement, the reasons for the decision not to implement such recommendation.\n(D) An assessment of the extent to which the research, development, acquisition, and logistics guidance and directives of the Department for weapons platforms are appropriately designed to address the policy established by subsection (a).\n(E) An assessment of the extent to which such guidance and directives are being carried out in the research, development, acquisition, and logistics programs of the Department.\n(F) A description of any additional actions that, in the view of the Secretary, may be needed to implement the policy established by subsection (a).\nConference Report\nSection 358 ( P.L. 109-364 , conference report of September 29, 2006) states:\nSEC. 358. UTILIZATION OF FUEL CELLS AS BACK-UP POWER SYSTEMS IN DEPARTMENT OF DEFENSE OPERATIONS.\nThe Secretary of Defense shall consider the utilization of fuel cells as replacements for current back-up power systems in a variety of Department of Defense operations and activities, including in telecommunications networks, perimeter security, individual equipment items, and remote facilities, in order to increase the operational longevity of back-up power systems and stand-by power systems in such operations and activities.\nSection 360 states:\nSEC. 360. ENERGY EFFICIENCY IN WEAPONS PLATFORMS.\n(a) Policy- It shall be the policy of the Department of Defense to improve the fuel efficiency of weapons platforms, consistent with mission requirements, in order to—\n(1) enhance platform performance;\n(2) reduce the size of the fuel logistics systems;\n(3) reduce the burden high fuel consumption places on agility;\n(4) reduce operating costs; and\n(5) dampen the financial impact of volatile oil prices.\n(b) Report Required-\n(1) IN GENERAL- Not later than one year after the date of the enactment of this Act, the Secretary of Defense shall submit to the congressional defense committees a report on the progress of the Department of Defense in implementing the policy established by subsection (a).\n(2) ELEMENTS- The report shall include the following:\n(A) An assessment of the feasibility of designating a senior Department of Defense official to be responsible for implementing the policy established by subsection (a).\n(B) A summary of the recommendations made as of the time of the report by\n(i) the Energy Security Integrated Product Team established by the Secretary of Defense in April 2006;\n(ii) the Defense Science Board Task Force on Department of Defense Energy Strategy established by the Under Secretary of Defense for Acquisition, Technology and Logistics on May 2, 2006; and\n(iii) the January 2001 Defense Science Board Task Force report on Improving Fuel Efficiency of Weapons Platforms.\n(C) For each recommendation summarized under subparagraph (B)—\n(i) the steps that the Department has taken to implement such recommendation;\n(ii) any additional steps the Department plans to take to implement such recommendation; and\n(iii) for any recommendation that the Department does not plan to implement, the reasons for the decision not to implement such recommendation.\n(D) An assessment of the extent to which the research, development, acquisition, and logistics guidance and directives of the Department for weapons platforms are appropriately designed to address the policy established by subsection (a).\n(E) An assessment of the extent to which such guidance and directives are being carried out in the research, development, acquisition, and logistics programs of the Department.\n(F) A description of any additional actions that, in the view of the Secretary, may be needed to implement the policy established by subsection (a).\nThe conference report stated:\nReport on actions to reduce Department of Defense consumption of petroleum-based fuel\nThe Senate amendment contained a provision (sec. 354) that would require the Secretary of Defense to report on the actions taken, and to be taken, by the Department of Defense to reduce the consumption of petroleum-based fuels.\nThe House bill contained no similar provision.\nThe Senate recedes.\nThe conferees note that the implementation of current legislation and regulatory guidance should facilitate reduction of petroleum-based fuels by the Department. Therefore, the conferees direct the Secretary to submit a report, not later than September 1, 2007, to the Committees on Armed Services of the Senate and the House of Representatives on the status of implementation by the Department of the requirements contained in the following:\n(1) Energy Policy Act of 2005 (Public Law 109—58);\n(2) Energy Policy Act of 1992 (Public Law 102—486);\n(3) Executive Order 13123;\n(4) Executive Order 13149; and\n(5) other regulations or directions relating to the Department's consumption of petroleum-based fuels.\nFurthermore, the conferees are concerned that although Flexible Fuel Vehicles (FFVs) are being introduced into the Department's vehicle inventory, little reduction in petroleum-based fuel is being realized because operators continue to fuel the FFVs with gasoline rather than E85 (85 percent ethanol with 15 percent gasoline) or M85 (85 percent methanol and 15 percent gasoline). Therefore, the conferees direct the Secretary to include in the report an analysis of the reduction of petroleum-based fuels since introduction of FFVs into the inventory and an assessment of how the Department might increase the consumption of E85 or M85 in FFVs.\nThe House Committee on Armed Services, in its report ( H.Rept. 109-452 of May 5, 2006) on H.R. 5122 states:\nWinglets for in-service aircraft\nThe committee commends the Air Force in its efforts to increase aircraft fuel efficiency and decrease fuel consumption. The committee notes that initiatives such as re-engining aircraft, modifying in-flight profiles, and revising aircraft ground operations contribute to decreased fuel consumption and increased life-cycle savings.\nThe committee is aware that winglet technology exists for aircraft to increase fuel efficiency, improve take-off performance, increase cruise altitudes, and increase payload and range capability. The committee notes that winglets are currently used on commercial aircraft and result in a five to seven percent increase in fuel efficiency. On September 16, 1981, the National Aeronautics and Space Administration released the KC-135 Winglet Program Review on the incorporation of winglets for KC-135 aerial refueling aircraft. However, the Air Force concluded that the cost of adding winglets to the KC-135 did not provide sufficient payback in fuel savings or increased range to justify modification. Although the Air Force did conclude that modifying aircraft with winglets could increase fuel efficiency, the Air Force determined that re-engining the KC-135 aircraft produced a greater return on investment. The committee believes that incorporating winglets on military aircraft could increase fuel efficiency on certain platforms and that the Air Force should reexamine incorporating this technology onto its platforms.\nTherefore, the committee directs the Secretary of the Air Force to provide a report to the congressional defense committees by March 1, 2007, examining the feasibility of modifying Air Force aircraft with winglets. The report shall include a cost comparison analysis of the cost of winglet modification compared to the return on investment realized over time for each airlift, aerial refueling, and intelligence, surveillance, and reconnaissance aircraft in the Air Force inventory; the market price of aviation fuel at which incorporating winglets would be beneficial for each Air Force platform; all positive and negative impacts to aircraft maintenance and flight operations; and investment strategies the Air Force could implement with commercial partners to minimize Air Force capital investment and maximize investment return.\nFY2007 Defense Appropriations Act ( H.R. 5631 /P.L. 109-289)\nThe Senate Appropriations Committee, in its report ( S.Rept. 109-292 of July 25, 2006) on H.R. 5631 states:\nThe Committee notes the recent developments relating to the conversion of coal to liquid fuels. Demonstration projects in the United States have produced high-quality, ultra clean synthetic diesel fuels that provide improved efficiency and improved emissions compared to traditionally produced diesel fuel. The Committee encourages the Department of Defense to continue to explore the use of Fischer-Tropsch fuels as alternative sources for DOD's fuel requirements. Further, the Committee requests that the Under Secretary for Acquisition, Technology, and Logistics prepare a report for the congressional defense committees on the Defense Department's assessment, use, and plans to continue to explore the potential of synthetic fuels, to include fuels produced through the Fischer-Tropsch process.\nThe House Appropriations Committee, in its report ( H.Rept. 109-504 of June 16, 2006) on H.R. 5631 states:\nC-32 WINGLET MODIFICATION\nThe Committee recommends $5,198,000 for C-32 modifications, which is $5,006,000 more than the amount provided in fiscal year 2006, and $5,000,000 more than the request for fiscal year 2007. These funds shall be used to install Blended Winglets on the 4 C-32 aircraft operated by the United States Air Force to demonstrate potential fuel savings, and/or increased operating range. Not more than one year after the modification of the first C-32 aircraft, the Secretary of the Air Force shall submit a report to the congressional defense committees assessing the utility of the winglet and making a recommendation if the program should be expanded to other types of aircraft.\nCoal-to-Liquid Fuel Energy Act of 2007 ( S. 154 )\nSection 5 of Senate Bill S. 154 of January 4, 2007 states:\nSEC. 5. LOCATION OF COAL-TO-LIQUID MANUFACTURING FACILITIES.\nThe Secretary, in coordination with the head of any affected agency, shall promulgate such regulations as the Secretary determines to be necessary to support the development on Federal land (including land of the Department of Energy, military bases, and military installations closed or realigned under the defense base closure and realignment) of coal-to-liquid manufacturing facilities and associated infrastructure, including the capture, transportation, or sequestration of carbon dioxide.\nSection 7 states:\nSEC. 7. AUTHORIZATION TO CONDUCT RESEARCH, DEVELOPMENT, TESTING, AND EVALUATION OF ASSURED DOMESTIC FUELS.\nOf the amount authorized to be appropriated for the Air Force for research, development, testing, and evaluation, $10,000,000 may be made available for the Air Force Research Laboratory to continue support efforts to test, qualify, and procure synthetic fuels developed from coal for aviation jet use.\nSection 8 states:\nSEC. 8. COAL-TO-LIQUID LONG-TERM FUEL PROCUREMENT AND DEPARTMENT OF DEFENSE DEVELOPMENT.\nSection 2398a of title 10, United States Code is amended—\n(1) in subsection (b)—\n(A) by striking 'The Secretary' and inserting the following:\n(1) IN GENERAL- The Secretary'; and\n(B) by adding at the end the following:\n(2) COAL-TO-LIQUID PRODUCTION FACILITIES-\n(A) IN GENERAL- The Secretary of Defense may enter into contracts or other agreements with private companies or other entities to develop and operate coal-to-liquid facilities (as defined in section 2 of the Coal-to-Liquid Fuel Energy Act of 2007) on or near military installations.\n(B) CONSIDERATIONS- In entering into contracts and other agreements under subparagraph (A), the Secretary shall consider land availability, testing opportunities, and proximity to raw materials.';\n(2) in subsection (d)—\n(A) by striking 'Subject to applicable provisions of law, any' and inserting Any'; and\n(B) by striking '1 or more years' and inserting 'up to 25 years'; and\n(3) by adding at the end the following:\n(f) Authorization of Appropriations- There are authorized to be appropriated such sums as are necessary to carry out this section.\nSection 9 states:\nSEC. 9. REPORT ON EMISSIONS OF FISCHER-TROPSCH PRODUCTS USED AS TRANSPORTATION FUELS.\n(a) In General- In cooperation with the Administrator of the Environmental Protection Agency, the Secretary of Defense, the Administrator of the Federal Aviation Administration, and the Secretary of Health and Human Services, the Secretary shall—\n(1) carry out a research and demonstration program to evaluate the emissions of the use of Fischer-Tropsch fuel for transportation, including diesel and jet fuel;\n(2) evaluate the effect of using Fischer-Tropsch transportation fuel on land and air engine exhaust emissions; and\n(3) in accordance with subsection (e), submit to Congress a report on the effect on air quality and public health of using Fischer-Tropsch fuel in the transportation sector.\n(b) Guidance and Technical Support- The Secretary shall issue any guidance or technical support documents necessary to facilitate the effective use of Fischer-Tropsch fuel and blends under this section.\n(c) Facilities- For the purpose of evaluating the emissions of Fischer-Tropsch transportation fuels, the Secretary shall—\n(1) support the use and capital modification of existing facilities and the construction of new facilities at the research centers designated in section 417 of the Energy Policy Act of 2005 (42 U.S.C. 15977); and\n(2) engage those research centers in the evaluation and preparation of the report required under subsection (a)(3).\n(d) Requirements- The program described in subsection (a)(1) shall consider—\n(1) the use of neat (100 percent) Fischer-Tropsch fuel and blends of Fischer-Tropsch fuels with conventional crude oil-derived fuel for heavy-duty and light-duty diesel engines and the aviation sector; and\n(2) the production costs associated with domestic production of those fuels and prices for consumers.\n(e) Reports- The Secretary shall submit to the Committee on Energy and Natural Resources of the Senate and the Committee on Energy and Commerce of the House of Representatives—\n(1) not later than 180 days after the date of enactment of this Act, an interim report on actions taken to carry out this section; and\n(2) not later than 1 year after the date of enactment of this Act, a final report on actions taken to carry out this section.\n(f) Authorization of Appropriations- There are authorized to be appropriated such sums as are necessary to carry out this section.\nCoal-to-Liquid Fuel Act of 2007 ( S. 155 )\nSection 104 of Senate Bill S. 155 of January 4, 2007 states:\nSEC. 104. LOCATION OF COAL-TO-LIQUID MANUFACTURING FACILITIES.\nThe Secretary, in coordination with the head of any affected agency, shall promulgate such regulations as the Secretary determines to be necessary to support the development on Federal land (including land of the Department of Energy, military bases, and military installations closed or realigned under the defense base closure and realignment) of coal-to-liquid manufacturing facilities and associated infrastructure, including the capture, transportation, or sequestration of carbon dioxide.\nSection 106 states:\nSEC. 106. AUTHORIZATION TO CONDUCT RESEARCH, DEVELOPMENT, TESTING, AND EVALUATION OF ASSURED DOMESTIC FUELS.\nOf the amount authorized to be appropriated for the Air Force for research, development, testing, and evaluation, $10,000,000 may be made available for the Air Force Research Laboratory to continue support efforts to test, qualify, and procure synthetic fuels developed from coal for aviation jet use.\nSection 107 states:\nSEC. 107. COAL-TO-LIQUID LONG-TERM FUEL PROCUREMENT AND DEPARTMENT OF DEFENSE DEVELOPMENT.\nSection 2398a of title 10, United States Code is amended—\n(1) in subsection (b)—\n(A) by striking 'The Secretary' and inserting the following:\n(1) IN GENERAL- The Secretary'; and\n(B) by adding at the end the following:\n(2) COAL-TO-LIQUID PRODUCTION FACILITIES-\n(A) IN GENERAL- The Secretary of Defense may enter into contracts or other agreements with private companies or other entities to develop and operate coal-to-liquid facilities (as defined in section 101 of the Coal-to-Liquid Fuel Promotion Act of 2007) on or near military installations.\n(B) CONSIDERATIONS- In entering into contracts and other agreements under subparagraph (A), the Secretary shall consider land availability, testing opportunities, and proximity to raw materials.';\n(2) in subsection (d)—\n(A) by striking 'Subject to applicable provisions of law, any' and inserting Any'; and\n(B) by striking '1 or more years' and inserting 'up to 25 years'; and\n(3) by adding at the end the following:\n(f) Authorization of Appropriations- There are authorized to be appropriated such sums as are necessary to carry out this section.'.\nSection 108 states:\nSEC. 108. REPORT ON EMISSIONS OF FISCHER-TROPSCH PRODUCTS USED AS TRANSPORTATION FUELS.\n(a) In General- In cooperation with the Administrator of the Environmental Protection Agency, the Secretary of Defense, the Administrator of the Federal Aviation Administration, and the Secretary of Health and Human Services, the Secretary shall—\n(1) carry out a research and demonstration program to evaluate the emissions of the use of Fischer-Tropsch fuel for transportation, including diesel and jet fuel;\n(2) evaluate the effect of using Fischer-Tropsch transportation fuel on land and air engine exhaust emissions; and\n(3) in accordance with subsection (e), submit to Congress a report on the effect on air quality and public health of using Fischer-Tropsch fuel in the transportation sector.\n(b) Guidance and Technical Support- The Secretary shall issue any guidance or technical support documents necessary to facilitate the effective use of Fischer-Tropsch fuel and blends under this section.\n(c) Facilities- For the purpose of evaluating the emissions of Fischer-Tropsch transportation fuels, the Secretary shall—\n(1) support the use and capital modification of existing facilities and the construction of new facilities at the research centers designated in section 417 of the Energy Policy Act of 2005 (42 U.S.C. 15977); and\n(2) engage those research centers in the evaluation and preparation of the report required under subsection (a)(3).\n(d) Requirements- The program described in subsection (a)(1) shall consider—\n(1) the use of neat (100 percent) Fischer-Tropsch fuel and blends of Fischer-Tropsch fuels with conventional crude oil-derived fuel for heavy-duty and light-duty diesel engines and the aviation sector; and\n(2) the production costs associated with domestic production of those fuels and prices for consumers.\n(e) Reports- The Secretary shall submit to the Committee on Energy and Natural Resources of the Senate and the Committee on Energy and Commerce of the House of Representatives—\n(1) not later than 180 days after the date of enactment of this Act, an interim report on actions taken to carry out this section; and\n(2) not later than 1 year after the date of enactment of this Act, a final report on actions taken to carry out this section.\n(f) Authorization of Appropriations- There are authorized to be appropriated such sums as are necessary to carry out this section.\nCoal-to-Liquid Fuel Promotion Act of 2007 ( H.R. 370 )\nSection 104 of House Bill H.R. 370 of January 10, 2007 states:\nSEC. 104. LOCATION OF COAL-TO-LIQUID MANUFACTURING FACILITIES.\nThe Secretary, in coordination with the head of any affected agency, shall promulgate such regulations as the Secretary determines to be necessary to support the development on Federal land (including land of the Department of Energy, military bases, and military installations closed or realigned under the defense base closure and realignment) of coal-to-liquid manufacturing facilities and associated infrastructure, including the capture, transportation, or sequestration of carbon dioxide.\nSection 105 states:\nSection 106 states:\nSEC. 106. AUTHORIZATION TO CONDUCT RESEARCH, DEVELOPMENT, TESTING, AND EVALUATION OF ASSURED DOMESTIC FUELS.\nOf the amount authorized to be appropriated for the Air Force for research, development, testing, and evaluation, $10,000,000 may be made available for the Air Force Research Laboratory to continue support efforts to test, qualify, and procure synthetic fuels developed from coal for aviation jet use.\nSection 107 states:\nSection 107 states:\nSEC. 107. COAL-TO-LIQUID LONG-TERM FUEL PROCUREMENT AND DEPARTMENT OF DEFENSE DEVELOPMENT.\nSection 2398a of title 10, United States Code is amended—\n(1) in subsection (b)—\n(A) by striking 'The Secretary' and inserting the following:\n(1) IN GENERAL- The Secretary'; and\n(B) by adding at the end the following:\n(2) COAL-TO-LIQUID PRODUCTION FACILITIES-\n(A) IN GENERAL- The Secretary of Defense may enter into contracts or other agreements with private companies or other entities to develop and operate coal-to-liquid facilities (as defined in section 101 of the Coal-to-Liquid Fuel Promotion Act of 2007) on or near military installations.\n(B) CONSIDERATIONS- In entering into contracts and other agreements under subparagraph (A), the Secretary shall consider land availability, testing opportunities, and proximity to raw materials.';\n(2) in subsection (d)—\n(A) by striking 'Subject to applicable provisions of law, any' and inserting Any'; and\n(B) by striking '1 or more years' and inserting 'up to 25 years'; and\n(3) by adding at the end the following:\n(f) Authorization of Appropriations- There are authorized to be appropriated such sums as are necessary to carry out this section.'.\nSection 108 states:\nSection 108 states:\nSEC. 108. REPORT ON EMISSIONS OF FISCHER-TROPSCH PRODUCTS USED AS TRANSPORTATION FUELS.\n(a) In General- In cooperation with the Administrator of the Environmental Protection Agency, the Secretary of Defense, the Administrator of the Federal Aviation Administration, and the Secretary of Health and Human Services, the Secretary shall—\n(1) carry out a research and demonstration program to evaluate the emissions of the use of Fischer-Tropsch fuel for transportation, including diesel and jet fuel;\n(2) evaluate the effect of using Fischer-Tropsch transportation fuel on land and air engine exhaust emissions; and\n(3) in accordance with subsection (e), submit to Congress a report on the effect on air quality and public health of using Fischer-Tropsch fuel in the transportation sector.\n(b) Guidance and Technical Support- The Secretary shall issue any guidance or technical support documents necessary to facilitate the effective use of Fischer-Tropsch fuel and blends under this section.\n(c) Facilities- For the purpose of evaluating the emissions of Fischer-Tropsch transportation fuels, the Secretary shall—\n(1) support the use and capital modification of existing facilities and the construction of new facilities at the research centers designated in section 417 of the Energy Policy Act of 2005 (42 U.S.C. 15977); and\n(2) engage those research centers in the evaluation and preparation of the report required under subsection (a)(3).\n(d) Requirements- The program described in subsection (a)(1) shall consider—\n(1) the use of neat (100 percent) Fischer-Tropsch fuel and blends of Fischer-Tropsch fuels with conventional crude oil-derived fuel for heavy-duty and light-duty diesel engines and the aviation sector; and\n(2) the production costs associated with domestic production of those fuels and prices for consumers.\n(e) Reports- The Secretary shall submit to the Committee on Energy and Natural Resources of the Senate and the Committee on Energy and Commerce of the House of Representatives—\n(1) not later than 180 days after the date of enactment of this Act, an interim report on actions taken to carry out this section; and\n(2) not later than 1 year after the date of enactment of this Act, a final report on actions taken to carry out this section.\n(f) Authorization of Appropriations- There are authorized to be appropriated such sums as are necessary to carry out this section." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 1, 2, 3, 4, 4, 3, 4, 4, 3, 4, 4, 3, 4, 4, 3, 4, 4, 2, 3, 4, 4, 3, 4, 4, 3, 4, 4, 3, 4, 4, 3, 4, 4, 3, 4, 4, 3, 4, 4, 3, 4, 4, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h2_title h3_title", "h3_full", "h2_full", "h2_full", "h2_title h3_title", "", "h2_full", "", "", "", "h3_full", "h3_full" ] }

{ "question": [ "Why should DOD reduce their use of and reliance on fossil fuel?", "What is the biggest opportunity for DOD to reduce their use of fossil fuel?", "What is the purpose of the report?", "How can the DOD's overall reliance on fossil fuel be reduced?", "How does DOD use fossil fuels?", "How did aviation fuel affect that percentage of fuel used?", "What other role does Congress envision for DOD?", "What do the Defense Authorization and Appropriations Acts require of DOD?", "How does additional proposed legislation affect DOD?", "How will DOD address the issue of its reliance on fossil fuels?", "What is DOD's strategy to meet its long-term energy goals?", "Will the department be able to achieve its long-term energy goals?" ], "summary": [ "The Department of Defense (DOD) is a factor in the nation's discussion about national energy security. As the largest single consumer of fuel in the United States, DOD has the potential to make important contributions to the national effort to reduce the use of and reliance on fossil fuel.", "Aviation fuel makes up the largest portion of fossil fuel consumed by DOD and therefore represents the area of greatest potential energy savings.", "This report examines DOD's use of aviation fuel and possibilities to reduce that use by examining related issues and presenting options Congress may choose to consider.", "Reducing DOD's consumption of aviation fuel could by itself significantly reduce the department's overall reliance on fossil fuel.", "In Fiscal Year 2005, DOD consumed roughly 125 million barrels of oil—approximately 1.2% of the nation's total. About 74% of that was used to power mobility vehicles—Air Force aircraft, Navy ships, and Army ground vehicles.", "Over half (roughly 52% ) was aviation fuel. (Note: aviation fuel is also used in \"non-aircraft\" systems such as tanks and generators in order to reduce logistics requirements on the battlefield.", "Congress also recognizes that DOD has a role to play in the nation's quest for alternative energy sources.", "Language contained in the FY2007 Defense Authorization and Appropriations Acts requires DOD to report to Congress on their actions to reduce consumption of fossil fuel, increase the energy efficiency of their weapon platforms, and explore the use of synthetic fuel made from coal.", "Additional proposed legislation would require DOD to further study coal as a fuel source and would remove certain DOD contracting restrictions viewed as a potential obstacle to synthetic fuel development.", "DOD has publically expressed its intention to devote resources to this issue; Air Force leadership has stated a goal of using domestically produced synthetic fuel for half of its domestic aviation fuel by 2016.", "At the present time, however, DOD does not seem to have a comprehensive long-term energy strategy or centralized leadership focused on energy issues for the department.", "At the present time, however, DOD does not seem to have a comprehensive long-term energy strategy or centralized leadership focused on energy issues for the department. This may affect the department's ability to achieve its long-term energy goals." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 1, -1, -1, 1, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Protections for Retirees: Background Factors", "Bankruptcy", "Chapter 7", "Chapter 11", "11 U.S.C. Section 1113: Rejection of Collective Bargaining Agreements", "11 U.S.C. Section 1114: Payment of Insurance Benefits to Retired Employees", "Type of Labor Organization", "Type of Employee", "Employer Agreements with Its Former Subsidiaries", "Protections for Retirees' Pensions: The Pension Benefit Guaranty Corporation", "Background", "Single-Employer Plans", "Multiemployer Plans", "Protections for Retirees' Health Insurance: VEBAs", "Advantages Associated with VEBAs", "Risks Associated with VEBAs", "Funding VEBAs", "Protections for Retirees: Other Federal Programs", "Case Study 1: General Motors and the United Auto Workers", "Background", "Pensions", "Retiree Health Insurance", "Case Study 2: Delphi and the Delphi Salaried Retirees Association", "Background", "Pensions", "Retiree Health Insurance", "Case Study 3: Patriot Coal and the United Mine Workers of America", "Background", "Pensions", "Retiree Health Insurance", "Recent Legislation", "The President's FY2016 Budget" ], "paragraphs": [ "", "Benefits for retired employees are of particular interest to policymakers, who often are concerned with the income security of retirees, a large and fast-growing population. One aspect of this congressional concern is what happens when bankrupt employers are unable to provide promised pension and health benefits to their retired employees.\nThis report explores the protections of benefits awarded retirees and future retirees of bankrupt private-sector employers under current law. Although there are many types of employee benefits, active employees, retirees, and the employers themselves are often especially concerned with postretirement pensions and health insurance benefits, usually the two largest components of these so-called legacy costs . This analysis provides examples from two industries of interest to Congress where competitive pressures resulted in changes in each sector's business outlook: automobiles and coal.\nAutomotive Industry . The bankruptcy of the General Motors Corporation (Old GM) in 2009 was the fourth-largest bankruptcy in U.S. history, and it was accompanied by a period of federal aid to the automotive industry. Two distinctive features of the Old GM bankruptcy were that federal financing was important to the ultimate outcome (and subsequent retiree benefits) and that the outcome was associated with a particularly strong labor union—the United Auto Workers (UAW).\nThe report also focuses on the Delphi Corporation, an automobile parts supplier whose salaried retirees attempted to receive the benefits that hourly UAW retirees received. Hourly UAW hourly employees at Delphi had received contractual promises regarding their benefits from Old GM in the pre-bankruptcy period. Salaried workers at Delphi had received no such contractual promises. To facilitate increasing their benefits, salaried retirees formed their own labor association, the Delphi Salaried Workers Association (DSRA).\nCoal Industry . The United Mine Workers of America (UMWA) represents more than 73,000 coal miners. Congress has periodically passed legislation covering retiree benefits for coal miners since at least the 1940s. In October 1992, passage of the Coal Act protected health benefits for some retired coal miners. In 2006, trust funds covering health insurance for retired miners received federal assistance. Various proposals dealing with pensions and health benefits provided by bankrupt coal employers have been advanced over the last several years. These proposals were influenced by the July 2012 bankruptcy of the Patriot Coal Corporation, an employer with coal mines in West Virginia.\nThese three case studies are not necessarily representative of all chapter 11 bankruptcy proceedings of large, unionized firms. Indeed, as case studies, they are not necessarily representative of all bankruptcy proceedings of large, unionized firms in industries in which Congress has become involved. Nevertheless, they do provide some evidence of how the federal government deals with retiree benefits in industries in which competitive pressures have changed.\nThis report begins with a discussion of whether bankrupt firms can invalidate previous commitments covering retiree pensions and health insurance. It next discusses the specific protections accorded to retiree pensions and health insurance benefits. Certain types of pensions are guaranteed by a quasi-public agency, but no such guarantee exists for retiree health insurance. The report concludes with brief case studies of the bankruptcies of Old GM, Delphi, and Patriot.", "Whether retirees and future retirees receive their promised pensions and health insurance benefits depends on many factors. Four are discussed in this section: (1) the type of bankruptcy (e.g., chapter 7 or chapter 11) and the relevant provisions of the Bankruptcy Code; (2) the type of labor organization (e.g., union, association, or not organized); (3) the type of employee (e.g., active employee or retired employee); and (4) the legal relationship between the bankrupt employer, any subsidiaries, and any parent company.", "Employers generally file one of two forms of bankruptcy: chapter 7 (liquidation) or chapter 11 (reorganization). The bankruptcies filed by companies in the automotive and coal industries generally have been filed under chapter 11; therefore, this report will focus on chapter 11 bankruptcies after providing background information on both types.", "Chapter 7 of the Bankruptcy Code is designed for liquidation. For businesses, this generally involves complete cessation of the business and disposition of all assets. An employer files for chapter 7 bankruptcy when it believes that no amount of reorganization (including restructuring and financial modifications) would make its business profitable. Under chapter 7, a trustee is appointed to preside over the consolidation and ultimate distribution of the employer's assets. The assets either would be sold or would be transferred to the employer's creditors. In either case, the value of the assets would be used to reimburse claimholders in a prescribed manner. Those with secured claims would be paid first. Remaining assets then would be used to pay select unsecured claims. If the assets were sufficient to pay all the priority claims in full, the remaining assets would be used to pay the unsecured, non-priority claims on a proportional basis. Any claim for retiree health or pension benefits would be both unsecured and non-priority. In short, employers in chapter 7 bankruptcy usually are unable to fund any retiree health benefits and are able to pay pension benefits only if their pension trust fund has sufficient assets.", "Chapter 11 bankruptcy proceedings generally involve a plan to restructure a business so that it may become viable. In other words, a debtor (often the employer) filing under chapter 11 generally expects its obligations to be reorganized so that the business can continue to exist. Under chapter 11, the debtor generally remains in possession of the assets and continues to operate. The debtor here is known as the debtor in possession . The debtor in possession operates the business. In some cases, a buyer may be found for some or all of the assets. However, no assets may be sold outside of the normal course of business without the approval of the bankruptcy court.\nRetiree benefits do not automatically end when a company files under chapter 11. Two sections of the Bankruptcy Code govern the law determining retiree benefits before the debtor sells assets under chapter 11. Section 1113 covers the rejection of a collective bargaining agreement (CBA) for unionized firms, and Section 1114 covers the payment of retiree health insurance in both unionized and nonunionized firms.", "Section 1113 covers the conditions under which a debtor in possession may reject a CBA by either modifying or terminating it. Although the employees (through their union) can be expected to argue that the negotiated benefits should continue to be awarded, the bankruptcy court may allow the debtor in possession to alter or terminate the CBA using the following procedure. The debtor in possession must first supply the authorized representative of the employees (usually a union officer) information justifying the need for modifying the employees' benefits and protections. The employees (through the union negotiator) and employer then engage in good-faith negotiations with respect to proposals for alteration or termination of the CBA. If the parties cannot negotiate an agreement, the debtor in possession requests that the court alter or terminate the CBA. The court may take this step upon finding that the following conditions have been met:\n1. The debtor in possession provided the authorized representatives of the employees with the necessary information, 2. The authorized representative has refused to accept the proposal without good cause, and 3. On balance, fairness favors voiding the CBA.\nThis section of the Bankruptcy Code applies only to unionized workplaces because nonunion workplaces will not have a CBA. Employees who have formed an association are nonunion employees.", "Section 1114 covers the conditions under which the debtor in possession may terminate or modify retiree health benefits, whether or not the employees are operating under a CBA. Section 1114 is modeled after Section 1113 and requires similar findings by the court to allow the debtor in possession to terminate or modify retiree health insurance benefits. The debtor in possession must first negotiate proposed modifications in benefits with an authorized representative of the retirees. If they cannot agree on changes, the court may permit modification if it finds that the proposed modification is necessary to permit the reorganization of the employer. In addition, all creditors, the employer, and all other affected parties must be treated fairly and equitably and the authorized representative must have refused to accept the proposal without good cause.", "Whether or not an employer is in bankruptcy, the benefits promised to current retirees and future retirees (i.e., active employees), and the risks assumed by the current retirees and future retirees, may depend on the type of labor union (or association) involved. The National Labor Relations Act (NLRA; P.L. 74-198, as amended) recognizes the right of employees to engage in collective bargaining through representatives of their own choosing. The NLRA, however, does not recognize a right of retirees to form a union or to engage in collective bargaining.\nThe relationship between labor and management in bankruptcies involving collective negotiations depends on whether the union is a single-employer union (such as the UAW), a multiemployer union (such as the UMWA), or an association (such as the DSRA). A union's membership generally coalesces around a type of work done by that group of employees. Union workers in U.S. firms are more likely to be paid by the hour than are many nonunion workers, who often are paid an annual salary.\nMost unions are single- employer unions in which representatives of one employer's management and the union (on behalf of the employer's employees) bargain over the terms and conditions of employment. These terms and conditions generally include wages, hours of work, sick days, vacation days, health insurance, retiree benefits, and many other aspects of work. The bargaining results in a contract, which is known as a collective bargaining agreement (CBA). Any employee who could be a member of the union, based on his or her occupation and perhaps other factors, is subject to the terms of the CBA even if the employee chooses not to join the union.\nMultiemployer unions represent employees of more than one employer in a single industry and frequently negotiate the same employee benefit plan for all eligible employees of many employers. These plans are referred to as Taft-Hartley plans and are relatively more likely to be found in industries in which employees frequently move among different employers. CBAs with Taft-Hartley plans ensure that union members can keep their pensions, health insurance, and all other benefits as they move from one employer to the next, because the union members are covered by the same CBA at their various places of employment. Unions in the trucking and construction industries often offer Taft-Hartley benefit plans.\nFinally, some groups of active employees and/or retirees, sometimes known as associations , partly behave like unions even though they are not officially certified as unions. In the current context, groups of retirees can form associations to facilitate the negotiations required by the Bankruptcy Code. The term association , however, is not legally defined, and there is nothing to prevent a union from calling itself an association. For example, the National Education Association is a union. In addition, some representatives of the employers call themselves an association, such as the coal industry's Bituminous Coal Operators Association.", "When bargaining over the terms and conditions of employment, either two or three categories of workers typically are considered. Single-employer unions may bargain on behalf of active employees and retired employees. (These categories are related because active employees may someday become retired employees.) Both active and retired employees may face the loss of at least some of their retiree benefits should the single employer become insolvent or otherwise be unable to fund the promised benefits.\nMultiemployer unions, however, also are associated with a third type of employee: the orphan retiree. An orphan retiree is a retiree who is covered by a multiemployer CBA entitling him or her to benefits from an employer that is no longer solvent. However, other employer signatories to the contract are solvent. In other words, the multiemployer CBA may specify that an employer is obligated to pay for the retiree's benefits, but the employer is unable or unwilling to do so for a variety of reasons; it may be entirely out of business, in bankruptcy proceedings, otherwise lacking funds, or refusing to pay the benefits. This retiree then becomes an orphan retiree. Other employers who are signatories to the CBA are expected to pay benefits for the orphan retirees. In this case, a solvent employer may find itself funding retiree benefits for individuals who were never employed by the employer.", "Some employers entering chapter 11 bankruptcy, such as Old GM, have a long history as independent firms. Other employers, however, were recently part of a larger entity. For example, Delphi was once a division of Old GM, and Patriot was once a part of Peabody Energy. The process by which Delphi and Patriot became independent employers is known as a spin-off , and Old GM and Peabody were the parent employers. The protections for retirees in bankrupt companies that were once a part of larger enterprises depend on the spin-off arrangements negotiated between the union and the parent company. In some cases, the parent company assumes responsibility for the pensions and/or retiree health benefits of the employees transferred to the new spin-off company.\nThe next three sections of this report discuss protections for employee pensions, protections for retiree health insurance, and other health insurance protections available for retirees.", "", "The Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406 ) protects the interests of participants in certain employee benefit plans. ERISA requires that benefit plans be operated solely in the interest of the participants and their beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries. It protects employees' pensions by establishing vesting requirements (how long an employee has to work to be entitled to benefits); funding requirements (how much the employer must set aside to pay for current and future benefit obligations); and pension insurance (which will pay retiree benefits in case of the plan sponsor's bankruptcy). Pension obligations must be prefunded by the employer, and the present value of the plan's assets must be large enough to cover the present value of the plan's liabilities.\nERISA pension insurance covers private-sector defined benefit (DB) pension plans. A DB plan typically pays a set monthly amount after the employee's retirement. The specific amount paid is often based on a combination of the employee's salary and years of service. Some DB plans, however, offer the benefit as a fixed lump-sum payment. Under ERISA, participants in DB plans do not own the pension plan assets but have a claim on the amount of their vested benefits. Pension plan sponsors generally may not reduce workers' vested pension benefits. In addition, employee pension trust funds are not part of the bankruptcy estate available to satisfy creditor claims.\nERISA established the Pension Benefit Guaranty Corporation (PBGC) to insure the pension benefits of workers in private-sector DB plans. The PBGC says it has \"protect[ed] more than 42 million workers and retirees in private defined benefit pension plans ... by encouraging companies to keep their plans, and by paying benefits when they cannot.\" To fund its benefit obligations, the PBGC collects insurance premiums from employers that sponsor insured pension plans, receives funds from the pension plans it takes over, and earns money from investments. The insurance premiums are set by Congress. The benefits to retirees paid by the PBGC do not come from taxpayer funding, and the benefit obligations of the PBGC are not obligations of the United States. Pensions disbursed by the PBGC to any retiree may not exceed a statutorily guaranteed limit.\nThe PBGC has a stated goal of avoiding the termination of plans in cases of bankrupt companies:\nEven after a company enters bankruptcy, we work to try and preserve its plans. We take an active role in bankruptcies to prevent unnecessary plan terminations, and to pursue claims on behalf of the plan participants, and the pension insurance program.\nThe PBGC maintains two separate insurance programs: one for single-employer pension plans and one for multiemployer pension plans. A single-employer pension plan is maintained by one employer for its eligible employees. A multiemployer plan is maintained under a CBA by more than one employer for all of their eligible employees. In 2014, the PBGC single-employer plan had a deficit of $19.3 billion and the multiemployer plan had a deficit of $42.4 billion.", "The PBGC protects the pension benefits of about 31 million active and retired employees in about 22,000 single-employer pension plans. The PBGC categorizes single-employer pension plan terminations into three categories.\nA standard termination occurs when the employer's plan has sufficient funding to cover future benefits and distribute all plan benefits as insurance company annuities or lump-sum payments. In this case, the PBGC's role is solely to ensure compliance with the plan termination rules of ERISA. A distress termination occurs when the employer's plan does not have sufficient assets to pay all the promised benefits. The PBGC determines whether the employer meets at least one of four financial distress tests. In this case, the PBGC becomes the plan's trustee and uses its own assets to insure that retirees and future retirees receive the benefits to which they are entitled, up to the guaranteed limit. An involuntary termination occurs when the PBGC chooses to terminate a pension plan, even if the employer has not started termination proceedings of its own accord. Involuntary plan termination occurs when the PBGC believes that the plan owners can no longer fulfill their responsibility to pay the current and future retirees their pension benefits as they become due.\nThe PBGC maximum guarantee for a pension plan terminated in 2015 is just over $6,000 per month for retirees who begin receiving pensions at the age of 65. If a participant in a terminated pension plan had been promised a pension greater than that amount per month from the employer, he or she would receive a lower monthly pension from the PBGC than had been promised by the employer.", "The PBGC insures the pensions of about 10 million active and retired employees in about 1,400 multiemployer pension plans. Benefit contributions for multiemployer plans are usually based on employer contributions in proportion to their current (covered) employment. The employer contributions also may be tied to some measure of employer output such as the number of items produced, tons of coal mined, or gross sales. Most multiemployer plans are governed by a board of trustees, with equal representation from employers and employees. Contributions are held in a trust fund, and assets in the plan never revert back to contributing employers.\nThere are various categories to describe a multiemployer plan's funded status. A plan is in critical status if at least one of five conditions holds. A plan is in endangered status if (1) the plan is less than 80% funded or (2) the plan is underfunded in the current year or is projected to be underfunded in one of the next six years. A plan is in seriously endangered status if the plan meets both criteria for endangered status. Multiemployer plans in endangered status must adopt a funding improvement plan that will reduce the plan's underfunding by 33% during a 10-year funding improvement period. Multiemployer plans in seriously endangered status must adopt a funding improvement plan that will reduce the plan's underfunding by 20% during a 15-year funding improvement period. Plans in endangered status or seriously endangered status may not increase pension benefits during the funding improvement period.\nAn employer may leave a multiemployer pension plan for a variety of reasons, including when the employer goes out of business, negotiates a new CBA, or moves the business out of the pension plan coverage areas. An employer that withdraws from a pension plan may be assessed withdrawal liabilities. Some part of these legacy liabilities may cover pension benefits for the employer's former employees.\nMultiemployer pension plans may become insolvent when the plan is unable to pay its benefit obligations. Unlike single-employer plans, multiemployer plans cannot be terminated as part of any employer's bankruptcy proceedings. When a multiemployer plan becomes insolvent, the PBGC provides a loan to the trustees of the pension plan and the pension plan uses the loan to pay benefits. The PBGC never becomes the trustee of a multiemployer plan. Because many multiemployer pension plans face financial difficulties, the PBGC calls itself \"flexible when plans propose new rules governing employer liability.\" Among other innovations, the PBGC has attracted new employers by limiting their legacy liabilities.\nThe PBGC maximum guarantee for an insolvent multiemployer pension in 2013 was $1,073 per month ($12,870 per year) for those who retired with 30 years of work at age 65. This maximum benefit level from the PBGC may have been less than the retiree would have received under the original CBA.\nThe overall financial health of the PBGC multiemployer pension trust is in some doubt. For example, the multiemployer trust reported a net loss of $34.2 billion in FY2014, up from a net loss of $3.0 billion in FY2013. In addition, the PBGC's projections indicate that there is a 50% chance that the multiemployer insurance program will be insolvent by the end of FY2022 and a 90% chance of insolvency by the end of FY2025. Two multiemployer pension plans are thought to be a particular threat to the multiemployer trust's overall solvency.\nBecause of the increasing threat of PBGC insolvency, the recent Multiemployer Pension Reform Act of 2014 (the Consolidated and Further Continuing Appropriations Act of 2014; P.L. 113-235 ) permits a reduction of benefits for members of pension plans under some conditions. Namely, the pension plan must be in \"critical and declining\" status. As discussed above, a plan is in critical status if at least one of five conditions holds. A plan is in declining status if the plan actuary forecasts plan insolvency over the next 14 years or over the next 19 years, depending on other conditions.\nNevertheless, participants in most plans may vote to reject the benefit reduction. Plans deemed to be systematically important , however, are able to reduce participants' benefits without a vote. A systematically important plan is one in which the PBGC would pay at least $1 billion in benefits if benefit reductions were not implemented.\nIn the event of a benefit reduction, participants could not have their benefits cut below 110% of the PBGC multiemployer maximum level. Some individuals could not have their benefits cut at all, including disabled individuals and retirees aged 80 and above. The act also specified additional rules for benefit reductions.\nA plan partition may be an additional way to reduce the PBGC's potential loan liability associated with a multiemployer plan facing insolvency. The PBGC may partition, or divide, the original multiemployer plan into two plans. The liabilities of the financially distressed employer(s) are moved from the original pension plan to their own pension plan. In this way, the original plan is restored to economic health because the liabilities from the employers that cannot pay them are removed. The original pension plan must meet five conditions to be eligible for partitioning:\n1. the plan must be in critical and declining status; 2. the plan sponsor must have taken all reasonable measures to avoid insolvency; 3. the PBGC must reasonably expect that the partition will reduce its expected long-term loss from the plan and that the partition is necessary for the plan to remain solvent; 4. the partition must not impair the PBGC's ability to meet existing financial assistance obligations; and 5. the cost of the partition must come from the PBGC's multiemployer fund.", "ERISA does not require retiree health insurance benefits to be prefunded. In practical terms, even if a retiree was contractually promised $400 a month in health insurance benefits, the employer is not required to have $400 a month available. In addition, retiree health insurance claims are neither a secured nor a priority claim in bankruptcy. Therefore, retirees have no guarantee that they actually will receive any of the benefits they were promised in a CBA. One way to guarantee at least some funding for health insurance benefits is for the (active and/or retired) employees to form a Voluntary Employees' Beneficiary Association (VEBA). VEBAs are tax-advantaged trust funds, first created by the Revenue Act of 1928 (P.L. 70-562). VEBAs can finance many types of employee benefits, including retiree health insurance benefits (but not pensions).\nVEBAs historically were owned by a single employer. However, some VEBAs now are structured as a trust independent of the employer. These trusts sometimes are termed independent VEBAs, new VEBAs, or stand-alone VEBAs. An independent VEBA must be controlled by its membership, by independent trustees, or by other fiduciaries designated by the membership. Trustees chosen by a CBA are considered designated by the membership. VEBAs have been created or modified both as part of bankruptcy proceedings and as part of the normal course of business in healthier entities. In all cases, the trust acts in the fiduciary interest of the employees. Nevertheless, the creation of a VEBA cannot be characterized across-the-board as a victory for either the employer or the employees; each individual VEBA differs with respect to funding levels and other terms, and the funding levels and other terms themselves depend on the relative bargaining power of the employer and employees.", "VEBAs, as tax-exempt instruments, provide the employer with incentives to prefund health benefits. More specifically, contributions to some VEBAs are tax deductible, and the investment income sometimes grows tax free. In addition to these tax advantages, VEBAs can improve an employer's financial position. Employers are required by the Financial Accounting Standards Board, which establishes financial and reporting standards for private-sector U.S. firms, to use accrual-basis accounting when calculating liabilities for retiree health benefits. In other words, the employer's liability increases as the number of employees eligible for benefits, along with the expected amount of these benefits, increases. This liability must be reported on the firm's balance sheet, where a particularly large liability value can depress the firm's market value. Removing the firm's liability for current and future benefits by transferring the benefits to a VEBA (independent of the employer) sometimes can increase the market value of the employer. This increase in market value is a primary advantage of a VEBA for the employer.\nFor the employee, a primary advantage of a VEBA is a reduction in the risk associated with actually receiving promised retiree benefits. If the employer already has deposited funds into a dedicated retiree health VEBA, these funds must go to their intended recipients. They may never revert to the employer. In many instances, without a VEBA, the employees have no recourse if an employer lacks the funds to pay for promised retiree health benefits. If an employer falls short, or simply decides to place its money elsewhere, no law or regulation compels the firm to honor past promises.", "The presence of a VEBA does not automatically remove all the risk to the employee, because the VEBA itself must have assets and income. For current and future retirees to receive promised benefits there must be sufficient funds in the VEBA to cover the cost of benefits. A VEBA that contains sufficient funds to cover the expected costs of the benefits over the life of the VEBA is known as a fully funded VEBA. Several scenarios can prevent VEBAs from being fully funded. First, the calculations of the funding needed for the VEBA to cover the expected costs of the retiree benefits may have been incorrect. Second, the employer may not have contributed the amount necessary to fully fund the VEBA. In any case, federal law does not require that VEBAs be fully funded.", "The amount of money necessary to fully fund the VEBA cannot be calculated easily. For illustrative purposes, consider a firm that wants to cover retiree health insurance for the 10,000 employees who were actively working on December 31, 2014, plus their surviving spouses and dependents. The calculation of the level of funding needed to meet such a guarantee typically involves forecasting the following variables:\nthe expected date of retirement for each employee working on December 31, 2014; each employee's (and his or her covered family's) life expectancy; each employee's (and his or her covered family's) health care utilization over time; the rate of medical inflation over time; the return on the VEBA trust's assets over time; and changes in the tax code affecting the value of the VEBA.\nIf any of these forecasts prove to be incorrect, then the amount of money needed to fully fund the VEBA over the course of its lifetime would be calculated incorrectly.\nThe calculation becomes more complicated if future employees (i.e., those who are not yet hired) are eligible for retiree health benefits funded from the VEBA. The number of such employees, together with the years in which they will start work and ultimately retire, must also be estimated. Calculating the fully funded level for an employer that has terminated the availability of benefits for new hires is therefore easier than calculating the fully funded level for a financially healthy employer that intends to continue offering retiree health benefits to new hires.\nSome VEBAs are created as part of the course of doing business, and others are created during chapter 11 bankruptcy proceedings. A VEBA also may be negotiated as part of a standard CBA and then modified during bankruptcy proceedings. Financial negotiations can be contentious. A percentage of the amount needed to fully fund the VEBA is negotiated. As would be expected, the employees prefer to receive as close to 100% of the fully funded amount as possible, whereas the employer prefers that the percentage be as small as possible. Additionally, the composition of the funding must be agreed upon. The employer can transfer any number of assets to the VEBA, including cash and notes. If the union accepts stock in the company as a VEBA funding source, the resulting situation becomes unusual in that a trust fund acting on behalf of the employees becomes a partial owner of the company.", "Apart from the PBGC, no federal programs provide pension benefits to retirees whose former employer cannot meet its pension obligations. However, retirees may have a number of additional health insurance options available to them.\nRetirees who no longer have access to health insurance through their former employer(s) may be able to obtain coverage through Medicare or Medicaid, receive federal subsidies to purchase coverage in the private health insurance market, or, in the case of some chapter 11 bankruptcies, obtain coverage through Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA; P.L. 99-272 ). Retired individuals who have end-stage renal disease as well as those who are disabled or aged 65 or older generally are eligible for Medicare. Some lower-income individuals may be eligible for Medicaid. Additionally, individuals can purchase private nongroup (individual) coverage. Nongroup coverage can be purchased through health insurance exchanges, as established by the Patient Protection and Affordable Care Act of 2010 (ACA; P.L. 111-148 , as amended by P.L. 111-152 ) or in the private market outside of exchanges. Individuals who purchase nongroup coverage through the exchanges may be eligible for premium tax credits and cost-sharing subsidies.\nUnder COBRA, employers are required to permit employees and family members to continue their group health insurance coverage at their own expense if they lose coverage because of designated work- or family-related events. These individuals must pay the full cost of coverage, including 100% of the premium plus an administrative fee. Among the qualifying events that trigger COBRA's continuation coverage is an employer's filing a case under the Bankruptcy Code. The retired employee is eligible for COBRA continuation coverage for life, and his or her spouse and dependents are eligible for continuation coverage for 36 months. This continuation coverage, however, is contingent upon the employer maintaining a health insurance plan for active employees.\nTwo additional congressionally authorized programs have provided retiree funding in the past few years but have expired. First, Section 1102 of the ACA authorized $5 billion in funding for the Early Retiree Reinsurance Program (ERRP). The ERRP reimburses employers for especially high health insurance claims incurred by early retirees. The early retirees themselves do not receive any reimbursements from this program. Rather, the reimbursements are used to fund various cost-savings and other improvements to the employer's provision of health insurance. The ERRP began accepting for reimbursement claims incurred on or after June 1, 2010, and was closed to new enrollees as of May 6, 2011, because expenditure projections indicated that the $5 billion would be exhausted by the employers already enrolled. The authorization for the ERRP ended on January 1, 2014.\nSecond, the Health Coverage Tax Credit (HCTC), a federal income tax credit, has subsidized 72.5% of the cost (premiums) of qualified health insurance for eligible taxpayers and their family members. Eligibility for the HCTC is limited to three groups of taxpayers, two of which are individuals eligible for the Trade Adjustment Assistance (TAA) program. The third group consists of individuals whose pension plans were taken over by the PBGC. This credit expired on January 1, 2014, and new enrollees must have registered before October 1, 2013.\nThe remainder of this report provides three examples of bankruptcy proceedings in unionized entities where the retirees' pensions and health insurance benefits received substantial federal attention. The first example is Old General Motors and the United Auto Workers, the second example is Delphi and the Delphi Salaried Retirees Association, and the final example is Patriot and the United Mine Workers of America.", "", "On June 1, 2009, the General Motors Corporation filed a chapter 11 bankruptcy petition. On July 5, 2009, the bankruptcy court approved the sale of the company's \"good\" assets in a \"section 363 sale.\" The sale closed on July 10, 2009. The buyer was a newly formed corporation that, after the sale was completed, changed its name to General Motors Company. In this report, Old GM is used to refer to General Motors Corporation , and New GM is used to refer to General Motors Company .\nFunding supplied by the Troubled Asset Relief Program (TARP) was instrumental in the restructuring of Old GM. TARP was a part of the Emergency Economic Stabilization Act of 2008 (EESA; P.L. 110-343 ). EESA originally was intended to purchase assets and equity from financial institutions, but President George W. Bush extended it to the automobile industry in 2008. In 2009, President Barack Obama granted further financial assistance. In total, Old GM and New GM together received $50.2 billion in financial support from the Department of the Treasury.", "Old GM maintained separate pension trusts for hourly and salaried workers. Unionized employees hired prior to October 15, 2007, are eligible for DB pensions. The amount of the pension was negotiated and depends on the number of years of service, with a supplemental amount for early retirees with at least 30 years of service. Taken together (that is, including New GM employees represented by any of its unions plus nonunionized employees) New GM pensions were underfunded by $17.1 billion at the end 2009. Despite this underfunding, pensions were not a central bargaining issue in the late 2000s. There was virtually no debate over UAW pensions during the bankruptcy process, and no changes were made to the pension plans.\nPension controversies did emerge after the bankruptcy. Concerned about possible large increases in their required pension contributions, New GM offered some salaried workers a buy-out in 2012; these workers could accept a lump-sum payment in exchange for giving up all rights to any other kind of pension support. About 30% of 44,000 eligible, salaried workers accepted this offer. Additionally, New GM has spoken of giving the UAW workers the option of trading their promised DB pensions for a lump-sum payment.", "Old GM historically has provided generous health insurance coverage. In 2005, the then-chairman and chief executive officer of Delphi, originally a part of Old GM, remarked, \"Some have said GM is actually a giant HMO that happens to make cars!\" Over time, however, the cost of providing this insurance proved to be high. For example, it was reported that health care costs were the single largest component of the growing disparity in labor costs between the domestic and foreign automakers. A 2007 memorandum of understanding covering postretirement medical care states that UAW and Old GM have \"discussed that the current cost of providing postretirement medical care is one of the most critical issues facing the Company's ability to compete in the North American marketplace.\"\nDuring the 2007 contract negotiations, Old GM agreed to contribute a percentage of its projected retiree health liabilities to an independent VEBA intended to fund retiree health benefits for 80 years. Following their initial VEBA contributions in 2007, Old GM also would make additional contributions to the VEBA beginning in 2008. According to one analyst, Old GM contributions were projected to fund about 68% of future retiree health obligations over the life of the VEBA (in present-value terms). The 2007 contract stipulated that GM was responsible for funding retiree health until January 1, 2010. On that date, the VEBA (officially known as the UAW Retiree Medical Benefits Trust ) took over all funding responsibilities for retiree health insurance from GM. Only those retirees (and their eligible spouses, surviving spouses, and dependents) eligible for retiree medical benefits from Old GM as of October 15, 2007, can participate in the VEBA.\nThe VEBA is one trust with three separate accounts, one each for New GM, Ford, and Chrysler. The assets in each account are separate, and one automaker's account cannot be used to fund benefits for another automaker. Nevertheless, the VEBA files a single tax return. The VEBA is managed by an independent board of 11 trustees appointed by the UAW and the bankruptcy court as part of the bankruptcy settlement agreements with New GM and Chrysler.\nBecause Old GM had a large debt load and no cash flow when it entered bankruptcy, the UAW accepted a contribution of stock in New GM. The restructuring agreement made the UAW a partial owner of New GM. Such an ownership structure is not typical of bankruptcy decisions. When the VEBA became the source for retiree health benefits on January 1, 2010, the VEBA held $14.5 billion in investment assets, 17.5% of New GM's common stock, New GM's preferred stock with a face value of $6.5 billion, and a note with a face value of $2.5 billion. Because New GM's common stock was not publicly traded at that time, there was great uncertainty associated with the ultimate value of owning 17.5% of the common stock. The VEBA ownership in New GM fell from 17.5% in 2009 to 9.2% in 2014 as the VEBA sold stock.\nIt is difficult to evaluate the performance of a trust fund designed to last 80 years after the passage of only five years. Nevertheless, the VEBA officers have emphasized the investment risks when communicating with the membership. In particular, they have mentioned the \"market meltdown\" of 2008 and early 2009, and the uncertainty associated with projections of future medical costs. In fact, the 2011 contract negotiations covered the possibility of diverting up to 10% of profit sharing to the VEBA.\nThe most recent legislation concerning the Old GM bankruptcy was introduced in the 111 th Congress and concerned the use of TARP funding in the bankruptcy proceedings. The bills were H.R. 4118 , H.R. 6046 , and S. 3526 .", "", "The Delphi Corporation supplies parts and components directly to vehicle manufacturers. Delphi originally was a part of Old GM. It was spun off into its own public company in 1999 and continues to have New GM as its primary customer. As part of the spin-off agreement, Old GM and the UAW negotiated the benefits of union employees who were being moved from Old GM employment to Delphi employment. Old GM agreed to cover the pension benefits for Delphi employees (former Old GM employees) who retired prior to October 1, 2000. The pension benefits of employees who retired on or after October 1, 2000, became the obligations of the various Delphi pension plans.\nIn addition, Old GM entered into a benefit guarantee agreement with the UAW covering employees whose pensions might be taken over by the PBGC in the future. In the event of a termination of the Delphi pension plans for hourly workers, the guarantee agreement obligated GM to supplement the benefits for workers who received the statutory maximum benefit from the PBGC. In other words, GM agreed to a \"top-up\" for each covered UAW retiree. A top-up is a payment of the difference between the benefit received from the PBGC and the benefit that would have been received had the plan not been terminated. Salaried employees were not UAW members and were not covered by this top-up guarantee.\nIn October 2005, Delphi entered chapter 11 bankruptcy. Delphi emerged from bankruptcy in October 2009 after a group of Delphi's lenders purchased most of Delphi's assets; New GM also assumed some of the Delphi assets.\nThe PBGC assumed responsibility for Delphi's DB pension plans in July 2009. In total, the pension plans had almost 70,000 participants and were underfunded by about $7.2 billion, according to the PBGC.\nThis case study focuses on a group of Delphi salaried retirees who did not have the protections of a CBA. These retirees did not receive the same pension and retiree health benefits as the unionized retirees. On one hand, the salaried workers never had contractual rights to the benefits that the union workers had. On the other hand, the salaried workers argued that it was only fair that they receive the same benefits as their unionized coworkers. To pursue this matter, many Delphi salaried workers formed the Delphi Salaried Retirees Association (DSRA). The DSRA was recognized as an authorized representative of the retired employees by the bankruptcy court.", "Both Old GM and New GM might have been able to invalidate the top-up agreement with Delphi during the bankruptcy proceedings. Nevertheless, New GM said that it honored its top-up agreement with the UAW for commercial reasons. One reason cited was that these union members needed to give their consent to finalize the sale of assets in Delphi's bankruptcy and the top-up would speed bankruptcy proceedings. In addition, New GM topped-up pensions for members of two other unions that comprised large shares of its workforce: the International Union of Electricians-Communication Workers of America (IUE-CWA); and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers Union (USW). New GM maintained that it was not contractually obligated to give retired members of these two unions top-ups. Once the PBGC assumed responsibility for the remaining Delphi pensions, some Delphi salaried retirees (who were not union members) saw their pension benefits reduced because their monthly benefit (as previously promised by Delphi) was larger than the statutory maximum benefit. New GM did not top-up these salaried workers' pensions. New GM argued that it had no contractual obligation to do so.\nWhen the Delphi plans were terminated in 2009, the maximum benefit from the PBGC was $54,000 per year for an individual who retired at the age of 65 with no survivor benefit. As of June 2011, the PBGC estimated that 18% of the total number of salaried retirees would see their pension benefits reduced to this amount, while 1% of the total number of hourly workers would see their total pension benefits reduced to this amount.\nThe DSRA argued that all parties, including the federal government, were treating salaried workers less well than hourly workers. In particular, the DSRA argued that the top-up funding came from TARP as part of the Old GM restructuring.\nOn September 14, 2009, the DSRA filed a lawsuit against the PBGC, the U.S. Treasury Department, and the Presidential Task Force on the Auto Industry. One of the DSRA's claims was that the agreement between New GM and the unions representing hourly employees to top-up the hourly employees' pensions was a violation of the Equal Protection Clause of the Fifth Amendment to the U.S. Constitution. The DSRA argued that New GM, acting as a government agent because of TARP's role in the Old GM bankruptcy, unfairly discriminated against the salaried employees \"solely on the basis of their choice not to associate with a union.\" The DSRA argued that Old GM's bankruptcy in June 2009 voided the 1999 top-up agreements and that New GM renegotiated and provided the top-up to the unions' pension plans for political reasons. On September 9, 2011, the U.S. district court dismissed the claims against the U.S. Department of the Treasury. The PBGC remains a defendant in the case.\nThe DSRA submitted an affidavit from a pension actuary stating that the PBGC miscalculated the benefit obligations of the Delphi pension plans and that the pension plan for salaried employees was 86.5% funded at termination. It also said that it was rare for pension plans with this amount of funding to require termination. According to PBGC estimates, at the time of termination the plans for the Delphi salaried employees had $2.4 billion in assets and $5.0 billion in liabilities; the plan was therefore only 48% funded. The PBGC indicated that it expected to be responsible for about $2.2 billion of the plan's estimated $2.6 billion in underfunding. The Delphi court case remains ongoing; recently, a U.S. district judge ordered the U.S. Department of the Treasury to turn over documents related to President Barack Obama's Auto Task Force's role in the termination of the salaried pension plan.\nThere is some difference of opinion concerning Old GM's contractual obligation to honor previous top-up commitments to the UAW Delphi hourly workers. Both the Government Accountability Office (GAO) and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) argue that the UAW was treated with special care because it could influence the bankruptcy proceedings and/or call a strike. However, the GAO writes that the \"Treasury did not explicitly approve or disapprove of GM's agreement to honor previously negotiated top-up agreements.\" On the other hand, SIGTARP quotes a Treasury official that \"it is my understanding that as the buyer, we got to determine which liabilities [we would take on].\"\nAlthough no top-up commitment was ever given to the Delphi salaried workers, the DSRA argues that the salaried workers should enjoy the same benefits as the hourly workers. This position rested on a notion of \"fairness\" without regard to contractual obligations. Nevertheless, the DSRA did not have current employees at New GM, and, therefore, could not slow down bankruptcy proceedings.", "The process of establishing health benefits for Delphi's current and future retirees took less time than the still-ongoing pension process. The DSRA created a VEBA committee, and the bankruptcy court accepted this committee as the Section 1114 committee. The negotiations between Delphi and the Section 1114 committee proceeded according to the rules of the Bankruptcy Code. Delphi eventually agreed to provide $8.75 million in up front funding for the VEBA. The funding was in cash; the VEBA did not receive any Delphi stock. When the bankruptcy court accepted the agreement, only salaried workers who were retired or eligible to retire on or before April 1, 2009, were eligible to receive health insurance benefits from the VEBA. Nevertheless, the trust agreement was amended by its own trustees such that it could provide its benefit plans to hourly retirees of Delphi and their dependents and survivors. As a result, if the hourly retirees preferred the health insurance plans offered by the DSRA VEBA, they could enroll in these plans at their own expense instead of the plans offered by Delphi. The hourly retirees, however, could receive no funds from the VEBA.\nThe DSRA VEBA, which is formally known as the Delphi Salaried Retirees Association Benefit Trust , opened with the $8.75 million Delphi contribution in 2009. Delphi has provided no additional contributions since that time. To date, the largest source of additional VEBA funding has been the Early Retiree Reinsurance Program. Most recently, the DSRA was advocating for an extension of the now-expired Health Coverage Tax Credit (HCTC), for which they are eligible because their pensions were taken over by the PBGC. Several bills introduced in the 113 th Congress would have extended the HCTC for varying lengths of time. These bills were H.R. 2783 , S. 1446 , and S. 1859 . In the 114 th Congress, S. 505 , a bill to amend the Internal Revenue Code of 1986 to extend the Health Coverage Tax Credit, would extend the HCTC until January 1, 2020.", "", "Federal involvement in retiree pensions and health insurance in the coal industry has a long history in the United States. Following World War II, the United Mine Workers of America (UMWA) demanded health and retirement benefits from coal employers. When these benefits were not forthcoming, the miners staged a walkout. To avoid a shutdown of American coal production, President Harry Truman signed an executive order seizing all of the nation's bituminous coal mines. The Secretary of the Interior, Julius Krug, was ordered to negotiate an agreement with the UMWA President John L. Lewis. The Krug-Lewis Agreement, signed on May 29, 1946, established the UMWA Health and Retirement Funds. Congress has been involved in the retiree benefits of coal miners ever since.\nThe current structure of pension and retiree health benefits in the coal industry is spelled out in the most recent National Bituminous Coal Wage Agreement (NBCWA), a CBA between the UMWA (a multiemployer union) and the Bituminous Coal Operators Association (BCOA), whose members represent the owners of the coal mines. The most recent NBCWA was negotiated in 2011 and extends through 2016. It includes, among other terms and conditions of employment, details covering the pension plan and three retiree health funds used by signatory employers.\nAll plans contain an \"evergreen clause\" or \"continuing contributions clause\" to provide for the long-term financing of pensions and health benefits for retired employees and orphan retirees. Thus, all employers who are (or ever were) members of the pension plan or any health plan must contribute, including employers who are not current members of the BCOA. In other words, employers who were once signatory employers to any NBCWA must continue to contribute to all pension and health insurance trust funds until the CBA is changed. Employers are therefore responsible for maintaining benefits for miners who may never have been their employees.\nPatriot filed for chapter 11 bankruptcy protection in July 2012 and emerged from bankruptcy in December 2013. Patriot was formed in 2007 as a spin-off company from Peabody Energy. The following year, Patriot purchased Magnum Coal, itself a spin-off of Arch Coal. Consequently, Patriot entered bankruptcy with about three times as many retirees, inherited from Arch and Peabody, compared to active employees. The two parent employers had an improved financial picture following the spin-off; for example, the present value of Peabody's retiree health obligations was reduced by $637.6 million. Patriot, however, was left with an estimated present value of over $1.6 billion in retiree health obligations, an amount the bankruptcy court called \"astronomical.\" In addition, Patriot had been receiving funding from the Early Retiree Reinsurance Program, but additional funding from this source is no longer available.", "The 1974 Pension Trust (the Trust) was established by collective bargaining and covers all employees whose employer was a signatory employer to the NBCWA one or more times. The Trust documents detail the required contributions of the employers and the benefits received by the eligible retirees under a wide variety of conditions. This Trust pre-dates the Coal Act. Patriot is now the Trust's second-largest contributor.\nAt the time of the Patriot bankruptcy filing, the Trust was less than 73% funded and had a status of seriously endangered. The trust is now in critical status.\nThe Patriot bankruptcy negotiations ended with Patriot remaining a participant in the 1974 Pension Trust. Patriot covers current retirees, surviving spouses, and dependents under the existing terms. In addition, active employees hired before January 1, 2012, are covered. Employees hired on or after January 1, 2012, are not eligible for the 1974 (defined benefit) Pension Trust but have a (defined contribution) 401(k) retirement plan.", "As with the automotive industry, the coal industry provides generous health benefits. The UMWA says that it sacrifices wage increases for employees in exchange for better health insurance because miners face many occupational health challenges.\nCoal employers usually maintain their own retiree health plans. However, some employees, especially those whose former employers are no longer mining coal or are bankrupt, have access to one of three UMWA retiree health care funds. Each fund has its own trustees, and the trustees are responsible for paying premiums and benefits and for investing the assets of their respective trust fund.\nThe Combined Benefit Fund (CBF) is a trust fund created by the Coal Act. It provides retiree health benefits for UMWA employees (and their surviving spouses and dependents) who retired on or before July 20, 1992, and did not have another source of retiree health benefits because they were orphan retirees. The currently proposed legislation (discussed below) does not affect the CBF. The 1992 Benefit Trust is a trust fund created by the Coal Act. It provides retiree health benefits to those employees (and their surviving spouses and dependents) who retired from the coal industry after July 20, 1992, but before September 30, 1994, and do not have another source of retiree health benefits. The major difference between the 1992 Benefit Trust and the CBF is that under the 1992 Benefit Trust, the premiums paid by each signatory coal company are adjusted each year to meet the expected health care costs of the beneficiaries. The 1992 Trust is therefore better able to keep pace with increases in health care costs than the CBF. The 1993 Benefit Trust covers employees who retired on or after October 1994. In addition, new, inexperienced miners hired after January 1, 2007, cannot receive benefits from this Trust unless they are disabled as a result of a mine accident. The 1993 Benefit Trust is therefore almost entirely closed to new enrollees. The 1993 Benefit Trust was created through negotiation between the UMWA and the BCOA as part of the NBCWA of 1993. Retired miners are eligible for the 1993 Benefit Plan if their past employers either went out of business or defaulted in providing retiree health benefits. The NBCWA specifies the required contributions of the BCOA members for active employees, retired employees, and orphan employees. Note that the bargained level of funding need not correspond with the funding level required to maintain the contractual level of health care benefits for its members.\nAt the start of the chapter 11 bankruptcy proceedings, Patriot spoke of eliminating retiree health insurance benefits entirely. The UMWA's Section 1114 committee started negotiations, but the bankruptcy court ruled in favor of Patriot's Section 1113 and Section 1114 motions. Therefore Patriot no longer had to honor the existing NBCWA, and no longer had to honor previous commitments to provide retiree health insurance to UMWA retirees (or any other current or future retirees). The court's ruling was viewed unfavorably by the UMWA, and the union threatened to strike. Patriot and the UMWA then began negotiations that included contributions to a new VEBA.\nThese negotiations became irrelevant when the United States Bankruptcy Appellate Panel for the 8 th Circuit reversed an earlier bankruptcy court decision. The original bankruptcy court would have allowed Peabody Energy to stop paying the health care benefits for certain retirees that it had agreed to at the time of the Patriot spin-off. The appellate decision requires Peabody to take responsibility for paying the health care benefits for these retirees. After another round of negotiations, the Peabody case was settled with Peabody contributing $90 million to the VEBA in 2014, $75 million in 2015, $75 million in 2016, and $70 million in 2017, in addition to other requirements.", "As of the cover date of this report, no bills explicitly covering retiree health benefits have been introduced in the 114 th Congress. Several bills introduced in the 113 th Congress would have changed the benefits awarded to current and future retirees in the coal industry.\nH.R. 980 and S. 468 (113 th Congress), Coal Accountability and Retired Employee (CARE) Act of 2013, would have transferred part of the interest earned on a coal mine land reclamation fund to the 1974 UMWA Pension Trust to be used to pay pension benefits required under this plan without regard to whether Pension Trust participation is limited to individuals who retired in or after 1976. The act would have made those who were eligible to receive benefits from the 1974 UMWA Pension Trust following an insolvency proceeding relating to a coal operator eligible for the 1992 trust. H.R. 2627 (113 th Congress), the Caring for Coal Miners Act, would have made retired miners who were not receiving benefits they were otherwise entitled to because of a bankruptcy commencing in 2012 eligible for the 1993 Benefit Trust. Benefits made available by this act would have been reduced by the amount actually paid by the VEBA on behalf of a covered beneficiary, so that no beneficiary would receive a greater benefit than would have been payable before the establishment of the VEBA. H.R. 2918 (113 th Congress), the Coal Healthcare and Pensions Protection Act of 2013, would have made retired miners who were not receiving benefits they were otherwise entitled to because of a bankruptcy commencing in 2012 eligible for the 1993 Benefit Trust. Benefits made available by this act would have been reduced by the amount actually paid by the VEBA on behalf of a covered beneficiary. Any additional monies (except the amount needed to cover administrative costs) would have been transferred from the VEBA to the 1993 Trust. Any remaining excess monies would have been transferred to the 1974 UMWA Pension Trust.\nAll four bills introduced in the 113 th Congress would have increased the health benefits available to Patriot retirees. The CARE Act of 2013 would have allowed Patriot retirees to join the 1992 Benefit Trust and thus to receive the most generous benefits available to any orphan retiree. The Caring for Coal Miners Act would have allowed those who became orphan retirees as a result of a bankruptcy proceeding commencing in 2012 to join the 1993 Benefit Trust. However, the 1993 Benefit Fund would have been prohibited from covering expenses on behalf of a beneficiary that was already covered by the VEBA. The Coal Healthcare and Pensions Protection Act of 2013 would have allowed those who became orphan retirees as a result of a bankruptcy proceeding commencing in 2012 to join the 1993 Benefit Trust and would have transferred all monies from the VEBA to this trust. Any extra funding after health care obligations had been fully met would have been transferred to the 1974 UMWA Pension Trust.\nOf the four bills introduced in the 113 th Congress, only two definitely would have increased the funding available to the 1974 Pension Trust. The CARE Act of 2013 would have moved some of the interest earned on a coal mine land reclamation fund to the 1974 Pension Trust. This move, however, would have reduced the funds available to two health benefit trust funds. The Coal Healthcare and Pensions Protection Act of 2013 would have transferred any extra funding after health care obligations had been fully met to the 1974 UMWA Pension Trust.", "The President's FY2016 budget would make those retirees whose health benefits were denied or reduced as a result of a bituminous coal industry bankruptcy commencing in 2012 eligible for the 1993 UMWA Health Plan. The budget also would transfer funds through the PBGC to the trustees of the 1974 UMWA Pension Plan to \"ensure the Plan's long-term solvency.\"" ], "depth": [ 0, 1, 1, 2, 3, 3, 4, 4, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2 ], "alignment": [ "h5_title h0_title h2_title h4_title h3_title h1_title", "h4_full h1_full h2_full h5_full h3_full", "h0_title", "h0_title", "", "h0_full", "", "", "h0_full", "", "h0_full", "h5_title h1_title h4_title", "h1_full", "h4_full h1_full", "h5_full", "h0_title h2_full", "h0_full h2_full", "", "h2_full", "", "h3_title", "", "", "h3_full", "h4_title", "h4_full", "h4_full", "", "h5_title h2_title", "", "h5_full", "h5_full h2_full", "", "" ] }

{ "question": [ "What is chapter 11 bankruptcy reorganization?", "What do these protections include?", "How might this protection affect employees?", "What are legacy costs?", "What might happen to pension trusts if the employer enters bankruptcy?", "What is the role of the Pension Benefit Guaranty Corporation?", "How has the PBGC been performing in past years?", "What benefits do retirees receive from former employers?", "What is another way for health benefits for active and retired employees to be funded?", "How does a VEBA work?", "What happens after an employer and union agree to form a VEBA?", "How much of an issue was retiree health benefits prior to the bankruptcy of General Motors?", "How did the United Auto Workers fund retiree health care?", "What will happen to UAW's funding for retiree health benefits in the future?", "What caused controversy during the Delphi Corporation's bankruptcy?", "How were pensions affected during the bankruptcy?", "What was the response of salaried workers to the fall of their pensions?", "How successful has the DSRA been in increasing its members' pensions?", "How important were pension and retiree health benefits during negotiations regarding the bankruptcy of the Patriot Coal Corporation?", "What is the United Mine Workers of America?", "How could the insolvency of the coal employers' pension plan threaten PBGC's program?", "What was the ruling of the bankruptcy court?" ], "summary": [ "In chapter 11 bankruptcy reorganization, the employer receives protections against its financial commitments in the hope that it may once again become profitable.", "This protection could include not having to honor obligations concerning pensions and retiree health insurance.", "Its employees may therefore be at risk of not receiving some of their promised benefits. Unionized and nonunionized employees may be treated differently under the law because unionized workers have a legal contract governing their terms and conditions of employment.", "The costs to employers for the pension, health insurance, and other benefits promised to retired employees are known as legacy costs, and different costs are subject to different federal laws.", "Although employers are required to prefund their defined benefit pension trusts, the level of required funding may not be present as the employer enters bankruptcy.", "The Pension Benefit Guaranty Corporation (PBGC), a quasi-public agency, monitors the finances of pension plans. The PBGC becomes the trustee of and pays benefits to participants in terminated, underfunded single-employer pension plans. PBGC benefits are subject to a statutory maximum that may be less than the retiree was promised by his or her employer.", "The PBGC has been running deficits for several years, and the deficit for one of its two programs is at an all-time record high. PBGC funding comes from employer premiums set by Congress, the assets of the plans it takes over, and investment returns. There is no taxpayer funding.", "Some retirees receive health benefits from their former employer. Retiree health benefits, however, are not insured by any public agency, and employers are not required to prefund health benefits.", "However, health benefits (for active and retired employees) can be funded through a tax-preferred trust fund known as a Voluntary Employees' Beneficiary Association (VEBA).", "When an employer and union agree to form a VEBA, and it is approved by a bankruptcy court, the employer generally contributes a collectively bargained level of funding to the VEBA. Providing this contribution usually fulfills the employer's total responsibility for retiree health care.", "All subsequent retiree health benefit decisions are transferred to the trustees of the VEBA. (VEBAs often are created outside of bankruptcy and are not restricted to unionized work places. In addition, VEBAs may be funded by employers only, by employees only, or jointly by both employers and employees.)", "During bankruptcy proceedings for the General Motors Corporation (commonly known as Old GM or pre-bankruptcy GM), retiree health benefits were central and pensions, although underfunded, were not a major issue.", "Old GM's main union, the United Auto Workers (UAW), accepted stock in the General Motors Company (commonly known as New GM or post-bankruptcy GM) as a partial funding source for its retiree health care VEBA, which has covered retiree health benefits since 2010.", "The VEBA was intended to cover retiree health benefits for 80 years, but it is unclear how long its funding will last.", "Pensions were a central source of controversy during the Delphi Corporation's bankruptcy.", "Some (union and nonunion) employees had been promised a pension greater than the PBGC maximum. When the various Delphi pension plans were terminated by the PBGC, most unionized employees did not see their pensions fall because of supplemental pension coverage originally negotiated by Old GM and the UAW. The salaried Delphi workers, however, had no union, and some found themselves receiving lower pension benefits than had been promised by Delphi.", "Salaried workers formed a labor association, the Delphi Salaried Retirees Association (DSRA), with hopes of strengthening their position.", "The DSRA has been unsuccessful in its efforts to have its members' pensions increased, and a subsequent court case has not yet been settled.", "Both pension and retiree health benefits were central to the complicated and contentious negotiations during the bankruptcy of the Patriot Coal Corporation.", "The relevant union, the United Mine Workers of America (UMWA), is a multiemployer union in which the collectively bargained contracts cover the employees of many employers.", "In fact, some consider the potential insolvency of the coal employers' pension plan a threat to the overall solvency of PBGC's program on multiemployer pension plans.", "Because many Patriot retirees were employees of another employer, Peabody Energy, when they were actively working, the bankruptcy court ruled that Peabody, and not Patriot, was responsible for funding the VEBA created to cover health benefits." ], "parent_pair_index": [ -1, 0, 1, -1, -1, -1, 2, -1, -1, 1, -1, -1, -1, 1, -1, -1, 1, -1, -1, -1, 1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 5, 5, 5, 6, 6, 6, 6, 7, 7, 7, 7 ] }

{ "title": [ "", "Introduction", "What is Military Sexual Assault?", "A Framework for Congressional Oversight", "DOD Management and Accountability", "DOD Organization, Policy, and Planning", "SAPRO Structure, Functions and Roles", "Strategic Planning and Evaluation", "Assessment: DOD Metrics and Non-Metrics", "DOD Plan of Action for Male Sexual Assault", "Data Collection, Management, and Reporting", "Defense Sexual Assault Incident Database (DSAID)", "DOD Surveys and Focus Groups", "Workplace and Gender Relations Survey", "Service Academy Gender Relations Survey and Focus Groups", "Focus Groups on Sexual Assault Prevention and Response", "Survivor Experience Survey", "Military Investigation and Justice Experience Survey", "QuickCompass of Sexual Assault Prevention and Response-Related Responders", "Prevention", "Organizational Culture and Leadership", "Identifying and Mitigating Community Risk Factors for Assault", "Sexual Harassment and Sexism", "Stalking", "Hazing", "Alcohol Use", "Command Climate and Commander Accountability", "Education and Training", "Standardized Training Requirements and Target Audiences", "Core Elements of Training", "Evaluating Training Effectiveness", "Entry Screening", "Victim Protection, Advocacy and Support Services", "Victim Privacy and Safety", "Restricted vs. Unrestricted Reporting", "Expedited Transfers and Military Protective Orders", "Expedited Transfers", "Military Protective Order", "Victim Medical Care", "Helpline Support", "Legal Assistance and Victim Advocacy", "Victim Assistance Standards", "Enhancing SVC Training, Services, and Eligibility for Support", "Retaliation", "Definitions of Retaliation", "Investigative Authority for Retaliation", "Measuring the Extent of Retaliation", "Military Justice and Investigations", "Investigation", "Disposition of Cases", "Commander's Discretion", "Judicial Processes", "Judicial Proceedings Panel", "Defense Advisory Committee on Investigation, Prosecution, and Defense of Sexual Assault in the Armed Forces (DAC-IPAD)", "Congressional Outlook and Considerations", "Are Sexual Assault Rates Increasing or Decreasing?", "Are Prevention Activities Effective?", "Are Victim Support Services Satisfactory?", "Appendix. Abbreviations" ], "paragraphs": [ "", "The U.S. Constitution provides Congress with powers over the Armed Forces, including the power \"to make Rules for the Government and Regulation of the land and naval Forces.\" As such, Congress has oversight of Department of Defense (DOD) policies and programs. Congressional efforts to address military sexual assault intensified in 2004 in response to rising public concern about the rate and number of assaults and perceptions of an inadequate response by the military to support the victims and to hold perpetrators accountable. In February of 2004, the Senate Armed Services Committee Subcommittee on Personnel held a hearing on Policies and Programs for Preventing and Responding to Incidents of Sexual Assault in the Armed Services. In his opening statement, the ranking member, Senator E. Benjamin Nelson, stated,\nWe're greatly alarmed at reports of sexual assaults on our service women and the apparent failure of the military systems to respond appropriately to the needs of the victims. Women who choose to serve their Nation in military service should not have to fear sexual attacks by their fellow servicemembers. When they are victims of such an attack, they absolutely must have effective victim intervention services readily available to them, and they should not fear being punished for minor offenses when they report the attack, or being re-victimized through the investigative process.\nIn the same year, Congress enacted law requiring the Secretary of Defense to develop a comprehensive policy on the prevention of sexual assaults involving servicemembers and to begin annual reporting on statistics and metrics related to sex-related violence in the military. Since 2004, Congress has enacted over 100 provisions intended to address various aspects of the problem as part of the National Defense Authorization Act (NDAA).\nThe potential threat of sexual violence against military servicemembers has been part of the debates over whether women should be allowed to serve in the military and in certain combat roles, and whether they should be required to register for the selective service and be subject to a military draft. In these debates, a frequently cited concern has been the possibility that women could be captured, exposing them to potential sexual violence from enemy forces. However, the threat of sexual assault does not only come from enemy forces, nor is it only a threat for women in the military.\nIn the 1990s, several military sexual misconduct incidents (e.g., the Navy's 1991 Tailhook Conference, and the Army's Aberdeen Proving Ground scandal) garnered congressional attention. These events highlighted the internal threat of assault perpetrated by one servicemember on another. In 2003, a sexual assault scandal at the Air Force Academy again brought public attention to sexual assault in a training environment and called into question senior military leaders' efforts to establish an appropriate culture for prevention of and response to sexual assault. Shortly thereafter, allegations of sexual assaults by servicemembers on fellow servicemembers deployed to combat theaters in Iraq and Kuwait raised concerns that the prevalence of sexual violence in theater could have a negative effect on the morale and effectiveness of deployed units. More recently, statistics have shown that in absolute numbers, more men than women in the military report experiences with unwanted sexual contact. This has raised the profile of male sexual assault and DOD policies and programs to support male victims. Finally, the exposure of sexist comments and nonconsensual sharing of sexually explicit/intimate images among the Marines United social media group led many in Congress to question the impact of service culture on sexism and sexual violence.\nSexual violence is not a problem confined to the military. Actual prevalence in the civilian sector is difficult to estimate as many experts believe sexual assault is an underreported crime. Some national surveys suggest that up to 19.3% of women and 1.7% of men in the United States have been victims of sexual assault at some point in their lives. There is a continued national dialogue with regard to sexual violence at universities, and other government and private organizations. Congress also has shown an interest in addressing society-wide issues through broad legal reforms. Nevertheless, there are particular aspects of military service (e.g., the possibility of remote assignments, the command structure, and the unique justice system) that may require different policy solutions than those that might apply in the civilian workplace.\nSexual assault can have both deleterious physical and psychological effects on the victim. This is particularly true if the alleged victim and perpetrator are in the same unit. According to a psychologist specializing in military sexual assault,\n\"When you are raped by a stranger, you don't have to deal with that in day-to-day life. [In the military, the victim] deals with the rape and the impact on her community and also the ongoing influence of the offender on her life outside of that specific assault.\"\nWhen an assault occurs in or around the workplace it can negatively affect the working environment and organizational functioning. In the military context, when the ability of a unit to work together effectively is impaired, it can ultimately impact mission success. Survey data from 2016 indicates that among those servicemembers who experienced sexual assault in the previous year, 73% of the incidents occurred at a military location.", "Major criminal sexual violence offenses in the military are defined in in the Uniform Code of Military Justice (UCMJ), Chapter 47, Title 10 United States Code. Since 2006, Congress has made substantial changes to the UCMJ articles regarding these offenses. DOD policies further define sexual assault as intentional sexual contact characterized by the use of force, threats, intimidation, or abuse of authority or when the victim does not or cannot consent. While some of DOD's sexual violence policies and programs may apply to DOD civilians and military dependents, this report will focus primarily on sexual assaults involving uniformed servicemembers as alleged victims or perpetrators. This includes active component members, cadets and midshipmen, and Reserve Component members who are involved in an incident while performing active service or inactive duty training. Intimate partner and child sexual assaults involving military family members are typically handled by the DOD Family Advocacy Program.\nThe Department of Veterans Affairs handles health care needs for former servicemembers with trauma related to military sexual assault, often termed Military Sexual Trauma (MST), therefore veterans programs are beyond the scope of this report. Also not discussed in this report are policies and programs specific to the U.S. Coast Guard (while operating under the Department of Homeland Security), although much of the statute that applies to DOD servicemembers also applies to uniformed members of the Coast Guard and the Coast Guard Academy. Finally, this report does not address sexual assault at the Merchant Marine Academy, which falls under the Department of Transportation.\nBecause sexual harassment can be associated with community risk factors for sexual assault, congressional efforts to combat sexual harassment in the military form part of this analysis. However, within DOD the process for handling sexual harassment complaints is separate and distinct from sexual assault allegation processes. Sexual harassment is considered a form of sex discrimination and falls under DOD military equal opportunity policies. DOD's Office of Diversity Management and Equal Opportunity oversees these issues.", "Given the extensive legislative and policy reform in this arena, CRS offers this framework for analysis and oversight. This framework may help congressional staff understand the legislative and policy landscape, link proposed policy solutions with potential impact metrics, and identify possible gaps that remain unaddressed. Congressional oversight and action on military sexual assault can be organized into four main categories.\nDOD management and accountability.\nPrevention.\nVictim protection and support.\nMilitary justice and investigations.\nDOD management and accountability pertains to organization, monitoring, and evaluation of DOD's efforts in sexual assault prevention and response. Prevention efforts are aimed at \"reducing the number of sexual assaults involving members of the Armed Forces, whether members are the victim, alleged assailant, or both.\" Victim protection and support focuses on DOD's response once an alleged assault has occurred, including actions to protect and support the victim. Finally, m ilitary justice and investigations addresses holding perpetrators accountable through military investigative and judicial processes.", "Subject to the direction of the President, the Secretary of Defense has \"authority, direction, and control over the Department of Defense.\" This authority allows the Secretary to develop military personnel policies and programs. Congress, under its authority to regulate the armed forces, has taken considerable interest over the past 15 years in the effectiveness of DOD's sexual assault prevention and response initiatives, and in the disposition of military sexual assault investigations. Congress has raised questions about accountability and organization, which can generally be summarized as:\nIs DOD organized to manage and oversee sexual assault prevention and response programming effectively? Are appropriate policies and procedures in place and are they adequately communicated to the military departments? Do sufficient, rigorous, and objective data-collection processes and metrics exist to measure the extent of the problem and to evaluate DOD progress in addressing the issue?", "On February 5, 2004, following allegations of sexual assault from servicemembers deployed to Iraq and Kuwait, the Secretary of Defense directed the establishment of the Care for Victims of Sexual Assault Task Force. This Task Force's report was released in April 2004. At this time, military departments and services had primarily managed sexual assault regulations and programs. One of the main findings from this report was that definitions, policies, and processes for sexual assault prevention and reporting across services were inconsistent and incomplete. This led the Task Force to recommend a single defense-wide point of accountability.\nIn response to this recommendation, DOD established the Joint Task Force for Sexual Assault Prevention and Response in October 2004. This Joint Task Force took responsibility for developing a new DOD-wide sexual assault policy as directed by Congress in the FY2005 NDAA ( P.L. 108-375 §577). It delivered the new policy on January 1, 2005. At that same time, the Joint Task Force transitioned into the permanent structure that is now the Sexual Assault Prevention and Response Office (SAPRO) under the Office of the Secretary of Defense.\nThe FY2005 NDAA also included a provision that established the Defense Task Force on Sexual Assault in the Military Services (SAMS) that renamed, expanded the scope, and extended the timelines of the existing Task Force on Sexual Harassment and Violence at the Military Service Academies.", "The SAMS Task Force's December 2009 report made 30 recommendations for enhancing DOD SAPR programs and policies. In the area of SAPRO functions and structure, the task force noted the need for better coordination among stakeholders and improvement in staff experience levels. As such, the task force recommended\nrevising the SAPRO structure to reflect the expertise necessary to lead and oversee its primary missions of prevention, response, training, and accountability; appointing a SAPRO director at the general or flag officer level, active duty military personnel from each Service, and an experienced judge advocate; and establishing a Victim Advocate position whose responsibilities and authority include direct communication with victims.\nFollowing this report, Subtitle A of the FY2011 NDAA formalized the role and functions of the SAPR office and programs. Section 1611 of the act provided statutory requirements and roles for the inspector general, SAPRO staff, and the director. Operating under the oversight of an Advisory Working Group the statutory duties of the SAPRO Director are to\n(1) oversee implementation of the comprehensive policy for the Department of Defense sexual assault prevention and response program;\n(2) serve as the single point of authority, accountability, and oversight for the sexual assault prevention and response program; and\n(3) provide oversight to ensure that the military departments comply with the sexual assault prevention and response program.\nIn particular, this provision required DOD to assign at least one officer from each of the Services (Army, Navy, Marine Corps, and Air Force) to the SAPRO office, and required those assigned officers to be in the grade of O-4 (Lieutenant Commander or Major) or above. The law also required at least one of the four officers assigned to be in the grade of O-6 (Captain or Colonel) or above. The FY2012 NDAA further required that the SAPRO director be a general or flag officer (GFO) or equivalent civilian employee.", "The SAMS Task Force 2009 report also recommended that DOD create a comprehensive sexual assault prevention strategy to aid in standardization and coordination across the Services. Subsequent provisions in the FY2011 NDAA ( P.L. 111-383 ) required DOD to develop and implement a plan to evaluate sexual assault prevention and response programs and establish standards to assess progress on strategic goals.\nIn May 2013, DOD released its first Sexual Assault Prevention and Response (SAPR) strategic plan including five distinct lines of effort:\nPrevention: deliver consistent and effective methods and programs.\nInvestigation: achieve high competence in the investigation of sexual assault.\nAccountability: achieve high competence in holding offenders appropriately accountable.\nVictim Assistance and Advocacy: deliver consistent and effective victim support, response, and reporting options.\nAssessment: effectively standardize, measure, analyze, assess, and report program progress.\nDOD updated the strategic plan in January 2015 and again on December 1, 2016, for 2017-2021.", "In 2014, in collaboration with subject matter experts, researchers and policy-makers, DOD developed a series of measurable metrics and non-metrics to \"help illustrate and assess DOD progress in sexual assault prevention and response\" (see Table 1 ). Metrics are included in DOD's data gathering and reporting as discussed in the next section. DOD leaders and Congress may use metrics to support oversight and to gauge whether outcomes are being met. For example, metrics such as \"estimated prevalence versus reporting\" may help Congress to assess whether reforms to support and protect victims of sexual assault are increasing the percentage of individuals willing to make reports and initiate investigative processes.\nNon-metrics differ from metrics in that they are intended to be descriptive in nature only. These items address the military justice process. Any effort by military commanders to direct aspects or outcomes of the judicial process may constitute unlawful command influence in the military justice system. For example, if a military commander were observed trying to reduce the \"time interval from report of sexual assault to nonjudicial punishment outcome\" (non-metric 4), it could be perceived as pressuring investigators to forgo a thorough investigation in the interest of speed. These non-metrics may still be useful for congressional oversight, as they can indicate potential issues or trends within the military justice system.", "In 2015, in response to growing concerns about the prevalence and low reporting rates for male victims of sexual assault in the military, Congress, in the FY2016 NDAA, also required DOD to develop a plan to prevent and respond to cases of male sexual assault. DOD's plan, released in August 2016, outlined four key objectives:\nDevelop a unified communications plan tailored to men across the DOD.\nImprove servicemember understanding of sexual assault against men.\nEnsure existing support services meet the needs of males who experience sexual assault.\nDevelop metrics to assess prevention and response efforts pertaining to males who experience sexual assault.\nIn addition, DOD has put together a working group to oversee progress toward these objectives and intends to reevaluate outreach, response, and prevention efforts within three years of completion of the plan's objectives.", "The availability and quality of sexual assault data are fundamental elements of accountability. DOD has provided annual reports to Congress related to sexual assault in the military since calendar year 2004—the statutory requirement for reporting was added in FY2011. In 2009, the SAMS Task Force report noted a lack of precision and reliability in annually reported data. In addition, the task force highlighted inconsistencies in terminology use among the services that could potentially affect data integration. As a result of these findings, the task force recommended several improvements to DOD's annual reporting processes. Congress has amended and expanded the statutory requirements for various elements of this report over the past decade in response to the 2009 Task Force recommendations and other information needs. For example, the FY2013 NDAA required reporting of additional case synopsis details (i.e., alcohol involvement, existence of moral waivers for offenders, etc.) and FY2015 NDAA required an analysis of the disposition of sexual assault offenses.\nDOD, Congress and other stakeholders use information from this annual report to analyze trends, evaluate SAPR program effectiveness, and develop evidence-based approaches to improve prevention and response. However, gathering data and measuring sexual assault prevalence and trends is challenging for a number of reasons. For one, sexual assault is widely considered to be the most underreported type of violent crime in the United States. According to the U.S. Department of Justice (DOJ), Bureau of Justice Statistics' National Criminal Victimization Survey (NCVS), an estimated 34% of rapes and other sexual assaults were reported to police in 2014. This compares to robberies, of which roughly 61% were reported to the police, or domestic violence incidents, of which roughly 56% were reported. There are various reasons for underreporting, including personal embarrassment or shame, lack of trust in the criminal justice system, or fear of reprisals or stigmatization.\nSome researchers have cautioned against comparisons of military sexual assault statistics with civilian data, noting that, \"rates of sexual assault are likely to be sensitive to the age distribution in the population, the gender balance, education levels, the proportions that are married, duty hours, sleeping accommodations, alcohol availability, and many other sexual assault risk factors that differ between the active-duty population and various candidate comparison groups.\" In addition, data collection, comparisons, and analysis of trends are difficult when different organizations use inconsistent terminology or metrics. For example, until 2013, the Federal Bureau of Investigation (FBI) defined forcible rape as \"the carnal knowledge of a female forcibly against her will.\" This definition excluded male victims and other sexual offenses that are criminal in most jurisdictions. In 2016, the Government Accountability Office (GAO) released a report that highlighted the difficulties and lack of standardization across federal agencies in defining and collecting data on sexual assault. The review included four federal agencies—DOD, Department of Education, Department of Health and Human Services, and Department of Justice. According to the GAO report, these agencies,\n[M]anage at least 10 efforts to collect data on sexual violence, which differ in target population, terminology, measurements, and methodology. […]These data collection efforts use 23 different terms to describe sexual violence.\nDOD definitions related to sexual assault have varied over time as has the methodology for DOD's data collection. To address the issue of consistency in definitions, Section 577 of the FY2005 NDAA required DOD to develop a uniform definition of sexual assault that applies to all the Armed Forces. Changes to the UCMJ in 2012 also affected categorization of incidents, creating a challenge for comparisons of incident indicators over time.\nDOD uses various tools to collect, record, and manage sexual assault data. These tools include surveys, focus groups, and the Defense Sexual Assault Incident Database (DSAID) (see below). While some surveys are used to estimate prevalence of reported and unreported incidence of sexual violence and harassment, DSAID is used for recording actual reported incidents. As discussed above, sexual violence is often under-reported, so there are likely to be disparities between prevalence estimates and DSAID incident data.", "Congressional actions in 2004 and subsequent legislation required DOD to enhance the collection and management of reported sexual assault incident data. In particular, Section 583 of the FY2007 NDAA required the Secretary of Defense to\n[I]mplement a centralized, case-level database for the collection and maintenance of information regarding sexual assaults involving a member of the Armed Forces; including, nature of the assault, the victim, the offender, and the outcome of legal proceedings in connection with the assault.\nThe provision required that this database be used to create the sexual assault-related congressional reports mandated in previous and subsequent NDAAs. The resulting database, known as the Defense Sexual Assault Incident Database (DSAID) has been in place since 2012 and was fully implemented in October 2013. It is the primary mechanism for tracking reported incidents, the associated circumstances, and the disposition of cases. DSAID has three primary functions: (1) to serve as a case management system for the maintenance of data on sexual assault cases and to track support for victims in each case; (2) to facilitate program administration and management for SAPR programs; and (3) to develop congressional reports, respond to ad hoc queries, and assist in trend analysis.\nThe Defense Assault Incident Database Form is used to collect sexual assault incident data. This form is typically completed by a SAPR responder. The victim may choose to submit a restricted report, in which case no personally identifiable information for the victim or subject is captured on the report. If a victim selects to submit an unrestricted report, the form will include personally identifiable information, but other document privacy controls still apply. See Table 7 for selected aggregate incident data from FY2013 to FY2017.\nIn 2016 the GAO conducted a separate review of DSAID to examine the extent to which the database has met the mandated requirements. According to a 2017 GAO report, DOD has plans to spend $8.5 million over fiscal years 2017 and 2018 to improve DSAID, for a total expenditure of approximately $31.5 million on implementing and maintaining the database since its initial development.", "DOD uses a variety of surveys and focus groups to collect data on the prevalence of and attitudes toward sexual violence and to provide feedback from servicemembers on the effectiveness of DOD prevention and response programs. These data are used for program assessment metrics and non-metrics. The Department has recently introduced additional surveys specifically for victims of sexual assault to better understand their experiences with sexual assault support programs and the military investigative and judicial processes.", "The NDAA for FY1997 ( P.L. 104-201 ) first required DOD to include gender in mandated servicemember surveys on issues of harassment and discrimination in the military. In the FY2013 NDAA, Congress added assault to the survey requirements and mandated surveys of active duty and reserve component servicemembers every two years in alternating years beginning in 2014. DOD's Office of People Analytics (OPA) currently administers the Workplace and Gender Relations Survey (WGR) to measure the past-year prevalence of sexual assault, sexual harassment and gender discrimination. This survey is administered to random samples of active duty and reserve component members and used to assess the prevalence of self-reported \"gender-based harassment, assault, and discrimination\".\nThere are some limitations to this survey. As noted by the Adult Sexual Crimes Panel in its 2014 report,\n[…] this survey is not meant to—and does not—accurately reflect the number of sexual assault incidents that occur in a given year, nor can it be used to extrapolate crime victimization data. For example, the definition of unwanted sexual contact used in the survey covers a wide range of conduct that may not rise to the level of a crime.\nIn particular, the survey measures \"unwanted sexual conduct\" and does not use the same definitions of sexual assault as those in the UCMJ. The reason for this approach is that it is assumed that the average servicemember completing the survey may not be familiar with the more technical UCMJ terms, and thus might not be able to accurately categorize the offense that they experienced.\nIn 2014, a congressionally mandated panel, the Response Systems to Adult Sexual Assault Crimes Panel, recommended that DOD update its sexual assault survey language and metrics to align better with the UCMJ Article 120 definitions of rape and sexual assault. In response, DOD contracted with the RAND Corporation to review the survey methodology for the WGR and to conduct an independent assessment of sexual assault, sexual harassment, and gender discrimination in the military. RAND fielded two surveys; the first used the same questions as in the previous WGR survey. The second, the RAND Military Workplace Survey (RMWS) used a newly constructed crime victimization measure with more explicitly and anatomically defined terms. In particular, the new definitions removed the terms sex or sexual when describing an act, as the act does not need to be associated with sexual gratification to qualify as a crime under the UCMJ, but instead might be designed to humiliate or debase the person that is assaulted. RAND found that under the new survey methodology, the estimated number of self-reported assaults was higher than in previous surveys particularly in those classified as penetrative s exual assaults . The survey also pointed to a notably large difference from previous surveys in the number of assaults men reported. One of the clear findings from this survey was that men were more likely to describe a sexual assault as \"hazing.\"\nTo be measured as a sexual assault in the survey data, three requirements must be met. The member must indicate experiencing the following UCMJ-based actions by the perpetrator:\nAt least one sexual assault behavior (i.e., rape, sexual assault, aggravated sexual contact, abusive sexual contact, forcible sodomy, or attempts to commit these offenses) At least one intent behaviors (i.e., sexual gratification, abuse, or humiliation), and At least one coercive mechanism (e.g., threats, use of force, inability to consent).\nSelected results from the FY2016 survey by service are shown in Figure 2 . In 2016, estimated prevalence rates across the active-duty population in DOD were 4.3% for women and 0.6% for men. These estimated prevalence rates were slightly lower than reported prevalence rates in 2014 (4.9% and 0.9% respectively).\nTo address findings from related civilian studies that showed higher rates of sexual assault in populations that identify as lesbian, gay, bisexual, and transgender (LGBT), DOD incorporated additional questions on sexual orientation in the 2016 WGRA survey. DOD's findings were consistent with civilian literature, indicating that LGBT members are statistically more likely to experience sexual assault than members who do not identify as LGBT (see Table 3 ).", "Section 532 of the FY2007 NDAA, required the military departments to conduct annual assessments of the effectiveness of service academy policies, training, and procedures with respect to sexual harassment and sexual violence involving academy personnel. This law requires surveys be conducted in odd-numbered years. The military departments conduct focus groups at the academies in even-numbered years to supplement the annual assessment requirements.", "Starting in 2015, DOD began including focus groups for active duty servicemembers in its assessment cycle. Like the service academy focus groups, the servicemember focus groups are conducted in alternate years to the WGRA survey to \"provide deeper insights into the dynamics behind survey results and help better understand potential emerging trends.\" In the 2015 focus groups, 459 active duty members across the four services participated.", "The Survivor Experience Survey (SES) began in 2014 in response to a Secretary of Defense directive. DMDC's Survey Design, Analysis and Operations Branch, designed this survey in coordination with SAPRO experts. The survey gathers information related to a sexual assault survivor's awareness of, and experience with, DOD's reporting process and support services, including\nsexual assault response coordinators (SARCs), victims' advocates (VAs), and medical and mental health services.\nThis survey was the first survey of survivors to be conducted across the active and reserve components. To maintain anonymity, the SES was distributed primarily through the SARCs, VAs, and legal counsels to all sexual assault survivors who had made an unrestricted or restricted report of sexual assault at least 30 days prior. The survey continues to be administered on a rolling basis.", "The Military Investigation and Justice Survey (MIJES) is an anonymous survey first administered by DOD between August 31 and December 4, 2015. The purpose of this survey is to \"provide the sexual assault victim/survivor the opportunity to assess and provide feedback on their experiences with SAPR victim assistance, the military health system, the military justice process, and other areas of support.\" The MIJES is focused only on those military servicemembers who made a formal (unrestricted) report of sexual assault and had the case closed during a specified time period. The survey excludes those victims whose alleged assailant was not a military member.", "The QuickCompass of Sexual Assault Prevention and Response-Related Responders (QSAPR) survey is an evaluation tool administered by DMDC to provide insights on the effectiveness of DOD's sexual assault responder programs. The 2015 QSAPR was administered to all certified Sexual Assault Response Coordinators (SARCs) and Victim Advocates (VA). This is the third survey to be administered to the responder population with previous surveys in 2009 and 2012. The survey is intended to capture the experiences and perspectives of sexual assault responders. DOD uses the results of this survey to identify additional resource needs for responder programs, assess the degree of SAPR policy implementation across the services, and complement other surveys in understanding issues that \"may discourage reporting or negatively affect perceptions of the SAPR program.\"", "DOD uses the U.S. Centers for Disease Control and Prevention (CDC) terminology to define prevention and prevention strategies as they apply to sexual violence. This section of the report mainly discusses primary prevention of sexual assault, characterized by the CDC as,\npopulation-based and/or environmental and system-level strategies, policies, and actions that prevent sexual violence from initially occurring. Such prevention efforts work to modify and/or entirely eliminate the events, conditions, situations, or exposure to influences (risk factors) that result in the initiation of sexual violence and associated injuries, disabilities, and deaths.\nThe CDC has identified four types of risk factors that are correlated with higher incidence of sexual assault, (1) individual risk factors (e.g., general aggressiveness and acceptance of violence, alcohol/drug use); (2) relationship risk factors (e.g., association with sexually aggressive, hypermasculine , and delinquent peers); (3) community risk factors (e.g., general tolerance of sexual violence, lack of institutional support); and (4) societal risk factors (e.g., weak gender-equity laws/policies). A full list of these risk factors is displayed in the Appendix in Table A-2 .\nMilitary leaders have repeatedly stated a \"zero tolerance\" philosophy toward military sexual assault. Nevertheless, DOD's prevention strategy acknowledges that the potential for assault exists,\n\"Individuals within the DoD come from a wide variety of backgrounds and their past experiences shape their attitudes and behavior in response to life events. Individuals may express themselves in different ways, and for some, violence may be a choice.\"\nDOD's prevention actions in this regard have been focused on reducing risk factors for sexual assault. Questions of congressional concern include:\nAre military leaders adequately trained for, committed to, and held accountable for developing an organizational culture that reduces risk factors for sexual assault? Are sexual assault prevention training programs in the military timely, effective, and appropriate for the target audiences? Does DOD have the appropriate authorities and are they taking adequate actions to screen out or deter potential perpetrators?", "Organizational culture is commonly defined as, \"a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.\" The military's organizational culture varies both across the services (Army, Navy, Marine Corps, and Air Force) and within the services by occupational specialty (e.g., infantry, aviation, logistics). At the unit level, the organizational culture depends to a large degree on the \"command climate\" established by unit leadership. As such, while many of the policy changes to improve organizational culture are often initiated at a DOD-wide level, implementation of change is typically the responsibility of commanders at the unit level. These commanders may face unique community risk factors for sexual violence. For example, as stated by an Army representative:\nPrimary prevention is looking at what are the risks. And that differs based on the installation, unit makeup, the gender makeup, what types of units they are, and other factors. We need to understand […] the things that contribute to an environment for sexual harassment and sexual assault, […] and help those sexual assault response coordinators and victim advocates work with their commanders to understand what is the environment there, and then what they can do specifically to address those issues, to reduce incidence of sexual harassment and sexual assault.\"", "Among active duty servicemembers who reported experiencing a sexual assault in 2016, 73% of all men and women reported that assault occurred at a military location, while 12% of women and 18% of men indicated that the assault occurred \"while at an official military function.\" Research suggests that workplace culture is important in sexual assault prevention. While not all military assaults happen in the workplace, attitudes that are fostered in the workplace can influence servicemembers' off-duty actions.\nThe connection between actions and circumstances leading to sexual violence are sometimes called the continuum of harm. DOD defines the continuum of harm as \"inappropriate actions, such as sexist jokes, hazing, cyber bullying, that are used before or after the assault and or support an environment which tolerates these actions.\" By using existing data collected through the WGRA survey to identify the circumstances and leading indicators of sexual assaults, military commanders can take action to reduce community risk factors along this continuum and create a culture of early intervention (for selected indicators see Figure 3 ).", "Studies have found strong positive correlations between the incidence of sexual assault within units and an environment permissive to sexism and sexual harassment. For example, a 2003 military study found that women reporting sexually hostile work environments had approximately six-fold greater odds of rape. The same study found that officers allowing or initiating sexually demeaning comments or gestures toward female soldiers was associated with a three-to-four-fold increase in likelihood of rape. In 2016, DOD reported that 8.1% of active duty members indicated experiencing a sexually hostile work environment in 2016, with women experiencing a sexually hostile work environment at over three times the rate as men (see Figure 4 ).\nThe prevalence of sexual harassment in the military is estimated through survey responses and data on formal complaints. Results from the WGR surveys suggest that servicemembers experience a higher rate of sexual harassment than is actually reported. According to SAPRO data, in FY2016, there were a total of 601 formal complaints of sexual harassment across the active and reserve component; however, estimated prevalence rates would indicate that approximately 8% (over 100,000) servicemembers experienced sexual harassment. Previous reports suggest that a majority of individuals choose not to submit formal complaints with the belief that the incident \"was not sufficiently serious to report or that the incident would not be taken seriously if reported.\"\nIn 2010, in response to GAO questions about command climate and sexual harassment, a majority of servicemembers (75%) believed that their immediate supervisor made \"honest and reasonable\" efforts to stop sexual harassment. However, GAO also reported that 41% of servicemembers indicated that people in their workgroup would be able to get away with sexual harassment to some extent, even if it were reported. In addition 16.6% of women and 24% of males surveyed did not believe, or were unsure of whether their direct supervisor created a climate that discourages sexual harassment from occurring.\nCongress and DOD have taken actions to improve monitoring of sexual harassment. Section 579 of FY2013 NDAA ( P.L. 112-239 ) required the Secretary of Defense to develop a comprehensive policy to prevent and respond to sexual harassment in the armed forces and to develop a plan to collect information and data regarding substantiated incidents of sexual harassment involving members of the armed forces. Congress has also sought to encourage commanders' visibility of unacceptable behavior at an early stage by requiring commanders to include documentation of substantiated sexual harassment incidents in a servicemember's performance evaluation.", "DOD survey results from FY2014 indicated that approximately 9% of both male and female servicemembers who had experienced a sexual assault also experienced stalking prior to assault. Stalking or \"grooming\" behaviors are often associated with sexual harassment and sexual violence. Stalking is defined as\na pattern of repeated and unwanted attention, harassment, contact, or any other course of conduct directed at a specific person that would cause a reasonable person to feel fear.\nOutside of the military, both federal and state laws prohibit stalking. Those who violate federal stalking laws may be subject to certain criminal penalties. States' civil and criminal stalking laws vary. Stalking activities often include repeated nonconsensual communication (e.g., texts, phone calls), frequently following an individual, or making threats against someone or that person's family or friends. More recently, social media and technology tools have been used for stalking activities. Some examples of these are video-voyeurism—installing video cameras to give the stalker access to someone's private activities—posting threatening or private information about someone in public forums, or using spyware or GPS tracking systems to monitor someone without consent.\nIn the FY2006 NDAA ( P.L. 109-163 ), Congress added stalking to the punitive articles in the Uniform Code of Military Justice (UCMJ) to \"enhance the ability of the Department of Defense to prosecute offenses relating to sexual assault.\" A servicemember guilty of stalking is one,\n(1) who wrongfully engages in a course of conduct directed at a specific person that would cause a reasonable person to fear death or bodily harm, including sexual assault, to himself or herself or a member of his or her immediate family; (2) who has knowledge, or should have knowledge, that the specific person will be placed in reasonable fear of death or bodily harm, including sexual assault, to himself or herself or a member of his or her immediate family; and (3) whose acts induce reasonable fear in the specific person of death or bodily harm, including sexual assault, to himself or herself or to a member of his or her immediate family.", "Survey data also point to an association between hazing and sexual assault. For example, in recent surveys, 34.2% of male victims and 5.7% of female described a sexual assault they experienced as \"hazing.\" In 2015, DOD defined hazing as\nany conduct through which a military member or members, or a Department of Defense civilian employee or employees, without a proper military or other governmental purpose but with a nexus to military service or Department of Defense civilian employment, physically or psychologically injure or create a risk of physical or psychological injury to one or more military members, Department of Defense civilians, or any other persons for the purpose of: initiation into, admission into, affiliation with, change in status or position within, or as a condition for continued membership in any military or Department of Defense civilian organization.\nHazing is prohibited by DOD policy and by law. Hazing has been associated with various military initiation rituals or ceremonies, for example the awarding of \"blood wings\" for completion of the Army's Air Assault School or elements of Navy's traditional \"crossing the line\" ceremony. While some argue that these are relatively harmless and fun traditions that help to build unit camaraderie, others argue that the rituals can quickly devolve into situations in which individuals may sustain physical and psychological injuries.\nA 2015 GAO report on male servicemember sexual assault found that in a group of 122 surveyed, 20% had heard of initiation-type activities that could be construed as sexual assault, and six of the respondents were able to provide first-hand accounts. Moreover, the GAO noted that two of the victim advocates they had interviewed at different installations believed that some commanders chose not to address hazing-type incidents that could have been sexual assault.\nRecently, Congress has taken measures to address hazing in the military. A provision in the FY2013 NDAA required service secretaries to report to the Armed Services Committees on hazing in their respective services to include any recommended changes to the UCMJ. The Senate report to accompany the bill noted,\nThe committee believes that preventing and responding to incidents of hazing is a leadership issue and that the service secretaries, assisted by their service chiefs, should be looked to for policies and procedures that will appropriately respond to hazing incidents.\nThe FY2015 NDAA included a provision requiring a GAO report on hazing in the armed services. In February 2016, the GAO released its report, noting that although DOD and the Coast Guard have policies in place to address hazing, there is a lack of regular oversight and monitoring of policy implementation. To address some of these shortfalls, Congress included a provision in the FY2017 NDAA that required DOD to establish a hazing database, improve training, and submit annual reports on hazing to the Armed Services Committees.", "The CDC indicates alcohol use is an individual risk factor for potential perpetrators and is correlated with risk of victimization. For example, one study found that those who consume more than five drinks in one episode on a regular basis are at higher risk for falling victim to assault and aggressive behavior. It is important to note that alcohol use raises the risk of an assault occurring, but is not considered a defense for perpetrators of sexual assault under the UCMJ. Consumption of alcohol can impair an individual's ability to consent to sexual activities and can impair witness and bystander judgement in recognizing nonconsensual activities. In some instances alcohol may also be used as a weapon by sexual predators to reduce a victim's resistance or to fully incapacitate a victim.\nData suggest that military servicemembers might be more prone to binge drinking than civilian counterparts, putting this demographic at higher risk. For example, survey data from 2008 found that 26% of active duty personnel aged 18 to 25 reported heavy alcohol use compared with 16% of civilians in the same age cohort. In 2014, nearly half of all military women and one-fourth of all military men who reported experiencing a sexual assault indicated that alcohol consumption (by the perpetrator, victim, or both) was involved in the incident. In addition, military service-reported sexual assault case synopses and assessments from FY2015 indicate that across DOD, alcohol use was associated with 43% of reported incidents of sexual assault.\nDOD and the services encourage commanders to address alcohol use as part of their prevention strategies. For example the Navy's Sexual Assault Prevention and Response Commander's Guide suggests setting the example for responsible alcohol consumption, deglamorizing alcohol use, and developing liberty policies and strategies that limit opportunities for servicemembers to abuse alcohol. Military commanders are also encouraged to create an environment where bystanders can recognize risky situations and are empowered to intervene. The Director of SAPRO described this type of intervention in a 2009 hearing before the House Armed Services Committee:\nSo what we are trying to do is to teach young people if they see predator-type behavior to intervene. Because we do know there are predators that will use alcohol as a weapon to reduce a woman's defenses in order in order to complete a sexual assault. So one of the things we were trying to do is to make young people aware if somebody is mixing really strong drinks for a young girl, stop it, intervene. Or if they walk out together and it just doesn't look like a good idea, they should take care of each other and maybe say we need to go in this direction. Let's not go home with him tonight or walk out with him tonight.\nOther interventions by commanders include reducing the hours of alcohol sales on military installations, increasing prices, or limiting purchase quantities. Some commands have instituted other policies such as limiting the amount of alcohol that individuals can have in the barracks or banning alcohol use for deployed units in certain areas. The Army and Air Force have also reported efforts to fund additional research on the role of alcohol use in sexual assault cases and on potential interventions to reduce alcohol abuse.", "Congress has taken some actions to hold military leadership accountable for their command climate. Section 572 of the NDAA for FY2013 required the commander of each military command to conduct a climate assessment for the purposes of preventing and responding to sexual assaults within 120 days of assuming command and at least annually thereafter. DOD uses the Defense Equal Opportunity Climate Survey (DEOCS) as a survey tool to measure factors associated with sexual harassment and sexual assault prevention and response, as well as other factors affecting organizational effectiveness and equal opportunity. The DEOCS may be administered to uniformed personnel and civilian employees of any DOD agency and is anonymous. The DEOCS is used at the unit level to establish a baseline assessment of the command climate. Subsequent surveys track progress relative to the baseline.\nThe FY2014 NDAA imposed additional requirements on the command climate assessment by requiring the following:\nDissemination of assessment results to the next higher level in the chain of command; Inclusion of evidence of compliance with command climate assessment in commanders' performance evaluations; and Departmental tracking of compliance with required assessments.\nAnother provision in the FY2014 NDAA expressed a sense of Congress that\n(1) commanding officers in the Armed Forces are responsible for establishing a command climate in which sexual assault allegations are properly managed and fairly evaluated and in which a victim can report criminal activity, including sexual assault, without fear of retaliation, including ostracism and group pressure from other members of the command;\n(2) the failure of commanding officers to maintain such a command climate is an appropriate basis for relief from their command positions; and\n(3) senior officers should evaluate subordinate commanding officers on their performance in establishing a command climate as described in paragraph (1) during the regular periodic counseling and performance appraisal process prescribed by the Armed Force concerned for inclusion in the systems of records maintained and used for assignment and promotion selection boards.", "Sexual assault education and training are key components of DOD's prevention activities. According to SAPRO, education and training efforts are \"designed to improve knowledge, impart a skill, and/or influence attitudes and behaviors of a target population.\" Oversight questions regarding military sexual assault training include the following:\nIs it tailored to the roles and responsibilities of the audience (commanding officers, first responders, new recruits, etc.)? Does the delivery and content meet the same standards across military departments? Is it designed based on best practices for effective training?", "The 2009 report of the congressionally mandated Defense Task Force on Sexual Assault in the Military Services (SAMS) noted deficiencies in the curricula, design, and leadership involvement in SAPR training. The task force recommended tailoring training courses to better address the training needs of new recruits, responders, leadership, and peers. Subsequent congressional actions and DOD policy changes have addressed many of the task force's concerns.\nIn Section 585 of the FY2012 NDAA, Congress required DOD to develop sexual assault prevention training curricula for specific audiences and new modules for inclusion in each level of professional military education (PME) to better tailor the training for \"new responsibilities and leadership requirements\" as members are promoted. This provision also required that DOD consult experts in the development of the curricula and that training be consistently implemented across military departments. In fulfillment of the FY2012 NDAA requirements, DOD developed tailored SAPR training core competencies and learning objectives for specific audiences and coupled these with recommended adult learning strategies.\nIn the FY2013 NDAA, Congress enacted additional training requirements for new or prospective commanders at all levels of command and for new active and reserve component recruits during initial entry training.\nFurther congressional action in the following year expanded certain sexual assault prevention training requirements to service academy cadets and midshipmen within 14 days after initial arrival and annually thereafter. In addition, Section 540 of the FY2016 NDAA required regular SAPR training for Reserve Officers' Training Corps (ROTC) instructors and administrators.\nCommanders are responsible for ensuring that training is complete in accordance with all requirements. The 2009 report of the congressionally mandated Defense Task Force on Sexual Assault in the Military Services found that many servicemembers felt that leadership involvement in training is important both to reinforce the commander's zero tolerance stance and to clear up any misconceptions with regard to reporting processes and outcomes. In addition, the services have processes in place to monitor and report on the status of completing mandated SAPR training.", "Section 1733 of the FY2014 NDAA ( P.L. 113-66 ) required DOD to review and report on the adequacy of SAPR training and education provided to members of the Armed Forces. This provision also required the department to identify \"common core elements\" to be included in training or education programs. Current DOD policy requires all secretaries of the military departments and the Chief of the National Guard Bureau to submit a copy of their respective SAPR training elements through SAPRO to ensure consistency and compliance with standards.\nFor new commanders, statutory training requirements related to prevention include\n(1) Fostering a command climate that does not tolerate sexual assault.\n(2) Fostering a command climate in which persons assigned to the command are encouraged to intervene to prevent potential incidents of sexual assault.\n(3) Fostering a command climate that encourages victims of sexual assault to report any incident of sexual assault.\n(4) Understanding the needs of, and the resources available to, the victim after an incident of sexual assault.\n(5) Use of military criminal investigative organizations for the investigation of alleged incidents of sexual assault.\n(6) Available disciplinary options, including court-martial, non-judicial punishment, administrative action, and deferral of discipline for collateral misconduct, as appropriate.\nDOD incorporated specialized leadership sexual assault prevention training for all military services and components as part of its 2015 strategic plan. Other selected elements included in annual training, new accession training, and professional military education, and, are below:\nDefinitions of sexual assault and sexual harassment. Tips on how to recognize sexual assault. Strategies for bystander intervention. Penalties for offenders. Rape myths (see box below). Definitions of reprisal. Available resources for those who have been assaulted. Information on the impact of sexual assault on victims, units, and operational readiness.\nPre-deployment sexual assault prevention training also includes instruction on the local history, culture, and religious practices of foreign countries and coalition partners that may be encountered on deployment.", "There is very little literature that evaluates the quality or effectiveness of military sexual assault training programs. A 2015 analysis of Air Force training programs found that military training has adopted many of the generally accepted best practices (see \"Principles of Effective Prevention Programs\" box below), particularly in terms of tailoring the message to the Air Force cultural context and clearly communicating relevant information. The authors also noted that the Air Force improved the program between 2005 and 2014. The study, however, also found that a lack of program evaluation processes limited the ability to judge the effectiveness of training programs and modifications to those programs.", "Some academic literature suggests that those with a history of coerciveness or assault are at high risk of committing future assaults. Although few studies have been done in the military context, a study of Navy recruits based on survey data found that men who reported behavior that met the criteria for a completed sexual assault prior to their military service were over ten times more likely to commit or attempt to commit sexual assault in their first year of service than men who did not commit sexual assault prior to joining the military. DOD acknowledges there may be some servicemembers that may be at risk of \"sexually coercive behavior.\" One of the goals of training is to help those individuals who may have coercive tendencies to identify appropriate behavior, recognize consequences of their actions, and dissuade them from committing sexual violence. For a smaller subset of individuals, training may not be sufficient to bring about behavioral change, and other approaches may be necessary to remove potential perpetrators from the applicant pool.\nSection 504 of Title 10 United States Code which has been in effect since 1968, prohibits any person who is \"who is insane, intoxicated, or a deserter from an armed force, or who has been convicted of a felony,\" from enlisting in any armed force. However, the statute authorizes the Secretary of Defense to authorize exceptions in certain meritorious cases. This exercise of authority has historically been referred to as a moral waiver but may also be referred to as a conduct or character waiver .\nAs military end-strength was increased to respond to conflicts in Iraq and Afghanistan, the number of moral waivers authorized for new recruits also grew—particularly in the Army and Marine Corps. According to data provided by DOD in response to a FOIA request, approximately 18% (127,524) of new enlistees were granted a moral waiver between 2003 and 2007. Over half of these waivers were for traffic or drug offenses, while serious non-traffic misdemeanors (e.g., assault and petty larceny) accounted for 35%, and those with felony convictions accounted for approximately 3% of the waivers across all military services. These statistics raised concerns that, by enlisting those with a history of criminal activity, the military was unnecessarily putting the safety of other servicemembers at risk. Nevertheless, a 2009 report by the Defense Task Force on Sexual Assault in the Military Services found \"no evidence of significantly increased disciplinary problems because of the use of waivers.\"\nIn 2013, Congress enacted a provision in the FY2013 NDAA that amended 10 U.S.C. §504 to prohibit the Secretary of Defense from issuing a moral waiver for commissioning or enlistment in the armed forces of any individual who had been convicted of a felony offense of rape, sexual abuse, sexual assault, forcible sodomy, incest, or any other sexual offense. In the following year's NDAA, Congress enacted a new statute (10 U.S.C. §657) to prohibit the commissioning or enlistment of individuals who have been convicted of felony offenses of rape or sexual assault, forcible sodomy, incest, or of an attempt to commit these offenses.", "A third area of congressional focus is the provision of protection, advocacy and support services for victims of sexual assault— those currently serving and those who have been discharged or retired from military service. Although this analysis does not include congressional actions with relation to veteran services for victims of military sexual assault, it does include provisions associated with military discharges and the correction of discharge paperwork. While this section focuses on DOD services to victims of sexual assault, servicemembers may also be eligible for Department of Justice-funded programs in their respective states of residence.\nCongressional actions to protect and support victims of sexual assault fall under four main categories.\nEnsuring victim privacy and safety; Ensuring accessible and adequate medical and mental health services; Developing legal assistance programs for victims; and Protecting victims from retaliation or other adverse actions.", "The 2004 DOD task force found that military victims of sexual assault were often reluctant to report the incident. One of the main reasons cited was a perceived lack of confidentiality. Victims also cited concerns about the impartiality of the command's response and the potential for retaliatory actions. Following this review, DOD implemented a number of policies and strategies to help improve confidentiality of reporting and to provide victims with a safe environment for seeking care and legal assistance. At the same time, Congress initiated a series of legislative requirements to strengthen victim support and protection.", "In 2005, DOD instituted a restricted reporting option for sexual assault victims. This is intended to help victims receive needed support services while maintaining a certain level of privacy. When a victim chooses to make a restricted report, he or she discloses the incident to specified officials and may then gain confidential access to medical health, mental health, and victim advocacy services. Incident data is then reported by the official to SAPRO for inclusion in DOD sexual assault statistics. However, the individual's commander and law enforcement agents are not notified, nor is an official investigation initiated.\nEither initially or after making a restricted report, victims may choose to make an unrestricted report of a sexual assault incident. When an unrestricted report is made, the servicemember's commanding officer is notified and a Military Criminal Investigative Office begins a formal investigation. Processes following a restricted or unrestricted report are shown in Figure 5 .\nDOD has deemed restricted reporting \"critical\" to the SAPR program. In addition, the availability of a restricted reporting option has generally garnered positive feedback from victims, health practitioners, and advocates. As stated by a rape victim advocate in a 2009 hearing of the House Armed Services Committee on Victim Support and Advocacy,\nYou heard earlier folks were talking about an increase in a number of reports, whether restricted or unrestricted is a good thing. […]We think that is a good thing. When those numbers are going up, those are fundamentally a positive move. Because it means that, number one, those folks are getting services. Number two, it means that there is an atmosphere and environment in which people believe that they can come forward, that they are safe in doing so. And so if restricted reporting enhances that, we are absolutely all for it.\nSome of the challenges that DOD has faced with protecting the victim's right to pursue the restricted reporting option include state mandatory reporting laws and other jurisdictional challenges. The FY2016 NDAA included a provision (Section 536) preempting state laws that require an individual who is a victim of sexual assault to disclose personally identifiable information except in cases when reporting \"is necessary to prevent or mitigate a serious and imminent threat to the health or safety of an individual.\"", "In order to protect the safety and well-being of sexual assault victims, Congress has enacted a statute to encourage the development of policies and guidance for use of humanitarian transfers and military protective orders. Currently, when a victim makes a restricted report , he or she cannot receive a military protective order against the assailant or seek expedited transfer to a different unit or base. If the victim initiates an unrestricted report or changes his or her restricted report to an unrestricted report, he or she may then request an expedited transfer or military protective order (MPO).", "In 2004, Congress noted that DOD did not have standard policies or protocols for removal or transfer of an alleged victim from a unit when the alleged attacker was part of the same unit or the victim's chain of command. The issue of transfers for victims of sexual assault was again raised by Representative Jane Harman in a 2010 hearing as a possible way to protect victims from retaliation and encourage victim reporting. In the FY2011 NDAA, Congress added a provision that required the Secretary concerned to provide timely consideration of an application for permanent change of station or change of duty assignment by a victim of sexual assault or related offense. DOD implemented this \"expedited transfer\" policy in February 2012 with the stated purpose to,\n[…] address situations where a victim feels safe, but uncomfortable. An example of where a victim feels uncomfortable is where a victim may be experiencing ostracism and retaliation. The intent behind the Expedited Transfer policy is to assist in the victim's recovery by moving the victim to a new location, where no one knows of the sexual assault.\nUnder DOD policies, temporary or permanent transfers may be authorized to a new duty location on the same installation, or a different installation. The servicemember's transfer may include the member's dependents and military spouse for transfers to a different installation. If a servicemember's request for transfer is disapproved by the commanding officer, the individual has the right to have the request reviewed by a general or flag officer in their chain of command (or the civilian equivalent).\nAlthough some advocacy groups have argued that the expedited transfer option is a positive support measure for victims, they have also raised concerns about the implementation, citing cases of delays and denials. In addition, some of the same groups have raised concerns that the transfer might actually be perceived as punishing the victim verse the alleged perpetrator. In a 2013 Senate Armed Services Committee hearing, a witness from the organization Protect Our Defenders described this problem,\nWe find while it is a good thing at times, expedited transfer requests, some victims say, yes, I was offered an expedited transfer, but to a job less than what I have now. Why am I being punished for being protected and trying to be sent off base? I am now being asked to make sandwiches for the pilots when once I was on another track in a successful career. Why do I have to leave? Why can't he leave?\nIn response to this concern, Congress sought to clarify the military commander's ability to transfer the alleged perpetrator to another unit following an unrestricted report of a sex-related offense. The authority for DOD to establish guidelines for these transfers was enacted in the FY2014 NDAA and codified in 10 U.S.C. §674. Commanders may also take other actions to remove an accused military offender from his or her position, to place him or her in pre-trial confinement, or to issue a military protective order. The total number of requested and approved expedited transfers for victims has been growing since FY2012 (see Table 5 ).", "A military protective order (MPO) is typically issued by a commanding officer, and informs the accused servicemember that contact or communication is prohibited with the protected person or members of the protected person's family/household. A victim of sexual assault may also receive a civilian protection order (CPO) from local authorities. By statute, a CPO has full force and effect on military installations within the jurisdiction of the court that issues the order. However, MPOs are not enforceable by civilian law authorities. Therefore, a victim of sexual assault – particularly a reservist or dual status technician - may work in a civilian office with his or attacker where the MPO cannot be enforced.\nCongressional concerns about this lapse of protection have led to legislation to encourage coordination between military and civilian authorities. To encourage such coordination, a provision in the FY2009 NDAA required DOD to notify appropriate civilian authorities when a military commander issues an MPO. The installation commander may also develop a memorandum of understanding with local police to detain an individual who may have violated an MPO until military police can respond. Since FY2010, Congress has required DOD to track, for each sexual assault case, whether a military protective order was issued (involving either the victim or alleged perpetrator) and whether any military protective orders were violated.", "While serving, military members are eligible to receive a broad range of medical and mental health services through TRICARE, the military health system. This includes services immediately following a sexual assault and longer-term services as needed. Those who retire from the military may continue to receive military health services if enrolled. Those who are discharged from the military before retirement eligibility may be eligible to receive health care services from the VA. Questions that Congress has raised about medical care for victims of sexual assault include:\nDo military medical professionals have the appropriate training and resources to respond to the health needs of different victim populations? Do the types of military medical and mental health services provided to victims reflect evidence-based best practices for victim treatment and rehabilitation? Are appropriate medical services broadly available and accessible to victims of assault, particularly when the assault occurs in a deployed or operational setting?\nAccording to DOD's 2014 Survivor Experience Survey, 49% of respondents indicated that they had interacted with a medical provider and 71% indicated that they had spoken with a mental health provider following a sexual assault incident. In some cases, caregivers at a military or civilian medical facility might be the first point of contact for a victim of military sexual assault. Medical staff will provide the victim with urgent medical assistance and may, with the victim's permission, administer a sexual assault forensic examination (SAFE). When Congress reauthorized the Violence Against Women Act in 2005, provisions were added to ensure that victims could not be charged for medical forensic exams, commonly referred to as \"rape kits.\" In 2006, Congress authorized TRICARE coverage for forensic examinations following a sexual assault or domestic violence. The evidence from the SAFE is required to be saved for five years in case of an investigation.\nBeyond the response to these short-term needs, victims of sexual assault often require longer-term care for associated physical and psychological effects. These may include sexually transmitted diseases, anxiety, depression, and Post-Traumatic Stress Disorder (PTSD). The after-effects of the incident might also be associated with negative behavioral changes in the victim, such as increased drug or alcohol use, poor work performance, or other disciplinary issues.\nThe FY2011 NDAA required DOD to establish \"comprehensive and consistent protocols for providing and documenting medical care to a member of the Armed Forces or covered beneficiary who is a victim of a sexual assault, including protocols with respect to the appropriate screening, prevention, and mitigation of diseases.\" This provision noted that gender should be considered in these protocols. The FY2012 NDAA required a review of women-specific health services in DOD including the availability of services for female victims of sexual assault or abuse. The resulting GAO report found some availability and standardization issues. In particular, GAO noted challenges across the services in providing comprehensive and consistent medical and health services in deployed environments. It recommended improved guidance for care providers. DOD's current regulations include instructions for combatant commanders to:\n(a) Require that victims of sexual assault in deployed locations within their area of responsibility are transported to an appropriate evaluation site, evaluated, treated for injuries (if any), and offered SAPR VA assistance and a SAFE as quickly as possible.\n(b) Require that U.S. theater hospital facilities (Level 3, NATO role 3)…have appropriate capability to provide experienced and trained SARC and SAPR VA services, SAFE providers, and those victims of sexual assault, regardless of reporting status, are medically evacuated to such facilities as soon as possible (within operational needs) of making a report, consistent with operational needs.\nConcerns about male victims of sexual assault prompted the House in 2012 to call for a review of DOD's policies and protocols for the provision of medical and mental health care for male servicemembers. The resulting GAO report found that DOD's health affairs office, \"has not systematically evaluated, using various available sources of information, the extent to which either male or female victims of sexual assault have any gender-specific needs or whether the department's current care is sufficiently developed to ensure that such needs are met.\" In response to the GAO's report and recommendations, DOD highlighted some ongoing efforts to provide gender-specific treatment; for example, male-only therapy groups, and enhanced medical staff training on responding to and treating male victims.\nTo address concerns about the availability of trained forensic examiners, in 2013, as part of the FY2014 NDAA, Congress required that at least one full-time sexual assault forensic examiner be assigned to each military medical treatment facility (MTF) that operates a 24-hour emergency room. In addition, the law, as amended, requires that the secretary of the military department concerned make a sexual assault forensic examiner available to patients at other facilities when needed.\nRecent survey data from DOD suggests that there are generally high levels of satisfaction with military medical and mental health care for sexual assault survivors. The 2014 Survivor Experience Survey reported over 75% of the respondents who received care at MTFs indicated that they were satisfied with the medical and mental health services they received, while 8% reported that they were dissatisfied. In addition, a majority of the respondents treated at MTFs had positive and professional experiences with their medical or mental health provider.", "In 2011, DOD launched the \"Safe Helpline,\" a 24/7 helpline accessible worldwide, to provide confidential crisis support and information for the DOD community. The helpline provides \"live, one-on-one, specialized support and information\" intended for adult servicemembers in the Active and Reserve Components as well as Coast Guard members. It offers a number of different ways to interact with Helpline staff including phone, text, a moderated online chat group (Safe HelpRoom) for sexual assault survivors, and an app for creating a personalized self-care plan.\nSAPRO oversees the operation of the helpline through a contract with the Rape, Abuse & Incest National Network (RAINN). Staff members serving the DOD community are trained in military-specific policies and procedures such as restricted and unrestricted reporting processes, and are able to connect victims with appropriate military resources and victim advocates. During FY2011, the first year in which the Helpline operated, the Defense Human Resources Activity (DHRA) obligated $780,000 for associated services. In the following year—during which the Safe Helpline app was developed—this figure rose to $2.8 million. In recent fiscal years, DHRA has obligated approximately $4 million to operate the Helpline each fiscal year.\nSurvivor Experience Survey results from 2014 indicated that 54% of the respondents—individuals who had experienced a sexual assault—were aware of the DOD Safe Helpline prior to the assault. In addition, 49% were aware of an installation 24-hour helpline, and 33% were aware of a local civilian 24-hour helpline. In 2016, overall usage of the helpline increased by 67% following expanded DOD outreach efforts. Roughly half of those who reported an assault on the Helpline in 2016 reported that they had not yet disclosed the event to a military authority, and men were more likely than women to make their first disclosure on the Helpline.", "One of the most extensive efforts undertaken to strengthen support for sexual assault victims is the enhancement of legal assistance and victim advocate services. Pursuing accountability for perpetrators through the criminal justice service can be challenging and time-consuming for victims of sexual assault, who often have to repeat their story several times and must navigate unfamiliar legal processes while dealing with the physical and emotional after-effects of the assault.\nIn 2005, DOD initiated a victim care response system that created the support roles of sexual assault response coordinator (SARC) and sexual assault prevention and response victim advocates (SAPR-VA). While there was broad agreement that this new program provided valuable victim support, concerns remained that it was unevenly implemented with lower levels of support available for deployed units, victims were unaware of their rights to support, SARC/SAPR-VA training was not fully standardized, and challenges remained in soliciting volunteers to act in these roles as a collateral duty.\nIn the FY2011 NDAA, Congress enacted provisions that entitled members of the armed services and dependents who are victims of sexual assault to (1) legal assistance by a military or civilian special victims' counsel (SVC)—sometimes called victims' legal counsel (VLC) , (2) assistance provided by a SARC, and (3) assistance provided by a SAPR-VA. Under this legislation, a victim must be notified of the right to receive (or decline) these services whether he or she has made a restricted or unrestricted report. The law also requires a minimum of one full-time SARC and one full-time SAPR-VA to be assigned to each brigade or equivalent level in the armed forces. A 2015 survey of SARCs and SAPR-VAs found that the average number of military personnel served by a SARC is 4,109 and the average for a SAPR-VA is 1,409. There is broad variability between the services with more Army SARCs and VAs per servicemember than the other services.", "The FY2012 NDAA (Section 584) requires standardized training for SARCs and victim advocates across DOD to help improve the quality of services received by sexual assault victims. In response, DOD established the Department of Defense Sexual Assault Advocate Certification Program (D-SAACP).The National Organization for Victim Assistance Incorporated manages this certification program for DOD with an annual obligation of approximately $1 million.\nIn 2013, the Department also established the Victim Assistance Leadership Council. This council \"advises the Secretary of Defense on policies and practices across four programs: sexual assault prevention and response, family advocacy, victim-witness assistance, and sexual harassment.\" The roles of this council include promoting efficiencies, coordinating victim assistance policies and assessing the implementation of victim assistance standards (including competency, ethical, and foundational standards).", "The Judicial Proceedings Panel (JPP) reviewed special victims counsel programs in 2014. In the panel's February 2015 report they expressed concerns about the following:\nStatutory requirements linking SVC services to entitlement for legal assistance services, potentially excluding some reserve component servicemembers from SVC program eligibility; Lack of standardized reporting structures across the services—with particular concern about the independence of the SVC structure in the Army; Lack of uniform quality standards for SVC training; Geographic availability of face-to-face SVC services; and Lack of standardized metrics for evaluating the operation of the SVC program.\nIn response to some of these concerns, Congress enacted a number of changes to the SVC program through the FY2015 and FY2016 NDAAs. In the FY2015 NDAA Congress expanded eligibility for SVC services to certain reserve component members who might otherwise not be eligible for legal assistance. In the following year, Congress authorized access for certain DOD civilians. The FY2016 NDAA also required DOD to establish standardized training time and baseline training requirements for SVCs, as well as other SVC program enhancements. These include\n(A) guiding principles for the Special Victims' Counsel program, to include ensuring that—\n(i) Special Victims' Counsel are assigned to locations that maximize the opportunity for face-to-face communication between counsel and clients; and\n(ii) effective means of communication are available to permit counsel and client interactions when face-to face communication is not feasible;\n(B) performance measures and standards to measure the effectiveness of the Special Victims' Counsel program and client satisfaction with the program; and\n(C) processes by which the Secretaries of the military departments and the Secretary of the Department in which the Coast Guard is operating will evaluate and monitor the Special Victims' Counsel program using such guiding principles and performance measures and standards.\nSection 533 of the FY2016 NDAA also expanded the role of SVC to provide legal consultation and assistance to victims with complaints against the government, Freedom of Information Act requests and correspondence with Congress.", "Retaliation is sometimes used as an umbrella term to refer to a range of illegal, impermissible, or hostile actions taken against someone as a result of their having made or being suspected of having made a protected communication, including a crime report. Experts have reported that retaliation can have negative psychological impacts on sexual assault victims and that a lack of social support leads to a higher likelihood of developing post-traumatic stress disorder (PTSD). The threat, or perceived threat, of retaliation may also influence victims' willingness to make an unrestricted report of an incident and thus a reduced ability to hold perpetrators accountable. There is some evidence that this may be a factor in the willingness of servicemembers to report an incident. The 2014 Military Workplace Study found that among servicemembers who experienced but did not report a sexual assault, 32% were concerned about retaliation by the perpetrator, 28% were concerned about retaliation by their peers or coworkers, and 23% were concerned about retaliation by a supervisor or someone in their chain of command. DOD has expressed awareness of the potential for retaliation to undermine organizational trust, as stated in the Department's prevention and response strategy,\nRetaliation not only harms the lives and careers of victims, bystanders/witnesses, and first responders but also undermines military readiness and weakens the culture of dignity and respect. Without question, retaliation has no place in the Armed Forces.\nStatutory restrictions on retaliatory actions for protected servicemember communications, sometimes called whistleblower protection , were enacted in the 1988 Military Whistleblower Protection Act and codified in 10 U.S.C. §1034. Given the reported prevalence and negative impacts associated with retaliation, Congress has taken actions in recent years to:\nclarify and expand the definitions of retaliation, enhance whistleblower protections for sexual assault victims and bystanders/witnesses, and enhance oversight of the investigation and reporting processes for alleged retaliatory actions.", "Section 1709 of the FY2014 NDAA required DOD to prescribe regulations prohibiting retaliation against an alleged victim or other member of the Armed Forces who reports a criminal offense. The law also specified that the DOD regulations must make retaliation an offense punishable under Article 92 of the UCMJ, \"Failure to Obey Order or Regulation.\" The provision required the Secretary of Defense's definition of retaliation punishable under Article 92 to include, at a minimum:\n(A) taking or threatening to take an adverse personnel action, or withholding or threatening to withhold a favorable personnel action, with respect to a member of the Armed Forces because the member reported a criminal offense; and\n(B) ostracism and such of acts of maltreatment, as designated by the Secretary of Defense, committed by peers of a member of the Armed Forces or by other persons because the member reported a criminal offense.\nIn 2015, the Secretary of Defense directed the development of a \"DoD-wide comprehensive strategy to prevent retaliation against military members who report or intervene on behalf of victims of sexual assault and other crimes.\" DOD's strategy currently adheres to three types of retaliation that are defined in law and policy: reprisal, ostracism, and cruelty, oppression and maltreatment (see Table 6 ).\nReprisal, sometimes called professional retaliation, is currently defined in statute (10 U.S.C. §1034) as taking or threatening to take an unfavorable personnel action, or withholding or threatening to withhold a favorable personnel action, for making or preparing to make a protected communication or being perceived as making or preparing to make a protected communication. Examples of reprisal include: promotion interference, transfer or reassignment, poor performance evaluations, disciplinary action, or making or threatening to make significant changes in duties or responsibilities that are inconsistent with the military member's grade. A 2012 GAO report found that the most common forms of reprisal for all military whistleblower cases (not only sexual assault-related cases) were assignment or reassignment (50%), a poor performance evaluation (46%), or some sort of disciplinary action (42%).\nOstracism is sometimes referred to as social retaliation and involves exclusion of an individual from social acceptance, friendship or privileges with the intent to discourage the reporting of a criminal offense or the due administration of justice. Unlike reprisal, ostracism is not only confined to acts taken by the chain of command, but could include acts by peers or other colleagues. Ostracism is defined in military department-level regulations and may include bullying (in person or through social media), exclusion from group activities, or denying the privilege of friendship. Current definitions of ostracism vary between the military departments; however, most define it as \"the exclusion, from social acceptance, privilege or friendship with the intent to discourage reporting of a criminal offense or otherwise discourage the due administration of justice.\" According to DOD, the intent requirement in the definition is included as to not violate First Amendment rights to freedom of association. There may be some challenges to identifying and proving ostracism, since commanders and NCOs may have limited information about the cases while the cases are under investigation.\nMaltreatment is also defined in military department-level regulations as a form of social retaliation that includes\ntreatment by peers or other persons that, when viewed objectively under all the circumstances, is abusive or otherwise unnecessary for any lawful purpose, that is done with the intent to discourage reporting of a criminal offense or otherwise discourage the due administration of justice, and that results in physical or mental harm or suffering, or reasonably could have caused, physical or mental harm or suffering.\nA 2016 report on retaliation by the Judicial Proceedings Panel (JPP) found this definition of maltreatment problematic because it was not consistent with other law and regulations prohibiting similar misconduct (e.g., hazing, and Article 93 of the UCMJ which specifically defines these concepts). The JPP recommended that the military departments revise their definitions of maltreatment. The JPP's recommended definition would include \"behaviors that are cruel, abusive, humiliating, oppressive, demeaning, or harmful.\"\nOther forms of retaliation may by punishable under the UCMJ, and these are typically considered to be criminal retribution. This may include actions like cruelty or maltreatment (Article 93), assault (Article 128), stalking (Article 130), or obstruction of justice (Article 131b) (see Table 6 ). The JPP noted in its 2016 report that these UCMJ articles give commanders adequate tools for addressing social retaliation, and recommended that Congress not add a separate UCMJ offense for retaliation.", "Victims of sexual assault may seek assistance to report retaliation in a variety of ways, including hotlines, victim advocates, counselors, and military commanders outside of their chain of command. The investigative authority for reprisal (professional retaliation) cases is the Department of Defense Inspector General (DODIG). The military services typically lead other forms of retaliation investigations, and these are conducted by military criminal investigative organizations (MCIOs), law enforcement, or commanders at the unit level.\nIn the FY2014 NDAA Congress enhanced protections for military whistleblowers and also added a requirement for IG retaliation investigations to include those \"making a protected communication regarding violations of law or regulation that prohibit rape, sexual assault, or other sexual misconduct.\" The law requires the investigating IG to be outside the immediate chain of command and/or at least one organizational level higher than both the member submitting the reprisal allegation, and the individual or individuals alleged to have taken the retaliatory action.\nOversight entities, however, continued to raise concerns about the quality and independence of DODIG investigative processes with regard to reprisal cases. A 2015 GAO review of DODIG management of whistleblower complaints found that \"DODIG did not have a process for documenting whether investigations were independent and were conducted by someone outside the military service chain of command.\" In addition, the report noted substantial delays in the average length of DODIG and service IG whistleblower reprisal investigations, failure to regularly notify servicemembers about the investigation delays, and lack of standardization in definitions and reporting between DOD and service IGs.\nCongress again expanded whistleblower protections in the FY2017 NDAA and included provisions to address issues raised in the GAO report. In particular, prohibited personnel actions against whistleblowers were expanded to include\n(i) The threat to take any unfavorable action.\n(ii) The withholding, or threat to withhold, any favorable action.\n(iii) The making of, or threat to make, a significant change in the duties or responsibilities of a member of the armed forces not commensurate with the member's grade.\n(iv) The failure of a superior to respond to any retaliatory action or harassment (of which the superior had actual knowledge) taken by one or more subordinates against a member.\n(v) The conducting of a retaliatory investigation of a member.\nThe amendments also required uniform conduct and training standards for DODIG investigators, and required DODIG to provide periodic updates on the investigation status to member who made the allegation, the Secretary of Defense and the Secretary of the department concerned.", "Existing information on retaliation in DOD is mainly derived from self-reported perceptions from victims of sexual assault. DOD surveys and focus groups conducted between 2012 and 2014 revealed that roughly two-thirds of female members who reported a sexual assault perceived some sort of retaliation either by peers, coworkers or their chain of command. However, estimates from these surveys are considered imprecise due to terms that were inconsistent with terminology in law. Methodology changes in the 2016 WGRA allowed for more precise data. The 2016 survey data suggested that while approximately half of those reporting sexual assault perceived some form of retaliation, less than one-third perceived retaliation that met definitional criteria (see Figure 6 ).\nThe data reported in Figure 6 are estimates based on survey data. Until recently, DOD has not had centralized, systematic processes in place for monitoring and reporting actual instances of retaliation against sexual assault victims. The first major effort by DOD to collect data on the nature and disposition of retaliation cases began in March 2015 when the Undersecretary of Defense for Personnel and Readiness issued a data-call to each of the services for \"alleged retaliation case synopses\" from unrestricted reports of sexual assault during the time between the beginning of FY2014 and February 2015. The required data included the following.\nWhether a report is professional (reprisal) or social (ostracism) retaliation. A narrative of the allegation. The authority that received the complaint (e.g., IG, MCIO, chain of command). Whether the retaliator(s) were in the reporter's chain of command, peer, coworker, or other. Whether the alleged retaliation was actionable. Whether the alleged retaliator was also the alleged perpetrator of the crime. The gender of the retaliator and victim. The retaliation report outcome.\nIn May of 2015, the Judicial Proceedings Panel (JPP) requested similar data from the services. At that time, DOD's SAPRO office reported to the JPP that steps were needed to modernize DSAID to support collection and management of retaliation data. A 2016 report by the Judicial Proceedings Panel stated that although the Services were unable to provide this information, the Army, Air Force, and Marine Corps have independently taken steps to track retaliation data.", "Uniformed members of the military services who allegedly commit sexual assault crimes are subject to prosecution under the military justice system. The military justice system is embodied in a code of military criminal laws called the Uniform Code of Military Justice (UCMJ) which the President implements through the Manual for Courts-Martial (MCM). The purpose of this system is to \"promote justice, to assist commanders in maintaining good order and discipline, to promote efficiency and effectiveness within the military establishment, and thereby to strengthen the national security of the United States.\" Prosecution of sexual assault offenders through the military justice system typically has a dual purpose: (1) to apply just punishment for illegal acts, and (2) to deter future offenders. Under the military justice system, members of the Armed Forces are subject to different rules, orders, proceedings, and consequences than their civilian counterparts.\nMuch of the sexual assault legislation that Congress has proposed and/or has been enacted over the past decade has been directed at reforming the military's relevant investigative and judicial processes.\nThe following sections summarize selected issues that have been on the forefront of congressional interest since 2004.", "The investigation and disposition of military sexual assault cases is complicated by questions of jurisdiction between civilian law enforcement agencies and military law enforcement organizations on installations. In some instances, cases are entirely under Federal jurisdiction and handled only by military authorities; in others, coordination with civilian authorities is required. Some cases fall outside DOD's jurisdiction. In reported sex-related offenses that fall within the military's jurisdiction, Military Criminal Investigative Organizations (MCIOs) lead the investigations.\nCongressional concerns in the area of investigation include the following questions.\nAre investigations being initiated in a responsive manner upon notification of an unrestricted report? Are the alleged victim's rights being protected in the investigative process? Are MCIOs properly trained and do they adhere to prescribed policies and procedures? Are investigations conducted in a fair, comprehensive, timely, and transparent manner?\nIn the FY2014 NDAA, Congress included provisions that require commanding officers to immediately refer reports of sex-related offenses involving members of their command to MCIO investigators. This provision also stipulated that commanders shall not conduct internal, command-directed investigations on sexual assault allegations, and shall not delay contacting the MCIO while attempting to assess the credibility of the report. An additional provision in the FY2014 NDAA requires commanders to provide an incident report within eight days of an unrestricted report of sexual assault.\nMCIO investigators are required to adhere to several processes specific to cases involving allegations of sexual assault, among them ensuring a SARC is notified, avoiding disclosure of individuals' sexual orientation unless necessary for an investigation, ensuring that investigation reports are retained for a period of 50 years, and making data available for use in the Defense Sexual Assault Incident Database.\nSome Members of Congress, advocacy organizations, and the news media have raised concerns that the military uses flawed processes to conduct some sexual assault investigations. The DOD Inspector General (DODIG) has investigated individual claims and has also conducted broader evaluations of investigative processes. In a March 2015 report, DODIG found that 99% of the MCIO investigations opened on or after January 1, 2012, and completed in 2013, met existing investigative standards or had minor deficiencies. This was an improvement over a 2013 DODIG evaluation that found significant deficiencies in 11% of cases completed in 2010.", "Once the MCIO has completed an investigation, he or she will share a report documenting the evidentiary finding with the servicing military lawyer, known as a staff judge advocate (SJA). The SJA will review the report and recommend appropriate legal or other action to the disposition authority. The disposition authority is typically a military commander in the accused's chain of command and may also be in the victim's chain of command. Section 574 of the FY2005 NDAA (P.L. 108-375) included a provision that prohibited interference with the SJA's ability to provide independent legal advice to commanders.\nIn some cases, the investigation will determine that the commander lacks legal authority to prosecute a crime, for example, when the subject of the investigation is unknown, has died or deserted, or is a civilian or foreign national. If DOD has jurisdiction, the investigation may not yield sufficient evidence to substantiate a sexual assault charge, or command action may be precluded due to, for example, refusal of the victim to participate or expiration of the statute of limitations. The military commander has the authority to review results of an investigation and decide on the disposition of the case—whether to submit the case for court-martial proceedings, to dismiss the charge without further action, or to undertake other actions, such as nonjudicial punishment (also known as NJP or an \" Article 15 \"), administrative discharge, or other adverse administration actions. If the commander determines that there is sufficient evidence to support a finding of probable cause, he or she may prefer court-martial charges and forward those charges to a convening authority.\nThe FY2014 NDAA included a provision that requires an Article 32 (pre-trial) hearing before proceeding to a general court-martial (unless waived by the accused). By statute, the purpose of this hearing is limited to\n(A) Determining whether there is probable cause to believe an offense has been committed and the accused committed the offense. (B) Determining whether the convening authority has court-martial jurisdiction over the offense and the accused. (C) Considering the form of charges. (D) Recommending the disposition that should be made of the case.\nIn cases that proceed to court-martial, the case may proceed to a completed trial, charges may be dismissed, or the perpetrator may be discharged or resign in lieu of court-martial. Figure 7 shows the dispositions and outcomes of sexual assault allegations for FY2016. These data indicate that a court-martial was initiated for 59% of sexual assault cases that were deemed to have sufficient evidence to support a sexual assault charge. Of those cases that went to trial, 33% were convicted on any charge.", "The commander's authority to decide on punitive or administrative actions to take based on the result of an investigation is often termed \"commander's discretion\" and has been one of the more frequently debated aspects of military sexual assault investigations.\nSome of the questions raised by Congress in recent years include:\nDoes the commanding officer/disposition authority have the requisite information, experience and objectivity to make disposition decisions? Are appropriate procedures in place to ensure that the disposition decision is transparent and based on sound legal advice?\nIn certain cases, the commanding officer supervises both the victim and the accused, a situation that could lead to unfair bias or the perception of unfair bias in favor of one or the other that would affect the commander's disposition decision. The FY2014 NDAA, includes a provision to help address this last concern by modifying Rule 36 of the Manual for Courts-Martial to strike the character and military service of the accused from the matters a commander should consider in deciding how to dispose of an offense.\nIn past years, Congress questioned whether the discretion afforded to commanders was too broad and if commanders have the right qualifications to make these decisions. Some in the military and the academic community argue that the commander's authority in this matter supports his or her ability to maintain good order and discipline. They further argue that individuals assigned to command positions are fully qualified, carefully screened and have many years of experience. Still others in the legal community contend that modifying commander disposition authority solely for sex-related cases would create separate legal processes that could be \"wasteful, confusing, and potentially counter-productive.\"\nCongress has raised concerns that commanders may be more inclined to use their authority to dispose of cases through non-judicial punishment or administrative action, or to discharge the alleged offender rather than to hold him or her accountable for more serious penalties through the court-martial process. On the other hand, some have argued that the political focus and high visibility of military sexual assault cases encourages commanders to pursue courts-martial and prosecutions when not warranted by the evidence. Some in the legal community have pointed to cases where involvement by commanders in the judicial process has resulted in unlawful command influence (UCI), generally defined as \"the improper use, or perception of use, of a superior authority to interfere with the court-martial process.\" This can compromise an accused servicemember's presumption of innocence, right to fair investigation and disposition, and access to witnesses or evidence. As noted in Judicial Proceedings Panel discussions,\nIt is very difficult for a commander to be very strong in his message or her message about how she feels or he feels about sexual assault. We saw General Amos come out, go around to a number of Marine Corps bases, and talk strongly about how we need to support victims, how we need to hold people accountable. As a result of the General showing the leadership that you would expect him to show, we are now having cases thrown out by the appellate courts because of unlawful command influence.\nSAPRO has noted that legislative change over the past few years has \"sharply constrained\" military commanders' discretion over cases. Indeed, several pieces of legislation have curbed commanders' discretion or shift decisionmaking power to a higher-level authority. Since June 28, 2012, DOD policy has required that all unrestricted reports of adult sexual assault offenses must be reviewed by a special court-martial convening authority (SPCMCA) for the initial disposition decision. The SPCMCA is a senior military commander (typically in the grade of O-6—colonel or Navy captain), and generally has at least 20 years of experience. In the FY2014 NDAA Congress enacted several provisions that limited commander discretion. This bill also expressed the sense of Congress that sexual assault offenses, \"should be disposed of by court-martial, rather than by non-judicial punishment or administrative action,\" and that that commanders should be \"exceedingly sparing\" in discharging alleged offenders in lieu of court-martial. The bill (Section 1744) also required secretaries of the military departments to review decisions not to refer charges for trial by court-martial in cases in which a sex-related offense has been alleged by a victim.\nIn 2014, a congressionally mandated panel was tasked with conducting a review and assessment of the systems used to investigate, prosecute, and adjudicate crimes involving adult sexual assault and related offenses. Upon reviewing the commander's authority in sexual assault cases, as well as the practices of allied militaries and available civilian statistics, the Response Systems to Adult Sexual Assault Crimes Panel cautioned against further limitations of convening authorities under the UCMJ, stating,\nThe evidence does not support a conclusion that removing convening authority from senior commanders will reduce the incidence of sexual assault, increase reporting of sexual assaults, or improve the quality of investigations and prosecutions of sexual assault cases in the Armed Forces. In addition, proposals for systemic changes to the military justice system should be considered carefully in the context of the many changes that have recently been made to the form and function of the military justice system. The numerous and substantive changes recently enacted require time to be implemented and then assessed prior to enacting additional reforms.\nIn addition, the panel also recommended repealing Section 1744 of the FY2014 NDAA which required Secretary-level review of decisions not to refer charges to court martial suggesting that this requirement \"may cause undue pressure on convening authorities and their legal advisors to refer cases to trial in situations where referral does not serve the interests of victims or justice.\" In response to this recommendation, Congress amended this requirement in the FY2015 NDAA to require review by the Secretary if requested by the chief prosecutor.", "Between 2012 and 2015, much of the congressional action related to sexual assault has focused on judicial processes, especially in increased protections and rights for victims in the court-martial proceedings. Some of the areas of reform have been:\nIncreasing requirements for retention of evidence and records; Eliminating statute of limitations for certain offenses; Minimum sentences for sex-related offenders; and Other changes to the Military Rules of Evidence related to admissibility and privileged communications.\nSome within DOD and outside legal professionals have been concerned about the magnitude of change to the military justice system and the complexity of implementing these changes. In its FY2014 assessment of the military judicial system and its treatment of sexual assault cases, SAPRO noted that legal and regulatory changes over the course of the previous three years had so greatly altered the trial process for sexual assault crimes that \"virtually every portion of the military justice system\" had seen modifications. In its 2015 initial report, the Judicial Proceedings Panel (JPP) noted that \"the numerous and substantial changes in sexual assault laws have created a confusing landscape for victims and practitioners at all levels of military judicial proceedings.\" Oversight of these issues continues to be supported by congressionally mandated panels and advisory committees.", "In 2012, Congress directed the establishment of the Judicial Proceedings Panel (JPP) to \"conduct an independent review and assessment of judicial proceedings conducted under the Uniform Code of Military Justice involving adult sexual assault and related offences.\" The panel's scope of work more specifically included evaluating trends in the,\nType, consistency, and appropriateness of punishments rendered for sexual assault offenses; Training and experience levels of military defense and trail counsel; and Development, utilization and effectiveness of special victims capabilities.\nIn 2016 the JPP provided the results of analysis of 1,761 judicial cases, spanning the time period of FY2012-FY2014 and involving at least one count of a sexual assault offense. The JPP's statistical analysis of sexual assault conviction rates measured the relationship between the likelihood of conviction and various other factors (such as the gender of the victim, the rank of accused, and the fiscal year of the proceedings). The JPP found that in general, \"the likelihood of conviction for any charge was not affected by the military service of the accused, the rank of the accused, or the status of the victim.\" The termination date for this panel is September 30, 2017.", "Section 546 of the FY2015 NDAA called for the establishment of a 20-member Defense Advisory Committee on Investigation, Prosecution, and Defense of Sexual Assault in the Armed Forces. This panel was originally to be established upon termination of the JPP; however, the FY2016 NDAA (Section 537) required its establishment within 90 days of enactment. The committee was established on February 18, 2016.\nThe duties of this committee, are to (1) \"advise the Secretary of Defense on the investigation, prosecution, and defense of allegations of rape, forcible sodomy, sexual assault, and other sexual misconduct involving members of the Armed Forces\", and (2) \"review, on an ongoing basis, cases involving allegations of sexual misconduct.\" The committee is also required by law to submit annual reports to the Secretary of Defense and the Armed Services Committees of the House and Senate not later than March 30 th of every year.", "Members of Congress may question if the reforms in this space have had any impact on the problem of sexual assault in the military. As discussed at the beginning of this report, Congress's desired outcomes for DOD's SAPR program are (1) continued preparedness, effectiveness and good order of military units, and (2) health and well-being of military servicemembers. However, given the vast number of legal and policy changes in the military's approach to sexual assault over a relatively short period of time, evaluating the impact of these changes can be challenging.", "As Congress and others attempt to verify whether sexual assault rates are increasing or decreasing, some may look at the rates of actual reported incidents ( Table 7 ) to identify trends. Some caution should be taken in this approach for several reasons. First, it is only in the past few years that DOD has begun collecting and reporting detailed incident data in a systematic, consistent, and comparable way across the Armed Forces. This makes it challenging to validate any conclusions about the effects of recent reform efforts compared to past performance. Second, as previously discussed, it is assumed that a significant number of sexual assault incidents that occur are not reported. Therefore, analysis of self-reported anonymous survey data is considered to be a more accurate indicator of the actual rate of sexual assault in the military. It should be noted, however, that changes in survey methodology limit the ability to observe trends over a longer period of time since prevalence rates from the FY2014 and FY2016 surveys are not directly comparable to prevalence data from previous years.\nSome of the reforms that have been implemented (e.g., improving command culture and training, provisions for restricted reporting) are intended, in part, to encourage those who have been assaulted to make an incident report. Therefore, incident rates need to be viewed in the context of estimated prevalence rates from survey data (see Figure 2 ). If the rate of reported incidents increases in the short term, it could indicate negative or positive change. On one hand, it could mean that there are more sexual assaults occurring. However, given that estimated prevalence rates are higher than reported incident rates, it could mean that unreported incident rates are actually the same or lower. This might be an indication not that more crime is occurring, but instead more individuals who have experienced assault feel comfortable about reporting. For example, in FY2013, DOD reported 627 incidents involving male victims (see Table 7 ). The number of reported incidents for FY2014 and FY2015 were 921 and 821 respectively. However, the estimated prevalence of male sexual assault in 2014 was about 10,500 members. In the long run, Congress might look for both estimated prevalence and incident rates to decrease. However, in the short term, convergence of incident reporting and prevalence estimates might also be an indicator of positive change in command climate, confidence in the system, and/or victim awareness of his or her reporting processes and rights.", "It is nearly impossible to determine how many sexual assaults may have not happened due to reforms that are intended to improve prevention programs. In addition, it would be difficult to attribute any reduction in assault rates directly to such programs. Nevertheless, Members of Congress and their staff can monitor some indicators to determine whether prevention activities are being implemented in a manner consistent with best practices.\nDOD reports that it has implemented a standardized sexual assault training curriculum in accordance with statutory requirements. There is some evidence to suggest that the services' training curricula and delivery generally complies with best practices in adult learning. In addition, across the services, 2016 data indicate that 95% or more of men and women received training on topics related to sexual assault within the previous 12 months. In addition, feedback from servicemembers on effectiveness and relevancy of the training was overwhelmingly positive. While data on implementation suggests that training programs are generally reaching the targeted audiences, there is less data and evidence-based research on training program outcomes.\nCongress may continue monitoring servicemember awareness, participation, learning, and satisfaction with existing training and future programs. There may also be an opportunity to compare the implementation of prevention programs and share best practices among the services within DOD and also across other federal, state, or civilian programs (e.g., colleges and universities). For example, the services have all adopted active bystander training, but each service and the National Guard Bureau have adopted slightly different training programs. Survey data from 2016 suggests that Navy women and men were generally more likely than those from the other services to cite bystander training as influencing their decision to intervene in a situation that was believed to be sexual assault. Additionally, Congress could direct funding to support additional research on effective sexual violence prevention programs.\nMany in DOD and Congress have recognized the importance of organizational culture and prevention of risk factors along a continuum of harm (including, for example, sexual harassment and sexism, hazing, stalking, and alcohol use). Analysis of 2016 survey data indicates that when servicemembers perceive that their command climate is more supportive, or where they can speak more openly about sexual harassment issues, they are more willing to act to prevent sexual harassment. This suggests that policies and programs to encourage open dialog and trust in leadership may support positive cultural changes.\nCongress may continue to monitor DOD programs and progress for other associated risk factors. For example, some of the services indicated in 2015 that they are funding research on the role of alcohol in sexual assault cases with a view for developing additional interventions. As potential interventions are applied, it would be expected that the number of reported incidents associated with alcohol use or other risk factors would decline.", "A large portion of the congressional reforms over the past decade have focused on ensuring that military victims of sexual violence have access to adequate and confidential support services immediately following the incident, throughout the investigative and judicial process, and in the longer term along the path to recovery. Servicemember confidence and satisfaction with these services may encourage victims to report sexual violence, to gain access to additional mental health services, and to engage with the investigative and/or judicial process to bring perpetrators to justice.\nDOD has noted positive trends in the rate of restricted reports converted to unrestricted reports and the rate of conversion. DOD considers these positive indicators of the robustness of the support structure in place and servicemember trust in the reporting system. The percent of conversions was stable at 15% between FY2007 and FY2013, but rose to 20% in FY2014 and has consistently been above 20% since (see Table 8 ).\nIn 2016, over 73% of servicemembers who made unrestricted reports of sexual assault reported being satisfied with their interactions with the SARCs, SAPR VAs, and SVCs during the military judicial process. In addition, 83% of victims felt that SVCs kept them adequately informed them about the status or progress of their case during the judicial process, while less than 50% reported that their unit commander/director or enlisted advisor/supervisor kept them informed. These figures are roughly equal to prior year (2015) metrics and suggest that victims perceive value in continuing or enhancing the SVC programs. An area for congressional oversight remains the training, professionalization, and standardization of victim support functions across the services and geographical locations.", "" ], "depth": [ 0, 1, 2, 2, 1, 2, 3, 3, 4, 4, 2, 3, 3, 4, 4, 4, 4, 4, 4, 1, 2, 3, 4, 4, 4, 4, 3, 2, 3, 3, 3, 2, 1, 2, 3, 3, 4, 4, 2, 2, 2, 3, 3, 2, 3, 3, 3, 1, 2, 2, 3, 2, 3, 3, 1, 2, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full h1_full", "h0_full", "h3_full h2_full", "h2_title", "h2_title", "", "h2_title", "", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h3_full", "", "", "", "", "", "", "h3_title h1_full", "h3_full", "", "", "" ] }

{ "question": [ "What power does Article I, Section 8 of the U.S. Constitution give Congress?", "How does Congress wield this power?", "What has Congress determined regarding sexual assault?", "How recent is the concern regarding sexual violence?", "What do surveys suggest about victims of sexual assault?", "What are the effects of sexual assault?", "How do these effects apply to a military context?", "How has the way Congress addressed military sexual assault changed over the past two decades?", "What actions has Congress taken to address the issue?", "What is the purpose of the report?", "How is Congressional oversight and action on military sexual assault categorized?", "What does the first category do?", "What does the second category include?", "How is the third category important or relevant?", "What is the purpose of the fourth category?" ], "summary": [ "Article I, Section 8 of the U.S. Constitution gives Congress the power to raise and support armies; provide and maintain a navy and make rules for the governance of those forces.", "Under this authority, Congress determines military criminal law applicable to members of the Armed Forces.", "Congress has determined that sexual assault is a criminal act under the Uniform Code of Military Justice (UCMJ). As such, Congress has an interest in overseeing the implementation and enforcement of these laws in order to provide for the health, welfare, and good order of the Armed Forces.", "Prevention and response to sexual violence in the military is not a new concern, nor is sexual violence a problem confined to the military.", "While prevalence is difficult to estimate, some surveys suggest that up to 19.3% of women and 1.7% of men in the United States have been a victim of sexual assault at some point in their lives.", "Sexual assault can have both deleterious physical and psychological effects on the victim and, when an assault occurs in or around the workplace, it can harm the working environment and function of the organization.", "In the military context, when an assault occurs it impairs the unit's ability to work effectively; it can have an impact on cohesion, stability, and ultimately, mission success. Thus, concern about sexual assault in the military stems from complementary imperatives: protecting the individual health and welfare of military servicemembers, and ensuring preparedness and effectiveness of military units.", "Congressional efforts to address military sexual assault, pursuant to its Constitutional authority, have intensified over the past two decades in response to rising public concern about incident rates and perceptions of a lack of adequate response by the military to support the victims and hold perpetrators accountable.", "Since 2004, Congress has enacted over 100 provisions intended to address some aspect of the problem as part of the annual National Defense Authorization Act (NDAA). In addition, DOD has devoted significant resources to the issue in terms of funds, personnel, and training time.", "Given the scope and complexity of this issue, it is helpful to apply a framework for analysis and oversight. This report provides such a framework to help congressional staff understand the legislative and policy landscape, link proposed policy solutions with potential impact metrics, and identify possible gaps that remain unaddressed.", "Congressional oversight and action on military sexual assault can be organized into four main categories: (1) Department of Defense (DOD) management and accountability, (2) prevention, (3) victim protection and support, and (4) military justice and investigations.", "The first category deals with actions to improve management, monitoring, and evaluation of DOD's efforts in sexual assault prevention and response.", "The second category includes efforts to reduce the number of sexual assaults through screening, training, and organizational culture.", "The third category focuses on DOD's response once an alleged assault has occurred, including actions to protect and support the victim.", "Finally, the last category addresses bringing perpetrators to justice through military investigative and judicial processes." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 2, -1, 0, -1, -1, 0, 0, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3, 3 ] }

{ "title": [ "Background", "FTA Has Made Progress Implementing Most of the Key Required Changes in the Capital Investment Grant Program", "Issuing Rules for Evaluating and Rating Projects", "Issuing Guidance for Evaluating and Rating Projects", "Establishing an Evaluation and Rating Process for Programs of Interrelated Projects", "Using an Expedited Technical-Capacity Review Process", "Making Greater Use of Warrants", "Selected Project Sponsors Expressed Support for MAP-21 Changes to the Capital Investment Grant Program and FTA’s Implementation of Those Changes", "Project Sponsors Generally Support the MAP-21 Changes but Are Concerned about Some Changes’ Potential Effects", "Selected Project Sponsors Generally Support FTA’s Efforts in Implementing the MAP-21 Changes", "Substantially More Projects Have Entered the Program since MAP-21, but Whether They Will Progress More Expeditiously Is Not Yet Known", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of Transportation", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "FTA’s primary source of funding for new fixed-guideway projects or extensions to existing fixed-guideway systems is the Capital Investment Grant program, which is a discretionary program funded from annual appropriations rather than the Highway Trust Fund. Over the past 10 fiscal years, FTA has provided states, cities, and other localities with almost $18 billion in federal funding to plan and build new projects through this program. Projects eligible to compete for federal funding under the Capital Investment Grant program include:\nCommuter rail—systems that operate along electric or diesel- propelled railways and provide train service for local, short distance trips between a central city and adjacent suburbs.\nHeavy rail—systems that operate on electric railways with high- volume traffic capacity and are characterized by separated right-of- way, sophisticated signaling, high platform loading, and high-speed, rapid-acceleration rail cars operating singly or in multi-car trains on fixed rails.\nLight rail—systems that operate on electric railways with light-volume traffic capacity and are characterized by shared or exclusive rights-of- way, or low or high-platform-loading, single or double-car trains, and overhead electric lines that power rail vehicles.\nStreetcars—systems that are similar to light rail, but distinguishable because they are usually smaller and designed for shorter routes, more frequent stops, and lower travel speeds.\nBus rapid transit—systems in which the majority operates in a separated right-of-way during peak periods and includes features that emulate the services provided by rail transit, such as defined stations, traffic signal priority, short headway bidirectional services for a substantial part of weekdays and weekend days, pre-board ticketing, platform-level boarding, and separate branding. Fixed-guideway bus rapid transit systems may include portions of service that are non- fixed guideway. In addition, bus rapid transit can also include corridor- based bus rapid transit projects, which have similar characteristics as fixed-guideway systems, but the majority of the project does not operate in a separated right-of-way dedicated for public transportation use during peak periods.\nFerries—systems comprised of vessels that operate over a body of water and are generally steam or diesel powered.\nThese projects are designed and implemented by project sponsors, which are usually local transit agencies, often in coordination with local metropolitan-planning organizations. Within the Capital Investment Grant program, project sponsors have typically applied for funding as either a New Starts or a Small Starts project. Under MAP-21, New Starts projects include new fixed-guideway projects, extensions to fixed- guideway projects, and fixed-guideway bus rapid transit projects that have a total capital cost of $250 million or greater or a Capital Investment Grant program contribution of $75 million or greater. Small Starts projects include new fixed-guideway projects, extensions to fixed-guideway projects, and both fixed-guideway and corridor-based bus rapid transit projects that have a total net capital cost less than $250 million and a Capital Investment Grant program contribution less than $75 million.\nPrior to the enactment of MAP-21, the Capital Investment Grant program was governed by statutory provisions put in place under SAFETEA-LU. MAP-21, which was enacted in July 2012, made numerous changes to the program. For example, MAP-21 reduced the number of phases in the process that projects must follow to be eligible for and receive federal funding. Under SAFETEA-LU, project sponsors were required to identify the transportation needs of a specific corridor and evaluate a range of alternatives to address locally identified problems in that corridor during what was called the alternatives analysis phase. To complete this phase, project sponsors selected a locally preferred alternative to be advanced for further development after costs, benefits, and impacts of each alternative were analyzed. However, under MAP-21 the process relies on the review of alternatives performed during the metropolitan transportation planning and the National Environmental Policy Act of 1969 (NEPA) environmental review processes. In addition, MAP-21 created a new category of eligible projects called Core Capacity Improvement projects, which are substantial corridor-based capital investments in existing fixed-guideway systems that increase the capacity of a corridor by at least 10 percent in a corridor that is at or above capacity today or is expected to be within 5 years. Core Capacity Improvement projects can include expanding system platforms, the acquisition of real property, rights-of-way, and rolling stock associated with increasing capacity, among other things, and cannot include elements to improve general station facilities, parking, or elements designed to maintain a state of good repair.\nUnder MAP-21, any project that fits the definition of a new fixed-guideway project or an extension to an existing fixed-guideway system is eligible to compete for federal funding under the Capital Investment Grant program. Once a project sponsor decides to seek Capital Investment Grant program funding it submits an application to FTA consisting of information on the proposed project, such as a description of the transportation problem the project is seeking to address, among other requirements. If accepted into the program, the process that project sponsors must follow varies depending on whether the project is a New Starts, Small Starts, or Core Capacity Improvement project (see fig. 1).\nNew Starts and Core Capacity Improvement projects. New Starts and Core Capacity Improvement projects must complete two phases in the development process to be eligible for a Construction grant agreement—Project Development and Engineering. During the Project Development phase, among other requirements, the Secretary must determine that the project has been selected as the locally preferred alternative at the end of the environmental review process. Under MAP-21 changes to the Capital Investment Grant program, New Starts and Core Capacity Improvement projects have 2 years after the day in which they enter into Project Development to complete the activities required to obtain a project rating by FTA, a process that is discussed further below. If approved to advance into the second phase of the development process—Engineering—project sponsors must, among other things, develop a firm and reliable cost, scope, and schedule for the project and obtain all non-Capital Investment Grant program funding commitments.\nSmall Starts projects. Small Starts projects complete a similar but more streamlined process that requires project sponsors to complete only one phase—Project Development—to be eligible for a Construction grant agreement. During this phase, the Secretary must also determine that the project has been adopted as the locally preferred alternative and the project sponsor must complete the environmental review process. To complete Project Development, project sponsors must develop a firm and reliable cost, scope, and schedule for the project and obtain all non-Capital Investment Grant program funding commitments, among other things.\nBefore FTA can recommend a project to Congress for funding, it is required by law to rate the project by using a number of criteria designed to provide important information about project merit. While New Starts and Small Starts project justification criteria have changed over time, there are currently six criteria: mobility improvements, environmental benefits, cost-effectiveness, economic development, land use, and congestion relief. In contrast, the project justification criteria for Core Capacity Improvement projects are: mobility improvements, environmental benefits, cost-effectiveness, economic development, congestion relief, and existing capacity needs of a corridor. FTA is also required to evaluate and rate the local financial commitment to the project and the project sponsor’s ability to operate the project and continue to operate the existing transit system.\nFTA is also required to rate each individual criterion on a five point scale, from low, medium-low, medium, medium-high, and high. As we have previously reported, FTA prepares and combines a summary project justification, which is based on the ratings of the six criteria, and a summary local financial commitment rating to arrive at a project’s overall rating, as shown in figure 2. To advance through the development process and be eligible for funding, proposed projects must score at least a medium overall project rating (which requires at least a medium rating for both the summary project justification and the summary local financial commitment). In order to recommend a project for a grant agreement in the President’s budget, FTA considers the evaluation and rating of the project under the specified criteria, availability of Capital Investment Grant program funds, and the readiness of the proposed project.\nProjects that compete for Capital Investment Grant program funding are formally overseen by FTA with the help of contractors, who provide assistance to FTA with oversight of planning, construction, and financing of projects throughout the development process. FTA and its contractors evaluate each project’s risk, scope, cost, schedule, financial plan, and project management plan, as well as the project sponsor’s technical capacity and capability—before recommending a project for funding. Throughout the development process, project sponsors submit periodic updates to FTA on different aspects of their projects, such as on project cost, schedule, projected ridership, and the financing of the projects. FTA maintains its headquarters in Washington, D.C., with 10 regional offices throughout the continental United States, to assist with project oversight.\nAs mentioned previously, this report focuses on the statutory, regulatory, and other FTA requirements applicable to the Capital Investment Grant program under MAP-21. In December 2015, the FAST Act was enacted. In addition to significantly altering or repealing some of the MAP-21 requirements, the FAST Act also made other changes to the Capital Investment Grant program’s processes. According to FTA officials, some of those key changes include: (1) raising the dollar threshold for eligibility for New Starts and Small Starts projects, (2) increasing the number of projects eligible for funding by allowing joint public transportation and intercity passenger rail service and commuter rail projects to be eligible for funding, and (3) eliminating a requirement that corridor-based bus rapid transit projects must provide weekend service to be eligible for funding. We plan to examine FTA’s implementation of the FAST Act in future work on the Capital Investment Grant program.", "FTA has made progress implementing most of the key changes MAP-21 made to the Capital Investment Grant program. As shown in table 1, FTA has issued policy guidance outlining the new review and evaluation process and criteria for New Starts, Small Starts, and Core Capacity Improvement projects and also provided project sponsors with instructions on how they can request to pre-qualify for a satisfactory rating based on the characteristics of their project, otherwise known as warrants. However, FTA has not completed the rulemaking required to fully implement the MAP-21 changes or fully addressed all requirements, such as the requirement to establish an evaluation and rating process for programs of interrelated projects, all of which we discuss below. FTA officials told us they are working toward addressing the remaining requirements.", "FTA has promulgated new rules for the Capital Investment Grant program but plans to initiate the rulemaking necessary to fully implement the changes MAP-21 made to the program in the future. Specifically, MAP-21 required FTA to issue rules establishing an evaluation and rating process for new fixed-guideway capital projects as well as Core Capacity Improvement projects. In January 2013, FTA issued a final rule establishing a new regulatory framework for the evaluation and rating of New Starts and Small Starts projects. FTA initiated this rulemaking—by issuing a Notice of Proposed Rulemaking—prior to the enactment of MAP-21, and FTA’s final rule covers portions of the evaluation and rating requirements for New Starts and Small Starts projects that MAP-21 did not significantly change. According to FTA, future rulemaking will cover new items included in MAP-21 that have not yet been the subject of the rulemaking process, such as the evaluation and rating process for Core Capacity Improvement projects and the revised processes for New Starts and Small Starts projects. FTA officials told us they plan to address the remaining requirements of MAP-21 and now the Fast Act in future rulemaking. They noted that they still have to review the changes the FAST Act made to the Capital Investment Grant program and that factors outside of their control could delay their efforts.", "FTA provided project sponsors with updated policy guidance for the Capital Investment Grant program in both 2013 and 2015 and plans to update its policy guidance again in 2017. MAP-21 required FTA to issue policy guidance specifying the review and evaluation process and criteria for new fixed-guideway capital projects and Core Capacity Improvement projects and issue updated guidance each time FTA makes significant changes to the rating process and criteria, but not less frequently than once every 2 years. Concurrent with the January 2013 issuance of the final rule, FTA solicited public comment on its proposed policy guidance for New Starts and Small Starts projects and, in August 2013, issued policy guidance covering the evaluation and rating process for New Starts and Small Starts projects. In April 2015, FTA again solicited public comment on its proposed policy guidance for the evaluation and rating process for Core Capacity Improvement projects along with other topics not included in FTA’s August 2013 guidance, such as the new congestion relief criterion and the ways in which projects can qualify for warrants. Subsequently, FTA issued updated policy guidance for the program in August 2015. FTA has stated its August 2015 guidance will serve as a guide for running the Capital Investment Grant program until it completes the rulemaking to fully implement the MAP-21 changes and now the requirements of the FAST Act.\nIn addition to covering the evaluation and rating process for Core Capacity Improvement projects, FTA’s August 2015 policy guidance also:\nSet a deadline for project development: MAP-21 specified that New Starts and Core Capacity Improvement projects have 2 years after the day in which they enter into Project Development to complete the activities required to obtain a project rating by FTA. In addressing this requirement, FTA’s policy guidance encourages project sponsors to begin planning early, noting that project sponsors may wish to conduct early work, such as initiating the environmental review process, prior to requesting entry into Project Development.\nImplemented a new congestion relief criterion: MAP-21 added congestion relief as a project justification criterion for projects while removing operating efficiencies as a criterion, and under FTA’s policy guidance, congestion relief is calculated based on the number of new weekday linked transit trips that are projected to result from a project’s implementation.\nUtilized the new definition of bus rapid transit as set out in MAP-21: According to an FTA official, the new definition of bus rapid transit represented a significant change because it impacts funding eligibility. For example, the new definition required eligible bus rapid transit projects to have short headway bi-directional service for a substantial part of weekdays and weekend days, which was not the case under SAFETEA-LU. FTA, in turn, defined the interval of time required for service during peak periods and during other times of the day and made other related determinations.\nFTA officials told us they anticipated soliciting public comment on FTA’s policy guidance again later this year or in 2017 in order to meet the MAP- 21 requirement that FTA issue new guidance no less than every 2 years.", "FTA plans to address the programs of interrelated project provisions of MAP-21 through future rulemaking and policy guidance updates. FTA officials told us that before they could begin working to address these provisions, they first needed to establish the evaluation and rating process for Core Capacity Improvement projects because a Core Capacity Improvement project could be one of the interrelated projects. FTA’s August 2015 policy guidance covers the evaluation and rating process for Core Capacity Improvement projects; however, officials also said that some aspects of the law related to programs of interrelated projects were unclear and made it difficult to implement. For example, MAP-21 did not specify which evaluation criteria FTA should use to rate programs of interrelated projects that include more than one type of project. At the time of our review, FTA was working with Congress to address these issues and, in December 2015, the FAST Act was enacted, which officials told us provided the clarification they sought. FTA officials told us they plan to address these provisions in future rulemaking and policy guidance updates; however, they had no firm date for when these provisions would be implemented and noted it would take time. Figure 3 shows an illustrative example of a proposed program of interrelated projects consisting of two Core Capacity Improvement projects and one Small Starts project in Dallas, Texas.", "FTA is finalizing the development of a tool that will help officials determine the level of review required of project sponsors based on a number of risk factors, such as the total cost and complexity of a proposed project and the project sponsor’s in-house technical capacity and capability. According to FTA officials, this tool, once complete, will address the MAP- 21 requirement that FTA use an expedited technical-capacity review process for project sponsors under certain circumstances. Specifically, the expedited review would be used for project sponsors that have recently and successfully completed a project that achieved budget, cost, and ridership outcomes consistent with or better than projections and that has demonstrated continued staff expertise and other resources necessary to implement a new project. FTA officials estimated that the development of this tool would be completed over the next few months.", "At the time of our review, FTA had provided project sponsors with instructions on how to request the use of warrants; however, it was too early to tell the extent to which FTA will be able to make greater use of warrants. Warrants are ways that proposed projects can pre-qualify for a satisfactory rating on a given criterion based on the characteristics of a project or the project corridor as long as the Capital Investment Grant program’s share of the project does not exceed $100 million or 50 percent of the project’s cost and the applicant certifies that its existing public- transportation system is in a state of good repair. For example, New Starts projects can qualify for an automatic rating of medium for some criteria as long as the total capital cost of the proposed project and the number of existing weekday transit trips in the corridor meet certain eligibility criteria, among other things. FTA’s August 2015 policy guidance specified the parameters that FTA will use to determine if projects are eligible for warrants and provided project sponsors with instructions on how to request the use of warrants. FTA officials told us that for the most recent rating cycle—which is also the first rating cycle in which FTA allowed the use of expanded warrants—three project sponsors requested warrants and FTA determined two were eligible. According to FTA officials, it will take several rating cycles and feedback from project sponsors before the officials will have enough information to assess the effect of expanded warrants.", "The selected project sponsors we contacted were generally supportive of the changes MAP-21 made to the Capital Investment Grant program and of FTA’s implementation of the changes. However, the project sponsors also told us they were concerned about the potential impact some of the changes—such as locking in funding at entry into Engineering and requiring New Starts and Core Capacity Improvement projects to complete Project Development within 2 years—might have on project sponsors. In addition, while the number of projects in the Capital Investment Grant program has increased by about 70 percent since 2012, project sponsors also told us it was too early to tell the extent to which the MAP-21 changes will help expedite projects through the program.", "A prevalent theme from our discussions with representatives from 13 project sponsors was that they generally support changes—such as: (1) streamlining the project development process, (2) establishing Core Capacity Improvement projects as a new category of eligible projects, (3) instituting a 2-year requirement for New Starts and Core Capacity Improvement projects to complete Project Development, and (4) revising the evaluation and rating process, that MAP-21 made to the Capital Investment Grant program. Representatives from 9 of the 13 project sponsors we interviewed told us that the changes streamlined the project development process by decreasing the number of time-consuming reviews FTA undertakes or by eliminating what these representatives considered to be burdensome requirements, such as the alternatives analysis requirement under SAFETEA-LU. According to the representatives we interviewed, streamlining should help expedite projects through the program because fewer FTA reviews decrease the amount of work project sponsors need to perform prior to submitting information to FTA for review. According to APTA representatives, the elimination of the alternatives analysis requirement was a particularly positive development for project sponsors because project sponsors devoted significant resources to analyzing alternatives prior to requesting entry into the Capital Investment Grant program.\nOne of the MAP-21 changes that some project sponsors indicated they were supportive of is the addition of Core Capacity Improvement projects. Representatives from one project sponsor said the addition of these projects is a positive development because these projects give project sponsors options to increase the capacity of a system as ridership increases, while two others noted that the addition of Core Capacity Improvement projects expands project eligibility for projects that would likely not have rated favorably under New Starts criteria. According to representatives from one of these project sponsors, these projects expand eligibility because Core Capacity Improvement projects are designed to increase the capacity of existing corridors, not add extensions to an existing system. Figures 4 and 5 provide information on the two Core Capacity Improvement projects we visited for this review— Dallas Area Rapid Transit’s (DART) platform extensions project and Metropolitan Transportation Authority’s (MTA) power improvements project in New York City.\nRepresentatives from 6 of 13 project sponsors also indicated that they were generally supportive of the MAP-21 requirement that New Starts and Core Capacity Improvement projects complete Project Development within 2 years. Representatives from two project sponsors told us that requiring project sponsors to complete more work, such as initiating the environmental review process, prior to entering Project Development should help expedite a project’s progress through the program because completing this work decreases the amount of work project sponsors need to complete while in Project Development. Further, representatives from one project sponsor indicated that this change should also deter project sponsors that do not yet have defined projects from entering the program. However, as discussed below, most of the project sponsors also raised some concerns about the 2-year completion deadline.\nIn addition, representatives from 12 of the 13 project sponsors told us that they were generally supportive of the changes MAP-21 made to the evaluation and rating process. Representatives from one project sponsor noted, for example, that the MAP-21 changes have greatly simplified and streamlined the review process and made it more transparent. Representatives from another project sponsor also noted that the changes required FTA to implement more evaluative measures that take into account improvements that benefit existing riders, such as measures designed to reduce travel time, rather than focusing solely on the addition of new riders.\nHowever, project sponsors also raised some concerns regarding certain aspects of the MAP-21 changes.\nRepresentatives from 11 of the 13 project sponsors told us that requiring New Starts and Core Capacity Improvement projects to complete Project Development activities within 2 years could pose a challenge for projects sponsors—for example, increasing project sponsors’ costs because project sponsors may have to perform more work prior to entering Project Development. These representatives noted that such work is not eligible for pre-award authority under MAP-21. In FTA’s August 2015 policy guidance, FTA acknowledged that it may be challenging for certain proposed projects to complete Project Development within 2 years. However, FTA also acknowledged that the intent of the MAP-21 changes was to help projects make quick progress and not linger in the program, and FTA encouraged project sponsors to perform whatever work they feel necessary prior to requesting entry into Project Development.\nRepresentatives from 5 of the 13 project sponsors indicated that locking in Capital Investment Grant program funding at entry into the Engineering phase could be too early in the development process and could pose a challenge because some projects may have yet to develop realistic cost and schedule estimates. According to these representatives, locking in funding at entry into Engineering increases the risk of escalating costs to project sponsors—costs which project sponsors would be responsible for—and is a change compared to under SAFETEA-LU where funding was locked in prior to a project being recommended for a grant agreement. APTA representatives told us that some projects may spend more time in Project Development as a result of this change, in order to help ensure that project sponsors develop more mature cost estimates before locking- in funding. According to FTA, project sponsors, not the federal government, should bear the risk of cost overruns once a project enters Engineering. FTA officials noted that the project sponsor determines when to proceed to Engineering and thus is responsible for ensuring that a project’s cost estimates are supported by sufficient engineering and design work.\nRepresentatives from 10 of the 13 project sponsors voiced various concerns regarding some of the changes MAP-21 made to the evaluation and rating process. For example, representatives from 4 project sponsors told us that they thought the ridership measure of the new congestion relief criterion appeared biased toward more mature regions with legacy transit ridership compared to fast-growing regions with emerging transit ridership, or, according to representatives from one of these project sponsors, modes that transport a greater number of passengers, such as light rail projects. FTA has acknowledged limitations with the ridership measure and noted it intends to continue to refine the congestion relief measure over time with input from the transit industry and experience gained through its implementation of the MAP-21 changes.", "Representatives from 11 of 13 project sponsors indicated that they were generally satisfied with FTA’s implementation of the MAP-21 changes. For example, representatives from four project sponsors said that FTA has made a good effort to listen to and incorporate many of the recommendations offered by project sponsors. APTA representatives similarly told us that FTA has done an excellent job engaging the transit industry in trying to streamline the Capital Investment Grant program. In addition, representatives from 11 of 13 project sponsors said that they were generally supportive of the policy guidance FTA has issued since the enactment of MAP-21. For example, representatives from five project sponsors said FTA’s policy guidance has been comprehensive and useful in explaining how FTA will implement the MAP-21 changes and describing what FTA expects of project sponsors. Furthermore, representatives from all 13 project sponsors said that FTA has continued to provide support to project sponsors prior to entry into Project Development, such as during the application process, as well as throughout the program, as it has worked to implement the MAP-21 changes. For example, project sponsors noted that FTA continues to provide checklists, roadmaps, and technical assistance, in addition to its policy guidance updates and reporting instructions. FTA officials noted that they provide ongoing technical assistance on a routine basis during each of their conversations with project sponsors.\nAlthough project sponsors were generally satisfied with FTA’s efforts thus far, they pointed out that not all MAP-21 changes, such as the programs of interrelated projects provisions, have been implemented yet. In addition, representatives from 9 of the 13 project sponsors told us they thought it took a long time for FTA to issue some of its policy guidance. FTA officials noted that by law they are required to issue new policy guidance for the Capital Investment Grant program no less than every 2 years and emphasized that by law they are also required to invite and respond to public comment on their guidance via the Federal Register— requirements that are time-consuming to comply with. Representatives from 11 of the 13 project sponsors also offered various suggestions regarding how FTA could enhance the support it provides project sponsors, such as by providing checklists for different types of projects, such as design-build, operate-maintain, or public-private partnerships or by increasing the number of training opportunities it provides project sponsors.", "Since 2012, the total number of projects in the Capital Investment Grant program has increased by 70 percent, from 37 projects as of February 2012 to 63 projects as of February 2016, as shown in figure 6. FTA officials, selected project sponsors, and representatives from APTA largely attributed this growth to the fact that under MAP-21, FTA is no longer required to rate proposed projects prior to their entry into the Capital Investment Grant program. While FTA officials told us they view increased participation in the program as an opportunity to help improve public transit in communities across the country, they also said such growth presents challenges, noting that FTA’s resources to review and evaluate projects have largely remained flat over the last several years. Further, they noted that participation in the program by Small Starts projects is increasing—since 2012, Small Starts projects, as a percentage of the total number of projects, increased from about 24 percent to more than 50 percent—and that Small Starts project sponsors typically have little experience constructing major capital projects. Consequently, FTA often provides those project sponsors with greater levels of technical assistance and support. FTA officials told us they have requested additional funding from Congress to address these challenges. They also noted that absent being given additional resources, they cannot spend as much time providing technical assistance or evaluating projects.\nWhile the number of projects in the Capital Investment Grant program has increased since the enactment of MAP-21, we found that limited data were available to assess whether projects were progressing through the program more quickly compared to under SAFETEA-LU. For example, at the time of our review only 4 projects had approached the 2-year deadline to complete Project Development. According to FTA officials, 3 of these projects completed the activities required to obtain a project rating from FTA before their 2-year deadlines passed while the third requested to postpone entry into Engineering to complete additional design work and address local funding issues.\nRepresentatives from 8 of the 13 project sponsors we spoke with and representatives from APTA also felt that it was is too early to tell the extent to which the MAP-21 changes will help expedite projects through the program. For example, among other things, representatives from these project sponsors told us that while MAP-21 consolidated the number of phases in the development process it was not yet apparent to them how this might affect their projects since they perceived they would still have to complete the same amount of work. In discussing this issue with FTA, officials emphasized that projects were not far enough along for FTA to determine whether the MAP-21 changes are expediting projects through the program.", "We provided a draft of this report to DOT for review and comment. In its comments, which we have reproduced in appendix II, DOT noted that it is committed to continuing its efforts to improve the Capital Investment Grant program while ensuring that project evaluations provide important information to decision makers. DOT also provided technical comments that we incorporated where appropriate.\nWe are sending copies of this report to interested congressional committees and the Secretary of the Department of Transportation. In addition, this report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions or would like to discuss this work, please contact me at (202) 512-2834 or [email protected]. 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.", "This report discusses: (1) the Federal Transit Administration’s (FTA) progress in implementing changes the Moving Ahead for Progress in the 21st Century Act (MAP-21) made to the Capital Investment Grant program and (2) how selected project sponsors view the MAP-21 changes and FTA’s implementation of those changes. We focused our work on selected statutory requirements contained in MAP-21 that were not significantly altered or repealed by the Fixing America’s Surface Transportation Act (FAST Act).\nTo address our objectives, we reviewed the relevant provisions of MAP- 21, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), and the FAST Act. We also reviewed FTA’s policy guidance; other pertinent FTA documents related to the program, such as FTA’s annual reports to Congress; and our body of work on FTA’s Capital Investment Grant program. In addition, we interviewed FTA officials, representatives of the American Public Transportation Association, and selected project sponsors. Specifically, we interviewed representatives from 13 project sponsors representing 17 of 52 projects participating in the program as of February 2015 and conducted a content analysis of the interviews with project sponsors to identify and summarize themes that emerged during our discussions. The information obtained from our interviews with project sponsors is not generalizable to all project sponsors but provides insight into project sponsors’ views of the MAP-21 changes thus far. We also visited New York City and Dallas, Texas, to tour the sites of two proposed Core Capacity Improvement projects. The project sponsors we contacted and the locations we visited were selected based on a number of factors, the primary being previous project experience in FTA’s Capital Investment Grant program under SAFETEA-LU, which provided a basis to compare changes made by MAP-21. These project sponsors represent 7 New Starts projects, 8 Small Starts projects, and 2 Core Capacity Improvement projects, as well as different rail modes (heavy rail, light rail, commuter rail) and both bus rapid transit and streetcar projects, as shown in table 2.\nWe conducted this performance audit from July 2015 through April 2016 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 above, key contributors to this report included Brandon Haller (Assistant Director), Andrew Burton, Geoffrey Hamilton, Wesley A. Johnson, Delwen Jones, Hannah Laufe, Malika Rice, and Andrew Stavisky.", "Public Transportation: Multiple Factors Influence Extent of Transit- Oriented Development. GAO-15-70. Washington, D.C.: November 18, 2014.\nPublic Transit: Length of Development Process, Cost Estimates, and Ridership Forecasts for Capital-Investment Grant Projects. GAO-14-472. Washington, D.C.: May 30, 2014.\nPublic Transit: Funding for New Starts and Small Starts Projects, October 2004 through June 2012. GAO-13-40. Washington, D.C.: November 14, 2012.\nBus Rapid Transit: Projects Improve Transit Service and Can Contribute to Economic Development. GAO-12-811. Washington, D.C.: July 25, 2012.\nPublic Transportation: Requirements for Smaller Capital Projects Generally Seen as Less Burdensome. GAO-11-778. Washington, D.C.: August 2, 2011.\nPublic Transportation: Use of Contractors Is Generally Enhancing Transit Project Oversight, and FTA is Taking Actions to Address Some Stakeholder Concerns. GAO-10-909. Washington, D.C.: September 14, 2010.\nPublic Transportation: Federal Project Approval Process Remains a Barrier to Greater Private Sector Role and DOT Could Enhance Efforts to Assist Project Sponsors. GAO-10-19. Washington, D.C.: October 29, 2009.\nPublic Transportation: Better Data Needed to Assess Length of New Starts Process, and Options Exist to Expedite Project Development. GAO-09-784. Washington, D.C.: August 6, 2009.\nPublic Transportation: New Starts Program Challenges and Preliminary Observations on Expediting Project Development. GAO-09-763T. Washington, D.C.: June 3, 2009.\nPublic Transportation: Improvements Are Needed to More Fully Assess Predicted Impacts of New Starts Projects. GAO-08-844. Washington, D.C.: July 25, 2008.\nPublic Transportation: Future Demand Is Likely for New Starts and Small Starts Programs, but Improvements Needed to the Small Starts Application Process. GAO-07-917. Washington, D.C.: July 27, 2007.\nPublic Transportation: New Starts Program Is in a Period of Transition. GAO-06-819. Washington, D.C.: August 30, 2006.\nPublic Transportation: Preliminary Information on FTA’s Implementation of SAFETEA-LU Changes. GAO-06-910T. Washington, D.C.: June 27, 2006.\nPublic Transportation: Opportunities Exist to Improve the Communication and Transparency of Changes Made to the New Starts Program. GAO-05-674. Washington, D.C.: June 28, 2005.\nMass Transit: FTA Needs to Better Define and Assess Impact of Certain Policies on New Starts Program. GAO-04-748. Washington, D.C.: June 25, 2004.\nMass Transit: FTA Needs to Provide Clear Information and Additional Guidance on the New Starts Ratings Process. GAO-03-701. Washington, D.C.: June 23, 2003.\nMass Transit: FTA’s New Starts Commitments for Fiscal Year 2003. GAO-02-603. Washington, D.C.: April 30, 2002.\nMass Transit: FTA Could Relieve New Starts Program Funding Constraints. GAO-01-987. Washington, D.C.: August 15, 2001.\nMass Transit: Implementation of FTA’s New Starts Evaluation Process and FY 2001 Funding Proposals. GAO/RCED-00-149. Washington, D.C.: April 28, 2000." ], "depth": [ 1, 1, 2, 2, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h0_full", "", "", "", "", "", "", "", "", "", "", "", "h1_full", "", "", "", "", "" ] }

{ "question": [ "What does FTA's Capital Investment Grant program provide funds for each year?", "How do project sponsors apply for funding through this program?", "How was the Capital Investment Grant program revised in 2012?", "What did MAP-21 require GAO to do?", "What does this report discuss?", "How did GAO collect data for this report?", "How were project sponsors and locations visited selected?" ], "summary": [ "FTA's Capital Investment Grant program provides roughly $2 billion in appropriated funds each year to help states, cities, and localities plan and build new or extensions to existing fixed-guideway transit systems.", "Under this program, project sponsors—usually local transit agencies—have typically applied for their projects to receive federal funding as either a New Starts or a Small Starts project.", "In 2012, MAP-21 created a new category of eligible projects called Core Capacity Improvement projects and also revised the process proposed projects must follow to be eligible for and receive federal funding.", "MAP-21 included a provision for GAO to biennially review FTA's and the Department of Transportation's implementation of this program.", "This report discusses: (1) FTA's progress in implementing changes to the program required by MAP-21 and (2) how selected project sponsors view the MAP-21 changes and FTA's implementation of those changes.", "To conduct this review, GAO reviewed the relevant provisions of pertinent laws and FTA's policy guidance, interviewed FTA officials and representatives from 13 project sponsors representing 17 of 52 projects participating in the program, and visited the sites of two Core Capacity Improvement projects.", "Project sponsors and locations visited were selected based on previous experience in the program, among other things." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "Background", "Overview of the Federal Reserve System", "Federal Reserve Income, Surplus Account, and Remittances to Treasury", "Stock Purchase Requirement for Member Banks and Membership Benefits", "Reserve Bank Boards of Directors", "Central Bank Independence", "Rationales for Stock Purchase Requirement and Dividend Rates", "Stock Purchase Requirement Established an Ownership and Control Structure for Reserve Banks as a Counterbalance in the Federal Reserve", "Dividend Rate of 6 Percent Was Intended to Compensate for Bank Costs and Risks and Attract State Banks", "Potential Implications of Modifying the Capital Surplus Account and Dividend Rate", "Surplus Account Cap Has Not Impeded Federal Reserve’s Operations but Raises Other Questions for Some", "Dividend Rate Modification Raises Potential Implications but Has Had No Immediate Effect on System Membership", "Modifications to Stock Ownership Requirement Would Have Implications for the Federal Reserve’s Public and Private Balance and Reserve Bank Operations", "Retiring Reserve Bank Stock and Making Reserve Banks Field Offices", "Voluntary Stock Ownership", "Callable Stock Purchase Requirement", "Agency Comments", "Appendix I: Scope and Methodology", "Appendix II: Selected Bibliography", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Acknowledgments" ], "paragraphs": [ "", "The Federal Reserve Act established the Federal Reserve to operate collectively as the country’s central bank. The Federal Reserve Act established the Federal Reserve as an independent agency with a decentralized structure to ensure that monetary policy decisions would be based on a broad economic perspective from all regions of the country. The Federal Reserve’s monetary policy decisions do not have to be approved by the President, the executive branch of the government, or Congress. However, the Federal Reserve is subject to oversight by Congress and conducts monetary policy so as to promote the long-run objectives of maximum employment, stable prices, and moderate long- term interest rates in the United States, as specified by law.\nThe Federal Reserve operates in a unique public and private structure. It consists of the Board of Governors (a federal agency), the 12 Reserve Banks (federally chartered corporations), and FOMC.\nBoard of Governors. The Board of Governors is an independent regulatory federal agency located in Washington, D.C., and has broad interest in monitoring and promoting the stability of financial markets. The Board of Governors’ authorities include: supervising bank and thrift holding companies, state-chartered banks that are members of the Federal Reserve, and the U.S. operations of foreign banking organizations; reviewing and determining discount rates for lending to depository institutions; conducting monetary policy (in cooperation with FOMC); and providing general supervision over the operations of the Reserve Banks. The top officials of the Board of Governors are the seven members who are appointed by the President and confirmed by the Senate. Moreover, the Federal Reserve Act requires the Board of Governors to submit written reports to Congress twice each year containing discussions of the conduct of monetary policy and economic developments and prospects for the future. The act also requires the Chair of the Board of Governors to testify on the conduct of monetary policy twice each year in connection with the monetary policy report, as well as economic development and prospects for the future.\nReserve Banks. The Federal Reserve is divided into 12 districts, with each district served by a regional Reserve Bank. In most cases, each regional Reserve Bank also operates one or more branch offices (see fig. 1). The Reserve Banks are not federal agencies; rather, each Reserve Bank is a federally chartered corporation with a board of directors and member banks that are stockholders.\nUnder the Federal Reserve Act, Reserve Banks are subject to the general supervision of the Board of Governors. The Reserve Banks were established by Congress as the operating arms of the Federal Reserve, and they combine both public and private elements in performing a variety of services and operations. These functions include participating in formulating and conducting monetary policy; providing payment services to depository institutions, including transfers of funds, automated clearinghouse services, and check collection; distributing coin and currency; performing fiscal agency functions for Treasury, certain federal agencies, and other entities; providing short-term loans to depository institutions; serving consumers and communities by providing educational materials and information on financial consumer protection rights and laws and information on community development programs and activities; and supervising bank holding companies, state member banks, savings and loan holding companies, U.S. offices of foreign banking organizations, and designated financial market utilities pursuant to authority delegated by the Board of Governors.\nIn addition, certain services are provided to foreign and international monetary authorities, primarily by the Federal Reserve Bank of New York.\nState-chartered member banks are subject to supervision by the state in which they are chartered and the Board of Governors (through a regional Reserve Bank) as a condition of membership. National banks are chartered and supervised by OCC. State nonmember banks are supervised by the state in which they are chartered and by FDIC. See figure 2 for a chart displaying the number and percentage of commercial banks supervised by each prudential regulator.\nFOMC. FOMC plays a central role in the execution of the Federal Reserve’s monetary policy mandate to promote price stability, maximum employment, and moderate long-term interest rates in the United States. FOMC is responsible for directing open market operations—the purchase and sale of securities in the open market by a central bank—to influence the total amount of money and credit available in the economy. FOMC has authorized and directed the Federal Reserve Bank of New York to conduct open market operations by engaging in purchases or sales of certain securities, typically U.S. government securities, in the secondary market. FOMC also plays a central role in monetary policy strategy and communication.", "Reserve Banks derive income from various sources, maintain surplus accounts, and remit earnings in excess of expenses to Treasury. The Reserve Banks derive income primarily from the interest on their holdings of U.S. government securities, agency mortgage-backed securities, and agency debt acquired through open market operations. Other sources of income are the interest on foreign currency investments held by the Reserve Banks; interest on loans to depository institutions; reimbursements for services performed as fiscal agent for Treasury and other agencies; and fees received for payment services provided to depository institutions, such as check clearing, funds transfers, and automated clearinghouse operations. However, Reserve Banks are not operated for profit. The Reserve Banks use earnings to pay operational expenses and dividends to member banks and to fund their capital surplus accounts.\nThe surplus account is primarily intended to cushion against the possibility that total Reserve Bank capital would be depleted by losses incurred through Federal Reserve operations. Until enactment of the FAST Act, Federal Reserve policy as established in the Financial Accounting Manual for Federal Reserve Banks required the Reserve Banks to retain a surplus balance equal to the 3 percent that commercial banks pay in to purchase Reserve Bank stock. Due to this matching provision, as the value of member banks’ capital and surplus increased over time, so did the values of the Federal Reserve’s surplus account (see fig. 3).\nThe Reserve Banks then transfer earnings in excess of expenses to Treasury. About 95 percent of the Reserve Banks’ net earnings have been transferred to Treasury since the Federal Reserve began operations in 1914. The transfers, known as remittances, have been above historic levels since the 2007—2009 financial crisis (see fig. 4).", "Under the Federal Reserve Act, a member bank (a national bank or state- chartered bank that applies and is accepted to the Federal Reserve) must subscribe to capital stock of the Reserve Bank of its district in an amount equal to 6 percent of the member bank’s capital and surplus. The member bank will pay for one-half of this subscription upon approval by the Reserve Bank of its application for capital stock (with the remaining half of the subscription subject to call by the Reserve Bank). The capital stock of each Reserve Bank is valued at $100 per share. When a member bank increases its capital stock or surplus, it must subscribe for an additional amount of Reserve Bank stock equal to 6 percent of the increase with half of the stock paid in. Conversely, when a member bank reduces its capital stock or surplus it is to surrender the same amount of stock to its regional Reserve Bank. Shares of the capital stock of Reserve Banks owned by member banks do not carry with them the typical features of control and financial interest conveyed to holders of common stock in for-profit organizations. For example, member banks cannot transfer or sell Reserve Bank stock or pledge it as collateral; voting rights do not change with the number of shares held; and each member bank has only a single vote in those director elections in which they are eligible to vote.\nCurrently, stock ownership provides a dividend payment and the right to vote for two classes of Reserve Bank directors, as discussed later. Under the original Federal Reserve Act, the annual dividend rate was 6 percent on paid-in capital stock and was cumulative. Therefore, member banks would earn a dividend of 0.5 percent per month on the amount of their paid-in capital stock. The Reserve Banks’ long-standing practice is to make dividend payments on the last business days of June and December (that is, a dividend payment of 3 percent twice a year).\nProvisions in the FAST Act effective January 1, 2016, altered the dividend rate that some member banks receive on paid-in capital. For banks with more than $10 billion in consolidated assets, the dividend rate was reduced from 6 percent per annum to the lesser of 6 percent or the highest accepted yield at the most recent auction of 10-year Treasury notes before the dividend payment date. The high yield of the 10-year Treasury note auctioned on June 30, 2016 (the last auction before the dividend payment) was 1.702 percent, and on December 30, 2016, was 2.233 percent. The dividend rate for member banks with less than $10 billion in consolidated assets remains at 6 percent. The Reserve Banks continue to make dividend payments semiannually.", "The composition of boards of directors for Reserve Banks is statutorily determined and intended to ensure that each board represents both the public and member banks in its district. The Federal Reserve Act established nine-member boards of directors to govern all 12 Reserve Banks. Each board is split equally into three classes of directors. Class A directors represent the member banks, while Class B and C directors represent the public. For Class B and C directors, the Federal Reserve Act requires “due but not exclusive consideration to the interests of agriculture, commerce, industry, services, labor, and consumers.” The Federal Reserve Act also requires that member banks elect Class A and Class B directors and that the Board of Governors appoints Class C directors. The Federal Reserve Act provides that the chairman of the board, like all Class C directors, cannot be an officer, director, employee, or stockholder of any bank. The principal functions of Reserve Bank directors are to play a role in the conduct of monetary policy; oversee the general management of the Reserve Bank, including its branches; and act as a link between the Reserve Bank and the community.\nThe boards of directors of Reserve Banks play a role in the conduct of monetary policy in three primary ways: (1) by providing input on economic conditions to the Reserve Bank president (all 12 Reserve Bank presidents attend and participate in deliberations at each FOMC meeting); (2) by participating in establishing discount rate recommendations (interest rate charged to commercial banks and other depository institutions on loans received from their regional Reserve Bank’s discount window) for Board of Governors’ review and determination; and (3) for the Class B and C directors, by appointing Reserve Bank presidents with the approval of the Board of Governors.", "A large amount of research has been produced on the attributes and effects of central bank independence. According to the research, a high level of central bank independence is generally considered to be desirable. The research has generally found that countries with high central bank independence have been able to maintain lower levels of inflation. Central bank independence can be divided into three categories (political, instrument, and financial independence), as described in the following bullets.\nPolitical independence is based on a central bank’s capacity to define monetary policy strategy (goals) without political interference. Political independence encompasses appointing procedures, relationships with the government, and formal responsibilities.\nInstrument independence is based on a central bank’s capacity to define monetary policy instruments without political interference. Instrument independence for a central bank includes the ability to avoid financing public spending by money creation, autonomy in setting interest rates, and ability to conduct monetary policy without banking sector oversight responsibilities.\nFinancial independence is based on a central bank’s capacity to govern its own budget. Financial independence encompasses conditions for capitalization and recapitalization, determination of the central bank budget, and arrangements for profit distribution and loss coverage.\nIndependence in the implementation of monetary policy can be a function of the degree of independence in all three categories: political, instrument, and financial. Lower degrees of independence in any of these areas can affect monetary policy independence. Existing research shows that the Federal Reserve is relatively independent overall compared to central banks in other advanced economies. The level of political independence is lower for the Federal Reserve than its instrument or financial independence due in part to existing appointment procedures for the Board of Governors, whose members are appointed by the President and confirmed by the Senate. However, Board of Governors officials stated that Federal Reserve political independence is strengthened by the fact that Reserve Bank presidents are not political appointees. In addition, the instrument independence of the Federal Reserve is high, and the financial independence of the Federal Reserve is also relatively high.", "According to legislative history and historical accounts that we reviewed, the stock purchase requirement in the Federal Reserve Act established an ownership and control arrangement at Reserve Banks to facilitate a balance of power between the Board of Governors and private interests, capitalized the Reserve Banks, and helped support the new national currency created by the act. Based on our interview with a past Federal Reserve historian and historical accounts, the dividend rate of 6 percent was intended to compensate member banks for the requirement to provide funds to the Reserve Banks to begin operations and the risk of the Federal Reserve not succeeding, as well as to attract state-chartered banks to the Federal Reserve.", "According to the legislative history and historical accounts related to the Federal Reserve Act, debate over the creation of the Federal Reserve focused on the balance of power among economic regions of the United States and between the private sector and government. The resultant corporate structure of Reserve Banks was intended to help balance the influence of government over the central bank, of different regions, and of small versus large banks, as well as to help fund the Federal Reserve. Many Americans were resistant to the creation of a central bank (dating back to the nation’s founding); thus, early drafts of proposals for a central bank did not include the term “central bank.” However, there was strong recognition that the nation needed a central bank to forestall and mitigate financial panics. There was considerable disagreement about how it should be structured, including considerations about the role of private bankers versus government officials, how centralized the new bank should be, and the extent of its powers.\nThe Federal Reserve Act as proposed in January 1913 by Representative Carter Glass generally was viewed as occupying the middle ground between positions advocating for government control over the Federal Reserve and positions advocating for more control by private commercial banks. The Glass bill proposed creating up to 15 Reserve Banks and the Board of Governors. The Reserve Banks were modeled after clearinghouses or “banker’s banks” and some European central banks in that they would be funded by selling stock shares to commercial banks. In particular, the design adopted for the Federal Reserve was federated, with independent Reserve Banks overseen by the Board of Governors.\nUnder the bill, each Reserve Bank was required to have minimum capital to begin business. According to a past historian of the Federal Reserve, proponents in Congress of a central bank did not want to fund it, but needed to raise cash for capital and gold to back Federal Reserve notes that would serve as the national currency. The original proposal required member banks to purchase stock equal to 20 percent of their paid-in and unimpaired capital, with one-half paid on joining the Reserve Bank and one-half callable from the member bank. The Senate and conference committees agreed to change the capital of the Federal Reserve to 6 percent of member banks’ capital and surplus rather than 20 percent of capital alone as provided in the Glass bill. This change yielded almost the same total capital but satisfied small banks claiming that the Glass bill discriminated against them. Member banks had to pay for the stock in gold or gold certificates, which concentrated gold deposits in the Reserve Banks to support Federal Reserve notes.\nThe bill also required that each national bank subscribe to the stock of the Reserve Bank in its district. Only national banks were compelled to subscribe because their charters were issued by the federal government. State-chartered banks were not required to purchase Reserve Bank stock but were permitted to join the Federal Reserve if they met certain requirements. State-chartered banks opposed mandatory membership because they did not want to be subject to supervision by a federal regulator. The mandatory nature of national bank membership and stock ownership was controversial when the Federal Reserve Act was under debate. But for Glass, “the compulsory and pro rata capital contribution were ‘means to the achievement of a democratic organization constituted by the democratic representation of the several institutions which are members and stockholders of a reserve bank’” and also “considered necessary for the establishment of corporate entities that would act ‘primarily in the public interest.’” In addition, Senator Robert Owen, primary sponsor of the Federal Reserve Act in the Senate, supported the stock purchase requirement because he believed it would ensure that commercial banks would have an incentive to safeguard the Federal Reserve.", "The rationales for paying a 6 percent dividend rate included compensating banks for opportunity costs for providing capital and reserves to the Reserve Banks and attracting state-chartered banks to Federal Reserve membership. According to the legislative history and other information we reviewed, notable proposals for creating a central bank included stock and dividend payments. One of the early proposals for a central bank was written in 1910 by Paul Warburg and included dividends on central bank stock of 4 percent. The original Federal Reserve Act proposed by Representative Glass provided for a dividend rate of 5 percent. Glass stated in his report on the 1913 bill that 5 percent represented the normal rate of return from current bank investments “considering the high character of the security offered.” Debate in the Senate and conference committee resulted in a 6 percent dividend rate on Reserve Bank stock. This rate was comparable to those of European central banks of the time.\nBased on our interviews with a past Federal Reserve historian, one of the rationales for creation of the 6 percent dividend rate was to compensate member banks for the opportunity costs of the capital they invested in the Reserve Bank stock. National banks and state-chartered banks that chose to join the Federal Reserve were required to purchase the stock and therefore could not invest this capital in other instruments that might earn a higher return. Also, the 6 percent dividend rate included a risk premium associated with the stock of this new institution. While the Reserve Banks are seen as safe today, during the debates over the Federal Reserve Act there was worry that they would fail, particularly smaller Reserve Banks in rural regions of the country that had less initial capital. However, concerns were raised about making the dividend rate so attractive that member banks would pull too much bank capital away from the local community. Lastly, the dividend was intended to help induce state-chartered banks to join the Federal Reserve. As noted earlier, state-chartered banks were not required to join the Federal Reserve and purchase Reserve Bank stock and therefore would not be subject to supervision by the Federal Reserve. As a result, a low percentage of state-chartered banks initially joined the Federal Reserve and there was a gap in the Board’s knowledge of the safety and soundness of the banking system. Thus, the 6 percent dividend rate was intended as an incentive for state-chartered banks to voluntarily join the Federal Reserve.\nTo examine the comparative value of a dividend rate of 6 percent since the enactment of the Federal Reserve Act, we examined rate of return information on Treasury and certain corporate bonds. (See appendix I for information about our data sources and methodology.) As shown in figure 5, returns on investment-grade and medium-grade corporate bonds and Treasury bonds varied widely from 1900 through 2015. Before enactment of the Federal Reserve Act in 1913, returns for investment-grade corporate bonds and Treasury bonds were around 4 percent and stayed in that range until about 1960, when they began to rise dramatically. Returns for each of the instruments (medium-grade corporate bond data were recorded from the mid-1940s) were consistently above 6 percent from the early 1970s to the early 1990s, and peaked around 1980 at about 16 percent. Returns for each of the bond categories above are now below 6 percent. In addition, we reviewed U.S. stock data and found total returns to average about 6.5 percent over more than a century. However, stocks can pose higher variability in returns than corporate bonds and Treasury securities.\nWe also compared the 6 percent Reserve Bank dividend rate to the federal funds rate and 1-year nominal interest rates. We analyzed the federal funds rate—the interest rate at which depository institutions trade federal funds (balances held at Reserve Banks) to other depository institutions overnight—to consider a member bank’s opportunity costs of holding a share of Reserve Bank stock. The federal funds rate represents a market of interbank lending at low risk. We collected data on the federal funds rate since 1954. In addition, we analyzed a nominal interest rate series to understand opportunity costs prior to 1954. As shown in figure 6, nominal interest rates were between 4 percent and 6 percent in 1913, but dipped dramatically during the Great Depression and World War II. Rates reached 6 percent again in the late 1960s and then peaked around 18 percent in the early 1980s. The federal funds rate has been near zero since the 2007—2009 financial crisis.", "Based on our interviews with Federal Reserve officials, the cap on the aggregate Reserve Banks’ surplus account had little effect on Federal Reserve operations, and we found that the modification to the Reserve Bank stock dividend rate has had no immediate effect on membership. While it is debatable whether transferring funds from the Federal Reserve to Treasury when the FAST Act also funded specific projects should be viewed any differently than the recurring transfers that occur on a regular basis, some stakeholders raised concerns about future transfers that could ultimately affect, among other things, the Federal Reserve’s financial independence and consequently, autonomy in monetary policy decision making (instrument independence). Although commercial banks and Federal Reserve officials we interviewed raised a number of concerns about the stock dividend rate change, it appears to have had no effect on Reserve Bank membership as of December 2016.", "According to Board of Governors officials, the statutory requirement to cap the surplus account and transfer excess funds has not impeded Federal Reserve operations as of December 2016. However, according to current and former Federal Reserve officials we interviewed, the nature of the transfer of funds, which were added to Treasury’s General Fund and used as an offset to make up a shortfall in the Highway Trust Fund, raises questions about the possibility of future transfers. They also raised questions that the cap could negatively affect the Federal Reserve’s independence in monetary policy decision making by rendering it dependent on Treasury for recapitalization in the event that total Reserve Bank capital is depleted.\nThe FAST Act, which authorized the Highway Trust Fund for fiscal year 2016 through fiscal year 2020, requires that the aggregate of the Reserve Banks’ surplus funds not exceed $10 billion and directed that amounts in excess of $10 billion be transferred to Treasury’s General Fund. The excess of Reserve Bank surplus over the $10 billion limitation as of the December 4, 2015, enactment date of the FAST Act was $19.3 billion, which was transferred to Treasury on December 28, 2015. The $19.3 billion transferred from the surplus account was part of $117 billion in earnings the Federal Reserve transferred to Treasury in 2015. The FAST Act transferred a total of $70 billion from Treasury’s General Fund to make up a projected shortfall in the Highway Trust Fund through fiscal year 2020. In addition to its annual remittances, the Congressional Budget Office estimates that the Federal Reserve’s transfers to Treasury will be increased by a total of $53.3 billion from 2016 to 2025 as a result of capping the surplus account balance at $10 billion.\nAs we found in our 2002 report on the surplus account, reducing the Federal Reserve capital surplus account creates a one-time increase in federal receipts, but the transfer by itself will have no significant long-term effect on the federal budget or the economy. Because the Federal Reserve is not included in the federal budget, amounts transferred to Treasury from reducing the capital surplus account are treated as a receipt under federal budget accounting but do not produce new resources for the federal government as a whole. The surplus account cap reduces future Reserve Banks’ earnings because the Reserve Banks would hold a smaller portfolio of securities. As a result, the cap reduces their transfers to Treasury in subsequent periods. Since the one-time transfer from the Federal Reserve also increases Treasury’s cash balance over time, Treasury would sell fewer securities to the public and thus pay less interest to the public. Over time, the lower interest payments to the public approximately offset the lower receipts from Federal Reserve earnings.\nAccording to Board of Governors officials, the cap on the surplus account had little effect on Federal Reserve operations as of December 2016, and the chances of the cap impeding operations in the long term appear to be small. This is because Federal Reserve operations are funded before remaining excess funds are transferred to the surplus account. In addition, if Reserve Bank earnings during the year are not sufficient to provide for the costs of operations, payment of dividends, and maintaining the $10 billion surplus account balance, remittances to Treasury are suspended. A deferred asset is recorded in the Federal Reserve’s accounts to represent the amount of net earnings a Reserve Bank will need to realize before remittances to Treasury resume. In our September 2002 report, we found no widely accepted, analytically based criteria to show whether a central bank needs capital as a cushion against losses or how the level of such an account should be determined. However, according to Board of Governors officials, if a central bank exhausts its capital cushion or its capital position is negative, realized losses that result from asset sales or draining of monetary liabilities would further exacerbate the capital deficiency.\nAccording to Federal Reserve officials and academics we interviewed, transferring Federal Reserve funds to address a budgetary shortfall might lead the public and financial markets to question if the Federal Reserve was independent from the executive and legislative branches. In their view, if these actions set a precedent, the public and financial markets might conclude that the central bank was not conducting monetary policy aimed solely at achieving the monetary policy objectives set forth in the Federal Reserve Act (price stability, maximum employment, and moderate long-term interest rates in the United States). Instead, some might believe that the Federal Reserve had been directed to take policy actions that would help fund government spending.\nWhether transferring funds from the Federal Reserve to address budgetary shortfalls should be viewed any differently than the annual remittances is debatable. Congress has transferred money from the surplus account to Treasury’s General Fund on other occasions, most recently with the Consolidated Appropriations Act of 2000 that directed the Reserve Banks to transfer to Treasury additional surplus funds of $3.752 billion during fiscal year 2000. These transfers are deposited in Treasury’s General Fund and available for appropriation and use for general support of the government. Nevertheless, Federal Reserve officials, an industry association, and some commercial banks we interviewed believed the requirement to transfer funds from the surplus account, which many see as specifically intended to support the Highway Trust Fund, was different and set a worrying precedent. In particular, Board of Governors officials stated that prior transfers from the Reserve Banks to Treasury did not place a cap on the amount of the surplus accounts that could be retained by the Reserve Banks.\nSeveral academic experts with whom we spoke noted that countries with independent central banks have strict provisions against transfers of central bank funds by the legislative branch. However, as long as rules regarding the transfer of central bank earnings to the government are clearly defined, such transfers are consistent with best practices associated with central bank financial independence. As we discuss later, concerns may arise if subsequent transfers reduce the capital surplus to zero, which could lead to dependence on Treasury for capital integrity. Since capital integrity is required to support monetary policy autonomy, reliance on Treasury could diminish the independence of the Federal Reserve. As we discuss later in this report, there are ways to preserve Federal Reserve independence under varying capital structures.", "The FAST Act’s modification of the Reserve Banks’ stock dividend rate for large member banks from 6 percent to a rate pegged at the lesser of 6 percent or the 10-year Treasury rate, which was below 6 percent in June 2016, increased federal receipts and reduced revenues for large member banks, but has had no immediate effect on Federal Reserve membership. In 2015, the Federal Reserve made dividend payments to member banks totaling more than $1.7 billion. Board of Governors officials told us that dividend payments to member banks in 2016 totaled $711 million.\nThe modified dividend rate for the larger member banks reduced the dividend payment for the first half of 2016 by nearly two-thirds from the payment for the first half of 2015 (from approximately $850 million to approximately $300 million).\nMore specifically, the difference between what larger member banks received at June 30, 2015, and what they received at June 30, 2016, ranged from about $185,000 to about $112 million less.\nWhile the current interest rate environment is historically low, the difference in dividend income earned by large banks due to the dividend rate modification would decline in a higher interest rate environment, because the 10-year Treasury rate could increase over time to 6 percent (the ceiling on the dividend rate for member banks with more than $10 billion in consolidated assets).\nCommercial banks and Federal Reserve officials we interviewed expressed some concerns about the dividend rate modification. We interviewed 17 member and nonmember commercial banks, including 6 of the 85 Federal Reserve member banks that held more than $10 billion in assets as of December 31, 2015, and 11 smaller member banks. Four of the 6 large member banks stated that they would likely act to recoup this lost revenue. For example, some mentioned employee layoffs and increased fees on consumers as potential options to recoup the lost revenue. Two large member banks noted that the dividend rate modification was made at a time when these institutions were adjusting to changes in the regulatory and financial environment, and incorporating the revenue cut made adjusting to these changes even more challenging. However, these factors also make it difficult to link the dividend rate modification to any specific effects on employees or consumers.\nMost of the member and nonmember banks we interviewed argued that the selection of the 10-year Treasury note as a benchmark for the dividend rate does not appropriately compensate member banks. Several commercial banks noted that the decision to use the 10-year Treasury note did not account for the illiquidity of Reserve Bank stock (it cannot be traded while 10-year Treasury notes can). They added that this illiquidity should be accounted for by the addition of a premium to the rate paid on Reserve Bank stock (an illiquidity premium). Additionally, several commercial banks reported that shifting from a fixed dividend rate to a floating rate determined during the month when dividends are paid increased the uncertainty surrounding their business decisions.\nSeveral commercial banks also stated that they would have preferred that the dividend rate modification were considered on its own merits rather than utilized to help pay for transportation projects. The American Bankers Association stated in a comment letter on the interim final rule implementing the dividend rate modification that the change represented a breach of contract between the Federal Reserve and member banks and amounted to “an unconstitutional taking of member banks’ property without compensation.” It further stated that the “Takings Clause of the Fifth Amendment provides that ‘private property’ shall not ‘be taken for public use, without just compensation’” and the dividend rate change was in violation of the Fifth Amendment. On February 9, 2017, the American Bankers Association filed a lawsuit against the United States which included a Fifth Amendment Taking Clause claim.\nCertain Federal Reserve officials with whom we spoke were concerned about increased membership attrition as a result of the dividend rate modification. However, as of December 2016 there was no evidence that banks had dropped their Federal Reserve membership as a result of lower dividend payments. According to data provided by the Board of Governors and Reserve Banks, membership in the Reserve Banks dropped by about 2 percent (46 banks) from December 31, 2015, to June 30, 2016. The Reserve Banks generally attributed this drop to normal attrition and consolidation in the industry. This decrease is consistent with the general decline in the number of banks supervised by the Federal Reserve from 2010 through 2015 (as shown in fig. 2).\nFDIC officials stated in May 2016 that they had seen no impact of the dividend rate modification on state-chartered member and nonmember banks. OCC officials stated that it was too early to determine the impact of the dividend rate modification on national banks. However, OCC officials noted that the costs associated with changing membership can be significant and can be a decision-making factor. For example, industry association officials said that such costs could include those associated with changing the institution’s name. Furthermore, of the 14 member banks with which we spoke, including 6 banks with assets of more than $10 billion, none indicated that they would drop Federal Reserve membership as a result of the dividend rate modification. But several of the banks with less than $10 billion in assets stated that they were worried that the dividend rate modification would set a precedent for future transfers from the Reserve Banks, and that they would reconsider Federal Reserve membership if the dividend rate threshold were reduced to include banks in their asset range.", "Modifying the Reserve Bank stock ownership requirement could have a number of wide-ranging policy implications on the structure of the Federal Reserve. We examined potential implications of three scenarios for modifying the purchase requirement: (1) permanently retiring Reserve Bank stock and eliminating the stock ownership requirement, (2) making ownership of Reserve Bank stock voluntary for member banks, and (3) modifying the capital requirement associated with the stock to allow member banks to hold the entire 6 percent capital contribution as callable capital.\nIn scenario 1, permanently retiring Reserve Bank stock could change the existing corporate structure of the Reserve Banks.\nIn scenario 2, Federal Reserve membership would not require stock ownership; however, Reserve Bank stock would remain available for purchase by member banks.\nIn scenario 3, the full capital contribution would be retained by member banks, could be called at any time by the Reserve Banks, and could be available for use by the member bank.\nThe primary benefit to making any of the changes to the stock purchase requirement is that member banks would gain more control over the capital currently committed to ownership of Reserve Bank stock. Banking associations that we interviewed said that the capital contribution for the stock places a burden on member banks. Specifically, the capital is illiquid and cannot be used as collateral, so it represents a significant opportunity cost to member banks. Despite the cost associated with the capital requirement, 11 of the 17 banks we interviewed indicated that the capital requirement is either not an important factor or only somewhat of an important factor in their decision on Federal Reserve membership. More frequently, familiarity with their Reserve Bank as a supervisor was more important to their decision to join the Federal Reserve.\nThe three scenarios are not an exhaustive representation of possible modifications to the structure of the Federal Reserve, nor does our analysis account for all of the potential consequences of such modifications. Our discussion of the implications of each scenario should not be interpreted as a judgment on how or whether the Federal Reserve should be restructured. Instead, our intent is to identify policy implications that warrant full consideration and additional research should changes to the Federal Reserve stock requirement and therefore, the Federal Reserve’s structure, be made. Furthermore, the discussion of the impacts of the three scenarios is limited without identification of the exact replacement structures, which is beyond the scope of this study. As each scenario has a number of potential structures, each structure would have to be evaluated on its own merits to assess its ability to better ensure the benefits Congress seeks to achieve in the central bank, such as price stability and maximum employment. This discussion assumes that the goals reflected in the original construction of the Federal Reserve remain (independence, balance of power, and geographical diversity).\nReserve Bank and Board of Governors officials with whom we spoke said that changes to the stock ownership requirement should not be evaluated in isolation because any changes would have ripple effects on the governance structure, financial independence, and Reserve Bank operations that would warrant consideration in any discussion. In the following discussion, we focus on the impacts of modifying the purchase requirement that were of primary concern to regulators, commercial banks, and academics. Many were concerned that such modifications could undermine the governance of a central bank with a combined private and public structure—key attributes of the current structure designed to construct some barriers to political pressures and provide nationwide input for monetary policies. Nevertheless, these governance elements could be maintained through legislation and other mechanisms if the current Federal Reserve structure were altered.", "Retiring Reserve Bank stock could have a number of implications, including disrupting the Federal Reserve’s public and private balance, but other mechanisms could be used to preserve the structure’s key attributes. As discussed previously, the stock purchase requirement reflects the desire of the founders of the Federal Reserve to strike a balance between control by commercial banks and government control of the Federal Reserve. Under the Federal Reserve Act, the Reserve Banks were established as corporate entities after national banks subscribed to the minimum amount of Reserve Bank stock. Therefore, a structural change could result if Congress decided to retire the stock and the corporate structure of the Reserve Banks were not preserved. The corporate structure, which includes a board of directors to oversee operations, enables the Reserve Banks to maintain a degree of autonomy from the Board of Governors. Furthermore, the stock ownership requirement enables the Federal Reserve to maintain financial independence from the federal government because it allows the Reserve Banks to maintain a capital base that is not funded at the discretion of the government. Retirement of Reserve Bank stock could have implications for the autonomy of the Reserve Banks, the independence of the Federal Reserve, and the operations of the Reserve Banks, all of which would warrant consideration.\nDiminished Reserve Bank autonomy. One of the policy goals of the Federal Reserve’s structure is to provide Reserve Banks with a degree of autonomy or regional authority in relation to the Board of Governors. Eliminating Reserve Bank stock would have implications for this goal. According to Reserve Bank officials, all else being equal, retirement of the stock coupled with elimination of the current corporate structure of the Reserve Banks could result in removal of Reserve Bank boards of directors or limit the benefits currently provided by their participation. The existence of the boards of directors is tied to member banks’ equity ownership in their regional Reserve Bank. Specifically, this action could limit the diversity of views in monetary policy by weakening the link to regional input in FOMC discussions. Reserve Bank officials said that Reserve Bank boards serve an important function in the Federal Reserve, including providing important business advice and perspectives to the Reserve Banks. In our 2011 report on Federal Reserve governance, we found that directors of the Reserve Bank boards provide a link to the regions that the Reserve Banks serve, and give information on economic conditions to the Reserve Bank presidents who may use it to inform FOMC discussions about regional conditions.\nWith the loss of member bank equity ownership and the absence of Reserve Bank boards, advisory boards or advisory councils are mechanisms that could be used to serve the same function. However, according to Reserve Bank officials and directors, this approach might not be as effective as a formal corporate board. They said that, as appointed directors of a Reserve Bank board, they have a fiduciary responsibility to perform their duties and place the interests of the Reserve Bank and the nation ahead of personal interests. They noted that it may be difficult to attract high-caliber members to an advisory council or board in a different, more removed relationship. However, we found in our 2011 report that existing Reserve Bank branch boards and advisory councils are sometimes a source of director candidates for the Reserve Banks. Reserve Bank officials and directors also said that the level of commitment and engagement from members of an advisory board or council would be less than that of directors of a formal corporate board. Many different mechanisms could be employed to mitigate the effects of eliminating Reserve Bank boards, but without further analysis on specific mechanisms it is difficult to determine whether those mechanisms would be feasible.\nReserve Bank officials, academics, and banks said that another potential consequence of retiring Reserve Bank stock and eliminating the incorporated entities could be diminished Reserve Bank autonomy in relation to the Board of Governors. For example, retirement of Reserve Bank stock could result in eliminating the current corporate structure, and one structural option that we examined was to convert the Reserve Banks into field offices of the Board of Governors—that is, Reserve Banks would become part of a federal agency. Reserve Bank presidents currently are appointed by and accountable to Reserve Bank boards of directors. Some officials we interviewed believed that Reserve Bank presidents might feel less comfortable voicing dissenting opinions in FOMC meetings if they were leading field offices directly accountable to the Board of Governors. Therefore, a loss of autonomy could limit the diversity of views in FOMC meetings. More importantly, it could concentrate power and influence within the Board of Governors—for example, by centralizing FOMC decision making in the hands of the Board of Governors. The diversity of economic views that Reserve Bank presidents bring to FOMC meetings is illustrated by dissenting votes at FOMC meetings from July 1996 to July 2016. In that time, Reserve Bank presidents cast 80 dissenting votes while members of the Board of Governors cast 2 dissenting votes.\nSome academics with whom we spoke pointed out that eliminating the Reserve Bank stock purchase requirement could remove the perception of undue influence from member banks. For example, such perceptions might be removed if member banks (shareholders) no longer vote on Class A and B directors of Reserve Bank boards. We previously reported that the requirement to have representatives of member banks on the Federal Reserve Bank boards creates an appearance of a conflict of interest because the Federal Reserve has supervisory authority over state-chartered member banks and bank holding companies.\nConflicts of interest involving directors historically have been addressed through both federal law and Federal Reserve policies and procedures, such as by defining roles and responsibilities and implementing codes of conduct to identify, manage, and mitigate potential conflicts. Federal Reserve officials said that the Board of Governors already restricts Reserve Bank directors’ participation in banking supervision and, therefore, a field-office structure would address perception, not practice. For example, Reserve Bank directors cannot access member banks’ confidential supervisory information. Any application of a Class A director’s financial institution that requires Federal Reserve approval may not be approved by the director’s Reserve Bank, but instead is acted on by the Secretary of the Board of Governors. Class A directors cannot be involved in the selection, appointment, or compensation of Reserve Bank officers whose primary duties involve banking supervision. And Class B directors with certain financial company affiliations are subject to the same prohibition. Class A directors are also not involved in the selection of the Reserve Bank President or First Vice President.\nTo the extent that Congress values the benefits conferred by the current structure characterized by the balance of power and Reserve Bank autonomy, mechanisms would need to be devised to provide assurance these benefits remained if the Reserve Bank stock were retired. Eight of the 14 member banks that we interviewed said that Reserve Bank autonomy is either important or very important. For example, one bank stated that Reserve Bank autonomy is “hyper–important” because it creates a system of checks and balances, limits politicization of monetary policy, and ensures that viewpoints from across the nation are considered. Five of the member banks that we interviewed said that the structural option of converting the Reserve Banks to field offices would diminish the Reserve Banks’ autonomy and some said that the change would harm connections to the local communities. But only 1 of the 14 member banks with which we spoke said that they would be likely or very likely to drop membership if the Reserve Banks became field offices of the Board of Governors.\nDiminished Federal Reserve financial independence. One of the policy goals of the Federal Reserve System’s structure was to provide it with independence within the federal government. As noted earlier, financial independence supports monetary policy autonomy, which research has shown is important to low levels of inflation. Eliminating Reserve Bank stock, without a mechanism to re-establish financial autonomy, would have implications for this goal. The Reserve Banks’ income is generated primarily through interest on their investments and loans and through fees received for services provided to depository institutions. Reserve Bank officials said that historically the Federal Reserve has received enough income to fund its operations and therefore would be able to capitalize itself. According to the Federal Reserve, if losses were incurred remittances to Treasury would be suspended and a deferred asset would be recorded that represents the amount of net earnings a Reserve Bank would need to realize before remittances to Treasury could resume. Therefore, Reserve Banks do not need capital to fund operations. However, operating without a capital base could exacerbate negative perceptions that the Federal Reserve is insolvent. Alternatively, Treasury could capitalize the Federal Reserve through Treasury-owned stock, which would allow the Reserve Banks to maintain a corporate structure but would result in a central bank dependent, in part, on government funding.\nDepending on how it is structured, dependence on Treasury for capitalization could diminish the financial independence of the Federal Reserve. In particular, Federal Reserve independence would be diminished if recapitalization (in the event of capital base depletion) were at the discretion of Treasury. One academic we interviewed said that the $10 billion surplus cap introduced under the FAST Act increased the likelihood of the depletion of the Federal Reserve’s capital. Some academics have written that if Treasury capitalized the Federal Reserve, Congress could include provisions for automatic recapitalization of the Federal Reserve in the event that its capital were depleted and provide stronger capital buffers by increasing the surplus account cap. These provisions would preserve the independence of the Federal Reserve by removing the discretion of Treasury in recapitalizing the Federal Reserve. Moreover, according to research, 8 of 166 central banks are capitalized, in whole or in part, by private shareholders. The remaining 158 central banks, some of which are considered to be highly independent, are capitalized by their governments.\nNone of the 17 member and nonmember banks that we interviewed said they would be likely or very likely to change their membership status if Reserve Bank stock were permanently retired. The banks said that the stock ownership is not a major factor in membership considerations. Member banks cited familiarity with and reputation of their regulator, consistency of regulation across the holding company, and their bank structure as the most important factors for making a membership choice.\nHindered ability to conduct Reserve Bank operations. The Federal Reserve Act authorized the Federal Reserve Banks to act as depositories and fiscal agents of the United States government, at the direction of the Secretary of the Treasury. Eliminating Reserve Bank stock could have implications for the Reserve Banks’ ability to perform these functions, depending on how the Reserve Banks’ structures and authorities were revised. For example, converting the Reserve Banks to field offices could preclude them from conducting critical banking functions, and the activities they could undertake as fiscal agents for the government if they were to become government entities are unclear. Banking activities conducted by the Reserve Banks, including executing monetary policy through open market operations and providing short-term loans to institutions, are essential to the functioning of the Federal Reserve.\nSome Reserve Bank officials said that without the stock, the Reserve Banks would no longer be corporations and might not be able to conduct certain banking activities, depending on how the replacement structure and authorities were configured. If the Reserve Banks were to become field offices of the Board of Governors, they would no longer be able to perform certain activities related to their function as Treasury’s fiscal agent because the Board of Governors currently is not authorized to provide these services. Some also said that having the Board of Governors act as Treasury’s fiscal agent could present a conflict of interest. However, other Reserve Bank officials said that the current corporate structure could be maintained without the stock, but would at least require legislation amending the Federal Reserve Act to allow continuing conduct of banking activities. Reserve Bank officials noted that Treasury directs the Reserve Banks, as fiscal agents, to conduct auctions on its behalf and it is unclear whether Treasury could direct another federal agency to do so. Reserve Bank officials also pointed out that the Reserve Banks hold accounts for foreign central banks and it is unclear whether the federal government could hold an account for another government. As discussed earlier, capitalization by Treasury would allow the Reserve Banks to maintain their current corporate structure, through Treasury-owned stock. This could preserve the ability of Reserve Banks to conduct banking operations; however, as discussed earlier, this involves many issues that would need to be considered.\nEliminating the current corporate structure and converting the Reserve Banks into field offices of the Board of Governors could lead to more centralized functions, which could further improve the net efficiency of Reserve Bank operations. However, Reserve Bank officials said that innovation often comes from having private-sector voices on their boards. Moreover, Reserve Bank officials said that despite their autonomous structure they have been able to achieve efficiencies in their operations by consolidating certain activities such as retail payment (check and Automated Clearing House) processing, which is conducted through the Federal Reserve Bank of Atlanta; wholesale payment operations (Fedwire funds and securities services) and open-market operations, which are primarily conducted through the Federal Reserve Bank of New York, or information technology and payroll services, which are primarily conducted by the Federal Reserve Bank of Richmond. In contrast, we have reported that some efficiencies in Reserve Bank operations were achieved partly because of external factors such as legislation.", "Making stock ownership voluntary could have a number of policy implications. Voluntary ownership likely would not significantly affect Federal Reserve membership, but according to Reserve Bank officials, the implications could include concentration of stock ownership and voting rights and a need for more resources to plan for and manage increased fluctuations in paid-in capital. Voluntary ownership of Reserve Bank stock could take many forms. Currently, only nationally chartered banks and state-chartered banks that opt to join the Federal Reserve are required to purchase stock. Such a scenario could entail no ownership requirement for membership and an option for member banks to purchase (or redeem) stock in their regional Reserve Bank at any time.\nAs with permanent retirement of the stock, we did not find evidence that voluntary stock purchase would have a significant impact on Federal Reserve membership. Member banks that we interviewed suggested that making stock ownership voluntary would not affect their Federal Reserve membership decision, but stock ownership could become volatile in certain interest rate environments, as the following examples illustrate.\nThirteen of the 14 member banks that we interviewed said that they likely would not change their Federal Reserve membership status if the ownership of stock became voluntary for member banks.\nOf these 13, all 6 member banks with more than $10 billion in assets also said that they likely would not purchase stock if ownership were voluntary for members.\nOf those 13, 6 of the 7 member banks with assets below $10 billion indicated they likely would (ranging between somewhat likely, likely, and very likely) purchase the stock if it were voluntary. They added that if they could make a better return than 6 percent on the capital committed to the stock in a higher interest-rate environment, they would redeem the stock.\nTwo of the three nonmember banks that we interviewed said that they likely would not change their Federal Reserve membership status if the ownership of stock became voluntary for member banks.\nThe remaining banks (one member, one nonmember) said that they would be somewhat likely to change their membership status.\nIn a high interest rate environment stock ownership by member banks could be low, because banks could receive a higher return by investing the capital in securities other than the Reserve Bank stock. This would result in a high concentration of voting rights; however, this might not differ much from current practices. Reserve Bank officials stated that if voting rights remained with stock ownership, not membership, and if stock ownership among member banks were low, then the votes to elect board members would be concentrated in just a few banks. Some Reserve Bank officials said that the concentration of votes could lead to undue influence from a few banks. We previously found that, under the current mandatory stock ownership structure, member bank voter turnout was often low during some Reserve Banks’ elections. In these cases, assuming current participation rates persist, voting patterns under voluntary stock ownership might not significantly differ from those of the current arrangement.\nReserve Bank officials also said that high volatility of stock ownership would require a higher level of management of the stock. Officials said that the processes for issuing, monitoring, and redeeming the stock would become significantly more complex as a result of a likely increase in the volume of transactions and require additional personnel. While a voluntary stock ownership structure is more complicated than the current structure, it would involve similar stock ownership characteristics as publicly traded stocks and publicly traded companies have systems to manage stock ownership.\nReserve Bank officials pointed out that volatility in stock ownership among member banks also would result in fluctuation in the level of paid- in capital held at the Reserve Banks, which could make it more difficult for Reserve Banks to predict and manage their capital. If a large number of member banks chose not to purchase the stock, which member banks suggested would be likely in a high-interest rate environment, then the potential public perception issues associated with having a low capital base, as discussed previously, could apply. However, as we have discussed, the Reserve Banks could operate without capital, or Treasury could capitalize the Reserve Banks.", "Allowing member banks to hold the full capital contribution on call could have a number of implications. For instance, allowing member banks to hold the entire capital contribution on call would allow Reserve Banks to maintain their current corporate structure, since the member banks would retain their equity stakes. However, this scenario would eliminate the dividend payment to member banks because there would be no Reserve Bank stock outstanding for which dividend payments would be owed. Also, it could cause public perception problems and, in theory, exacerbate financial distress in stressful economic times.\nCurrently, member banks are required to purchase stock in their regional Reserve Bank equal to 6 percent of their capital and surplus, with 3 percent paid-in and 3 percent on call by the Reserve Bank. This scenario would make the entire 6 percent purchase requirement callable, so that member banks would not have to contribute any capital to the Reserve Banks on joining the Federal Reserve. This modification would allow the Reserve Banks to keep their current corporate structure and preserve their ability to conduct banking operations. The change would also eliminate the dividend payment to member banks since the capital associated with the Reserve Bank stock would no longer be paid-in, so there would no longer be a basis to pay member banks a dividend. Similar to the scenario of retiring the stock or making its purchase voluntary for members, the Reserve Banks’ capital base would be reduced—in this case, to the amount of capital held in each Reserve Bank’s surplus account.\nReserve Bank officials and some academics said that Reserve Banks can operate without a capital base but, as discussed previously this could cause a public perception problem. Specifically, Reserve Bank officials said that if Reserve Banks incurred losses and called in capital from member banks, the call could send a signal to the broader markets that the Reserve Banks were insolvent. In turn, this perception could lead to negative ripple effects throughout the economy. That is, Reserve Bank officials said that situations in which Reserve Banks would incur losses and need to call capital likely would be situations of economic stress for banks. If banks could not quickly raise sufficient funds to meet the Reserve Bank’s capital call, their lending capacity could fall and a credit crunch could follow. Calling in capital from member banks at such a time could have a procyclical effect; that is, the call would exacerbate financial distress experienced by the member banks.\nReserve Bank officials added that because of the potentially severe systemic effects such a capital call would be highly unlikely. Officials pointed out that the Reserve Banks have never called in the 3 percent capital at member banks and that Reserve Banks currently do not have procedures for calling the 3 percent capital held at member banks. As discussed earlier, if losses were incurred remittances to Treasury would be suspended. If the Reserve Banks incurred losses over multiple periods and their capital base were depleted, then the method for recapitalization would need to be addressed (which, as discussed earlier, involves many issues that would need to be considered).\nBased on our interview responses, most banks would be unlikely to change their membership status as a result of making the entire capital contribution callable. All three of the nonmember banks that we interviewed said that they likely would not become members or would be only somewhat likely to become members in response to this change. Member banks likely would not drop membership as a result of this modification because, as some banks noted, it removes a potential barrier to membership (paying in 3 percent of capital).", "We provided a draft of this report to FDIC, the Federal Reserve, OCC, and Treasury for review and comment. None of the agencies provided written comments on the draft report. FDIC and the Federal Reserve provided technical comments, which we have incorporated, as appropriate.\nWe are sending copies of this report to FDIC, the Federal Reserve, OCC, and Treasury. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8678 or [email protected]. 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 III.", "In this report, we (1) examine the historical rationale for the Reserve Banks’ stock purchase requirement and 6 percent dividend, (2) assess the potential implications of capping the Reserve Banks’ aggregate surplus account and modifying the Reserve Bank stock dividend rate, and (3) analyze the potential policy implications of modifying the Reserve Bank stock ownership requirement for member banks under three scenarios.\nTo address our first objective, we conducted a literature search on the history of the Federal Reserve System (Federal Reserve), including a review of the legislative history of the Federal Reserve Act. See appendix II for a selected bibliography of literature we reviewed. We interviewed a past Federal Reserve historian and selected academics. We also conducted a literature search on rates of return on selected investment products. We specifically identified the following data sources:\nRoger Ibbotson, 2013 Ibbotson SBBI Classic Yearbook: Market Results for Stocks, Bonds, Bills, and Inflation1926–2012 (Chicago, Ill.: Morningstar, 2013).—We reviewed information describing the rates of return for a number of basic asset classes including large company stocks, small company stocks, long-term corporate bonds, long-term government bonds, intermediate-term government bonds, and Treasury bills. The return rate data include information from 1926 through 2012.\nRobert Shiller, Market Volatility (Cambridge, Mass.: MIT Press, 1989). —We reviewed annual data on the U.S. stock market specifically concerning prices, dividends, and earnings from 1871 to the present with associated interest rate, price level and consumption data.\nFrederick R. Macaulay, The Movements of Interest Rates, Bond Yields and Stock Prices in the United States since 1856 (New York: National Bureau of Economic Research, 1938).—We reviewed commercial paper rates in New York City from January 1857 to January 1936.\nSidney Homer and Richard Sylla, A History of Interest Rates, 4th ed. (Hoboken, N.J.: John Wiley & Sons, 2005).—We reviewed data on interest rates and yields from prime corporate bonds, medium-grade corporate bonds, and long-term government securities from 1899 to 1989.\nWe determined that these sources were sufficiently reliable for the purposes of our reporting objectives. Our data reliability assessment included reviewing the methodologies employed by the authors of each source and cross-checking certain data from the sources against each other. First, we analyzed return data on investment-grade and medium- grade corporate bonds, and Treasury bonds. We selected these instruments for comparison with Reserve Bank stock because they generally present low risk of default and have relatively long maturity periods. Corporate bonds can be classified according to their credit quality. Medium-grade corporate bonds can indicate a strong capacity to meet financial commitments but also can still be vulnerable to a changing economy. Investment grade corporate bonds are considered more likely than noninvestment grade bonds to be paid on time and have lower investment risk. Treasury bonds are obligations by the U.S. government and are considered to have low investment risk.\nSecond, we analyzed return data on interest rates based on commercial paper and certificates of deposit, and the federal funds rate. We selected these return data for analysis because they are common measures of the value of money in the markets. Commercial paper consists of short-term, promissory notes issued primarily by corporations that mature in about 30 days on average, with a range up to 270 days. A certificate of deposit is a savings account that holds a fixed amount of money for a fixed period of time, such as 6 months, 1 year, or 5 years, and in exchange, the issuing bank pays interest. The federal funds rate is the central interest rate in the U.S. financial market and is the interest rate at which depository institutions trade federal funds with each other overnight.\nWe determined not to include rate of return information on stocks and agency mortgage-backed securities. Stock is a more volatile investment product than Reserve Bank stock, with wide variation in prices from year to year. In addition, stock is a relatively liquid investment product compared to Reserve Bank stock, which cannot be sold or otherwise posted as collateral. Agency mortgage-backed securities are debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property. We found that agency mortgage-backed securities generally return higher yields than Treasury bonds, but not as high as corporate bonds, which have higher risk.\nTherefore, by discussing Treasury and corporate bonds, we are illustrating a complete range of possible returns.\nTo assess the potential implications of capping the aggregate Reserve Banks’ surplus account, we reviewed past GAO, Congressional Research Service, and Congressional Budget Office reports and Federal Reserve financial documents on the status of the surplus account. We interviewed Federal Reserve officials, including from the Board of Governors and the Reserve Banks; former members of the Board of Governors who had written about the changes in the Fixing America’s Surface Transportation Act (FAST Act); academics who had written extensively about the Federal Reserve; other federal bank regulators, including the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC); and, banking industry associations. To assess the potential implications of modifying the Reserve Bank stock dividend rate, we reviewed Board of Governors financial documents as of June 30, 2016, for dividend payment information. We conducted structured interviews with 17 commercial banks (including 14 member and 3 nonmember banks) to obtain their perspectives on the dividend rate modification and if it would affect their membership decisions or status. We selected commercial banks for these interviews to ensure representation for all size categories and primary federal banking regulator, using data from SNL Financial. We assessed the reliability of the data by reviewing information about the data and systems that produced them, and by reviewing assessments we did for previous studies. We determined that the data we used remain sufficiently reliable for the purposes of our reporting objectives.\nTo assess the potential implications of modifying the stock ownership requirement, we reviewed academic literature on the structure and independence of central banks. We also interviewed selected academics and economists who had written extensively on central bank independence; the chairpersons of all the Reserve Banks’ boards of directors, who may not be affiliated with commercial banks; officials from FDIC and OCC; and banking industry associations. In the structured interviews with selected commercial banks described above, we also sought to learn what factors might influence the banks’ choice to become a member of the Federal Reserve, and whether potential modifications to the Reserve Banks’ stock ownership structure would affect their choice. We presented three scenarios (of changes to the stock ownership requirement and therefore the Federal Reserve’s structure) in the interviews to which respondents could react and discuss implications. The scenarios are illustrative and do not represent all of the ways in which the Federal Reserve structure might be altered nor does our analysis account for all of the potential consequences of stock ownership modifications. Furthermore, our discussion of the range of consequences is limited to the respondents’ responses and the strategy in the interview, without knowledge of the mechanisms that could be put in place to retain the benefits of the current structure or mitigate any negative effects of the changes.\nWe conducted this performance audit from February 2016 to February 2017 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.", "Alesina, Alberto, and Lawrence H. Summers. “Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence.” Journal of Money, Credit and Banking, vol. 25, no. 2 (May 1993): 151–162.\nArnone, Marco, Bernard J. Laurens, Jean-Francois Segalotto. “The Measurement of Central Bank Autonomy: Survey of Models, Indicators, and Empirical Evidence.” International Monetary Fund Working Paper 06/227 (October 2006).\nCalomiris, Charles, Matthew Jaremski, Haelim Park, and Gary Richardson. “Liquidity Risk, Bank Networks, and the Value of Joining the Federal Reserve System.” National Bureau of Economic Research Working Paper 21684 (October 2015).\nClifford, A. Jerome. The Independence of the Federal Reserve System. Philadelphia, Penn.: University of Pennsylvania Press, 1965.\nConti-Brown, Peter. The Power and Independence of the Federal Reserve. Princeton, N.J.: Princeton University Press, 2016.\nCukierman, Alex. “Central Bank Finances and Independence – How Much Capital Should a Central Bank Have?” in The Capital Needs of Central Banks, S. Milton and P. Sinclair eds. Sue Milton and Peter Sinclair. London, England and New York, NY: Routledge, 2011.\nCukierman, Alex, Steven B. Webb, and Bilin Neyapti. “Measuring the Independence of Central Banks and Its Effects Policy Outcomes.” World Bank Economic Review, vol. 6, no. 3 (September 1992): 353-398.\nGorton, Gary. “Clearinghouses and the Origin of Central Banking in the United States.” The Journal of Economic History, vol. 45, no. 2 (June 1985): 277-283.\nHomer, Sidney and Richard Sylla. A History of Interest Rates. 4th ed. Hoboken, N.J.: John Wiley & Sons, 2005.\nIbbotson, Roger. Ibbotson SBBI Classic Yearbook 2013: Market Results for Stocks, Bonds, Bills, and Inflation 1926-2012. Chicago, Ill.: Morningstar, March 2013.\nLowenstein, Roger. America’s Bank: The Epic Struggle to Create the Federal Reserve. New York, N.Y.: Penguin Press, 2015.\nMasciandaro, Donato. “More Than the Human Appendix: Fed Capital and Central Bank Financial Independence.” BAFFI CAREFIN Centre Research Paper 2016-35 (September 2016).\nMacaulay, Frederick R., The Movements of Interest Rates, Bond Yields and Stock Prices in the United States since 1856. New York: National Bureau of Economic Research, 1938.\nMoen, Jon R., and Ellis W. Tallman. “Lessons from the Panic of 1907.” Federal Reserve Bank of Atlanta, Economic Review, May/June 1990, pp. 2-13.\nNational Monetary Commission. Report of the National Monetary Commission. Washington, D.C.: Government Printing Office, 1912.\nRossouw, Jannie, and Adele Breytenbach. “Identifying Central Banks with Shareholding: A Review of Available Literature.” Economic History of Developing Regions, vol. 26, supplement 1 (January 2011): 123-130.\nShiller, Robert J., Market Volatility. Cambridge, Mass.: MIT Press, 1989 (as updated).\nStella, Peter, and Åke Lönnberg. “Issues in Central Bank Finance and Independence.” International Monetary Fund working paper 08/37 (Feb. 2008).\nTimberlake, Richard H., Jr. “The Central Banking Role of Clearinghouse Associations.” Journal of Money, Credit, and Banking, vol. 16, no. 1 (February 1984): 1-15.\nTodd, Tim. The Balance of Power: The Political Fight for an Independent Central Bank, 1790-Present. 1st ed. Kansas City, Mo.: Federal Reserve Bank of Kansas City, 2009.\nWarburg, Paul M. The Federal Reserve System: Its Origin and Growth. 2 vols. New York, N.Y.: MacMillan, 1930.", "", "", "GAO staff who made major contributions to this report include Karen Tremba (Assistant Director), Philip Curtin (Analyst-in-Charge), Farrah Graham, Cody Knudsen, Risto Laboski, Barbara Roesmann, Christopher Ross, Jessica Sandler, Jena Sinkfield, and Stephen Yoder." ], "depth": [ 1, 2, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title", "", "h0_full", "", "", "", "", "", "", "h0_full h2_title", "h2_full", "h0_full h2_full", "h2_title h1_full", "", "", "h2_full", "", "h1_full", "", "", "", "" ] }

{ "question": [ "How did capping the surplus amount affect Federal Reserve operations?", "What must Reserve Banks do before remitting excess funds to the Treasury?", "What concerns have been raised regarding transfers to the Treasury's General Fund under the FAST Act?", "How have dividend payment trends and Reserve Bank membership since 2015?", "Under what circumstances would the implications of modifying Federal Reserve structure be considerable?", "Why does this report fail to consider all possible implications?", "How might retiring the stock affect the corporate structure of Reserve Banks?", "What have member banks of the Federal Reserve historically received on paid-in stock?", "How did the FAST Act affect dividends received by member banks of the Federal Reserve?", "How did the FAST Act affect the volume of surplus capital the Reserve Banks could hold?" ], "summary": [ "According to Federal Reserve System (Federal Reserve) officials, capping the surplus account had little effect on Federal Reserve operations, and GAO found that modifying the stock dividend rate formula had no immediate effect on membership.", "Reserve Banks fund operations, pay dividends to member banks, and maintain a surplus account before remitting excess funds to the Department of the Treasury (Treasury).", "Whether the transfers to Treasury's General Fund in the Fixing America's Surface Transportation Act (FAST Act) when the act also funds specific projects should be viewed any differently than the recurring transfers of Reserve Bank earnings to Treasury is debatable. Some stakeholders raised concerns about setting a precedent—future transfers could affect the Federal Reserve's independence and, consequently, autonomy in monetary policymaking.", "Dividend payments to 85 banks decreased by nearly two-thirds (first half of 2016 over first half of 2015), but GAO found no shifts in Reserve Bank membership as of December 2016. Some member banks affected by the rate change told GAO they had a few concerns with it and some said they might try to recoup the lost revenue, but none indicated they would drop membership.", "Assuming that the policy goals—independence, balance of power, and geographical diversity—reflected in the original private-public Federal Reserve structure remain important, the implications of modifying the stock ownership requirement and therefore the Federal Reserve structure could be considerable.", "The scenarios discussed in this report are illustrative and do not represent all the ways in which the Federal Reserve structure might be altered. Also, the discussion of effects is limited because exact replacement structures are unknown.", "Retiring the stock could result in changes to the existing corporate structure of the 12 Reserve Banks.", "Member banks of the Federal Reserve must purchase stock in their regional Reserve Bank, but historically received a 6 percent dividend annually on paid-in stock.", "A provision of the 2015 FAST Act modified the dividend rate formula for 85 larger member banks—and currently reduces the amount these banks receive.", "The FAST Act also capped the surplus capital the Reserve Banks could hold and directed that any excess be transferred to Treasury's general fund. Congress offset payments into the Highway Trust Fund by, among other things, instituting the Reserve Bank surplus account cap." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, -1, -1, 0, 0 ], "summary_paragraph_index": [ 4, 4, 4, 4, 5, 5, 5, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Background", "DOD's Use of Fuels", "In General", "The Services", "Air Force", "Navy and Marine Corps", "Army", "Operational Energy vs. Installation Energy", "How DOD Buys Fuels", "Defense Logistics Agency-Energy (DLA-E)", "Fully Burdened Cost of Fuel", "Contractor Fuel Costs", "Challenges and Risks Associated with DOD's Use of Fuels", "Financial", "Possible Longer-Term Trend of Increasing Fuel Costs", "Shorter-Term Volatility of Fuel Costs", "Operational", "Diversion of Resources", "Restraint on Mobility and System Effectiveness", "Vulnerability of Fuel Supply Lines", "Strategic", "Getting Fuel to the Area of Operations", "Ensuring the Global Free Flow of Oil", "DOD's Energy Initiatives", "DOD Office of Operational Energy Plans and Programs", "Air Force", "Navy", "Marine Corps", "Army", "Past Legislation on DOD Energy Use", "Installation Energy", "Operational Energy", "Position of Assistant Secretary of Defense for Operational Energy Plans and Programs", "Federal Policy Limiting Contracts for Procuring Alternative Synthetic Fuels", "DOD Policy on Fuel Efficiency of Weapon Platforms", "Fully Burdened Cost of Fuel As An Acquisition Consideration", "Annual DOD Reports Relating to DOD Energy Use", "Annual Energy Performance Master Plan", "Annual Report Related to Operational Energy", "Other Annual Reports", "Issues for Congress", "DOD Coordination of Service Operational Energy Initiatives", "Data and Metrics for Evaluating DOD's Initiatives", "DOD Estimate of Future Fuel Costs", "DOD Role in Federal Energy Initiatives", "Navy Role in Developing Advanced Biofuels", "Implications of Changes in Strategy", "Legislative Action for FY2013", "FY2013 National Defense Authorization Act (H.R. 4310/P.L. 112-239)", "House (As Reported)", "House (Floor Action)", "Senate (As Reported)", "Senate (Floor Action)", "Conference", "Department of Defense, Military Construction and Veterans Affairs, and Full-Year Continuing Appropriations Act, 2013 (H.R. 933/P.L. 113-6)", "Version Passed by House on March 6, 2013", "Version Passed by Senate and House on March 20 and 21, 2013 (P.L. 113-6)", "FY2013 Department of Defense Appropriations Act (H.R. 5856 of 112th Congress)", "House (As Reported)", "House (Floor Action)", "Senate", "Conference", "FY2013 Military Construction, Veterans Affairs, and Related Agencies Appropriations Act (H.R. 5854/S. 3215 of 112th Congress)", "House (As Reported)", "House (Floor Action)", "Senate", "Conference" ], "paragraphs": [ "", "This report provides background information and identifies issues for Congress on Department of Defense (DOD) energy initiatives. DOD spends billions of dollars per year on fuel, and is pursuing numerous initiatives for reducing its fuel needs and changing the mix of energy sources that it uses. DOD's energy initiatives pose several potential policy and oversight issues for Congress, and have been topics of discussion and debate at hearings on DOD's proposed FY2013 budget. Congress's decisions on DOD energy initiatives could substantially affect DOD capabilities, funding requirements, and U.S. energy industries.\nThis report supplements earlier CRS reports on DOD fuel use and conservation. Another CRS report discusses DOD's facilities energy conservation policies.\nThis report focuses primarily on DOD's use of liquid fuels. It does not discuss in detail DOD's use of other energy, such as natural gas or electrical power, or the use of nuclear power by some Navy ships.", "", "", "From fueling jets, ships, and tactical vehicles to powering domestic installations and forward operating bases, DOD consumes large amounts of energy to conduct its various operations. Points that help describe DOD's use of energy include the following:\nDOD is by some accounts the largest organizational user of petroleum in the world. DOD consumed about 117 million barrels of oil in FY2011. Even so, DOD's share of total U.S. energy consumption is fairly small. DOD's use of energy in FY2010 accounted for almost 1% of all U.S. energy consumption, DOD's use of petroleum in FY2010 accounted for about 1.9% of U.S. petroleum use. DOD is by far the largest U.S. government user of energy. DOD's use of energy in FY2010 accounted for about 80% of the federal government's use of energy. The amount of money that DOD spends on petrol eum-based fuels is large in absolute terms , but relatively small as a percentage of DOD's overall budget. In FY2011, DOD spent about $17.3 billion on petroleum-based fuels, accounting for about 2.5% of DOD's total outlays in FY2011 and about 6% of total operations and maintenance outlays in FY2011. DOD's petroleum costs have increased substantially over the last seven years even as DOD petroleum use has declined slightly over the same period . Between FY2005 and FY2011, DOD's petroleum use decreased 4%. Over the same period, DOD spending on petroleum rose 381% in real (i.e., inflation-adjusted) terms, from $4.5 billion in FY2005 (in FY2011 dollars) to about $17.3 billion in FY2011. Petroleum-based liquid fuels are by far DOD's largest source of energy . Petroleum use accounted for 71% of DOD energy use in FY2010. By comparison, electricity accounted for 11%; natural gas 8%; nuclear power in Navy ships 7%; coal 2%; and all other sources 1%. When divided by platform t ype, aircraft are DOD's largest user s of petroleum. According to a 2006 Navy report, in 2003 aircraft accounted for 73% of DOD's petroleum use, ground vehicles accounted for 15%, while ships accounted for 8%. DOD installations accounted for 4%.", "When DOD's fuel use is divided by service, the Air Force is the largest user, accounting for 53% of total DOD's fuel use, compared to 28% for the Department of the Navy (which includes the Navy and Marine Corps), and 18% for the Army (see Figure 1 ).", "Between 85% and 95% of the fuel used by the Air Force is aviation fuel. In FY2011, the Air Force used nearly 62 million barrels of petroleum fuel, including about 58 million barrels of aviation fuel. In FY2011, 64% of Air Force aviation fuel was used for mobility and logistics air operations, 31% for combat air operations, and 3% for training operations. In FY2009, the Air Force's Air Mobility Command, which provides airlift and refueling services to joint forces, consumed more than half of Air Force fuel use and a quarter of DOD total fuel use.", "The Department of the Navy is less dependent on petroleum than the Air Force and Army for meeting its energy needs, in part because all of the Navy's aircraft carriers and submarines are nuclear-powered. In FY2010, the Department of the Navy met 59% of its overall energy needs from petroleum, 22% from nuclear-powered ships, and 19% from electricity. Aircraft operations account for 54% of the Navy's use of petroleum fuels, ships account for 43%, and non-tactical uses account for 3%. The Marine Corps accounted for about 4.7 million barrels of the 30 million barrels of petroleum used by the Department of the Navy in FY2010. About 90% of the Marine Corps' fuel use is operational fuel, with aircraft accounting for about 85% and ground forces accounting for about 15% of operational fuel use.", "The Army, despite being the service with the greatest number of personnel, consumes less fuel than the Air Force or Navy. In FY2011, the Army used about 21 million barrels of petroleum fuel. The Army does not operate large numbers of airplanes, which are fuel-intensive platforms, and relies on the Air Force and the Military Sealift Command for transporting and sustaining troops.", "DOD's energy use can be divided into two broad categories—operational energy and installation energy. Section 2821(a) of the FY2012 National Defense Authorization Act ( H.R. 1540 / P.L. 112-81 of December 31, 2011) defines operational energy as \"the energy required for training, moving, and sustaining military forces and weapons platforms for military operations. The term includes energy used by tactical power systems and generators and weapons platforms.\" The definition is codified at 10 U.S.C. 2924. DOD's use of operational energy can vary over time, depending on the number, location, scale, and tempo of DOD's military operations around the world.\nInstallation energy is not defined in law, but in practice refers to energy used at installations, including by non-tactical vehicles, that does not fall under the definition of operational energy. Installation energy is sometimes referred to as facilities energy.\nUnder the definition of operational energy in P.L. 112-81 , energy used at an installation to train military personnel is considered operational energy.\nThe distinction between what is operational or installation energy is not always clear. For example, at a domestic base that serves as the home of remote drone operations, energy used at the base for drone operations could be viewed as operational energy. DOD is working to develop rules for allocating various activities to operational or installation energy.\nAccording to DOD, currently about 75% of DOD's energy use is operational energy and about 25% is installation energy. Officials state current DOD energy use reflects recent operations in Afghanistan and Iraq: the split between operational and installation energy would likely be much different during peacetime. About 80% of installation energy used in FY2010 was electricity and natural gas, about 15% was fuel oil and coal, and the remainder was renewable energy and other sources.\nEnergy used to directly support ongoing expeditionary operations, including logistics support throughout the supply chain, and in-theatre energy consumption, can be considered a subset of operational energy. According to DOD officials, the military is more reliant on fuel during expeditionary operations.", "", "The Defense Logistics Agency (DLA) is DOD's logistics support agency. DLA-Energy (DLA-E) is the part of DLA that is responsible for acquiring, storing, distributing and selling energy, including petroleum, natural gas, and coal. DLA-E buys petroleum from suppliers around the world and resells it to customers within DOD, acting as a clearinghouse for filling DOD's petroleum needs. DLA-E stores and sells fuel at more than 600 fuel depots worldwide, and also sells fuel to foreign governments and other federal agencies.\nTo reduce costs for transporting fuel, DLA-E generally purchases fuel from sources close to where it is to be used. Fuel to support operations in Afghanistan, for example, is generally purchased from sources within the Central Command (CENTCOM) area of responsibility, while fuel to support operations in the Pacific is generally purchased from sources within the Pacific Command.\nDLA-E incurs varying costs for obtaining fuels at different locations around the world, depending on regional fuel prices and logistic costs. Despite these differing costs, DLA-E establishes a \"global leveled set price\" for each fuel type—a single price for a gallon of that fuel type, regardless of where it is purchased. For example, DLA-E charges DOD customers the same price for a gallon of JP-8 (military jet fuel) purchased in Northern Afghanistan, Japan, or Fort Benning, Georgia. To calculate the global leveled set price, DLA-E averages the worldwide cost of fuel purchased, and then adds an operating surcharge to cover its worldwide operating expenses (such as expenses for storing and distributing fuel).", "Section 332(g) of the FY2009 Duncan Hunter National Defense Authorization Act ( S. 3001 / P.L. 110-417 of October 14, 2008) defines the fully burdened cost of fuel as \"the commodity price for fuel plus the total cost of all personnel and assets required to move and, when necessary, protect the fuel from the point at which the fuel is received from the commercial supplier to the point of use.\"\nThe price for fuel that DLA-E charges to DOD customers is less than the fully burdened cost of fuel—it covers the commodity cost of fuel and DLA-E's fuel handling and overhead costs, but it does not cover costs associated with transporting, storing, or protecting fuel beyond the DLA-E point of delivery. Calculating the fully burdened cost of fuel requires adding these other costs to DLA-E's set fuel price.\nThe fully burdened cost of fuel varies widely, depending on where and under what circumstances fuel is used. The fully burdened cost of fuel that is used near a DLA-E delivery point in the United States is generally close to the DLA-E set price. In contrast, in rare cases, the fully burdened cost of fuel delivered by helicopter to a remote and isolated location can run into the hundreds of dollars per gallon. Costs for supplying fuel during overseas contingency operations, particularly costs for logistics and force protection, generally increase the fully burdened cost of fuel. A DOD analysis concluded that the \"hidden costs\" associated with the fully burdened cost of fuel have led DOD to \"systematically undervalue the true cost of supplying fuel to its battlespace forces.\"\nA number of studies have attempted to calculate the fully burdened cost of fuel in Iraq and Afghanistan. In 2010, the Marine Corps estimated the fully burdened cost of fuel in Afghanistan at between $9 to $16 per gallon if delivered by land, and between $29 to $31 per gallon if delivered by air. An Army study estimated the fully burdened cost of fuel in Iraq at $9 to $45 per gallon, depending on the type of force protection used to and the delivery distance, while an Air Force study estimated the fully burdened cost of fuel delivered by land at $3 to $5 per gallon and $35 to $40 per gallon for aerial refueling. A 2008 report by the Army Environmental Policy Institute estimated that the fully burdened cost of fuel for a Stryker brigade in Iraq ranged from $14.13 to $17.44 per gallon.\nWhile the fully burdened cost of fuel illustrates the \"hidden costs\" of supplying fuel to forces in the field, it is not a record of actual costs and is not used for budgeting purposes. Rather, it is intended to be used in the acquisitions process as a factor in selecting new equipment, and to illustrate potential systems' logistical footprints. Section 332(c) of P.L. 110-417 states that \"The Secretary of Defense shall require that the life-cycle cost analysis for new capabilities include the fully burdened cost of fuel during analysis of alternatives and evaluation of alternatives and acquisition program design trades.\" The provision is codified at 10 U.S.C. 2911 note.", "The military relies on thousands of contractors to support military operations both domestically and abroad. These contractors depend on fuel to perform many of their activities. The cost of fuel used by contractors is often embedded in contracts and consequently not included in DOD's data on fuel. As a result, total DOD expenditures for fuel are higher than what is reflected in DOD data.", "DOD's reliance on fuel can lead to certain financial, operational, and strategic challenges and risks. In recent years, rising fuel costs and operations in Iraq and Afghanistan have highlighted some of these challenges and risks. DOD discusses these challenges and risks in some of its strategic guidance documents, and takes them into account in its operational plans and in developing its future force structure. This section focuses on challenges and risks associated with DOD's use of operational energy.", "Financial challenges and risks associated with DOD's reliance on fuel relate to the possibility of a longer-term trend of increasing costs for fuel, and to shorter-term volatility in fuel prices. Each of these is discussed below.", "DOD's petroleum costs have increased substantially over the last seven years even as DOD petroleum use has declined slightly over the same period. Between FY2005 and FY2011, DOD's petroleum use decreased 4%, from 122 million barrels to 117 million barrels (see Figure 2 ). Over the same period, DOD spending on petroleum rose 381% in real (i.e., inflation-adjusted) terms, from $4.5 billion in FY2005 (in FY2011 dollars) to about $17.3 billion in FY2011.\nA longer-term trend of increasing fuel costs could require DOD to devote an increasing share of its budget to fuel, which in turn could make it more difficult for DOD to fund other priorities, such as personnel pay and benefits or equipment acquisition programs. Since the early 1990s, the cost of buying fuel has increased faster than any other major DOD budget category, including health care and military personnel. Since FY2005, the share of DOD's spending dedicated to fuel increased from about 1.6% to about 2.5% of total spending. Although that change appears small, in a DOD budget of roughly $700 billion per year, the increase of about 0.9% equates to about $6 billion per year that otherwise might be available for funding other DOD priorities.\nSome DLA-E officials and other analysts expect the price of oil to continue to rise as a result of increasing demands for oil from developing countries. DOD projects that fuel costs will decline 13% from FY2013 to FY2014 and then remain roughly at that lower price through FY2017, primarily because DOD projects the price of refined oil products to decline, even as it expects the price of crude oil to remain relatively flat. Fuel appears to be the only category for which DOD projects costs to decrease over the next four years (see Appendix A ).", "Shorter-term volatility in fuel costs complicates DOD budgeting and can cause funding shortfalls in the current-year budget. Because DOD fuel is funded primarily through DOD's Operations and Maintenance (O&M) account, unexpected increases in fuel prices can lead to significant O&M funding shortfalls. In DOD's FY2012 budget, for example, the cost of oil was forecast to be $130 per barrel, but oil prices in FY2012 rose to $156 per barrel, reportedly leading to an unfunded obligation of more than $3 billion across DOD. Secretary of the Navy Ray Mabus stated in April 2012 that the Navy is facing nearly a billion dollars in unfunded fuel costs, while U.S. Pacific Command, to cite another example, is facing a $200 million shortfall in FY2012 O&M funding due to higher-than-expected fuel costs.\nEven slight unexpected increases in costs for fuel can have a substantial effect on DOD's current-year budget. Navy officials state that a one-dollar increase in the price of a barrel of petroleum costs the Navy alone about $30 million annually. (By extension, since DOD in FY2011 used about 117 million barrels of oil, a one-dollar increase in the price of a barrel of petroleum would cost DOD as a whole about $117 million.) A 10% increase from the FY2011 price of fuel would cost DOD as a whole an additional $1.7 billion per year—the price of about 14 F-35s.\nResponding to O&M funding shortfalls caused by unexpected increases in fuel costs can require either submitting supplemental funding requests (such as the $5 billion supplemental funding request to cover unexpectedly high fuel costs in FY2008), or reducing funding for other O&M-funded activities. Then-Secretary of Defense Robert Gates testified in 2011 that unbudgeted fuel costs could force cuts in Air Force flying hours, Navy steaming days, and training for home-stationed Army troops.\nBy some measures, petroleum prices have become increasingly volatile in recent years. DOD's petroleum costs, for example, increased by nearly 90% between FY2004 and FY2005, and then declined by about 50% between FY2008 and FY2009. Volatility in prices prompted DLA-E in FY2005 to shift from a practice of setting fuel prices once a year to adjusting prices as needed within a given fiscal year (see Appendix B ). Many analysts expect future oil prices to continue to be volatile in coming years.", "Operational challenges and risks associated with DOD's reliance on fuel relate to\nthe diversion of resources to the task of moving fuel to the battlefield; the negative impact of fuel requirements on the mobility of U.S. forces and the combat effectiveness of U.S. equipment; and the vulnerability of fuel supply lines to disruption.", "Maintaining a logistics capability for an overseas military operation requires substantial personnel and materiel resources. The logistic network for an overseas military operation can be so extensive that reportedly as much as 1.4 gallons of petroleum fuel can be consumed to deliver 1 gallon to forces on the battlefield. The use of personnel and material for getting fuel to the battlefield diverts resources that could otherwise be used for meeting other military requirements. A 2008 DOD analysis found that moving and protecting fuel \"add[s] to sustainment costs and divert[s] and endanger[s] in-theatre force capability.\" In addition, maintaining an extensive logistic network can result in increased numbers of contractors on the battlefield. In Iraq and Afghanistan, the extensive use of contractors has in some cases caused problems and undermined U.S. efforts.", "Fuel requirements can slow down the rate at which U.S. forces can be deployed and assembled in an overseas theater, can limit the rate of advance or the battlefield maneuverability of U.S. forces engaged in combat operations, and can affect the weight, speed, range, and lethality of U.S. weapon systems. A 2001 DOD study estimated that if the Abrams tanks used by the Army and Marine Corps were 50% more fuel efficient, and consequently if a smaller amount of fuel for those tanks needed to be moved to the battlefield, the build-up for Operation Desert Shield/Desert Storm (i.e., the 1990-1991 U.S.-led military operation against Iraq) could have been completed in about five months instead of six (i.e., about 15% more quickly). During the 2003 U.S. advance on Baghdad, then-Major General James Mattis, commander of the 1st Marine Division, noted that U.S. forces were outpacing their logistics support. General James Amos, Marine Corps Commandant, stated in 2001 that fuel dependency \"constrains our tactical options for executing missions in complex battlespaces, across long distances, and against hybrid threats.\"\nThe 2011 National Military Strategy states that U.S. forces in the future must become more \"expeditionary in nature\" and \"require a smaller logistical footprint in part by reducing large fuel and energy demands.\"", "Fuel supply lines are vulnerable to disruption from enemy attack or from natural events—such as poor weather, floods, or earthquakes—that can damage, destroy, or limit the use of roads, ports, and airfields. Protecting fuel-supply lines against enemy attack can lead to the assignment of additional personnel and other resources to the task of moving fuel through the battlefield, increasing the above-discussed diversion of resources away from other military requirements.\nDOD stated in 2011 that \"attacks on fuel convoys and fixed energy supplies in Afghanistan, Iraq, and surrounding countries already demonstrate the vulnerability of our current supply networks.\" Secretary of the Navy Ray Mabus testified in 2011 that \"Future adversaries [can] target our operational dependence on petroleum, as we see in attacks on fuel convoys in Afghanistan.\"\nU.S. Transportation Command estimated that ground convoys in Afghanistan suffered more than 1,100 attacks in 2010, including attacks from improvised explosive devices. The Marine Corps estimated in 2010 that there was one Marine casualty for each 50 Marine Corps fuel or water convoys in Afghanistan, and an Army analysis of the period 2003-2007 that included both Army and contractor personnel estimated one casualty per 24 fuel convoys in Afghanistan. The Marine Corps estimates that about 10% of battlefield casualties in Iraq and Afghanistan are related to convoy operations, while the Army estimated that 18% of casualties in Iraq and Afghanistan are related to ground resupply operations. A 2009 study by the Army Environmental Policy Institute reported that between 2003 and 2007, more than 3,000 U.S. troop and contractor deaths or injuries were attributable to fuel supply convoys in Iraq and Afghanistan.", "Strategic challenges and risks associated with DOD's reliance on fuel relate to getting fuel to the overseas operating area, and ensuring the global free flow of oil.", "Supply lines supporting overseas missions may cross international borders, giving other countries the ability to disrupt or otherwise influence the flow of supplies. Operations in Afghanistan highlight challenges associated with operating a logistic network that is dependent on the assent of other countries. Since Afghanistan is a landlocked country, fuel and supplies must run through the territory or airspace of one or more neighboring countries. Vice Admiral Mark Harnitchek, deputy commander of U.S. Transportation Command, reflecting on the task of keeping open U.S. supply lines to Afghanistan, described the U.S. military operation in Afghanistan as \"the logistics challenge of our generation.\"\nUntil November 2011, routes running through Pakistan were the primary ones for bringing fuel into Afghanistan, accounting for approximately 70% of fuel (and also 29% of supplies) delivered to U.S. forces in Afghanistan. DLA-E officials attribute hijackings and theft of supplies being transported along routes in Pakistan in part to Pakistan's prohibition on using U.S. military or private security contractors to protect convoys. Following a U.S. airstrike on November 26, 2011, that killed 24 Pakistani soldiers, Pakistan closed its supply routes to Afghanistan. This closure forced DOD to shift to using the Northern Distribution Network, a longer, more costly, and more complex logistics route stretching from Latvia or Azerbaijan across Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. DLA-E is currently moving all fuel through these northern routes. There have been allegations of corruption tied to DLA-E fuel contracts in Kyrgyzstan, jeopardizing continued U.S. use of the Manas Transit Center, a key logistics hub.\nUsing northern routes reportedly has increased DOD's costs for transporting fuel and supplies to Afghanistan to a reported $104 million per month—$87 million per month more than when routes through Pakistan were used. Shipping a 20-foot cargo container to Afghanistan costs $10,000 more if transported on northern routes, according to the U.S. Transportation Command. In addition to being more expensive, the northern route cannot be used to transport lethal cargo, can only be used one way, and, according to DLA-E officials was operating at fully capacity in March 2012. Air Force General William M. Fraser III of the Air Force, Commander of U.S. Transportation Command testified that both the northern and Pakistani routes are necessary to support the U.S. drawdown in Afghanistan.", "Oil is critical to the U.S. economy. It is the United States' largest source of energy, providing 37% of the total energy the nation consumes and 94% of the energy used for transportation. Every U.S. recession in the last 40 years has been preceded by an increase in oil prices. Any disruption in the global free flow of oil could result in an increase in oil prices and pose a serious risk to the U.S. and international economies. DOD officials state that protecting shipping lanes and the free flow of oil is a fundamental mission of the U.S. Navy, and is vital to U.S. national and economic interests.\nGlobal petroleum distribution networks pass through a number of \"chokepoints\" that are vulnerable to disruption, including in particular the Strait of Hormuz leading into and out of the Persian Gulf. Securing Persian Gulf shipping lanes, particularly through Straight of Hormuz, is one of the primary missions of the Navy's Fifth Fleet, headquartered in Bahrain. Although exact figures are difficult to calculate (because many U.S. forces have multiple mission responsibilities), observers believe that DOD spends billions or tens of billions of dollars annually protecting global oil transit routes and chokepoints. A 2009 RAND report estimated the cost to DOD of protecting the supply and transit of oil from the Persian Gulf at between $86 billion and $104 billion per year—figures that equate to a substantial fraction of DOD's total budget.\nDOD's role in protecting the global free flow of oil can lead to U.S. combat operations, such as those in the Persian Gulf against Iranian forces that occurred during Operation Earnest Will, the 1987-1988 U.S. military operation to protect oil tankers and other commercial ships operating in the Persian Gulf from Iranian attack during the so-called Tanker War (i.e., the at-sea component of the Iran-Iraq War of the 1980s). In December 2011, in response to threats by Iran to close the Strait of Hormuz, Secretary of Defense Leon Panetta stated that a closure of the strait would be considered a \"redline\" by the United States; a spokeswoman from the 5 th Fleet similarly stated that \"any disruption will not be tolerated.\"", "DOD is pursuing numerous initiatives for reducing its fuel needs and changing the mix of fuels that it uses. Some of DOD's energy initiatives respond to statutory requirements (see \" Past Legislation on DOD Energy Use \" below). More generally, DOD justifies its energy initiative in connection with reducing the challenges and risks associated with DOD's reliance on fuel that are discussed in the previous section of this report. Several DOD strategy documents discuss the need to decrease logistic footprints and reduce energy demands. A 2008 DOD report states \"the payoff to DOD from reduced fuel demand in terms of mission effectiveness and human lives is probably greater than for any other energy user in the world.\"\nAs part of its FY2013 budget submission, DOD is requesting more than $1.4 billion for operational energy initiatives in FY2013. Most of these initiatives are aimed at reducing the amount of energy DOD needs to conduct operations. DOD's five year (FY2013-FY2017) Future Years Defense Plan (FYDP) includes a total of about $8.6 billion for operational energy initiatives.\nDOD as a whole faces certain challenges in decreasing its reliance on fuel. One of these relates to equipment service lives: aircraft and ships, which together account for more than half of DOD fuel use, have long service lives, so the composition of the inventory of aircraft and ships tends to change slowly over time. Another challenge relates to gathering reliable data on energy use for developing clear metrics to evaluate the effectiveness of the initiatives, and making informed decisions.\nThe following sections summarize energy initiatives being pursued by DOD's Office of Operational Energy Plans and Programs (OEPP), and by each of the military services.", "DOD's office of Operational Energy Plans and Programs was established by statute as set forth in the FY2009 Duncan Hunter National Defense Authorization Act ( P.L. 110-417 , as amended). The office is headed by the Assistant Secretary of Defense, Operational Energy Plans and Programs (ASD(OEPP)), and is responsible for developing DOD policy for operational energy and alternative fuels, and for coordinating operational energy efforts across the services. OEPP states that its efforts focus on promoting institutional change, supporting current operations, and building energy awareness into the requirements of future systems. Table 1 lists what OEPP describes as its major operational energy initiatives.", "Air Force officials state that the Air Force's energy initiatives are aimed at reducing the service's energy costs (which accounted for 8.4% of the Air Force's budget in FY2011) and at reducing the budgetary impact of volatility in fuel prices. More specifically, the Air Force states that its operational energy goals are the following:\nReduce consumption of aviation fuel 10% by 2015. Be prepared to acquire 50% of the Air Force's domestic aviation fuel requirement via an alternative fuel blend by 2016. Test and certify all aircraft and systems on a 50:50 alternative fuel blend by 2012. The Air Force's FY2013 budget submission requests $655 million for operational energy initiatives in FY2013, and programs a total of about $2.6 billion for energy initiatives across the FYDP. Table 2 lists what the Air Force describes as its major operational energy initiatives.", "The Department of the Navy has identified six major objectives for FY2013, of which the third is to\nLead the Nation in Sustainable Energy. The Navy and Marine Corps are pioneering DoD's efforts to reduce energy consumption. Our investments in alternative fuels/biofuels have led to success in both aircraft and ships supporting our path to a green fleet. Our hybrid-drive system has already produced fuel savings on the [amphibious assault ship] USS Makin Island (LHD 8). Energy saving efforts have also drastically cut energy usage on bases, with new solar and geothermal technologies providing electricity. As the use of alternative energy increases across the Department, DON will be protecting the environment with clean energy and lessening our dependence on foreign oil.\nSecretary of the Navy Ray Mabus testified on February 16, 2012, that \"we would be irresponsible if we did not reduce our dependence on foreign oil.\" Secretary Mabus stated in April 2012 that the Navy's biofuel efforts will increase the security of the Navy's energy supply and reduce the service's vulnerability to price shocks.\nAccordingly, the Navy's operational energy initiatives focus on reducing the service's energy consumption and its reliance on fossil fuels. The Navy's operational energy goals are to\nRequire consideration of life-cycle energy costs as a factor in developing and awarding contracts for systems and buildings. Demonstrate a \"Green Strike Group\" of ships and aircraft powered by biofuels by 2012, and deploy it overseas by 2016. Ensure that at least 50% of the Navy's total energy consumption is from alternative sources by 2020. Increase energy efficiency and/or reduce fuel consumption afloat by 15% by 2020. The Navy's FY2013 budget submission requests $338 million for operational energy initiatives in FY2013, and programs a total of about $1.9 billion for operational energy initiatives across the FYDP. Of the $338 million requested for FY2013, $186.3 million is for maritime energy (i.e., ships), $121.3 million is for aviation energy, $13.4 million is for expeditionary energy, and $17.1 million is for alternative fuels procurement and testing. One of the most controversial of DOD's energy initiatives is the Navy's proposal to invest $170 million over the next several years to jumpstart a domestic advanced biofuels industry, using authority provided by the Defense Production Act. An August 2011 MOU between the Navy, and the Departments of Agriculture and Energy formalizes this intention. Each agency has pledged up to $170 million with substantial cost-sharing from industry, to construct or retrofit commercial scale (at least 10 million gallons) advanced drop-in biofuel plants and refineries. The Navy's alternative fuel purchases for testing and certification purposes and $170 million commitment to support construction of biofuel production facilities add up to slightly more than $200 million (a more in-depth discussion on the Navy's role in developing biofuels is discussed later in this report: see \" Navy Role in Developing Advanced Biofuels \"). Table 3 lists what the Navy describes as its major operational energy initiatives. The last item in the table—alternative fuels testing and certification—includes Navy testing of equipment performance and reliability on non-petroleum fuel, but does not include Navy efforts to promote the development of advanced biofuels.", "The Marine Corps' operational energy efforts focus primarily on increasing combat effectiveness through reducing energy challenges and risks (such as the vulnerability of fuel supply lines) for Marine Corps forces operating in the field. In support of this goal, the Marine Corps' energy goals are to increase the service's overall efficiency by 50% by 2025, and to be able by 2025 to deploy a Marine Corps expeditionary force from the sea that can operate self-sufficiently in terms of energy, except for vehicle fuel.\nThe Marine Corps' FY2013 submission requests $64.5 million for operational energy efforts in FY2013 and programs a total of $352 million for operational energy initiatives over the FYDP. About 58% of the funding requested for FY2013 is for procurement of new equipment with improved energy characteristics. The Marine Corps' proposed FY2013 programs are intended to reduce the fuel used by a Marine Expeditionary Brigade by 9%, allowing them to operate for 15 days from an initial assault without a fuel resupply, up from the current 14 days. Table 4 lists what the Marine Corps describes as its major operational energy initiatives.", "The Army's operational energy efforts focus on reducing energy demand, increasing fuel efficiency, and increasing the use of alternative and renewable energy. The Army's FY2013 budget submission requests $560 million for operational energy initiatives, and programs a total of about $4.1 billion across the FYDP, of which $3.3 billion is for procurement of new equipment and $832 million is for science and technology research. In April 2012 the Army opened the Ground Systems Power and Energy Laboratory to conduct research and development on mobility power and energy. The Base Camp Integration Laboratory is where the Army tests and evaluates new technologies/systems for basing during contingency operations, including smart micro-grid prototypes, more efficient environmental control units, rigid-wall shelters, and re-locatable buildings.\nMany of the Army's energy initiatives are intended to increase the Army's ability to operate remotely and in a broader variety of terrain. Table 5 lists what the Army describes as its major operational energy initiatives.", "Congress has been concerned with energy policy since the 1970s, and has passed legislation relating to federal government energy use, including DOD installation energy use. Congress has set specific energy-reduction targets for DOD installation energy, but not for operational energy.", "Congress has set targets for reducing federal (including DOD) government energy use and for increasing renewable power. Section 203 of the Energy Policy Act of 2005 ( H.R. 6 / P.L. 109-58 of August 8, 2005) states that \"The President, acting through the Secretary, shall seek to ensure that, to the extent economically feasible and technically practicable, of the total amount of electric energy the Federal Government consumes during any fiscal year,\" not less than 7.5% in FY2013 and each fiscal year thereafter shall be renewable energy. Section 431 of the Energy Independence and Security Act of 2007 ( H.R. 6 / P.L. 110-140 of December 19, 2007) requires federal building energy use to be reduced 30% by FY2015. Section 142 of the law mandates a 20% reduction in annual non-tactical vehicle petroleum use, and a 10% increase in annual non-tactical alternative fuel use, by the start of FY2015, as measured from an FY2005 baseline. Section 433 of the law requires certain new and significantly renovated federal buildings to reduce energy usage.\nCongress has also enacted DOD-specific installation energy requirements. Section 2852 of the FY2007 John Warner National Defense Authorization Act ( H.R. 5122 / P.L. 109-364 of October 17, 2006) \"to produce or procure not less than 25 percent of the total quantity of electric energy it consumes within its facilities and in its activities during fiscal year 2025 and each fiscal year thereafter from renewable energy sources.\" Section 2823 of the FY2012 National Defense Authorization Act ( H.R. 1540 / P.L. 112-81 of December 31, 2011) directed DOD to set an interim goal for 2018. These provisions are codified at 10 U.S.C. 2911(e).", "", "Section 902 of the FY2009 Duncan Hunter National Defense Authorization Act established the DOD position of Director of Operational Energy Plans and Programs (OEPP). The FY2011 Ike Skelton National Defense Authorization Act redesignated the position as an Assistant Secretary of Defense. The position is now codified at 10 U.S.C. 138c, which states in subsection (b) that the Assistant Secretary of Defense for Operational Energy Plans and Programs shall:\n(1) provide leadership and facilitate communication regarding, and conduct oversight to manage and be accountable for, operational energy plans and programs within the Department of Defense and the Army, Navy, Air Force, and Marine Corps;\n(2) establish the operational energy strategy;\n(3) coordinate and oversee planning and program activities of the Department of Defense and the Army, Navy, Air Force, and the Marine Corps related to -\n(A) implementation of the operational energy strategy;\n(B) the consideration of operational energy demands in defense planning, requirements, and acquisition processes; and\n(C) research and development investments related to operational energy demand and supply technologies; and\n(4) monitor and review all operational energy initiatives in the Department of Defense.", "Section 526 of the Energy Independence and Security Act of 2007 ( H.R. 6 / P.L. 110-140 of December 19, 2007) prohibits federal agencies from entering into a contract for procurement of an alternative or synthetic fuel, including a fuel produced from nonconventional petroleum sources, for any mobility-related use, other than for research or testing, unless the contract specifies that the lifecycle greenhouse gas emissions associated with the production and combustion of the fuel supplied under the contract must, on an ongoing basis, be less than or equal to such emissions from the equivalent conventional fuel produced from conventional petroleum sources.", "Section 360(a) of the FY2007 John Warner National Defense Authorization Act ( H.R. 5122 / P.L. 109-364 of October 17, 2006) states that it \"shall be the policy of the Department of Defense to improve the fuel efficiency of weapons platforms, consistent with mission requirements, in order to—(1) enhance platform performance; (2) reduce the size of the fuel logistics systems; (3) reduce the burden high fuel consumption places on agility; (4) reduce operating costs; and (5) dampen the financial impact of volatile oil prices.\"", "As mentioned earlier, Section 332(c) of P.L. 110-417 states that \"The Secretary of Defense shall require that the life-cycle cost analysis for new capabilities include the fully burdened cost of fuel during analysis of alternatives and evaluation of alternatives and acquisition program design trades.\" The provision is codified at 10 U.S.C. 2911 note.", "Congress has required DOD to provide a number of reports related to operational energy. Among these are the annual Energy Performance Master Plan and Report Related to Operational Energy.", "The requirement for an annual Energy Performance Master Plan was created by Section 2851 of the FY2007 John Warner National Defense Authorization Act and amended in subsequent legislation, including Section 2832 of the FY2011 Ike Skelton National Defense Authorization Act. The provision is codified at 10 U.S.C. 2911(b), which states that the document is to be \"a comprehensive master plan for the achievement of the energy performance goals of the Department of Defense, as set forth in laws, executive orders, and Department of Defense policies.\"", "The requirement for an annual Report Related to Operational Energy was created by Section 331(a) of the FY2009 Duncan Hunter National Defense Authorization Act. The provision is codified at 10 U.S.C. 10 U.S.C. 2925(b), which states that the document is to be a \"report on operational energy management and the implementation of the operational energy strategy.... \"", "Under 10 U.S.C. 138c(e)(3), the Assistant Secretary of Defense for Operational Energy Plans and Programs is required to annually review the budgets for operational energy activities of the military departments and defense agencies and certify that the budgets are adequate to implement the operational energy strategy. Other required annual reports relating to DOD energy include the following:\na list of DOD energy performance goals regarding transportation systems, support systems, utilities, and infrastructure and facilities (10 U.S.C. 2911(a)); a report on installations energy management detailing the fulfillment during the previous fiscal year of DOD's energy performance goals for that fiscal year as set forth under the above provision (10 U.S.C. 2925(a)); and a report on mitigation of power outage risks for DOD facilities and activities (10 U.S.C. 2911 note).\nFor a list of one-time reports that Congress has required on various DOD energy-related issues, see Appendix D . For an expanded review of legislative activity relating to DOD energy, see Appendix E .", "DOD's energy initiatives pose several potential policy and oversight issues for Congress. The sections below briefly review several of these issues.", "As discussed above, the various services have different energy goals and are pursuing different energy initiatives. One potential oversight issue for Congress concerns DOD coordination of the operational energy initiatives being pursued by the individual military services. As mentioned in the previous section, one of the responsibilities of the Assistant Secretary of Defense for Operational Energy Plans and Programs (ASD(OEPP)), which is codified by statute, is to coordinate and oversee planning and program activities relating to operational energy. Potential oversight questions for Congress include the following:\nHow well is ASD(OEPP) coordinating the operational energy initiatives of the various services? Have ASD(OEPP)'s coordination activities resulted in any changes to the services' proposed operational energy initiatives, and if so, what have been these changes? How much latitude should the services have in developing their service-specific operational energy strategies? Does ASD(OEPP) believe it makes sense, in terms of having a coordinated DOD approach to operational energy, for DOD's second-largest user of fuel—the Department of the Navy—to attempt to spur a domestic advanced biofuels industry, while DOD's largest user of fuel—the Air Force—is not attempting to do this, and has instead adopted an approach of not purchasing biofuels until they are cost competitive with petroleum-based fuels? What formal evaluation did ASD(OEPP) conduct to inform or validate its belief? Are the operational energy initiatives of the services sufficiently coordinated? What actions has ASD(OEPP) taken to ensure that there is no unnecessary duplication or overlap in the operational energy initiatives of the services? What process do the services have for consulting with one another on their operational energy initiatives, and what changes in the two services' initiatives have occurred as a result of such consultations?", "Another potential oversight issue for Congress concerns the status of DOD's efforts to gather data and develop metrics for evaluating DOD energy initiatives. Absent reliable data, DOD lacks the information upon which to make sound policy decisions. Without clear metrics, it is difficult to measure the effectiveness of the various energy initiatives currently underway. As mentioned earlier, DOD has acknowledged that it faces a challenge in gathering reliable data on DOD energy use for developing clear metrics to evaluate the effectiveness of DOD energy initiatives. Potential oversight questions for Congress include the following:\nWhat specific challenges does DOD currently face in gathering reliable data on DOD energy use? What actions has DOD taken, or what actions does DOD plan to take, to address these challenges? When does DOD anticipate having reasonably comprehensive data on DOD energy use? If DOD currently faces challenges in gathering reliable data on DOD energy use, how confident can it be in decisions it has already made regarding current DOD energy initiatives? How do current challenges in gathering reliable data on DOD energy use affect ASD(OEPP)'s ability to coordinate DOD operational energy initiatives across the services? What are DOD's current metrics for evaluating DOD energy initiatives, and how were they developed? What assumptions underpin these metrics? If addressing challenges in gathering reliable data on DOD energy use leads to a revision of these metrics, when and how does DOD anticipate reporting these revised metrics to Congress? In developing metrics for evaluating DOD energy initiatives, how much weight does DOD give to the various financial, operational, and strategic challenges and risks discussed earlier (see \" Challenges and Risks Associated with DOD's Use of Fuels \")? To what extent are factors such as potential climate effects (e.g., greenhouse gas emissions) or environmental degradation (e.g., pollution) used by DOD as metrics for evaluating DOD energy initiatives?", "As mentioned earlier, DOD in its FY2013 budget submission projects that fuel costs will decline 13% from FY2013 to FY2014 and then remain at that lower price through FY2017, primarily because DOD is projecting lower costs for refined products. Fuel appears to be the only category for which DOD projects costs to decrease over the next four years. While some analysts expect crude oil prices to decline, at least some of those analysts have said that DOD's projected declines may be overly optimistic. Underestimating future fuel costs can complicate DOD budget planning and execution, and can lead to inaccurate evaluations of the potential cost-effectiveness of DOD energy initiatives.\nThe Office of Management and Budget (OMB) provides the cost of crude oil to be used by federal government departments in preparing their departmental budgets. DOD takes the OMB-provided cost of crude oil and then adds a percentage markup to account for the difference between crude oil costs and the costs of refined petroleum products. DOD calculates this refining markup using actual figures from past years. DOD states that the actual markup in FY2011 varied between 45% and 60%, and that the assumed markup in FY2012 is about 55%. In estimating future fuel costs, DOD is assuming a 50% markup for FY2013 and 30% for FY2014-FY2017, \"consistent with standard practice between FY2007-FY2011.\" A potential oversight question for Congress is whether these markup rates are too high, too low, or about right.", "Another oversight issue for Congress concerns what role DOD should play in federal government energy initiatives. DOD is requesting substantial funding for an array of energy initiatives. In some cases, DOD is partnering with other federal government agencies in energy initiatives. In July 2010, for example, DOD and the Department of Energy (DOE) signed a Memorandum of Understanding (MOU) to coordinate efforts to enhance national energy security and \"demonstrate federal government leadership in transitioning America to a low carbon economy.\" The MOU covers the development and testing of a wide range of energy efficiency and renewable energy technologies to meet DOD energy needs or address national security, and \"speed innovative energy and conservation technologies from laboratories to military end users.\" As a second example, the Navy in August 2011 announced an MOU with Department of Agriculture (USDA) and DOE agreeing to invest in developing a domestic advanced biofuels industry, with each agency contributing $170 million.\nPotential oversight questions for Congress regarding DOD's role in federal energy initiatives include the following:\nAre DOD's energy initiatives adequately coordinated with those of other federal agencies? How much overlap or duplication, if any, is there between DOD's energy initiatives and those being pursued by other federal agencies? What process does the executive branch use to coordinate energy initiatives across all federal agencies? What criteria are used in this process to determine whether an initiative should be pursued by DOD or some other federal agency? What changes, if any, in DOD energy initiatives have been made as a result of the executive branch's process for coordinating federal energy initiatives? Under the July 2010 MOU between DOD and DOE, what role does DOD anticipate having in \"demonstrating federal government leadership in transitioning America to a low carbon economy?\" Given the wide range of technologies included in the MOU, what technologies does DOD see as priority areas? How will these \"innovative energy and conservation technologies\" move from development to military end users, and what is DOD's role in this process? Is the division in costs between the Navy, USDA, and DOE in the August 2011 MOU for developing a domestic advanced biofuels agency appropriate? How was this division determined?", "Within the broader issue of DOD's role in federal energy initiatives, a more specific oversight issue for Congress concerns the Navy's role in attempting to jumpstart a domestic advanced biofuels industry. This issue has been the topic of substantial discussion and debate during Congress's review of DOD's proposed FY2013 budget.\nThe Navy and other supporters of the initiative argue or might argue the following, among other things:\nDeveloping a domestic advanced biofuels industry will improve the Navy's (and the nation's) energy security by diversifying the Navy's (and the nation's) sources of energy. Developing a domestic advanced biofuels industry will reduce the Navy's (and the nation's) exposure to financial shocks caused by short-term volatility in petroleum fuel costs. The $200 million or so that the Navy plans to spend on advanced biofuels—including $170 million in costs to develop the fuels and about $20 million between FY2009-FY2012 for early purchases of advanced biofuels—is a small fraction of the Navy's annual cost for petroleum based fuel (which was about $4.5 billion in FY2011), and an even smaller fraction of the Department of the Navy's total budget (which was about $173.0 billion in FY2012, including about $15.7 billion for overseas contingency operations). In addition, the Navy's planned $170-million investment in developing a domestic advanced biofuels industry will leverage equal investments being made by USDA and DOE. Early purchases by the Navy of advanced biofuels will help create production economies of scale in the domestic advanced biofuels industry, causing the cost of advanced biofuels to come down over time. The Navy over the longer run anticipates that the cost of advanced biofuels will come down to a price competitive with that of petroleum-based fuels.\nSkeptics of the initiative argue or might argue the following, among other things:\nGiven that about 90% of the fuel used by a Navy carrier strike group during a typical overseas deployment lasting several months is obtained overseas, from sources close to where the strike group is operating, it is not clear whether developing a domestic advanced biofuels industry would do much in practical terms to diversify the Navy's fuel sources. There are alternatives that the Navy could pursue to reduce its dependence on petroleum-based fuels, such as nuclear-propulsion for surface combatants other than aircraft carriers or kite-assisted propulsion for Navy auxiliary ships. It is not clear whether developing advanced biofuels would provide the Navy (and the nation) with much protection against volatility in petroleum-based fuel prices. Since advanced biofuels are intended to be drop-in substitutes for petroleum-based fuels, providers of cost-competitive advanced biofuels might simply adjust their prices up and down to match changes in prices for petroleum-based fuels. An alternative way to insulate the Navy (and DOD) from short-term volatility in petroleum-based fuel costs would be to purchase fuel through multiyear contracts that lock in prices over the term of the contract—an approach that has long been used by commercial airlines and other firms to insulate themselves from volatility in energy prices. The Navy's decision to expend funding in an attempt to jumpstart a domestic advanced biofuels industry, and to pay a cost premium for early biofuel purchases, is not consistent with the decision by the Air Force—a service that uses even more petroleum-based fuel than the Department of the Navy—to not do these things. Given the current high cost of advanced biofuels, and technical challenges involved in developing cost-competitive advanced biofuels, it is not clear whether the Navy's initiative, even with the added efforts of USDA and DOE, will succeed in establishing a commercially viable domestic advanced biofuels industry or in reducing the costs of advanced biofuels to levels competitive with those of petroleum-based fuels. Particularly in light of current and future constraints on the Navy's budget, funding that the Navy is proposing to spend on advanced biofuels could be better spent on other Navy program priorities, such as platform acquisition. The $200 million or so that the Navy has spent and plans to spend on this initiative is roughly equivalent, for example, to the cost of a Joint High Speed Vessel (JHSV).\nPotential oversight questions for Congress include the following:\nWhy is the DOD effort to jumpstart a domestic advanced biofuels industry being led by the Navy rather than the Air Force? If the Navy were not attempting to jumpstart a domestic advanced biofuels industry, would the Air Force decide to do it? To what degree does DOD currently use multiyear fuel-purchasing contracts as a means of insulating itself against short-term volatility in petroleum-based fuel costs? What impediments (legal or otherwise) are there to having DOD increase its use of such contracts, and could these impediments be mitigated through legislation? What is the Navy's specific projection for how quickly prices for advanced biofuels will drop to levels competitive with those for petroleum-based fuels? On what studies is the Navy relying for this projection, or for its confidence more generally that biofuels will at some point become cost-competitive with petroleum-based fuels? Do the Air Force, ASD(OEPP), and private industry agree with the Navy's interpretation of these studies? What studies did the Navy or DOD conduct to evaluate the cost-effectiveness of developing a domestic advanced biofuels industry against the cost-effectiveness of other options for diversifying the Navy's fuel sources or for insulating the Navy against volatility in prices of petroleum-based fuels?", "Another potential oversight issue for Congress concerns the potential implications for DOD energy initiatives of shifts in U.S. military strategy, such as the new strategic guidance issued by the Obama Administration in 2012, which, among other things, features an increased emphasis on operations in the Asia-Pacific region. Shifts in strategy can have implications for how and where the U.S. military will use fuel, as well as for risks that DOD could face as a result of its reliance on liquid fuel. DOD officials, for example, project that, as a result of the new strategic guidance, Army operational energy use will decline, while its installation energy use will remain high. Potential oversight questions for Congress include the following:\nAre DOD energy initiatives aligned with DOD's projected operational patterns under the January 2012 strategic guidance? What changes in DOD's energy initiatives have been made as a result of this new strategic guidance?", "", "", "Section 253 of the FY2013 National Defense Authorization Act ( H.R. 4310 of the 112 th Congress) as reported by the House Armed Services Committee ( H.Rept. 112-479 of May 11, 2012) states:\nSEC. 253. BRIEFING ON POWER AND ENERGY RESEARCH CONDUCTED AT UNIVERSITY AFFILIATED RESEARCH CENTER.\nNot later than February 28, 2013, the Secretary of Defense shall brief the Committees on Armed Services of the Senate and House of Representatives on power and energy research conducted at the University Affiliated Research Centers. The briefing shall include—\n(1) a description of research conducted with other university based energy centers; and\n(2) a description of collaboration efforts with university-based research centers on energy research and development activities, particularly with centers that have an expertise in energy efficiency and renewable energy, including—\n(A) lighting;\n(B) heating;\n(C) ventilation and air-conditioning systems; and\n(D) renewable energy integration.\nSection 313 states:\nSEC. 313. EXEMPTION OF DEPARTMENT OF DEFENSE FROM ALTERNATIVE FUEL PROCUREMENT REQUIREMENT.\nSection 526 of the Energy Independence and Security Act of 2007 ( P.L. 110-140 ; 42 U.S.C. 17142) is amended by adding at the end the following: `This section shall not apply to the Department of Defense.'\nSection 314 states:\nSEC. 314. LIMITATION ON AVAILABILITY OF FUNDS FOR PROCUREMENT OF ALTERNATIVE FUEL.\n(a) Limitation- Except as provided in subsection (b), none of the funds authorized to be appropriated by this Act or otherwise made available during fiscal year 2013 for the Department of Defense may be obligated or expended for the production or purchase of any alternative fuel if the cost of producing or purchasing the alternative fuel exceeds the cost of producing or purchasing a traditional fossil fuel that would be used for the same purpose as the alternative fuel.\n(b) Exception- Notwithstanding subsection (a), the Secretary of Defense may purchase such limited quantities of alternative fuels as are necessary to complete fleet certification for 50/50 blends. In such instances, the Secretary shall purchase such alternative fuel using competitive procedures and ensure the best purchase price for the fuel.\nSection 2402 of the bill authorizes energy conservation projects at various locations inside and outside the United States.\nSection 2821 of the bill states:\nSEC. 2821. CONGRESSIONAL NOTIFICATION FOR CONTRACTS FOR THE PROVISION AND OPERATION OF ENERGY PRODUCTION FACILITIES AUTHORIZED TO BE LOCATED ON REAL PROPERTY UNDER THE JURISDICTION OF A MILITARY DEPARTMENT.\nSection 2662(a)(1) of title 10, Untied States Code, is amended by adding at the end the following new subparagraph:\n`(H) Any transaction or contract action for the provision and operation of energy production facilities on real property under the jurisdiction of the Secretary of a military department, as authorized by section 2922a(a)(2) of this title, if the term of the transaction or contract exceeds 20 years.'.\nH.Rept. 112-479 states that Section 2821 \"would require the Department of Defense to notify Congress when entering into contracts for the provision and operation of energy production facilities on real property owned by the United States if the contract is longer than 20 years.\" (Page 317)\nSection 2822 states:\nSEC. 2822. CONTINUATION OF LIMITATION ON USE OF FUNDS FOR LEADERSHIP IN ENERGY AND ENVIRONMENTAL DESIGN (LEED) GOLD OR PLATINUM CERTIFICATION AND EXPANSION TO INCLUDE IMPLEMENTATION OF ASHRAE BUILDING STANDARD 189.1.\nSection 2830(b) of the Military Construction Authorization Act for Fiscal Year 2012 (division B of P.L. 112-81 ; 125 Stat. 1695) is amended—\n(1) in the subsection heading, by inserting after `and ASHRAE Implementation' after `Certification'; and\n(2) in paragraph (1)—\n(A) by striking `authorized to be';\n(B) by striking `by this Act';\n(C) by inserting `or 2013' after `fiscal year 2012'; and\n(D) by inserting before the period at the end the following: `and implementing ASHRAE building standard 189.1'.\nRegarding Section 2822, H.Rept. 112-479 states:\nThis section would continue the prohibition on the use of funds for Leadership in Energy and Environmental Design gold or platinum certifications for fiscal year 2013 set forth in the National Defense Authorization Act for Fiscal Year 2012 ( P.L. 112-81 ). This section would also limit the use of funds for implementation of ASHRAE building standard 189.1. The committee remains concerned that the Department of Defense is investing significant funding for more aggressive certifications without demonstrating the appropriate return on investment. The committee looks forward to receiving the Department's report required in section 2830 of P.L. 112-81 by June 30, 2012. (Page 317)\nSection 2823 of the bill states:\nSEC. 2823. AVAILABILITY AND USE OF DEPARTMENT OF DEFENSE ENERGY COST SAVINGS TO PROMOTE ENERGY SECURITY.\nSection 2912(b)(1) of title 10, United States Code, is amended by inserting after `additional energy conservation' the following: `and energy security'.\nH.Rept. 112-479 states that Section 2823 \"would amend section 2912(b)(1) of title 10, United States Code, to allow the Department of Defense to also use the energy cost savings resulting from shared energy savings contracts for energy security.\" (Pages 317-318)\nSection 3104 authorizes funds for FY2013 energy security and assurance programs necessary for national security.\nH.Rept. 112-479 also states:\nENERGY ISSUES\nEnergy and Fuel Budget Justification\nThe committee commends the Department of Defense for its emphasis on energy reductions, investments in renewable projects that result in long-term savings, and more efficient processes that reduce demand for fuel consumption. The committee is, however, concerned by the lack of visibility into the annual investments in energy and expenditures on fuel. The committee notes that the Department of Defense spent $19.4 billion in fiscal year 2011 on energy, an increase from the total expenditure of $15.2 billion in fiscal year 2010. The committee is concerned about fluctuating fuel prices, and the resulting shortfalls and impacts on the operation and maintenance accounts.\nTherefore the committee directs the Secretary of Defense to submit to the congressional defense committees in conjunction with the annual President's Budget request, a separate budget justification material on energy and fuel budget justification. The material should include details of energy costs by account, energy investments by account, and details of fuel expenditures. The committee recognizes that there are a variety of funding accounts and mechanisms being leveraged for energy investments that result in reductions in long-term sustainment costs. Therefore, the energy and fuel justification should include the details regarding the total energy expenditures by account and investments being made for energy by account and type of funds across the Future Years Defense Program to ensure that the committee can exercise the necessary oversight for the investment in funds.\nRegarding fuel expenditures, the committee seeks information regarding budgeted fuel prices, adjustments to the account, resulting shortfalls or excesses, and details regarding the accounts that funded any such shortfalls and the impact to those accounts. The committee notes that in the fiscal year 2013 budget request, the projected price for fuel is $157 per barrel, whereas the average price in fiscal year 2012 is $162 per barrel. The committee also notes that the price for fuel projected across the FYDP is $137 per barrel. Recognizing the volatility in the fuel market, the committee further directs the Secretary of Defense to more accurately project fuel prices and to seek opportunities to enter into longer-term bulk fuel contracts or identify other options that would stabilize the fuel accounts for the military services.\nMarine Energy Technologies\nThe committee is aware of the Navy's efforts to develop and test wave marine and hydrokinetic energy technologies as one of many technology solutions helping the Navy meet its shore energy goals and mandates, as well as to potentially power maritime security systems, and support at-sea surveillance and communications systems. The committee directs the Secretary of Defense to provide a briefing to the congressional defense committees by October 31, 2012, on the current and future investments in test wave marine and hydrokinetic energy technologies, the payback associated with this investment, the future of the program, and a map of possible locations in proximity to military installations for employing this technology.\nNavy Hybrid Electric Technology\nThe committee is aware of the Navy's efforts to incorporate hybrid electric engines into its fleet to reduce fuel consumption, and to help meet its energy goals. The committee directs the Secretary of the Navy to provide a briefing to the Senate Committee on Armed Services and the House Committee on Armed Services by October 31, 2012, on the current and long-term employment of hybrid electric engine technology. The briefing should include details on the potential long-term savings that may be achieved, the projected cost for incorporating such technology in the initial design of engines, the cost to retrofit a platform with the technology, and future plans to incorporate this technology into additional classes of ships in the fleet.\nProcurement Procedures to Incorporate the Use of Fuel Cells\nThe Defense Logistics Agency sponsored report, \"Beyond Demonstration: The Role of Fuel Cells in DOD's Energy Strategy,\" published on October 19, 2011, offers recommendations with respect to the Department of Defense's use of fuel cell technology for distributed generation, backup power, unmanned vehicles, and non-tactical material handling equipment. The committee is very interested in the Department's use of fuel cells in defense energy applications.\nThe committee directs the Department to Defense to brief the congressional defense committees no later than June 1, 2013, on the implementation of the report's recommendations. This brief should address how the Department is addressing the following report recommendations:\n(1) Develop and implement procurement models, which enable more efficient acquisition of fuel cell systems, including through third-party financing mechanisms, such as power purchase agreements;\n(2) Require consideration of natural gas as well as renewable-fueled fuel cells for meeting electric power, heating, cooling and back-up power requirements for new and major renovations of DOD facilities and include evaluation of fuel cell options in all A/E design contracts;\n(3) Require that solicitations for energy services/electric power include consideration of natural gas and renewable fueled stationary fuel cells and fuel cells for back-up power;\n(4) Require that designers of unmanned vehicles evaluate fuel cells as an option for providing power; and\n(5) Encourage the incorporation of fuel cell power in material handling applications. (Pages 121-123)\nThe report also states:\nArmy Energy Initiatives Task Force\nThe committee recognizes the work the Army Energy Initiative Task Force has undertaken to improve and expand opportunities with the private sector to execute large scale renewable energy projects on Army bases. The committee encourages the Energy Initiative Task Force to also consider alternative energy efficiency and other sustainability proposals that could also assist the Army in meeting its energy goals.\nBriefing on Alternative Power Applications on Military Installations\nThe committee recognizes that there may be merit to the development of small modular reactors (SMR), that produce under 300 Megawatts, to support the electricity consumption on military installations. The Center for Naval Analysis (CNA) report, entitled Feasibility of Nuclear Power on US Military Installations, indicated that an SMR could be a viable option for a military installation provided the Department does not assume First Of a Kind (FOAK) expenses. If the Department was required or assumed FOAK expenses SMR was not determined to be a viable option for military installations. The committee is interested, however, in the Department's assessment of the CNA report, and whether the Department has assessed the practicality of partnering with interested parties that would undertake the FOAK expenses in order to assess the viability of SMR on a military installation. The committee, therefore, directs the Secretary of Defense to brief the House Committee on Armed Services by December 31, 2012, on any actions the Department has undertaken to date on this issue. If action has been taken to move forward on the deployment of SMR, the briefing should include the current and potential budget for such an undertaking, including any personnel costs associated with such projects, a timeline for the proposed projects, a plan for storing the resulting nuclear waste, if necessary, the additional security requirement that may be required, and any other factors that are pertinent to the successful execution of establishing a SMR on a military installation.\nBriefing on Direct Solar and other Energy Efficient Technologies Applications on Military Installations\nThe committee recognizes direct solar as one technology available to reduce Department of Defense energy consumption and enhance energy security on military installations. The committee also recognizes that direct solar devices such as daylighting systems and direct solar pipe technology can have broader application across military installations and may reduce demand load while providing light for facilities. In the committee report ( H.Rept. 112-78 ) accompanying the National Defense Authorization Act for Fiscal Year 2012, direct solar was listed as one of several possible technologies for the Department of Defense to consider jointly with Department of Energy when generating its list of energy efficient technologies. The committee, therefore, directs the Secretary of Energy in consultation with the Secretary of Defense to brief the congressional defense committees no later than December 31, 2012 about existing projects where direct solar devices as well as other energy efficiency technologies listed in the Energy Performance Master Plan have been employed across military installations. The briefing shall include a description of the most promising technologies, the savings achieved, and details regarding the impact of such technologies on the Department of Defense efforts to meet its energy goals and mandates.\nBuilding Conversions\nThe committee is aware that the Department of Defense is contemplating facility standards to support sustainable design features and has generally adopted Leadership in Energy and Environment Design (LEED) standards to meet these requirements. The committee supports sustainable design and building reuse standards that value existing and historic facilities as integral elements of the overall installation. The committee believes that the adoption of sustainable design and building reuse standards concurrently reduces the one time construction and renovation costs. For example, the Department of the Army has indicated their intent to reuse an existing building at Aberdeen Proving Ground, Maryland, and upgrade the facility for the purpose of conducting high performance computing. The committees urges the Secretary of Defense to adopt a comprehensive set of sustainable design and reuse standards that values building reuse and provides facility savings.\nDecentralized Steam Generation\nIn fiscal year 2013, the committee recommends authorization of over $180.0 million in military construction projects to support rapid energy savings in decentralizing steam utilities at three locations. In addition to the quick payback period, these investments are expected to reduce steam lost in the transmission lines and provide a more reliable utility. While the Department of Defense has proposed additional energy projects in the budget request for fiscal year 2013, the Department has elected to not prioritize any further decentralized steam systems. The committee supports investments in projects that provide a rapid return on investment and believes the payback period associated with these facilities makes them ideal candidates for future military construction projects.\nTherefore, the committee directs the Secretary of Defense to brief the congressional defense committees by March 1, 2013, on the current inventory of centralized steam systems. The briefing should include an assessment of the costs to decentralize these steam systems, the payback associated with decentralizing these assets, the current locations of decentralized steam systems, the potential location of additional decentralized steam systems, and funding options available to support these decentralized efforts.\nDepartment of Defense Energy Demonstration and Validation\nThe committee recognizes the services' efforts to reduce energy consumption, increase use of renewable energy, conserve water and utilize sustainability building practices for new construction, and implement energy efficiency initiatives. In this resource constrained environment, the committee commends the services' for their efforts to ensure that energy demonstration and validation programs continue to demonstrate an acceptable return on investment. The committee urges the services to continue their efforts to transition demonstration and validation energy programs into operational and installation initiatives and ensure there continues to be a sufficient payback.\nDepartments of Defense and Energy Collaboration and Technology Transition\nThe committee notes that in July 2010, the Department of Defense and the Department of Energy signed a memorandum of understanding (MOU) to encourage innovative energy and conservation technologies, from research and development to end user applications within the Department of Defense. The committee commends both agencies for working together to maximize both of their technical expertise in emerging energy technology. The committee is aware that the Department of Energy has made significant investment in the development of alternative energy sources, and the committee urges the Department of Defense to leverage those investments in its alternative energy initiatives. The committee is also aware that the Department of Defense's Environmental Security and Technology Certification program funds an installation energy test bed to demonstrate energy efficiencies and renewable energy technologies to validate performance, cost, and environmental impacts, and to determine which technologies would be applicable for broader application across the Department of Defense's inventory of installations. The committee directs the Secretary of Defense to provide a briefing to the congressional defense committees by October 31, 2012, on the current status of activities under the MOU, details regarding the installation energy technology selection process, the list of companies and technologies that received awards in fiscal years 2011–12, a description of how the technologies were transitioned, and the installations where they were employed.\nDepartment of Defense Energy Technologies\nThe committee is aware of efforts by the Department of Defense to reduce energy consumption and improve energy efficiency. The committee is aware of a variety of technologies, to include waste-to-energy systems and other new technologies, which can help the Department meet its energy goals and mandates. The committee encourages the Department to leverage these technologies where appropriate and continue its efforts to improve operational and installation energy programs....\nInclusion of Cost-Benefit Analysis for Energy Security\nThe committee recognizes the importance of energy security on military installations to ensure access to reliable supplies of energy sufficient to meet mission essential requirements. The National Defense Authorization Act for Fiscal Year 2012 ( P.L. 112-81 ) required the Secretary of Defense to establish a policy for military installations to include favorable consideration for energy security in the design and development of energy projects on military installations using renewable energy sources, and to provide guidance to commanders in order to minimize the effects of a disruption of services by a utility. The committee believes that energy security projects are vital to the operational requirements that support national security. Therefore, the committee directs the Secretary of Defense to ensure that any installation energy project that excludes energy security in its design due to excessive costs provide details of the factors used to value energy security within the required cost-benefit analysis.\nIncreased Utilization of Third Party Financing for Energy Efficiency Projects\nThe committee recognizes that the Department of Defense has very aggressive goals and mandates to reduce energy consumption on military installations and to enhance energy security. A critical component of this effort includes large-scale energy efficiency and conservation efforts at military installations, particularly through partnerships with the private sector. The committee urges the Department and the service secretaries to partner with third parties through energy savings performance contracts, enhanced use leases, and other third party authorities to achieve their goals, maximize savings, and achieve a demonstrated return on these investments. The committee also encourages the Department of Defense to consider the best complement of technologies that provide energy security to include consideration for those that provide continuous power at a cost-competitive price. (Pages 309-313)\nThe report also states:\nTurbo Fuel Cell Advanced Technology Development\nThe budget request contained $69.0 million in PE 62601A for combat vehicle and automotive technology. Of this amount, $24.4 million was requested for ground vehicle technology. The committee believes the integration of mature, advanced fuel cell technologies into an engine that could effectively meet military logistic requirements should be adequately resourced. The committee is encouraged by the work being done at the Army's Research, Development and Engineering Command-Tank Automotive Research, Development and Engineering Center (RDECOM–TARDEC), where engineers are developing a turbo fuel cell engine for the Heavy Expanded Mobility Tactical Truck, which is the primary logistics vehicle being used in support of Operation New Dawn and Operation Enduring Freedom. The committee notes that funding at RDECOM–TARDEC has been used to manufacture tubular air electrodes for stable, high-performance solid oxide fuel cells. The committee encourages RDECOM–TARDEC to continue its work in the development of the turbo fuel cell engine and supports its efforts to increase energy efficiency utilizing renewable and alternative sources of energy.\nThe committee recommends $69.0 million, the full amount requested, in PE 62601A for combat vehicle and automotive technology. (Pages 63-64)", "On May 17, 2012, as part of its consideration of H.R. 4310 of the 112 th Congress, the House passed H.Amdt. 1111 , an en bloc amendment that contained several amendments printed in the report ( H.Rept. 112-485 of May 17 [legislative day May 16], 2012) on H.Res. 661 , providing for the consideration of H.R. 4310 , including amendment number 98, which became Section 834 of H.R. 4310 . The text of Section 834 is as follows:\nSEC. 834. ENERGY SAVINGS PERFORMANCE CONTRACT REPORT.\nNot later than June 30, 2013, the Secretary of the Army, the Secretary of the Navy, and the Secretary of the Air Force shall each submit to the congressional defense committees a report on the use of energy savings performance contracts by the Department of the Army, the Department of the Navy, and the Department of the Air Force, respectively, including each of the following:\n(1) The amount of appropriated funds that have been obligated or expended and that are expected to be obligated or expended for energy savings performance contracts.\n(2) The amount of such funds that have been used for comprehensive retrofits.\n(3) The amount of such funds that have been used to leverage private sector capital, including the amount of such capital.\nOn May 18, 2012, as part of its consideration of H.R. 4310 , the House passed H.Amdt. 1133 , which was amendment Number 52 in the report ( H.Rept. 112-485 of May 17 [legislative day May 16], 2012) on H.Res. 661 , providing for the consideration of H.R. 4310 . H.Amdt. 1133 became Section 2824 of H.R. 4310 . The text of Section 2824 is as follows:\nSEC. 2824. DEFINITION OF RENEWABLE ENERGY SOURCE FOR DEPARTMENT OF DEFENSE ENERGY SECURITY.\nSection 2924(7)(A) of title 10, United States Code, is amended by inserting before the period at the end the following: `and direct solar renewable energy'.\nThe purpose of the amendment is to clarify that direct use solar energy technology is considered a renewable energy source for the purposes of the requirement that DOD obtain 25% of its facility energy from renewable sources by 2025.\nOn May 18, 2012, as part of its consideration of H.R. 4310 , the House passed H.Amdt. 1137 , an en bloc amendment that contained several amendments printed in the report ( H.Rept. 112-485 of May 17 [legislative day May 16], 2012) on H.Res. 661 , providing for the consideration of H.R. 4310 , including amendment number 68, which became Section 349 of H.R. 4310 . The text of Section 349 is as follows:\nSEC. 349. REPORT ON STATUS OF TARGETS IN OPERATIONAL ENERGY STRATEGY IMPLEMENTATION PLAN.\n(a) In General- The Secretary of Defense shall submit annually to the relevant congressional committees a report on the status of the targets listed in the document entitled `Operational Energy Strategy: Implementation Plan, Department of Defense, March 2012', including—\n(1) the status of each of the targets listed in the implementation plan;\n(2) the steps being taken to meet the targets;\n(3) the expected date of completion for each target if such date is different from the date indicated in the report; and\n(4) the reason for any delays in meeting the targets.\n(b) Relevant Congressional Committees Defined- In this section, the term `relevant congressional committees' means—\n(1) the Committee on Armed Services of the Senate and the House of Representatives;\n(2) the Committee on Oversight and Government Reform of the House of Representatives;\n(3) the Committee on Homeland Security and Governmental Affairs of the Senate;\n(4) the Committee on Foreign Affairs of the House of Representatives; and\n(5) the Committee on Foreign Relations of the Senate.", "Section 313 of the FY2013 National Defense Authorization Act ( S. 3254 of the 112 th Congress) as reported by the Senate Armed Services Committee ( S.Rept. 112-173 of June 4, 2012) states:\nSEC. 313. LIMITATION ON AVAILABILITY OF FUNDS FOR PROCUREMENT OF ALTERNATIVE FUEL.\n(a) Limitation- Except as provided in subsection (b), none of the funds authorized to be appropriated by this Act or otherwise made available during fiscal year 2013 for the Department of Defense may be obligated or expended for the production or sole purchase of an alternative fuel if the cost of producing or purchasing the alternative fuel exceeds the cost of producing or purchasing a traditional fossil fuel that would be used for the same purpose as the alternative fuel.\n(b) Exception- Notwithstanding subsection (a), the Secretary of Defense may purchase such limited quantities of alternative fuels as are necessary to complete engine or fleet certification for 50/50 blends. In such instances, the Secretary shall purchase such alternative fuel using amounts authorized for research, development, test, and evaluation using competitive procedures and shall ensure the best purchase price for the fuel.\nRegarding Section 313, S.Rept. 112-173 states:\nLimitation on availability of funds for procurement of alternative fuel (sec. 313)\nThe committee recommends a provision that would prohibit the use of funds authorized to be appropriated to the Department of Defense in fiscal year 2013 from being obligated or expended for the production or sole purchase of an alternative fuel if the cost exceeds the cost of traditional fossil fuels used for the same purpose, except for continued testing purposes.\nThe committee notes that in December 2011, the Defense Logistics Agency, on behalf of the Department of the Navy, purchased 450,000 gallons of biofuels for $12.0 million, which equates to $26.66 a gallon. According to the Department of the Navy it was the single largest purchase of biofuel in government history and was carried out in order to \"demonstrate the capability of a Carrier Strike Group and its air wing to burn alternative fuels.\" The Department of the Navy noted that, despite the use of operation and maintenance funds for the purchase, the demonstration is deemed a research, development, test, and evaluation (RDTE) initiative as justification for the higher cost per gallon.\nThe committee also notes that the Vice Chief of Naval Operations testified before the Subcommittee on Readiness and Management Support on May 10, 2012, regarding pressure on readiness accounts from increased fuel prices that \"every $1 increase in the price per barrel of fuel results in approximately $31M of additional cost annually above our budgeted level.\" Therefore, the high cost of fuel has direct and detrimental impact on other readiness accounts.\nThe committee strongly supports initiatives undertaken by the Department of Defense to reduce the fuel demand of the operational forces through affordable new technologies that increase fuel efficiency and offer alternative sources of power. But given the pressure placed on current and future defense budgets, the committee is concerned about the use of operation and maintenance funds to pay significantly higher costs for biofuels being used for RDTE efforts. Therefore, the committee directs the Secretary of Defense to develop and promulgate guidance to the military services and defense agencies on the difference between the operational use of alternative fuels versus continued RDTE initiatives. (Pages 80-81)\nSection 2821 states:\nSEC. 2821. GUIDANCE ON FINANCING FOR RENEWABLE ENERGY PROJECTS.\n(a) Guidance on Use of Available Financing Approaches- Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense, in consultation with the Under Secretary of Defense for Acquisition, Technology, and Logistics and the Deputy Under Secretary of Defense for Installations and Environment, shall issue guidance about the use of available financing approaches for financing renewable energy projects and direct the Secretaries of the military departments to update their guidance accordingly. The guidance should describe the requirements and restrictions applicable to the underlying authorities and any Department of Defense-specific guidelines for using appropriated funds and alternative-financing approaches for renewable energy projects.\n(b) Guidance on Use of Business Case Analyses- Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense, in consultation with the Under Secretary of Defense for Acquisition, Technology, and Logistics, the Deputy Under Secretary of Defense for Installations and Environment, and the Secretaries of the military departments, shall issue guidance that establishes and clearly describes the processes used by the military departments to select financing approaches for renewable energy projects to ensure that business case analyses are completed to maximize benefits and mitigate drawbacks and risks associated with different financing approaches.\n(c) Information Sharing- Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense, in consultation with the Under Secretary of Defense for Acquisition, Technology, and Logistics and the Deputy Under Secretary of Defense for Installations and Environment, shall develop a formalized communications process, such as a shared Internet website, that will enable officials at military installations to have timely access on an ongoing basis to information related to financing renewable energy projects on other installations, including best practices and lessons that officials at other installations have learned from their experiences in financing renewable energy projects.\nSection 2822 states:\nSEC. 2822. CONTINUATION OF LIMITATION ON USE OF FUNDS FOR LEADERSHIP IN ENERGY AND ENVIRONMENTAL DESIGN (LEED) GOLD OR PLATINUM CERTIFICATION.\nSection 2830(b)(1) of the Military Construction Authorization Act for Fiscal Year 2012 (division B of P.L. 112-81 ; 125 Stat. 1695) is amended—\n(1) by striking `authorized to be appropriated by this Act' and inserting `authorized to be appropriated'; and\n(2) by inserting before the period at the end the following: `until the date that is six months after the date of the submittal to the congressional defense committees of the report required by subsection (a)'.\nSection 2823 states:\nSEC. 2823. PROHIBITION ON BIOFUEL REFINERY CONSTRUCTION.\nNotwithstanding any other provision of law, neither the Secretary of Defense nor any other official of the Department of Defense may enter into a contract to plan, design, refurbish, or construct a biofuels refinery or any other facility or infrastructure used to refine biofuels unless such planning, design, refurbishment, or construction is specifically authorized by law.\nS.Rept. 112-173 states:\nEnergy efficiency research and development coordination and transition\nThe committee is encouraged by the Defense Department's efforts to coordinate with the Department of Energy in pursuing and evaluating energy efficient technologies. The wide variety of investments made by the Defense Department towards reducing energy usage has already illustrated savings; however, the numerous organizations pursuing these initiatives within the Defense Department and other federal agencies also presents increasing potential for duplicative research and development as well as successful technologies not identified and effectively transitioned. The continued cooperation and combination of technical expertise as coordinated in the July 2010, memorandum of understanding (MOU) between the Departments of Defense and Energy is important in maximizing the return on these investments. The committee encourages the Defense Department to continue both internal efforts and coordination with other agencies to manage ongoing and planned energy efficiency research and development as well as continuing to establish processes for effectively transitioning technologies for broader application across the Department of Defense. (Pages 70-71)\nThe report also states:\nConsideration of fuel cell systems\nThe committee is encouraged by many of the findings and recommendations included in the Defense Logistics Agency (DLA) sponsored report, \"Beyond Demonstration: The Role of Fuel Cells in DoD's Energy Strategy,\" published on October 19, 2011. Among other things, this report recommended that Department of Defense (DOD) headquarters organizations and the military services: (1) develop and implement procurement models that enable more efficient acquisition of fuel cell systems; (2) consider fuel cell systems for meeting electric power, heating, and cooling demands whenever new facilities and major renovations are planned and designed; (3) consider fuel cell systems when planning and designing backup power capability for DOD sites; and (4) consider fuel cell power for material handling equipment. The committee directs the DOD to report back to the congressional defense committees no later than June 1, 2013, on the steps being taken to implement the recommendations of the DLA report, or if the DOD does not intend to implement any of the recommendations, to explain the reasons behind those decisions. (Page 89)\nThe report also states:\nEnergy performance savings contracts\nThe committee understands that the Department of Defense (DOD) spends billions of dollars on energy costs each year and that financing large-scale energy projects can be cost-prohibitive for the DOD. Energy Performance Savings Contracts (ESPC) enable the DOD to finance energy efficiency upgrades on military installations by funding various Energy Conservation Measures, through private investments, and receive a guarantee that the energy savings will pay for the project.\nThe committee directs the Secretary of Defense to review the potential applicability of ESPC authority to construct power generating plants, and to acquire mobile sources, including electric and natural gas-powered vehicles and their associated charging stations on military installations, and to make recommendations to the congressional defense committees if changes in law or regulation are needed for the Department to pursue efficient and effective initiatives using ESPC authorities. (Page 92)\nThe report also states:\nSolar power units\nThe budget request included $98.2 million in Other Procurement, Army (OPA), Overseas Contingency Operations (OCO), for rapid equipping soldier support equipment (RESSE). The committee notes that the Army's Rapid Equipping Force has initiated the procurement of solar power units that significantly increase the operational energy effectiveness and sustainability of remotely located units in Afghanistan. These solar power units will be deployed to support Village Stability Operations, and will substantially reduce the requirement for fuel delivery by ground convoy or by air. These units provide sustainable power for U.S. forces and the Afghan people. The committee recommends an increase of $30.0 million in OPA OCO for RESSE solar power units. (Page 235)", "On November 28, 2012, as part of its consideration of S. 3254 of the 112 th Congress, the Senate agreed, 62-37, to S.Amdt. 2985 , striking Section 313 of S. 3254 as reported by the Senate Armed Services Committee, which limited the availability of funds for the procurement of alternative fuel (see previous section for the text of Section 313).\nOn November 29, 2012, as part of its consideration of S. 3254 , the Senate agreed, 54-41, to S.Amdt. 3095 , striking Section 2823 of S. 3254 as reported by the Senate Armed Services Committee, which prohibited the construction of a biofuel refinery (see previous section for the text of Section 2823).", "Section 314 of the conference report ( H.Rept. 112-705 , filed December 18, 2012) on the FY2013 National Defense Authorization Act ( H.R. 4310 / P.L. 112-239 of January 2, 2013) states:\nSEC. 314. REPORT ON STATUS OF TARGETS IN IMPLEMENTATION PLAN FOR OPERATIONAL ENERGY STRATEGY.\n(a) REPORT REQUIRED.—If the annual report for fiscal year 2011 required by section 2925(b) of title 10, United States Code, is not submitted to the congressional defense committees by December 31, 2012, the Secretary of Defense shall submit, not later than June 30, 2013, to the congressional defense committees a report on the status of the targets established in the implementation plan for the operational energy strategy established pursuant to section 139b of such title, as contained in the document entitled ''Operational Energy Strategy: Implementation Plan, Department of Defense, March 2012''.\n(b) ELEMENTS OF REPORT.—The report required by subsection (a) shall describe, at a minimum, the following:\n(1) The status of each of the targets listed in the implementation plan.\n(2) The steps being taken to meet the targets.\n(3) The expected date of completion for each target, if the date is different from the date indicated in the implementation plan.\n(4) The reason for any delays in meeting the targets.\nSection 315 states:\nSEC. 315. LIMITATION ON OBLIGATION OF DEPARTMENT OF DEFENSE FUNDS FROM DEFENSE PRODUCTION ACT OF 1950 FOR BIOFUEL REFINERY CONSTRUCTION.\nAmounts made available to the Department of Defense pursuant to the Defense Production Act of 1950 (50 U.S.C. App. 2061 et seq.) for fiscal year 2013 for biofuels production may not be obligated or expended for the construction of a biofuel refinery until the Department of Defense receives matching contributions from the Department of Energy and equivalent contributions from the Department of Agriculture for the same purpose.\nSection 2821 states:\nSEC. 2821. CONGRESSIONAL NOTIFICATION FOR CONTRACTS FOR THE PROVISION AND OPERATION OF ENERGY PRODUCTION FACILITIES AUTHORIZED TO BE LOCATED ON REAL PROPERTY UNDER THE JURISDICTION OF A MILITARY DEPARTMENT.\nSection 2662(a)(1) of title 10, United States Code, is amended by adding at the end the following new subparagraph:\n''(H) Any transaction or contract action for the provision and operation of energy production facilities on real property under the jurisdiction of the Secretary of a military department, as authorized by section 2922a(a)(2) of this title, if the term of the transaction or contract exceeds 20 years.''.\nThis provision requires DOD to notify Congress when entering into contracts for the provision and operation of energy production facilities on real property owned by the United States if the contract is longer than 20 years.\nSection 2822 states:\nSEC. 2822. AVAILABILITY AND USE OF DEPARTMENT OF DEFENSE ENERGY COST SAVINGS TO PROMOTE ENERGY SECURITY.\nSection 2912(b)(1) of title 10, United States Code, is amended by inserting after ''additional energy conservation'' the following: ''and energy security''.\nSection 2823 states:\nSEC. 2823. CONTINUATION OF LIMITATION ON USE OF FUNDS FOR LEADERSHIP IN ENERGY AND ENVIRONMENTAL DESIGN (LEED) GOLD OR PLATINUM CERTIFICATION.\n(a) ADDITIONAL REQUIREMENTS FOR REPORT ON ENERGY-EFFICIENCY STANDARDS.—Subsection (a) of section 2830 of the Military Construction Authorization Act for Fiscal Year 2012 (division B of Public Law 112–81; 125 Stat. 1695) is amended—\n(1) in paragraph (1), by striking ''Not later than June 30, 2012, the'' and inserting ''The''; and\n(2) by striking paragraph (3) and inserting the following new paragraph (3):\n''(3) DEPARTMENT OF DEFENSE UNIFIED FA CILITIES CRITERIA AND RELATED POLICIES.—The report shall also include the Department of Defense Unified Facilities Criteria and related Department of Defense policies, which shall be updated—\n''(A) to reflect comprehensive guidance for the pursuit of design and building standards throughout the Department of Defense that specifically address energy- and water-efficient standards and sustainable design attributes for military construction based on the cost-benefit analysis, return on investment, total ownership costs, and demonstrated payback of the design standards specified in subparagraphs (A), (B), (C), and (D) of paragraph (2); and\n''(B) to ensure that the building design and certification standards are applied to each military construction project based on geographic location and local circumstances to ensure maximum savings.''.\n(b) PROHIBITION ON USE OF FUNDS FOR LEED GOLD OR PLATINUM CERTIFICATION PENDING REPORT.—Subsection (b)(1) of such section is amended—\n(1) by striking ''for fiscal year 2012'' and inserting ''for fiscal year 2012 or 2013''; and\n(2) by inserting before the period at the end the following: ''until the report required by subsection (a) is submitted to the congressional defense committees''.\nRegarding Section 2823, the Joint Explanatory Statement for H.Rept. 112-705 states:\nThe House bill contained a provision (sec. 2822) that would continue the prohibition on the use of funds for Leadership in Energy and Environmental Design gold or platinum certifications for fiscal year 2013 set forth in the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112–81). This section would also limit the use of funds for implementation of the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) building standard 189.1.\nThe Senate amendment contained a similar provision (sec. 2822).\nThe Senate recedes with a clarifying amendment. The amendment would limit the prohibition on the use of funds to Leadership in Energy and Environmental Design gold or platinum certifications for fiscal year 2013 until the submission of a required report and updated policy guidance from the Department of Defense (DOD).\nThe conferees note that while there is no prohibition limiting the use of funds for implementation of ASHRAE building standard 189.1, they expect DOD to not provide broad, sweeping policy guidance on the use of ASHRAE building standard 189.1 but rather utilize this standard on a project by project basis to maximize savings based on geographic locations and returns on investment through water and energy efficiencies, among other considerations. (Pages 351-352)\nSection 2824 states:\nSEC. 2824. GUIDANCE ON FINANCING FOR RENEWABLE ENERGY PROJECTS.\n(a) GUIDANCE ON USE OF AVAILABLE FINANCING APPROACHES.—\n(1) ISSUANCE.—Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall—\n(A) issue guidance about the use of available financing approaches for financing renewable energy projects; and\n(B) direct the Secretaries of the military departments to update their military department-wide guidance accordingly.\n(2) ELEMENTS.—The guidance issued pursuant to paragraph (1) should describe the requirements and restrictions applicable to the underlying authorities and any Department of Defense-specific guidelines for using appropriated funds and alternative-financing approaches for renewable energy projects to maximize cost savings and energy efficiency for the Department of Defense.\n(b) GUIDANCE ON USE OF BUSINESS CASE ANALYSES.—Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall issue guidance that establishes and clearly describes the processes used by the military departments to select financing approaches for renewable energy projects to ensure that business case analyses are completed to maximize cost savings and energy efficiency and mitigate drawbacks and risks associated with different financing approaches.\n(c) INFORMATION SHARING.—Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall develop a formalized communications process, such as a shared Internet website, that will enable officials at military installations to have timely access on an ongoing basis to information related to financing renewable energy projects on other installations, including best practices and lessons that officials at other installations have learned from their experiences in financing renewable energy projects.\n(d) CONSULTATION.—The Secretary of Defense shall issue the guidance under subsections (a) and (b) and develop the communications process under subsection (c) in consultation with the Under Secretary of Defense for Acquisition, Technology, and Logistics and the Deputy Under Secretary of Defense for Installations and Environment. The Secretary of Defense shall also issue the guidance under subsection (b) in consultation with the Secretaries of the military departments.\nSection 2825 states:\nSEC. 2825. ENERGY SAVINGS PERFORMANCE CONTRACT REPORT.\n(a) REPORT REQUIRED.—Not later than June 30, 2013, the Secretary of Defense shall submit to the congressional defense committees a report on the use of energy savings performance contracts awarded by the Department of Defense during calendar years 2010, 2011, and 2012.\n(b) ELEMENTS OF REPORT.—The report shall include the following (identified for each military department separately):\n(1) The amount of appropriated funds that were obligated or expended during calendar years 2010, 2011, and 2012 for energy savings performance contracts and any funds remaining to be obligated or expended for such energy savings performance contracts.\n(2) The amount of such funds that have been used for comprehensive retrofits.\n(3) The amount of such funds that have been used to leverage private sector capital, including the amount of such capital.\n(4) The amount of savings that have been achieved, or that are expected to be achieved, as a result of such energy savings performance contracts.\nRegarding Section 2825, the Joint Explanatory Statement for H.Rept. 112-705 states:\nThe House bill contained a provision (sec. 834) that would require the military departments to submit reports to the congressional defense committees on the use of energy savings performance contracts (ESPCs).\nThe Senate amendment contained no similar provision.\nThe Senate recedes with an amendment requiring a single report by the Department of Defense (DOD), and clarifying the content of the required report.\nThe conferees note that DOD has encouraged the military services to increase the use of ESPCs to meet energy savings goals. Under section 8287 of title 42, United States Code, ESPC contracts provide for the contractor to incur the costs of implementing energy savings measures, including at least the costs (if any) incurred in making energy audits, acquiring and installing equipment, and training personnel, in exchange for a share of any energy savings directly resulting from the implementation of such measures.\nSection 8287 provides for the use of ESPCs \"solely for the purpose of achieving energy savings and benefits ancillary to that purpose.\" While ESPCs are not available for the purpose of the construction of new buildings or facilities, the conferees note that in some cases, the installation of equipment meeting the standard of section 8287 requires the modification or repair of existing facilities, or the construction of ancillary facilities or infrastructure, to accommodate the equipment. In such cases, ESPCs may be used for the construction, repair, maintenance, or modification of facilities or infrastructure ancillary to the qualifying equipment. The conferees expect a detailed description of any facility work required to carry out an ESPC to be included in the report required by this section. (Pages 352-353)", "", "H.R. 933 of the 113 th Congress as passed by the House on March 6, 2013, includes the FY2013 DOD appropriations act as Division A, and the FY2013 Military Construction, Veterans Affairs, and Related Agencies Appropriations Act as Division B.\nIn the explanatory statement for H.R. 933 , the part for Division A does the following:\nreduces by $10 million DOD's FY2013 Defense Production Act Purchases funding request for advanced drop-in biofuel production, with the decrease being for \"Ahead of need\" (pdf page 195 of 394); increases by $20 million the Army's FY2013 funding request for research and development work on electronics and electronic devices, with the increase being for \"Program increase—energy efficiency\" (pdf page 208 of 394, line 18); increases by $37 million the Army's FY2013 funding request for research and development work on combat vehicle and automotive advanced technology, with the increase being for \"Alternative energy research\" (pdf page 208 of 394, line 33); increases by $40 million the Navy's FY2013 funding request for research and development work on force projection applied research, with the increase being for \"Alternative energy research\" (pdf page 22 of 394, line 5); increases by $40 million the Navy's Fy2013 funding request for research and development work on the Navy energy program, with the increase being for \"Program increase-alternative energy initiatives\" (pdf page 223 of 394, line 60); and increases by $57 million the Air Force's Fy2013 funding request for research and development work on support systems development, with the increase being for \"Alternative energy research\" ($37 million) and \"Coal to liquid fuel only for lower emission research.\" ($20 million) (pdf page 240 of 394, line 238).\nThe part of the explanatory statement for Division A states:\nPROMOTING ENERGY SECURITY\nThe conferees do not include a provision as proposed by the House regarding the Energy Independence and Security Act. However, the conferees provide $20,000,000 in Research, Development, Test and Evaluation, Air Force only for research that will improve emissions of coal to liquid fuel to enable this technology to be a competitive alternative energy resource to meet the goals established in the Department of Defense's Operational Energy Strategy and its Implementation Plan. The conferees direct the Secretary of the Air Force, in consultation with the Assistant Secretary of Defense for Operational Energy Plans and Programs, to inform the congressional defense committees 30 days prior to any obligation or expenditure of these funds. (pdf page 242 of 394)\nThe part of the explanatory statement for Division B increases by $10 million the FY2013 request for defense-wide military construction planning and design funding, with the increase being for \"Energy conservation investment program\" (pdf page 17 of 44, line for worldwide unspecified, defense-wide funding).\nThe part of the explanatory statement for Division B states:\nEnergy Conservation Investment Program (ECIP ). —The conference agreement provides $150,000,000 for ECIP. Additionally, the conference agreement provides $10,000,000 in dedicated funding for ECIP planning and design. The conferees strongly support the efforts of the Department of Defense to promote energy conservation, green building initiatives, energy security, and investment in renewable energy resources, and commend the leadership of the Department and the services for making energy efficiency a key component of construction on military installations. The conferees urge the Department to use the dedicated planning and design funds to invest in innovative renewable energy projects as well as projects that enhance energy security at military installations. The conferees also encourage the Department to request dedicated planning and design funding for ECIP in future budget submissions. (pdf page 339 of 394)", "H.R. 933 of the 113 th Congress as passed by the Senate on March 20, 2013, and the House on March 21, 2013, includes the FY2013 DOD appropriations act as Division C and the FY2013 Military Construction, Veterans Affairs, and Related Agencies Appropriations Act as Division E. The bill was signed into law as P.L. 113-6 on March 26, 2013.\nThe explanatory statement for Division C of H.R. 933 as passed by the Senate on March 20, 2013, and the House on March 21, 2013, is the essentially the same as the explanatory statement for Division A of H.R. 933 as passed by the House on March 6, 2013 (see above).\nThe explanatory report for Division E increases by $10 million the FY2013 request for defense-wide military construction planning and design funding, with the increase being for \"Energy conservation investment program\" (pdf page 357 of 394, line for defense-wide funding).\nThe explanatory report for Division E states:\nEnergy Conservation Investment Program (ECIP). —The bill provides $150,000,000 for ECIP. Additionally, the bill provides $10,000,000 in dedicated funding for ECIP planning and design. The Committees strongly support the efforts of the Department of Defense to promote energy conservation, green building initiatives, energy security, and investment in renewable energy resources, and commend the leadership of the Department and the services for making energy efficiency a key component of construction on military installations. The Department is urged to use the dedicated planning and design funds to invest in innovative renewable energy projects as well as projects that enhance energy security at military installations. The Department is also encouraged to request dedicated planning and design funding for ECIP in future budget submissions. (pdf page 4 off 44)", "", "The House Appropriations Committee, in its report ( H.Rept. 112-493 of May 25, 2012) on H.R. 5856 of the 112 th Congress, states:\nADVANCED DROP-IN BIOFUEL PRODUCTION\nThe request [for Defense Production Act purchases] includes $70,000,000 for the construction or retrofit of domestic commercial (or pre-commercial) scale advanced drop-in biofuel plants and refineries. The Committee understands that the Department has allocated $100,000,000 of the $150,000,000 program addition to the fiscal year 2012 Defense Production Act account for this effort and that $70,000,000 of this funding likely will not execute until well into fiscal year 2013 or even into fiscal year 2014. While the Committee is supportive of alternative energy development, in these times of decreasing budgets, it does not seem prudent to stockpile funds so far ahead of need. Accordingly the recommendation provides no funding for this effort in fiscal year 2013. The Committee urges the Secretary of Defense to request this funding in future years when it can execute in a timely manner. (Page 203)", "On July 19, 2012, as part of its consideration of H.R. 5856 of the 112 th Congress, the House agreed to by voice vote H.Amdt. 1428 , an amendment to prohibit the use of funds to enforce Section 526 of the Energy Independence and Security Act of 2007 ( H.R. 6 / P.L. 110-140 of December 19, 2007).", "The Senate Appropriations Committee, in its report ( S.Rept. 112-196 of August 2, 2012) on H.R. 5856 of the 112 th Congress, recommends:\nincreasing the Army's FY2013 funding request for research and development work on combat vehicle and automotive advanced technology by $40 million, with the additional funding being for alternative energy research (page 174, line 33); increasing the Navy's FY2013 funding request for research and development work on force protection applied research by $40 million, with the additional funding being for alternative energy research (page 189, line 5); and increasing the Air Force's FY2013 funding request for research and development work on support systems development by $40 million, with the additional funding being for alternative energy research (page 203, line 238).\nThe report states (emphasis added):\nThe Committee has included funding above the President's budget request for several programmatic initiatives which the Committee believes are of inherent value for national defense. In several cases, funds are restored for programs which were included in previous Department of Defense budget requests, and several are for programs that the Committee believes are necessary to improve defense even though they have not been included under the request formulated by the Department of Defense. For instance, the Committee provides additional research funding in the following areas: alternative energy , space situational awareness, unexploded ordnance and landmine detection, nanotechnology, advanced metals and materials, military burn treatment, and traumatic brain injury and psychological health. The Committee believes additional research funding is warranted in these and other areas to ensure that the Department of Defense continues to pursue technological advances that are critical to our national defense. (Page 9)\nThe report also states:\nSolar Energy Development .—The Committee directs the Secretary of Defense and the Secretary of the Interior to jointly prepare a plan to facilitate solar energy development on military installations. The plan should be consistent with the military mission and habitat conservation needs of disturbed lands on military bases that have been withdrawn from the public domain. The Committee directs the Secretaries to submit to the congressional defense and interior committees a joint report that includes the proposed plan within 120 days of enactment of this act. If legislation is necessary to implement the plan, the Committee directs the Secretaries to submit to Congress a legislative proposal to accompany the plan.\nFurthermore, the Committee directs the Deputy Under Secretary of Defense for Installations and Environment to provide a report to the congressional defense committees not later than 180 days after enactment of this act on the viability or incompatibility of solar energy for Nellis and Creech Air Force Bases. (Page 14)\nThe report also states:\nMicrotechnology Energy .—The Committee understands that the Department of Defense continues its focus on developing sustainable energy technologies that provide strategic effectiveness and energy security in the areas of energy supply, demand and assured distribution. The Committee believes that continued research into these technologies is necessary to develop a wide range of micro- and nanotechnology-enabled mobile military energy technologies. Therefore, the Committee encourages the Department to continue research related to micro technology energy. (Page 180)\nThe report also states:\nOcean Renewable Energy .—The Committee commends the Navy's efforts to support ocean renewable energy testing, research, development, and deployment for maritime security systems, support at-sea surveillance and communications systems, and further opportunities to reduce the cost of energy and increase energy security at coastal Department of Defense facilities. The Committee encourages the Navy to continue its investments in developing ocean renewable energy technologies and to coordinate with the Department of Energy and designated National Marine Renewable Energy Centers for ocean renewable energy demonstration activities at or near Department of Defense facilities. The Committee understands the Navy's goal is to produce 50 percent of its shore-based energy requirements from alternative sources by 2020 and notes that deepwater offshore wind and other renewable energy sources could offer advantages as an electricity source for Navy facilities. Not later than 90 days after enactment of this act, the Department shall provide a briefing to the congressional defense committees on current and future programs related to ocean renewable energy research and development activities and provide an analysis of the locations within the United States that such activities would be viable. (Pages 190-191)", "For further action on the FY2013 DOD Appropriations Act, see H.R. 933 / P.L. 113-6 above.", "", "The House Appropriations Committee, in its report ( H.Rept. 112-491 of May 23, 2012) on H.R. 5854 of the 112 th Congress, states:\nRebates.— The Department of Defense has been increasing the use of green technology to reduce energy consumption on military installations. The Committee commends this policy but is concerned that the Department of Defense is not fully utilizing the potential savings and rebates that may be available from the use of certain technologies or utilities. The Committee directs the Deputy Under Secretary of Defense for Installations and Environment to report to the congressional defense committees on the amount of rebates the Department has been able to capture. (Page 16)\nH.Rept. 112-491 also states:\nIncreased Fuel and Training Efficiency.— The Committee is aware of proposals by the Department of Defense to use military construction funding to construct specialized training runways near existing aircraft locations. By constructing these specialized runways, the Department of Defense will save taxpayer dollars by decreasing the amount of transient flight hours required for aircraft to reach their training locations. Therefore, the Committee urges the Deputy Under Secretary for Installations and Environment to conduct a cost-benefit analysis regarding the construction of specialized training runways near existing aircraft locations and report back to the Committee within 180 days of enactment of this Act. (Page 17)\nThe report also states:\nLED lighting technologies.— The Committee understands that the use of LED lighting technology at military facilities has demonstrated substantial energy efficiencies and cost savings. However, the Committee is aware that LED lighting products of inferior quality were used at some facilities and installations and has resulted in those locations failing to achieve expected efficiencies. In some instances, this has led to policies prohibiting the use of this technology. Accordingly, the Committee directs the Deputy Under Secretary of Defense for Installations and Environment to establish minimum quality standards for the use of LED lighting products at Department of Defense installations and facilities. The standards should take into consideration Energy Star ratings and/or the Design Light Consortium lighting product recommendations. (Page 17)\nThe report also states:\nSustainable Buildings Policy.— The Committee supports the Department of Defense's commitment to green buildings, and its goal to promote cost-effective sustainability. However the Committee is concerned that the Department of Defense's current approach to sustainable construction appears to select one green building certification system over others, particularly for wood products. The Committee expects the Department to ensure equal acceptance of forestry certification systems, and that systems designated as American National Standards are allowed to compete equally for use in the Department of Defense's building construction and major renovations while continuing to follow existing Buy America requirements. The Committee also strongly urges the Department of Defense to incorporate in its Sustainable Buildings Policy energy efficiency standards that are cost-effective, incorporate Energy Star components, and the results of life cycle assessments. The Committee directs the Deputy Under Secretary of Defense for Installations and Environment to provide a report to the congressional defense committees on the Department's efforts not later than 90 days after enactment of this Act.\nEnergy security.— The Committee strongly supports Department of Defense efforts to reduce costs and increase energy security through their investments in alternative energy sources. The reliance on oil for forward-deployed operations leaves the military vulnerable to supply shortages, attacks on fuel convoys, and volatile swings in the cost of petroleum. The Committee recognizes that investments in clean alternative energy sources will make our nation more secure and result in significant long term energy savings. Therefore, the Committee directs the Department of Defense, as a follow up to the Operational Energy Strategy Implementation Plan released on March 6, 2012, to report to the congressional defense committees on how energy efficient construction on military installations will lower operation and maintenance costs. This report shall be submitted within 90 days of enactment of this Act. (Page 18)\nThe report also states:\nEnergy Conservation Investment Program.— The Committee believes that as new construction and retrofit projects are undertaken at facilities to improve building energy efficiency and achieve the objectives prescribed in statutes, executive orders, and initiatives, the Department of Defense is encouraged to utilize new and underutilized, low-cost energy efficient technologies that provide the best value to taxpayers through minimal lifecycle costs. The Deputy Under Secretary for Installations and Environment shall report to the congressional defense committees on the Department's plan to implement these technologies across the Department of Defense within 60 days of enactment of this Act. (Pages 20-21)\nThe report also states:\nThe Committee recommends a total appropriation of $1,650,781,000 for family housing construction, family housing operation and maintenance, and the homeowners assistance program, a decrease of $32,165,000 below the fiscal year 2012 enacted level and the same as the budget request. The decrease below the 2012 enacted level is due partly to the Department of Defense's success in implementing the Military Housing Privatization Initiative on military installations and the reduced requirement for appropriated construction and operating costs. The Committee encourages the Department, where feasible, to utilize energy efficient, environmentally friendly, and easily deployable composite building materials in new family housing construction. (Page 23)", "On May 31, 2012, as part of its consideration of H.R. 5854 of the 112 th Congress, the House passed H.Amdt. 1166 , which added Section 5 22 to the bill. Section 522 states:\nSec. 522. None of the funds made available by this Act shall be available to enforce section 526 of the Energy Independence and Security Act of 2007 ( P.L. 110-140 ; 42 U.S.C. 17142).", "The Senate Appropriations Committee, in its report ( S.Rept. 112-168 of May 22, 2012) on S. 3215 of the 112 th Congress, states:\nENERGY POLICY\nThe Department of Defense is the largest consumer of energy in the Federal Government, accounting for nearly 80 percent of the government's total energy consumption. DOD spends nearly $4,000,000,000 annually on facility energy alone, nearly a quarter of its total energy costs. However, installation energy consumption accounts for nearly 40 percent of the Department's greenhouse gas emissions. The Committee commends the Department for its aggressive efforts to improve the energy efficiency of its buildings and installations, reduce consumption, mitigate its carbon footprint, invest in renewable energy projects, and enhance energy security on its installations.\nThe Committee also supports the efforts of the Department to incorporate green building technologies into both new construction and renovations of buildings. As noted in the past, the Committee believes that the use of these technologies should be a fundamental consideration in the design or retrofit of all military construction projects.\nIn particular, the Committee believes that the Department should maximize the use of energy efficient, eco-friendly roofing technologies for new construction and renovations, including family housing construction and renovation. These technologies include, but are not limited to, photovoltaic panels, solar thermal roof coatings, rooftop direct use solar lighting technology, green roofs, and cool roofs. In an effort to capture the most innovative of these technologies, the Committee encourages the Department and the services to monitor new technologies emerging from government, industry, or university research and development programs.\nAlthough federally mandated sustainable design policies and energy efficiency goals are standard elements of military construction design, the Committee encourages the Department and the services to incorporate additional leading-edge technologies into the construction program and to utilize new and underutilized, low-cost energy-efficient technologies that provide the best value to taxpayers through minimal life-cycle costs.\nWhile strongly supportive of DOD's commitment to green buildings, and its goal to promote cost-effective sustainability, the Committee is concerned that the Department's current approach to sustainable construction could result in giving preference to one green building certification system to the exclusion of others, particularly wood products. The Committee expects DOD to ensure equal acceptance of forestry certification systems, and to allow systems designated as American National Standards to compete equally for use in the Department's building construction and major renovations, subject to Buy America requirements.\nCybersecure Microgrids at Military Installations.— The Committee is impressed with the progress the Department has made in deploying microgrids to mitigate risk to mission critical assets and promote energy independence at military installations through the Smart Power Infrastructure Demonstration for Energy Reliability and Security [SPIDERS] program. However, the Committee remains concerned that most installations across the country are dependent on commercial grids, which could potentially compromise the security and access to reliable supplies of energy necessary to meet mission essential requirements. The Committee believes the Department should study and evaluate using cybersecure microgrid technologies to promote energy security. Therefore, the Secretary of Defense shall submit a report to the congressional defense committees, no later than 180 days from the enactment of this act, regarding: (1) the status of microgrid demonstrations currently deployed domestically; (2) the Department's plan to secure energy supplied to military installations to meet mission essential requirements; and (3) the potential benefits of the wide-spread use of secure microgrid technology on domestic military installations. (Pages 8-9; material in brackets as in original)\nS.Rept. 112-168 also states:\nENERGY CONSERVATION INVESTMENT PROGRAM\nThe Committee recommends the requested level of $150,000,000 for the Energy Conservation Investment Program [ECIP]. The Committee also recommends a transfer of $10,000,000 from unspecified Defense-Wide planning and design into a separate line item for ECIP planning and design to ensure that adequate funds are available for future ECIP project planning.\nECIP is the only dedicated stream of funding for energy projects within DOD. Historically, ECIP has funded small projects with rapid payback. As DOD moves more aggressively to develop renewable energy resources and improve energy security, ECIP is emerging as a major tool to leverage investment in larger projects, such as net-zero energy facilities or smart grid technologies, that are intended to produce significant improvements in energy consumption, costs, and security at single or multiple installations. The Committee encourages the Department to continue using ECIP funds to leverage investments in game-changing major energy projects, particularly renewable energy initiatives.\nThe Committee notes that, in addition to ECIP funding, the fiscal year 2013 budget request includes two projects in the major construction program intended primarily to improve energy efficiency and security (an Army-funded ground source heat transfer system at Fort Benning, Georgia, and a Navy-funded remotely controlled electrical distribution system at Diego Garcia). The Committee believes that energy efficiency, energy security, and renewable energy investments are mission-critical requirements to reduce DOD's dependence on costly and potentially unreliable sources of commercial energy, and encourages the services and the defense agencies to aggressively pursue opportunities to include projects designed to improve installation energy efficiency and security in their major construction programs as well as through ECIP. (Page 20; material in brackets as in original; see also the table on page 88)", "For further action on the FY2013 Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, see H.R. 933 / P.L. 113-6 above.\nAppendix A. DOD Budget Deflation Factors\nAppendix B. DLA-E Price Adjustments\nFigure B -1 shows how DLA-E in recent years has adjusted the price for a barrel of fuel multiple times within individual years.\nAppendix C. Fuel Use in Afghanistan\nThis appendix presents some additional information on DOD fuel use for conducting operations in Afghanistan.\nIn Afghanistan, fuel purchased by U.S. forces increased from 48 million gallons in FY2003 to 489 million gallons in FY2011, an increase of 920%. Total fuel purchases in Afghanistan over this period exceeded 1.5 billion gallons (over $5.6 billion). This increase in fuel use tracked the increase in troop strength: between FY2003-FY2011, the number of U.S. uniformed personnel in Afghanistan increased from 10,400 to 97,000, an increase of approximately 830%. These figures do not include fuel purchased outside of Afghanistan to support Operation Enduring Freedom.\nWhile aircraft account for the largest amount of fuel used to support operations in Afghanistan, many aircraft are fueled outside of the country, where the logistics challenges are less pressing. By contrast, generators are one of the largest consumers of energy on the ground in Afghanistan. In August 2009, the Marine Energy Assessment team found that electrical power generation accounted for 32% of the fuel used by the Marine Expeditionary Brigade – Afghanistan. Other analyses estimate that climate control and air conditioning account for between 57% and 70% of generator power demand. Army officials have also commented on the growing use of personal electronic devices at bases in Afghanistan, which increase demand for electric power.\nFuel and water, the most commonly transported supplies, make up approximately 70% of total supplies shipped into Afghanistan. On a single day in Afghanistan, DLA-E and CENTCOM counted approximately 5,396 trucks moving supplies for U.S. forces in Afghanistan, in addition to an estimated 1,306 NATO and DLA-E fuel trucks. DLA-E provides about 1 million gallons of JP-8, 7,000 gallons of diesel fuel, and 9,000 gallons of motor gasoline to U.S. forces in Afghanistan daily.\nAppendix D. One-Time Reports on DOD Energy-Related Issues\nTable D -1 shows a list of one-time reports that Congress in recent years has required DOD to submit on various energy-related issues.\nAppendix E. Expanded Review of Past Legislation from 2005 Through FY2012\nThis appendix presents a more detailed review of past legislation on DOD energy-related issues from 2005 through FY2012.\nEnergy Policy Act of 2005 ( P.L. 109-58 )\nSection 203 of this act required federal agencies to procure 7.5% of their power from renewable sources by FY2013. This section also defined renewable power sources.\nFY2006 National Defense Authorization Act\nSection 357 required a report on DOD use of biofuel and ethanol fuel, including potential DOD requirements for increased biofuel and ethanol use and an assessment of current and future availability of alternative fuels.\nFY2007 John Warner National Defense Authorization Act ( P.L. 109-364 )\nThe FY2007 NDAA represented a major expansion of DOD interest in energy security issues, most notably Section 2851, which added Chapter 173 \"Energy Security\" to Title 10 of the U.S. code. Section 2851 required DOD to establish energy performance goals, as well as reports on the plan to meet these goals and on DOD's annual energy use and progress towards meeting the installation energy goals set by the Energy Policy Act of 2005.\nPolicy Changes\nFuel Efficiency in Weapons Platforms\nSection 360 required DOD to improve the fuel efficiency of weapons platforms as DOD in order to \"(1) enhance platform performance; (2) reduce the size of the fuel logistics systems; (3) reduce the burden high fuel consumption places on agility; (4) reduce operating costs; and (5) dampen the financial impact of volatile oil prices.\" This section did not require a specific target for improvements in fuel efficiency. DOD was required to submit a report on the how improvements in the fuel efficiency of weapons platforms will be implemented.\nE nergy Performance Goals, Plan and Progress\nSection 2851 required DOD to establish energy performance goals, including \"transportation systems, support systems, utilities and infrastructure and facilities.\" These goals must be submitted to the congressional defense committees annually by the date of the President's submittal of the defense budget to Congress. The Secretary was required to develop an energy performance plan to meet these energy goals. This section also required an annual energy report on the progress made on the Department's energy performance goals and the goals of the Energy Policy Act of 2005. This report must include a description of actions taken and energy savings realized. The report was also required to include a breakdown of energy used by military installations, including energy types, costs, and quantities consumed.\nInstallation Energy\nSection 2851 added several sections to the new Chapter 173, \"Energy Security\" dealing with energy costs, savings, and contracts. The inserted section 2913 required a simplified method of contracting for shared energy savings at military installations, while Section 2912 required DOD to spend half the funds saved on additional energy conservation measures, leaving half of the savings to be spent by the commanding officer of the installation on improvements to military family housing, small construction, or morale, welfare or recreation facilities or services. Section 2914 authorized military construction for energy conservation, using available funds, with congressional notification. Section 2854 further amended the new Chapter 173, \"Energy Security,\" to require energy efficient products in military construction as inserted Section 2915.\nRenewable Power\nSection 2852 required DOD to procure 25% of its electricity from renewable energy by FY2025, and directed DOD to procure power from renewable sources whenever it is consistent with DOD's energy performance goals and plan established in Section 2851.\nFuel Cells as Back-Up Power\nDOD was required by Section 358 to consider using fuel cells for current back-up power systems to increase the longevity of the systems.\nEnergy Independence and Security Act of 2007 ( P.L. 110-140 )\nPolicy Changes\nAlternative Fuels\nSection 526 prohibited any federal agency, including DOD, from contracting for alternative or synthetic fuels that have a lifecycle greenhouse gas emission greater than conventional petroleum fuel. This prohibition is for all mobility fuels, with the exception of fuel for testing and research.\nInstallation Energy\nFor all federal agencies, EISA 2007 required building energy use to be reduced by 3% annually through 2015 for a total reduction of 30% from a FY2003 baseline. It also mandated reductions in non-tactical vehicle petroleum use by 20% and increases in alternative fuel use by 10% annually by FY2015 from a FY2005 baseline. EISA 2007 also required new and majorly renovated federal buildings to reduce energy usage by set percentages.\nFY2008 National Defense Authorization Act ( P.L. 110-181 )\nEnergy Efficient Lighting\nSection 2863 required DOD to use energy efficient lighting fixtures in DOD facilities.\nRenewable Energy Report\nDOD was required by Section 2864 to submit a report discussing the extent of renewable energy use, their financing via appropriated funds or alternative financing, and a graph of renewable power as a percentage of total facility electricity use from FY2000 through FY2025, including projected future trends. Following the initial report, this information was required to be included in the Annual Energy Management Report, created by Section 2851 of the FY2007 NDAA.\nFY2009 Duncan Hunter National Defense Authorization Act ( P.L. 110-417 )\nThe 2009 NDAA established an operational energy office, defined operational energy, and required an operational energy implementation strategy The NDAA for FY2009 also required acquisitions planning and analyses to consider energy, including lifecycle costs and fuel logistics, as important factors. It also broadened the scope of the energy performance master plan required by Section 2851 of the FY2007 NDAA to require separate master plans for each department or agency and specific requirements and metrics to enable measurements of progress towards achieving energy performance goals. Section 2832 added the progress made towards achieving the goals of EISA 2007 to the annual energy management report.\nThe act required several reports on alternative energy topics, including the viability of onsite solar and wind energy to power expeditionary forces and the lifecycle emissions of alternative and synthetic fuels.\nPolicy Changes\nFuel in Acquisitions\nEnergy was highlighted as a required consideration in capacity analyses, force planning processes, and the acquisitions process. Section 332 required:\nAnalyses and force planning to consider \"requirements for, and vulnerability of, fuel logistics.\" Fuel efficiency to be included as a Key Performance Parameter (KPP) in the requirements process. This requirement puts energy on par with other KPPs, such as lethality, protection and reliability, during the requirements development phase. In acquisitions, the lifecycle cost analysis for new capabilities must include the fully burdened cost of fuel. DOD must prepare an implementation plan for these requirements within 180 days of enactment, and submit a progress report within 2 years. DOD must be in compliance within 3 years or provide an explanation.\nDefinitions\n\"Operational energy\" and the \"fully burdened cost of fuel\" are both defined in the 2009 NDAA. Operational energy is defined in Section 331 as,\n\"operational energy\" means the energy required for training, moving, and sustaining military forces and weapons platforms for military operations. The term includes energy used by tactical power systems and generators and weapons platforms.\nThe fully burdened cost of fuel is defined in Section 322 as,\nthe commodity price for fuel plus the total cost of all personnel and assets required to move and, when necessary, protect the fuel from the point at which the fuel is received from the commercial supplier to the point of use.\nOrganizational Changes\nOperational Energy Plans and Programs Office\nThe FY2009 NDAA established the Director of Operational Energy Plans and Programs office, charged with drafting an operational energy strategy with \"near-term, mid-term, and long-term goals, and a plan for implementation of the strategy.\" The two major responsibilities of the appointed Director of Operational Energy Plans and Programs are the creation of a department-wide operational energy strategy and implementation plan and the Director's certification of the adequacy of the services' budgets for implementing the operational energy strategy. Each service must also designate a senior official to be responsible for operational for energy plans and programs for that armed force within 90 days after the appointment of the Director of Operational Energy Plans and Programs.\nOperational Energy Strategy & Implementation Plan\nThe operational energy strategy will establish DOD goals for operational energy, performance metrics to measure progress, while the implementation plan will create a plan for implementing the strategy. This strategy was required within 180 days after the appointment of a Director.\nBudget Certification Authority\nSection 902 also required the Director of Operational Energy Plans and Programs to review the budgets of the military departments and defense agencies in regard to their efforts under the operational energy strategy. These proposed budgets must be submitted to the Director of Operational Energy Plans and Programs for review before being submitted to the Under Secretary for Defense (Comptroller). The Director must review the proposed budgets, and certify whether the proposed budget is adequate to implement the operational energy strategy. Not later than January 31 of the preceding fiscal year, the Director must submit a report containing commentary on the proposed budgets, together with the budget certification.\nIf the proposed budget is not found to be adequate to achieve the operational energy implementation plan, the Director may decline to certify it. In this case, DOD is required to submit a report to Congress proposing remedies for the inadequacy of the budget within 10 days of when the budget for the upcoming fiscal year is submitted to Congress.\nInstallation Energy\nSection 2831 required DOD to certify to the defense committees that enhanced use leases (Section 2667(h) of Title 10) longer than 20 years are consistent with the DOD energy performance goals and plan of Section 2911 of Title 10.\nThe Annual Energy Report of Section 2925(a) of Title 10 was broadened to include DOD progress in meeting the EISA 2007 installation energy requirements, and an estimate of progress made by DOD to meet the certification requires regarding green building standards in construction and major renovation, as required by Section 433 of EISA 2007.\nReports Required\nOperational Energy\nSection 331 required an annual report addressing operational energy to be submitted by the Director of the Operational Energy Plans and Programs to the congressional committees concurrently with the annual DOD energy management reports. The annual operational energy report must include extensive data about operational energy demands, expenditures, and efforts to date and an evaluation of progress made in implementing the operational energy strategy.\nSolar and Wind Energy for Use by Expeditionary Forces\nThis report, due from the Secretary of Defense 120 days after the enactment of the NDAA for FY2009, must consider \"the potential for solar and wind energy to reduce the fuel supply needed to provide electricity for expeditionary forces and the extent to which such reductions will decrease the risk of casualties by reducing the number of convoys needed to supply fuel to forward operating locations.\" The report must also address the cost, potential savings, environmental benefits, and sustainability and operating requirements of solar and wind electricity generation for expeditionary forces, as well as potential opportunities for experimentation and training.\nAlternative and Synthetic Fuels\nSection 334 required a report on ways to reduce the total lifecycle emissions of alternative and synthetic fuels, including coal-to-liquid fuels. For military operations and expeditionary forces, it must consider the usefulness of domestically produced alternative and synthetic fuels to the military utility and lifecycle emission of alternative fuels produced in-theatre. This report must also evaluate DOD's progress in research, testing and certification of alternative and synthetic fuels for military vehicles and aircraft, and evaluate the ability of the alternative and synthetic fuel industries to meet DOD fuel requirements, considering broad trends, levels of investment, and development of refining capacity. This report was required by March 1, 2009.\nMitigation of Power Outage Risks\nSection 335 required a technical and operational risk assessment of the risks posed to \"mission critical installations, facilities and activities ... by extended power outages\" from a failure of the grid or commercial electricity supply. DOD was required to develop plans to eliminate, reduce or mitigate risks identified, prioritizing the mission critical installations, facilities and activities that are at the greatest risk, considering the cost effectiveness various options. These prioritized plans and progress made must be described in annual report as part of the budget justification materials submitted to Congress for FY2010 and thereafter.\nFY2010 National Defense Authorization Act ( P.L. 111-84 )\nThe Director of Operational Energy Plans and Programs office received authorization of $5 million by Section 331, to be made available on the confirmation of a Director for the office.\nReports Required\nAnnual Energy Management Report\nSection 332 expanded the Annual Energy Management report, dealing principally with installation energy, to discuss the feasibility and financing of renewable energy projects, detailed funding information, and steps taken to ensure best practices for measuring energy consumption in DOD installations. The first revised report must also address the adequacy of current funding mechanisms to meet DOD installation energy goals, the cost and feasibility of requiring new power generation projects to go off the grid during a grid outage, the feasibility of net-zero installations, analysis of whether new DOD construction projects adhere to sustainable design standards, and assessments of costs, obstacles, and other considerations of renewable power generation on base.\nOn Implementation of Comptroller General Recommendations of Fuel Demand Management at Forward-Deployed Locations\nSection 333 required a report by February 1, 2010, on specific actions that DOD has taken on three of the recommendations in a GAO report.\nUse of Renewable Fuels to Meet DOD Energy Requirements\nSection 333 required a report considering the use of renewable fuels as alternative fuels for all DOD aviation, maritime and ground fleets, including both tactical and non-tactical vehicles and applications. Required by February 1, 2010, this assessment must consider domestically produced algae-based, biodiesel and biomass-derived alternative fuels and cover technical, logistical and policy considerations. The report must also assess potential benefits of establishing a renewable fuel commodity class distinct from petroleum-based products.\nEnergy Security on DOD Installations\nSimilar to Section 335 of the FY2009 NDAA, Section 335 of the FY2010 NDAA required the Secretary of Defense to develop a plan to identify and address vulnerabilities to critical military missions as a result of electricity disruptions.\nFY2011 Ike Skelton National Defense Authorization Act ( P.L. 111-383 )\nPolicy Changes\nEnergy Performance Master Plan\nThe energy performance plan of Section 2851 of the FY2007 NDAA was expanded by Section 2832 to a \"master plan\" to achieve the energy performance goals of \"laws, executive orders and Department of Defense policies.\" This revised master plan must include:\n(a) separate master plans for each Department and Defense Agency\n(b) the use of a baseline standard for energy consumption that is consistent across departments,\n(c) a method for measuring energy conservation\n(d) \"Metrics to track annual progress in meeting energy performance goals,\" and\n(e) a description of specific requirements and proposed investments.\nThe current master plan must be submitted to Congress annually no later than 30 days after the President submits his budget to Congress. The revised master plan must also consider hybrid electric drives, high performance buildings and high efficiency vehicles.\nSection 2832 also required adding hybrid-electric drive and alterative fuels and high-performance buildings as special consideration in the plan.\nUse of Energy Efficient Products in Facilities\nIn addition to amending the required reports, Section 2832 created a minimum list of energy-efficient technologies, including roof-top solar, energy management systems, energy efficient HVAC systems, thermal windows and insulation systems, electric meters, lighting and equipment designed to use less electricity, hybrid vehicle charging stations, solar power vehicle shade structures, and insulation and weatherproofing.\nPilot Study of Smart Microgrids for Deployment\nSection 242 allowed DOD (with coordination from the Department of Energy) to carry out a pilot program to evaluate and validate microgrids for deployment. This pilot program would be intended to inform key performance parameters and \"validat[e] energy components and designs that could be implemented ... at forward operating bases.\"\nDOD Policy on Acquisition and Performance of Sustainable Products and Services\nExecutive Order No. 13514, dated October 5, 2009, directed DOD and the federal agencies to establish a strategy to procure sustainable products and services. DOD's Strategic Sustainability Performance Plan responds to this executive order. Section 842 requires DOD to submit a report to the congressional defense committees on the status and achievements of DOD regarding these sustainable procurement goals.\nOrganizational Changes: Operational Energy Plans and Programs Office\nSection 901 redesignated the Director of Operational Energy Plans and Programs as the Assistant Secretary of Defense for Operational Energy Plans and Programs.\nThis section also required the Secretary of Defense to consider merging the positions of Deputy Undersecretary of Defense (Installations and Environment) and Assistant Secretary of Defense for Operational Energy Plans and Programs into a single Assistant Secretary position by January 1, 2015, and report the feasibility of this merger to the Committees on Armed Services of the Senate and House by September 15, 2013.\nFY2012 National Defense Authorization Act ( P.L. 112-81 )\nThe FY2012 NDAA continued the focus on operational energy and the logistics burden of fuel evident in the FY2009 NDAA. Among other provisions, the FY2012 NDAA added alternative fuels to the portfolio of the Assistant Secretary of Defense for Operational Energy Plans and Programs and requires energy technologies and practices from contractors providing logistical support for contingency operations.\nPolicy Changes\nAlternative Fuels\nSection 314 added oversight of DOD's alternative fuel efforts to the responsibilities of the Assistant Secretary of Defense for Operational Energy Plans and Programs. The Assistant Secretary shall lead the alternative fuel activities and oversee alternative fuel investments, make recommendations regarding the development of alternative fuels, encourage collaboration with other federal agencies, and issue guidelines and policy to streamline alternative fuels investments.\nThe budget certification authority of the Assistant Secretary of Defense for Operational Energy Plans and Programs will also include investment in alternative fuel activities. The annual operational energy report initially required by Section 331 of the NDAA for FY2009 must now include alternative fuels initiatives, including descriptions, funding and expenditures.\nEnergy Efficiency in Contingency Operations\nSection 315 required the energy performance master plan (amended by Section 2832 of the FY2011 NDAA, discussed above) to address requiring energy efficiency or energy conservation measures in logistics support contracts for contingency operations. The energy performance master plan must now include \"goals metrics and incentives for achieving energy efficiency in such contracts.\" Any energy efficiency or conservation measures would be required to\n(1) \"achieve long-term savings for the Government by reducing overall demand for fuel and other sources of energy in contingency operations,\"\n(2) ... \"not disrupt the mission, the logistics, or the core requirements in the contingency operation concerned,\" and\n(3) be \"able to integrate seamlessly into the existing infrastructure in the contingency operation concerned.\"\nAny guidance or regulations must consider the lifecycle costs savings of a technology or process and require logistics support contractors to demonstrate savings over traditional technologies.\nThe energy performance master plan report must discuss the implementation of Section 315, including savings achieved by the department.\nThe operational energy report must also discuss progress on applying energy efficiency measures to logistics support contracts for contingency operations, per Section 315, while Section 342 requires the operational energy report to evaluate practices used in contingency operations to reduce vulnerabilities related to fuel convoys, including improvements in tent and structure efficiency, generator efficiency, and displacement of liquid fuels with on-site renewable generation.\nEnergy Efficiency in Tents\nSection 368 required including the total life-cycle costs for tents, including heating and cooling, in calculating the best value of tents.\nDefinitions\nSection 2821 provided a comprehensive set of definitions for energy terms used by DOD. Among other terms, \"energy security\" is defined as \"assured access to reliable supplies of energy and the ability to protect and deliver sufficient energy to meet mission essential requirements.\"\n\"Defense logistics support contract,\" discussed above, is defined in Section 315 as, \"a contract for services, or a task order under such a contract, awarded by the Department of Defense to provide logistics support during times of military mobilization, including contingency operations, in any amount greater than the simplified acquisitions threshold.\"\nInstallation Energy : Renewable Energy and Energy Security\nThe FY2012 NDAA also contained a number of provisions related to installation energy. Section 2823 requires DOD to choose an interim goal for the amount of renewable power used in FY2018, prior to the FY2025 goal of 25%.\nDOD was also required by Section 2822 to favorably consider energy security in the design and development of renewable energy projects on military installations. DOD must also issue guidance for commanders of installations on planning measures to minimize the effects of disruptions in natural gas, water or electric utility services. This section also adds energy security of renewable energy projects to the required considerations of the energy performance goals and plans, as well as geothermal energy.\nThe Annual Energy Management Report was also amended by Section 2822 to include details of energy security provisions and details of the total number, frequency, financial impact of and mitigation strategies for utility outages. Section 2826 sets the deadline for this report of no later than 120 days after the end of each fiscal year.\nEnergy Data from Meters\nDOD was required to capture and track data on energy usage from installation energy meters in order to determine baseline consumption and help reduce energy consumption by Section 2827. Section 2828 requires the Navy to meter its piers to allow the energy consumption of navy vessels in port to be tracked. The progress of this effort must be included in the Annual Energy Management Report.\nDOD Energy Manager Training\nFollowing Section 2829, DOD must establish a training policy for military installation energy managers, focusing on improving their knowledge of current laws, mandates, regulations and alternative energy options, improve consistency, and create opportunities for knowledge exchange among departments and across DOD.\nOrganizational Changes\nSection 311 added a senior official for operational energy plans and programs for the Joint Chiefs of Staff and the Joint Staff, in coordination with the Assistant Secretary of Defense for Operational Energy Plans and Programs." ], "depth": [ 0, 1, 1, 2, 3, 3, 4, 4, 4, 3, 2, 3, 3, 3, 2, 3, 4, 4, 3, 4, 4, 4, 3, 4, 4, 2, 3, 3, 3, 3, 3, 2, 3, 3, 4, 4, 4, 4, 3, 4, 4, 4, 1, 2, 2, 2, 2, 2, 2, 1, 2, 3, 3, 3, 3, 3, 2, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3 ], "alignment": [ "h0_title", "", "h0_title", "h0_title", "h0_full", "h0_full", "", "", "", "", "", "", "", "", "h0_title", "h0_title", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What role does DOD play in the consumption of petroleum?", "How significant are DOD's energy costs to its overall budget?", "How have DOD's fuel costs changed over the last decade?", "What is DOD's largest source of energy?", "What organization within the DOD consumes the most fuel?" ], "summary": [ "By some accounts, DOD is the largest organizational user of petroleum in the world. Even so, DOD's share of total U.S. energy consumption is fairly small. DOD is by far the largest U.S. government user of energy.", "The amount of money that DOD spends on petroleum-based fuels is large in absolute terms, but relatively small as a percentage of DOD's overall budget.", "DOD's fuel costs have increased substantially over the last decade, to about $17 billion in FY2011.", "Petroleum-based liquid fuels are by far DOD's largest source of energy, accounting for approximately two-thirds of DOD energy consumption.", "When DOD's fuel use is divided by service, the Air Force is the largest user; when divided by platform type, aircraft are the largest user." ], "parent_pair_index": [ -1, 0, 0, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1 ] }

{ "title": [ "Background", "FSA Provides Benefits through Commodity and Crop Disaster Assistance Programs", "NRCS Administers Conservation Programs", "RMA Administers Subsidized Crop Insurance", "FSA Has Established Procedures for Preventing Improper Payments to the Deceased, but Some Supporting Information Is Incomplete", "FSA Established Procedures to Compare Its List of Program Participants with a Master List of Deceased Individuals", "Incomplete Data and FSA’s Payment Review Process Have Hindered FSA’s Ability to Identify Improper Payments to the Deceased", "NRCS Does Not Have Procedures in Place to Prevent Improper Payments to Deceased Individuals", "RMA Does Not Have Procedures in Place to Prevent Improper Subsidies on Behalf of Deceased Individuals", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the U.S. Department of Agriculture", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "USDA provides various programs that assist farmers and landowners through its subsidiary agencies FSA, NRCS, and RMA.", "FSA provides benefits to farmers through various programs, including farm commodity and crop disaster assistance programs authorized in the 2008 Farm Bill. FSA has overall responsibility for administering these programs, including ensuring that all recipients meet eligibility requirements and do not receive payments in excess of program limitations. Farming operations—whether individuals or entities—applying for benefits must file a farm operating plan and an annual acreage report with their local field office, and if any changes occur that could affect program eligibility, such as changes affecting one’s status as actively engaged in farming, the farming operation must file a revised farm operating plan. These documents record farming information, such as the name of each individual with an interest in the farming operation, which crops are planted on each field, and the farming practices used. FSA uses this information to determine farm program payments, including payments for various agricultural disaster assistance programs. Most farmers receive farm program payments directly from FSA as individual operators. Some farmers, however, use legal entities to organize their farming operations, thereby reducing their exposure to financial liabilities. Many FSA farm programs have statutory payment limits that set the maximum payment amount that an individual can receive per year. For example, for one of FSA’s farm commodity programs, the annual payment limit is $40,000 per individual. FSA carries out these responsibilities through its headquarters office, 50 state offices, and over 2,100 field offices.\nIn a 2007 report, we recommended that FSA implement management controls, such as matching payment files with SSA’s death master file, to verify that an individual receiving payments has not died and to provide reasonable assurance that the agency does not make improper payments to deceased individuals. We also recommended that FSA determine if improper program payments have been made to deceased individuals or to entities that failed to disclose the death of a member and, if so, recover the appropriate amounts.\nThe 2008 Farm Bill required FSA (1) to promulgate regulations that (a) describe the circumstances under which payments may be issued in the name of a deceased individual and (b) preclude the issuance of payments to, and on behalf of, deceased individuals who were not eligible for the payments and (2) to at least twice each year reconcile SSA’s numbers of all individuals who receive commodity program payments.", "NRCS administers voluntary programs that offer financial and technical assistance to eligible landowners and producers to help manage natural resources in a sustainable manner. Through these programs, the agency approves conservation program contracts or conservation easements, which provide participants financial assistance for planning and implementing conservation practices to save energy and improve resources, such as soil and water on agricultural lands and on nonindustrial private forestland. These programs can be divided into two categories—working-lands programs and easement programs.working-lands programs, NRCS provides program participants with financial and technical assistance through contracts, which are generally in effect for up to 10 years, to implement conservation practices on agricultural land and nonindustrial private forestland. Under easement programs, NRCS purchases conservation easements to restore, protect, or enhance grasslands and wetlands and provides assistance to eligible entities to purchase development rights to keep productive farm and ranch lands in agricultural uses. According to NRCS officials, when an NRCS program participant dies, NRCS considers the contract canceled, unless the participant had identified an executor or other estate Under representative to act on his or her behalf to transfer the contract to an eligible successor or to complete the contracted activities.", "By promoting crop insurance, the federal government has played an active role in helping to mitigate the effects on income of production risks—droughts, floods, and other natural disasters—as well as price risks that farmers face. RMA administers the federal crop insurance program, including controlling costs and protecting against fraud, waste, and abuse. The agency partners with 17 approved insurance companies, which sell and service the federal program’s insurance policies and share in a percentage of the associated risk of loss and opportunity for gain. The federal government subsidizes about 60 percent of the insurance premiums the insurance companies charge farmers and also pays the companies an allowance for administrative expenses, which is intended to cover the companies’ expenses for selling crop insurance policies and providing customer service to policyholders. Unlike payments made by FSA and NRCS, subsidies for crop insurance premiums are not paid directly to policyholders but can be considered a financial benefit to them. Without a premium subsidy, a policyholder would have to pay the full amount of the premium. The allowances for administrative expenses can be considered a further benefit to these policyholders, since these allowances are paid on their behalf. RMA also shares with insurance companies payments made on policyholders’ claims for losses.", "Since 2007, FSA has established procedures for preventing improper payments to deceased individuals, including matching payments to program participants with SSA’s data on deceased individuals. Nevertheless, the SSA data used by FSA for this match have been incomplete, and our review of a sample of payments made to deceased individuals raised some questions.", "Since our 2007 report and enactment of the 2008 Farm Bill, FSA has taken steps to implement and strengthen procedures to prevent improper payments to program participants who have died. Specifically, in 2007, FSA began computer matching its payment data with a list of deceased individuals, directed county and state offices to review the results of this match, and established procedures and updated guidance accordingly. According to FSA officials, to identify program participants who had died, in fiscal year 2007 FSA began computer-matching program participants’ names, addresses, and Social Security numbers—stored in FSA’s primary database of farm program participants—against SSA’s death master file. This match identifies any program participants who have died. FSA then compares this list of deceased program participants against its list of participants to whom payments were made during the previous quarter and creates a report listing deceased participants who have received payments. In 2008 FSA began performing these matches quarterly—twice a year more than required under the 2008 Farm Bill; FSA also directed its county and state offices to review these reports to determine whether payments were proper or improper. Every quarter, county officials code each payment to a deceased participant as proper or improper, and state officials review and verify the counties’ coding. According to FSA officials, most payments found to be improper are to be recovered by FSA.\nBy the end of December 2010, FSA had issued a final rule clarifying the regulations governing payments earned by a person who died and describing strengthened procedures for matching program participants with SSA’s death master file and having county, then state, offices check which payments to deceased individuals were proper and improper. The agency further improved this process in 2011, by moving from electronic spreadsheets to a web-based system, which, officials told us, greatly improved data accuracy and ease of reviewing and coding payments made to deceased individuals.\nIn addition to implementing this quarterly data-matching and review process, FSA has revised and updated its handbooks since the 2008 Farm Bill to include guidance related to making payments in cases where a program participant has died. The revised guidance defines the respective roles to be played by county and state offices, clarifies how county offices are to record payments to deceased individuals as proper or improper, and offers guidance for both county and state offices reviewing these records. Agency officials may also take other steps to find out about deceased program participants: in some counties, they may check obituaries in local papers or telephone program participants each year to ask if any changes have occurred among eligible participants.\nOverall, according to FSA officials, establishing these procedures has enabled the agency to identify thousands of individuals—17,409 in fiscal year 2011 and 13,684 in fiscal year 2012, for example—who were paid after their dates of death. Of a total of 28,613 deceased individuals who were paid in 2011 and 2012, FSA determined that 1,799 individuals, or about 6 percent, were paid a total of $3.3 million in improper payments during the 2-year period. According to figures from FSA’s DMF Review Report for fiscal years 2011 and 2012, FSA has recovered approximately $1 million of these improper payments and, according to agency officials, continues to pursue the remaining amount of improper payments.", "The version of SSA’s death master file against which FSA matches its payment records has been incomplete. Specifically, FSA has been matching its payment records against the public version of the death master file. This version—containing about 87 million death records and available to the public for purchase—lists all deaths since 1936 that have been reported to SSA by sources other than the states, such as hospitals and funeral homes. According to SSA documentation, to ensure confidentiality under section 205(r) of the Social Security Act, death records provided to the administration by the states are not to be publicly disclosed, except to other agencies that pay federally funded benefits. In May 2013, we testified before the U.S. Senate’s Committee on Homeland and Governmental Affairs that according to SSA officials, the complete death master file contains approximately 98 million records, about 11 million more records than the public version of the file. Therefore, until the agency begins matching its payment records to the complete death master file, it may continue to miss deceased individuals to whom it should no longer be making payments.\nDuring our review, FSA took steps to seek access to the complete death master file, and in January 2013, FSA received approval from SSA to obtain such access, along with NRCS and RMA. FSA officials said that they have been coordinating with NRCS and RMA on how they will use, share, and pay for this access. As of early June 2013, however, FSA had not received the complete file from SSA or incorporated these data into its quarterly reviews of payments made to deceased individuals.\nIn addition, our review of FSA’s payment files raised questions about the state and county offices’ coding and review of payments as proper or improper. We examined a generalizable random sample of 100 payments that were made to deceased individuals over a 1-year period beginning in April 2011 and coded as proper, and we estimated that FSA county offices coded 91 percent of these payments correctly. On the basis of supporting evidence FSA provided us, we found 9 payments that did not have sufficient support to be coded as proper. For 4 of these 9 payments, the supporting documentation bore the signature of the deceased individual or a representative but was dated after the individual’s death. For example, a deceased individual in Alabama received a payment of $4,273 in 2011. County officials coded this payment as proper, but our review identified that some program eligibility documents had been signed and dated in the deceased individual’s name more than 6 months after the individual had died. We spoke with the relevant county and state officials about this case, and they agreed that this payment should have been coded as improper. An agency official told us that the deceased individual’s heirs submitted correct paperwork for the next fiscal year and that FSA did not attempt to recover the 2011 payment. The remaining 5 payments, all made through one program and paid to deceased individuals after their dates of death, were coded by counties as proper but were actually improper. According to FSA officials, the statutory requirements for this program differ from those of most FSA programs in that they do not permit payments to a deceased individual after the date of death under any circumstances, and any such payment must be recovered. Officials told us that under this program, even if payments go to the correct heirs, such as a spouse, they are still considered improper until the right to receive payment has been transferred to an heir. The officials told us that some counties nevertheless code such payments as proper while awaiting completion of transfer paperwork, even though the payments are actually improper; the officials agreed that the 5 payments we found were indeed improper. According to an FSA official, in May 2012, FSA updated its guidance related to this program, including how to handle payments when a participant dies, and reminded relevant officials of the proper procedures.\nThe 95 percent confidence interval for this estimate is (4,16). effectiveness of the quarterly review process.process has largely enabled the agency to identify thousands of individuals who were paid after their dates of death. Nevertheless, if some coded payments were revisited, perhaps annually, to ensure that documentation supported the coding of payments as proper, the error rate could be further lowered, particularly for programs or county offices where errors were previously identified.", "NRCS does not have procedures to prevent improper payments to deceased individuals, and its ability to verify whether payment recipients are dead or alive is limited. As a result, the agency cannot be certain that payments it made to over a thousand deceased individuals are proper.\nAccording to NRCS officials we spoke with, not all conservation payments to deceased individuals are improper because they may have been made for work performed before the individuals died, or they were associated with easement contracts that became part of the deceased individuals’ estates and remained linked to their Social Security numbers. In addition, the officials believe that the risk of the agency’s making improper payments to deceased individuals is low, in part because NRCS conservation programs have certain built-in protections that help prevent such payments. The officials also explained that NRCS staff frequently interact with conservation program participants at the sites where projects are located. NRCS officials develop a conservation plan for the site in consultation with participants and typically revisit sites to certify implementation and discuss any deficiencies. As a result, they have regular opportunities to become aware of a participant’s death. Further, NRCS officials commented, counties the agency operates in are often small enough for local officials to know most program participants personally, and thus they would know if a participant died. Moreover, NRCS officials stated that the agency requires that heirs of the deceased notify the agency within 60 days of transferring property to another owner because of death or other reasons. NRCS officials acknowledged, however, that they may be unaware of the death of individuals who receive payments as members of an entity, because officials have less contact with members of an entity than with individual program participants. Thus, NRCS may be unaware that a member of an entity has died if other entity members do not notify the agency.\nNRCS’s built-in protections are limited, however, because the agency does not systematically verify whether its program participants have died, such as by matching participants’ Social Security numbers against SSA’s death master file. Under a memorandum of agreement with FSA, such a match is to be performed by FSA, and FSA is to provide NRCS with a list of “current year program payment recipients” who are deceased. FSA officials, however, told us that because they do not know which program participants have been paid by NRCS, they have not provided such a list to NRCS. FSA officials said they are working on a new memorandum of agreement (the previous one expired at the end of fiscal year 2012), in which they hope each agency’s responsibilities will be better defined, to enable FSA to provide the matching service. Moreover, FSA and NRCS officials said that the agencies are also coordinating with each other to acquire SSA’s complete death master file.\nTo examine whether NRCS was making potentially improper payments to deceased individuals, we used program participants’ Social Security numbers to match program payment data the agency provided to us for fiscal year 2008 through April 2012 against SSA’s complete death master file. In so doing, we estimate that NRCS made $10.6 million in payments on behalf of 1,103 individuals 1 year or more after death.\nTo better understand the reasons for payments that appeared to have been made on behalf of deceased individuals 1 or more years after death, we presented NRCS with six sample cases of such payments, and NRCS explained that four of the six cases were proper payments. For example, in one case, a data entry error appears to have linked the Social Security number of an individual who died in 2001 with multiple program payments made from 2008 through 2012—payments that had not been made to the deceased individual but in actuality, to the appropriate living participants. In another case, NRCS made two direct deposits into the bank account of a participant in a working-lands program 21 months and 32 months after the participant’s death. No one had notified the agency of the participant’s death or transferred the program contract to his legal heirs, although according to agency officials, the terms of his will did transfer his property to his widow. In another case, however, NRCS did not have proper signatures on a program contract for two payments made in 2008, and agency officials acknowledged that they would not have paid participants had they been aware of this error.\nWithout procedures such as matching its program participants with the death master file and reviewing those matches, NRCS does not know how many payments it made on behalf of deceased individuals, how often, or in what amounts. Under the standards for internal control in the federal government, agencies are to clearly document internal control in the form of management directives, administrative policies, or operating manuals, and the documentation should be readily available for examination. Furthermore, without reviewing each payment apparently made to a deceased individual, NRCS cannot know whether such payments were proper or improper. Under the standards for internal control in the federal government, monitoring is to be performed continually and include regular management and supervisory activities, comparisons, and reconciliations, which could identify potentially improper payments to deceased individuals. These standards indicate that monitoring should assess the quality of performance over time and ensure that the findings of audits and other reviews are promptly resolved.", "RMA does not have procedures in place to prevent improper subsidies on behalf of deceased individuals. Specifically, the agency does not systematically verify its policyholders by matching these policyholders’ information against SSA’s death master file. As a result, RMA may have provided potentially improper crop insurance subsidies and administrative allowances on behalf of thousands of deceased individuals. According to agency officials, however, the crop insurance cycle provides one or more opportunities each year to verify that an individual on whose behalf a subsidy or allowance is paid is alive: policyholders are required to provide a signed certification when filing their annual reports on production and yield and provide a written signature if they file a claim. RMA officials also told us that in 2007—on a one-time basis—the agency compared policyholders with the public death master file and, working with its partner insurance companies, updated and corrected records in its central database of participants, claims, and subsidies, all of which are linked by Social Security number. RMA officials commented that they have not compared the agency’s database of policyholders with the public death master file since then because they learned that this file does not have complete information on deceased individuals. Along with FSA and NRCS, however, RMA received approval from SSA for access to the complete file and, according to RMA officials, is coordinating with the other two agencies to begin using it.\nTo determine whether some of RMA’s subsidies and allowances may have been provided on behalf of policyholders who were deceased, we matched policyholders’ Social Security numbers from RMA’s crop insurance subsidies and administrative allowance data for crop reinsurance years 2008 through 2012 against SSA’s complete death master file. We found that approximately $22 million in subsidies and allowances may have been provided on behalf of 3,434 policyholders 2 or more reinsurance years after death. To better understand the reasons for subsidies that appeared to have been made to policyholders after death, we discussed with RMA five sample cases of such subsidies. RMA believed that all were proper, explaining that several were due to errors, such as incorrect Social Security numbers, in RMA’s database. Without reviewing each subsidy that could have been made to a deceased individual and reconciling it with SSA’s complete death master file, however, RMA cannot know whether such subsidies were proper or improper. Without such reconciliations or matches, RMA is not employing monitoring specified in federal internal control standards.\nThe Agricultural Risk Protection Act of 2000, Pub. L. No. 106-224, 114 Stat. 358, amended the Federal Crop Insurance Act. We have evaluated RMA’s data-mining activities in several reports: see GAO-12-256; GAO, Crop Insurance: Continuing Efforts Are Needed to Improve Program Integrity and Ensure Program Costs Are Reasonable, GAO-07-944T (Washington, D.C.: June 7, 2007); Crop Insurance: More Needs to Be Done to Reduce Program’s Vulnerability to Fraud, Waste, and Abuse, GAO-06-878T (Washington, D.C.: June 15, 2006); and Crop Insurance: Actions Needed to Reduce Program’s Vulnerability to Fraud, Waste, and Abuse, GAO-05-528 (Washington, D.C.: Sept. 30, 2005). on behalf of individuals who may be deceased. Under the standards for internal control in the federal government, agencies are to clearly document internal control in the form of management directives, administrative policies, or operating manuals, and the documentation should be readily available for examination.policyholders, RMA may be unable to rely on results from data mining and therefore be less likely to detect fraudulent, wasteful, or abusive crop insurance claims.", "Since our July 2007 report and the enactment of the 2008 Farm Bill, FSA has taken important steps to prevent improper payments to deceased individuals. We commend the agency for exceeding the 2008 Farm Bill’s requirement that it match its payment records against SSA’s death master file twice a year—the agency performs this match quarterly—and for reviewing all payments made to deceased individuals to determine whether they were proper or improper. In addition, FSA, NRCS, and RMA began working together during our review to acquire SSA’s complete death master file, an effort we also commend, and they have received approval from SSA for access. FSA’s quarterly review process has largely enabled the agency to identify thousands of individuals who were paid after their dates of death. Nevertheless, under current procedures, FSA may not verify all improper payments to deceased individuals, and an error rate of about 9 percent in coding payments could persist. As FSA conducts its reviews, if it employs ongoing monitoring activities, such as reconciliations, to ensure that county offices’ coding of payments is supported by documentation, the error rate could be reduced. Furthermore, until and unless NRCS and RMA develop and implement procedures to have their payment or subsidy data records matched against SSA’s complete death master file, either through coordination with FSA or on their own, these agencies cannot know if they are providing payments to, or subsidies on behalf of, deceased individuals; how often they are providing such payments or subsidies; or in what amounts. Without such procedures, NRCS and RMA are not employing internal controls specified in federal standards. And without reviewing each payment to or subsidy provided on behalf of a deceased individual, the agencies do not know if each payment or subsidy is proper or improper. In addition, without accurate information on policyholders, RMA may be unable to rely on results from data mining.", "We are making the following three recommendations to the Secretary of Agriculture:\nTo further strengthen FSA’s procedures for preventing improper payments to deceased individuals, we recommend that the Secretary of Agriculture direct the Administrator of FSA to employ ongoing monitoring activities, such as reconciliations, to ensure that county offices’ coding of payments is supported by documentation.\nTo help NRCS prevent improper payments to deceased individuals, we recommend that the Secretary of Agriculture direct the Chief of NRCS to develop and implement procedures to prevent potentially improper payments to deceased individuals, including (1) coordinating roles and responsibilities with FSA to ensure that either FSA or NRCS matches NRCS payment files against SSA’s complete death master file and (2) reviewing each payment to a deceased individual to ensure that an improper payment was not made.\nTo help RMA prevent improper crop insurance subsidies on behalf of deceased individuals and to improve the effectiveness of its data mining, we recommend that the Secretary of Agriculture direct the Administrator of RMA to develop and implement procedures to prevent potentially improper subsidies on behalf of deceased individuals, including (1) matching RMA’s crop insurance records against SSA’s complete death master file and (2) reviewing each subsidy provided on behalf of a deceased individual to ensure that an improper subsidy was not provided.", "We provided a draft of this report to USDA for review and comment. USDA provided written comments, which are summarized below and reproduced in appendix II. In its comment letter, USDA generally agreed with our report’s findings and recommendations but stated that it believes we inaccurately represented NRCS and RMA as having no procedures in place to identify deceased participants. USDA stated that it believes the agencies’ normal operating procedures provide opportunities to identify deceased participants. In its comment letter, USDA stated that for NRCS conservation easement programs, transferring property rights involves a title escrow agent, thereby providing an opportunity to determine whether any individuals identified on a deed of trust have died. For RMA, the letter stated that the agency’s preliminary analysis of sample cases of deceased individuals that we provided suggests that the potential scope of remaining questionable payments to deceased individuals is more limited than we reported. In addition to the fact that someone is paying the premium each year, the letter stated, the crop insurance cycle provides one or more opportunities each year to verify that an individual on whose behalf a subsidy or allowance is paid is alive—information we have incorporated into our report.\nAlthough NRCS and RMA can identify some deceased participants during their normal operations, we do not believe that identifying deceased individuals during normal operations is a reliable substitute for having a systematic process. As we noted in the report, the agencies have not had specific procedures in place to verify and prevent potentially improper payments to deceased individuals. Indeed, in our review, we found that, without reviewing whether these payments or subsidies were proper, NRCS made payments to more than 1,000 deceased individuals in fiscal year 2008 through April 2012 and that RMA provided subsidies and allowances on behalf of more than 3,000 deceased policyholders in reinsurance years 2008 through 2012. We are therefore pleased to learn from USDA’s comment letter that RMA has begun implementing formal, systematic procedures to identify and prevent subsidies on behalf of deceased individuals consistent with our recommendation. According to the comment letter, effective May 1, 2013, RMA implemented a new computer matching procedure to check federal crop insurance program eligibility, subsidies, and payments to policyholders against the public version of the death master file, and, when the complete death master file is available, RMA is prepared to integrate it into the agency’s computer matching system. The steps RMA is taking are promising. We encourage NRCS to take similar steps, because until and unless NRCS has its payment data records matched against SSA’s complete death master file, it cannot know if it is providing payments to deceased individuals or whether these payments are proper or improper.\nAs 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 Secretary of Agriculture, the appropriate congressional committees, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or [email protected]. 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 III.", "The objectives of our review were to determine the extent to which procedures are in place to prevent (1) the Farm Service Agency (FSA) from making potentially improper payments to deceased individuals, (2) the Natural Resources Conservation Service (NRCS) from making potentially improper payments to deceased individuals, and (3) the Risk Management Agency (RMA) from providing potentially improper subsidies on behalf of deceased individuals.\nTo address all three objectives, we reviewed relevant sections of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill), the Improper Payments Information Act of 2002, the Improper Payments Elimination and Recovery Act of 2010, the Improper Payments Elimination and Recovery Improvement Act of 2012, and the Do Not Pay initiative. We also reviewed relevant studies prepared by the U.S. Department of Agriculture’s (USDA) Office of Inspector General, as well as our own past reports.\nTo determine the extent to which FSA has procedures in place to prevent potentially improper payments to deceased individuals, we reviewed agency guidance, such as FSA’s Handbook on Common Management and Operating Provisions, 1-CM (Revision 3), as well as FSA’s reports compiling the results of its matches of payment data against the Social Security Administration’s (SSA) death master file. FSA refers to this report as the DMF Review Report. We also interviewed agency officials at FSA’s Washington, D.C., headquarters and at its Kansas City, Missouri, information technology office about agency procedures, guidance, payment processes, and the identification of improper payments. In addition, we interviewed FSA officials about the extent to which the agency follows requirements to compare agency data with the data in SSA’s death master file and the steps the agency takes to recover improper payments. To obtain information about agency procedures and adherence to guidance, we interviewed FSA’s state and county officials in California, Illinois, Kansas, Missouri, and county officials in Texas. We selected offices in Texas, Illinois, and Kansas because these states represent the highest numbers, respectively, of FSA payments made to deceased individuals. We selected the Missouri office because of the state’s large number of FSA payments made to deceased individuals and its geographic proximity to other states we visited, and we selected California for geographic diversity.\nTo determine if state and county offices accurately coded payments made to deceased individuals as proper or improper, we analyzed a generalizable, random sample of payments made by FSA to deceased individuals from April 2011 through March 2012, and we reviewed and analyzed supporting documentation to determine the individuals’ eligibility. Specifically, we randomly selected 100 payments made during that 1-year period. The sample size was chosen to provide a margin of error for an attribute measure of no greater than plus or minus 10 percentage points at the 95 percent level of confidence. Because we followed a probability procedure based on random selections, our sample is only one of a large number of samples that we might have drawn. Since each sample could have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 95 percent confidence interval (i.e., plus or minus 5 percentage points). This interval would contain the actual population value for 95 percent of the samples we could have drawn. We also randomly selected for case study analysis a nongeneralizable sample of 20 payments made to deceased individuals during the same time period and deemed erroneous by FSA. For the case study analysis, we reviewed and analyzed the supporting payment eligibility documentation of these improper payments. Because this analysis was a case study, the results cannot be generalized to all erroneous payments identified by FSA, but they provide examples of the kinds and types of improper payments made to deceased individuals. We assessed the reliability of FSA’s payment data by (1) reviewing existing information about the data and the system that produced them and (2) interviewing agency officials knowledgeable about the data. We determined that the data were sufficiently reliable for the purposes of our review.\nTo determine the extent to which NRCS has procedures in place to prevent potentially improper payments to deceased individuals, we interviewed agency officials at NRCS’s Washington, D.C., headquarters office and state and county offices in California, Illinois, Kansas, and Missouri. We selected these offices for geographic diversity and because of their close proximity to meetings we were holding with FSA officials. Using Social Security numbers, we compared the death master file with NRCS payment data for conservation programs from fiscal year 2008 through April 2012 to determine the number individuals paid by NRCS who died 1 year or more before the payment dates and the amount of these potentially improper payments. We assessed the reliability of SSA’s death master file by (1) performing electronic testing of required data elements and (2) reviewing relevant documentation. We determined that the data were sufficiently reliable for the purposes of our review. We included the following conservation programs in our analysis: the Agricultural Water Enhancement Program, Agricultural Management Assistance, Chesapeake Bay Watershed Initiative, Conservation Security Program, Conservation Stewardship Program, Environmental Quality Incentives Program, Farm and Ranch Lands Protection Program, Grassland Reserve Program, Healthy Forests Reserve Program, Wetlands Reserve Program, and Wildlife Habitat Incentives Program. We did not review a portion of payments made under these programs because NRCS was unable to provide us with the Social Security numbers for some program participants. We assessed the reliability of NRCS’s data by (1) performing electronic testing of required data elements and (2) interviewing agency officials knowledgeable about the data. We determined that the data were sufficiently reliable for the purposes of our review.\nTo determine the extent to which RMA has procedures in place to prevent improper subsidies to deceased policyholders, we interviewed RMA officials to obtain information about the steps the agency takes to verify its records of eligible policyholders. To determine the extent to which RMA’s records are regularly updated to verify whether policyholders have died, we compared the death master file with crop insurance data from RMA for reinsurance year 2008 through reinsurance year 2012 and produced a list of premium subsidies, administrative allowances, and claims payments provided on behalf of policyholders 2 or more reinsurance years after death. As mentioned earlier, we assessed the reliability of SSA’s death master file and determined that the data were sufficiently reliable for the purposes of our review. We assessed the reliability of RMA’s crop insurance data by (1) reviewing related documentation, (2) performing electronic testing of required data elements, and (3) interviewing agency officials knowledgeable about the data. We determined that the data were sufficiently reliable for the purposes of our review.\nWe conducted this performance audit from March 2012 through June 2013 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 individual above, Thomas M. Cook (Assistant Director), Carl S. Barden, Kevin S. Bray, Allen T. Chan, Jennifer Chanley, Ellen W. Chu, Mitchell B. Karpman, Michael Kendix, Karine E. McClosky, and Kiki Theodoropoulos made key contributions to this report.", "Social Security Administration: Preliminary Observations on the Death Master File. GAO-13-574T. Washington, D.C.: May 8, 2013.\nFarm Programs: Direct Payments Should Be Reconsidered. GAO-12-640. Washington, D.C.: July 3, 2012.\nFarm Bill: Issues to Consider for Reauthorization. GAO-12-338SP. Washington, D.C.: April 24, 2012.\nCrop Insurance: Savings Would Result from Program Changes and Greater Use of Data Mining. GAO-12-256. Washington, D.C.: March 13, 2012.\nCrop Insurance: Opportunities Exist to Reduce the Costs of Administering the Program. GAO-09-445. Washington, D.C.: April 29, 2009.\nFederal Farm Programs: USDA Needs to Strengthen Controls to Prevent Payments to Individuals Who Exceed Income Eligibility Limits. GAO-09-67. Washington, D.C.: October 24, 2008.\nFederal Farm Programs: USDA Needs to Strengthen Management Controls to Prevent Improper Payments to Estates and Deceased Individuals. GAO-07-1137T. Washington, D.C.: July 24, 2007.\nFederal Farm Programs: USDA Needs to Strengthen Controls to Prevent Improper Payments to Estates and Deceased Individuals. GAO-07-818. Washington, D.C.: July 9, 2007.\nCrop Insurance: Continuing Efforts Are Needed to Improve Program Integrity and Ensure Program Costs Are Reasonable. GAO-07-944T. Washington, D.C.: June 7, 2007.\nCrop Insurance: More Needs to Be Done to Reduce Program’s Vulnerability to Fraud, Waste, and Abuse. GAO-06-878T. Washington, D.C.: June 15, 2006.\nCrop Insurance: Actions Needed to Reduce Program’s Vulnerability to Fraud, Waste, and Abuse. GAO-05-528. Washington, D.C.: September 30, 2005." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h3_full", "", "", "", "h0_full", "h0_full", "h0_full", "h1_full", "h2_full", "", "h0_full", "h1_full", "h0_full h3_full", "", "", "", "", "h3_full" ] }

{ "question": [ "What has the FSA established procedures for since 2007?", "What have these procedures enabled FSA to do?", "What did GAO find in its review of a sample of payments to deceased individuals?", "How could a greater degree of monitoring benefit the FSA?", "What does the NRCS lack sufficient procedures for?", "How does this limit the NRCS's abilities?", "How does this differ from federal standards for internal control?", "What did GAO discover when reviewing NRCS's fiscal data from 2008 to 2014?", "Why is it difficult to verify the validity of these payments?", "What does the RMA lack sufficient procedures for?", "What is an example of this?", "What did GAO's analysis reveal about the implications of insufficient procedures?", "Why is it difficult to verify the validity of these payments?", "What issues might the RMA's lack of sufficient procedures cause?", "What does the USDA spend $20 billion on annually?", "Why have such programs come under increased scrutiny?", "What concerns have been voiced regarding such programs?", "What was GAO asked to do?", "What does this report examine?", "How did GAO collect data for this report?" ], "summary": [ "Since 2007, the Department of Agriculture's (USDA) Farm Service Agency (FSA), which administers various programs for farmers that help support farm incomes and provide disaster assistance, has established procedures for preventing improper payments to deceased individuals, including, on a quarterly basis, matching payments to program participants with the Social Security Administration's (SSA) data on deceased individuals. In addition, FSA state and county offices review and verify whether payments made to deceased individuals are proper or improper.", "Overall, these procedures have enabled FSA to identify thousands of deceased individuals who were paid $3.3 million in improper payments after their dates of death, of which FSA has recovered approximately $1 million.", "GAO reviewed a generalizable random sample of payments to deceased individuals that FSA identified as proper and found that 9 percent did not have sufficient support to be coded as proper.", "More monitoring to ensure that county offices' coding of payments is supported by documentation could help reduce the error rate.", "The Natural Resources Conservation Service (NRCS), a USDA agency that administers voluntary conservation programs, does not have procedures to prevent potentially improper payments to deceased individuals.", "For example, NRCS's ability to verify whether payment recipients have died is limited because the agency does not match these recipients against SSA's master list of deceased individuals.", "Under the standards for internal control in the federal government, agencies are to clearly document such control in the form of management directives, administrative policies, or operating manuals.", "GAO did a data review for fiscal year 2008 to April 2012, and estimates that NRCS made $10.6 million payments on behalf of 1,103 deceased individuals 1 year or more after their death.", "Some of these payments may have been proper, but NRCS cannot be certain because it neither identifies which of its payments were made to deceased individuals, nor reviews each of these payments.", "USDA's Risk Management Agency (RMA), which administers crop insurance programs, does not have procedures in place consistent with federal internal control standards to prevent potentially improper subsidies on behalf of deceased individuals.", "For example, RMA does not use SSA's master list of deceased individuals to verify whether its policyholders have died.", "GAO matched every policyholder's Social Security number in RMA's crop insurance subsidy and administrative allowance data for crop insurance years 2008 to 2012 with SSA's master list of deceased individuals and found that $22 million in subsidies and allowances may have been provided on behalf of an estimated 3,434 program policyholders 2 or more years after death.", "Many of these subsidies and allowances may have been proper, but without reviewing each subsidy and allowance made on behalf of deceased individuals, RMA cannot be certain that these subsidies and allowances are proper.", "In addition, without accurate records of which policyholders are deceased, RMA may be less likely to rely on results from data mining--a technique for extracting knowledge from large volumes of data--and therefore be less likely to detect fraudulent, wasteful, or abusive crop insurance claims.", "USDA spends about $20 billion annually on federal programs that support farm income, conserve natural resources, and help farmers manage risks from natural disasters, benefiting over 1 million participants.", "Given their cost and continuing nationwide budget pressures, these programs have come under increasing scrutiny.", "One concern has been the distribution of benefits to ineligible participants, including potentially improper payments to deceased individuals, which, as GAO and others have reported, may call into question whether these farm safety net programs are benefiting the agricultural sector as intended.", "GAO was asked to evaluate USDA controls over payments to the deceased.", "This report examines the extent to which procedures are in place to prevent (1) FSA and (2) NRCS from making potentially improper payments to deceased individuals and (3) RMA from providing potentially improper subsidies on behalf of deceased individuals.", "GAO reviewed a random sample of payments, compared USDA's databases with SSA's master list of deceased individuals, and interviewed agency officials." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, 0, -1, 3, -1, 0, 0, 2, 0, -1, 0, 0, -1, -1, 4 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Care for Veterans with MDD", "VA Suicide Prevention Efforts", "VA Suicide Data", "VA Data Show That 10 Percent of Veterans Had MDD and Most Were Prescribed at Least One Antidepressant, but VA Data May Underestimate MDD Prevalence", "VA Data Show About 10 Percent of Veterans Had a Diagnosis of MDD, and Almost All Were Prescribed at Least One Antidepressant", "VA’s Data May Not Fully Reflect the Extent to Which Veterans Have MDD Due to a Lack of Diagnostic Coding Precision by Clinicians", "Not All Veterans in Our Review Received CPG-Recommended Care and VA Lacks Mechanisms to Determine Whether This Care Is Provided", "Veterans We Reviewed Did Not Always Receive Care As Recommended", "VA Lacks Mechanisms to Determine the Extent to Which Veterans Are Receiving Care Consistent with CPG Recommendations", "Demographic and Clinical Data VA Collects on Veteran Suicides Were Not Always Complete or Accurate, and VAMCs Applied Instructions for Gathering Suicide Data Differently", "Veteran Suicide Data Are Incomplete", "Veteran Suicide Data Are Inaccurate", "VAMCs Have Interpreted and Applied Instructions for Completing the BHAP Templates Differently", "VAMCs, VISNs, and VA Central Office Do Not Review Suicide Data", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Scope and Methodology", "Characteristics of Veterans Diagnosed with Major Depressive Disorder (MDD)", "VA’s Oversight of the Extent to Which Veterans with MDD Prescribed Antidepressants Are Receiving Care As Recommended in the CPG", "Information VA Requires VAMCs to Collect on Veteran Suicides", "Appendix II: Department of Veterans Affairs Medical Centers’ Tracking of Veterans at High Risk for Suicide", "Appendix III: Department of Veterans Affairs’ Use of Data Related to Suicides and Suicide Behavior", "Appendix IV: Comments from the Department of Veterans Affairs", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "VA provides care to veterans with mental health needs through its 150 VAMCs, which may include both specialty mental health care settings— including mental health clinics—and other settings that may provide mental health services but focus primarily on other types of care, such as primary care. VA has implemented a program to co-locate mental health care providers within primary care settings in an effort to promote effective treatment of common mental health conditions in the primary care environment while allowing mental health specialists to focus on veterans with more severe mental illnesses.", "According to VA, the prevalence of MDD in primary care settings among veterans being treated through VA is higher than that among the general population. MDD is characterized by the presence of depressed mood or loss of interest or pleasure along with other symptoms for a period of at least 2 weeks that represent a change in previous functioning. VA has policies and guidance in place related to treating veterans with MDD. For example, the Uniform Mental Health Services in VA Medical Centers and Clinics handbook (Handbook), which defines VA’s minimum clinical requirements for mental health services, requires that VA facilities provide evidence-based treatment through the administration of medication, when indicated, consistent with the MDD CPG. The CPG is guidance intended by VA to reduce current practice variation between clinicians and provide facilities with a structured framework to help improve patient outcomes.\nThe MDD CPG provides evidence-based recommendations as guidance for clinicians who provide care for veterans with MDD. The MDD CPG includes approximately 200 recommendations to provide information and assist in decision making for clinicians who provide care for adults with MDD.assessments of depressive symptoms, such as the nine item Patient Health Questionnaire (PHQ-9), should be used at the initial assessment of MDD symptoms, to monitor treatment response at 4-6 weeks after initiation of treatment, after each change in treatment, and periodically For example, the CPG recommends that standardized thereafter until full remission is achieved.assessment is effective 4-6 weeks after initiation of treatment, making timely follow-up visits an important part of clinicians’ ability to assess whether the current treatment plan is effective or should be modified. According to the MDD CPG, veterans with MDD treated with antidepressants should be closely observed, particularly at the beginning of treatment and following dosage changes, to maximize veterans’ recovery and to mitigate any negative treatment effects, including worsening of depressive symptoms. The CPG should not take the place of the clinician’s clinical judgment.", "Beginning in June 2006, VA implemented several initiatives aimed at suicide prevention, including appointing a National Suicide Prevention Coordinator, developing data systems to increase understanding of suicide among veterans and inform VA suicide prevention programs, and instituting suicide prevention programs in VAMCs throughout the country. Additionally, VA Central Office established the Center of Excellence for Suicide Prevention and the Veterans Crisis Line in 2007. The Center of Excellence collects VA suicide prevention program data, which provides information on veteran suicide completions and suicide attempts for veterans receiving VA care, as well as those veterans not receiving VA care. VA’s Veterans Crisis Line provides toll-free, confidential support 24 hours per day for veterans, their families, and their friends through phone, online chat, or text message.Crisis Line fielded approximately 287,000 calls, 54,800 online chats, and 11,300 text messages.\nIn fiscal year 2013, the Veterans As part of VAMCs’ suicide prevention programs, the Handbook requires each VAMC to have a suicide prevention coordinator whose responsibilities include establishing and maintaining a list of veterans assessed to be at high risk for suicide; monitoring these high-risk veterans; responding to referrals from staff and the Veterans Crisis Line; collaborating with community organizations and partners; training staff members who have contact with veterans at the VAMC, community organizations, and partners; and collecting and reporting information on veterans who die by suicide and who attempt suicide.\nSee appendix II for more information on VAMCs’ tracking of veterans at high risk for suicide.", "VA Central Office uses several mechanisms to collect data on veteran suicides to help improve its suicide prevention efforts. One such mechanism includes data submitted by suicide prevention coordinators at VAMCs on known veterans who die by suicide. Beginning in December 2012, VA Central Office began a national initiative to collect demographic, clinical, and other related information on veteran suicides as a quality improvement initiative to improve its suicide prevention efforts by identifying information that can be used by VA Central Office to develop policy and procedures to help prevent future veteran deaths. This initiative, the Behavioral Health Autopsy Program (BHAP), replaced previous VA Central Office requirements to collect data on completed suicides. VA Central Office officials explained that they transitioned to the BHAP initiative to collect more systematic and comprehensive information about suicides, to incorporate interviews of family members of those who die by suicide, and to collect more contextual information.\nAccording to VA, the BHAP quality initiative has been adapted from a traditional psychological autopsy research framework that emphasizes the importance of information from outside sources as well as from those within the health care setting. The BHAP initiative is being implemented by VA in four phases:\nPhase 1—Standardized chart reviews: VAMCs’ suicide prevention coordinators are required to complete standardized chart reviews for all veterans’ suicides known to VAMC staff and reported on or after These reviews include specific information on a October 1, 2012.veteran’s utilization of VA health care services, as well as a veteran’s mental health diagnoses and risk factors for suicide. VA Central Office has instructed suicide prevention coordinators to use all available information, including VA medical records and information from a veteran’s family members to complete the chart review. These reviews are submitted to VA Central Office through completion of a BHAP Post-Mortem Chart Analysis Template (BHAP template) and VA Central Office has provided suicide prevention coordinators with a BHAP Guide on how to complete the fields in the BHAP template. VA Central Office requires VAMCs to submit the BHAP template within 30 days of VAMC staff becoming aware of a veteran’s death by suicide.\nPhase 2—Interviews with family members: In fiscal year 2013, VA Central Office began conducting interviews with family members of veterans who have died by suicide to obtain information on suicide risks, barriers to care, and suggestions for new programs to prevent suicide.\nPhase 3—Clinician questionnaire: This phase, which has not yet been implemented, will include an interview with the last provider that saw the veteran prior to his or her death. VA officials stated that there are no plans to begin this phase within calendar year 2014, and they have not established a future time table for implementing this phase.\nPhase 4—Public record review: This phase, which has also not been implemented, will be used to locate public records to identify stressors in the veteran’s life, such as a bankruptcy or divorce. Officials stated that there are no plans to begin this phase within calendar year 2014, and they have not established a future time table for implementing this phase.\nSince beginning the BHAP initiative, VA Central Office has internally issued two interim reports on data and trends from the submitted BHAP templates as part of Phase 1. The reports include information for veterans who died by suicide, both with and without a history of VA health care service utilization. Analyses of data on demographic characteristics, case information, period of service, and risk and protective factors were included for all veterans. Data on clinical characteristics and indicators of increased risk at the time of the veteran’s last contact with a VA provider were limited to veterans that utilized VA health care services.\nIn addition to the BHAP initiative, VA also requires VAMCs to collect and submit data on suicide attempts and completions through the following mechanisms.\nSuicide Prevention Application Network (SPAN): Through SPAN, VAMCs submit information to VA Central Office on the number of veterans that completed suicide, the number of suicide attempts, and indicators of suicide prevention efforts, such as outreach events conducted each month by suicide prevention coordinators.\nSuicide behavior reports: VAMC clinicians must complete a suicide behavior report when they learn that a veteran attempted or completed suicide and add that report to the respective veteran’s medical record. This report includes the date and time of the event, and other observations related to the suicide attempt or completed suicide. According to VA policy, information from suicide behavior reports is used for National Patient Safety reporting requirements and to populate SPAN.\nRoot cause analyses: Patient safety managers at VAMCs complete root cause analyses for suicide attempts and completed suicides under certain circumstances, such as when the attempt occurs at the VAMC during an inpatient stay or within 72 hours of being discharged from inpatient care. Root cause analyses are used to identify the factors that contributed to adverse events or close calls and any steps VAMCs could implement to prevent similar events in the future.\nSee appendix III for how VAMC and VISN officials we interviewed told us they have utilized data related to suicides and suicide behavior.", "Data for fiscal years 2009 through 2013 show that about 10 percent of veterans who received health care services through VA were diagnosed with MDD, and of those, 94 percent were prescribed an antidepressant. However, due to diagnostic coding discrepancies we found in a sample of veterans’ medical records, VA’s data may not accurately reflect the prevalence of MDD among veterans.", "Based on our analysis of VA data from veterans’ medical records and administrative sources, 532,222 veterans—about 10 percent of veterans who received health care services through VA—had a diagnosis of MDD from fiscal years 2009 through 2013. Among those veterans, the majority (60 percent) were 35 to 64 years of age. Most (86 percent) were In addition, not veterans of the recent conflicts in Iraq and Afghanistan.most of these veterans were male (87 percent) and the highest proportion was white (68 percent) and non-Hispanic (87 percent). See table 1 for a summary of characteristics of veterans who had a diagnosis of MDD from fiscal years 2009 through 2013.\nWe also found that about 499,000 of the 532,222 (94 percent) veterans who had a diagnosis of MDD from fiscal years 2009 through 2013 were prescribed at least one antidepressant. Of those veterans, the majority (about 73 percent) were dispensed a 12-week supply of an antidepressant at the start of an MDD episode. Fewer veterans (about 58 percent) were dispensed a 6-month supply of an antidepressant over the course of their treatment. Receiving a 12-week supply of an antidepressant can be important for addressing depressive symptoms initially, while continued treatment after remission of depressive symptoms, such as receiving a 6-month supply of an antidepressant, is associated with a decreased risk of relapse, according to the CPG.", "Based on our review of the documentation in 30 veterans’ medical records from VA’s medical record system, we found that over one-third (11) had diagnostic coding discrepancies. Specifically, these 11 veterans had at least one encounter where the clinician documented a diagnosis of MDD in the veteran’s medical record, but the clinician did not code the encounter accordingly. Instead, the clinician coded the encounter as “depression not otherwise specified,” a less specific code. According to the fourth edition of the Diagnostic and Statistical Manual of Mental Disorders, depression not otherwise specified is to be used to code disorders with depressive features that do not meet criteria for MDD and other depressive disorders, or to indicate depressive symptoms about which there is inadequate or contradictory information. VA’s data on the number of veterans with MDD are based on the diagnostic codes associated with patient encounters, so the discrepancies we found indicate that the number of veterans with MDD is most likely not fully reflected in these data. Accurately identifying the veteran population with MDD is critical to assessing Department performance in treating veterans in accordance with the MDD CPG and measuring health outcomes for these veterans. VA Central Office reviewed the 11 medical records where we found coding discrepancies and agreed that the encounters were not coded accurately. According to a VA Central Office official, the encounters we identified were corrected in the veterans’ medical record.\nAccording to VHA Handbook 1907.03 - Health Information Management Clinical Coding Program Procedures, VAMCs are required to monitor the accuracy of coding and provide training as necessary in order to help ensure accurate coding. VAMC officials from all six sites in our review said that monthly or quarterly coding audits are conducted at their facilities and the findings of those audits are reviewed and action is taken to correct issues with the accuracy and reliability of coding. However, at five of the six VAMCs in our review, those audits focus on billable encounters—that is, encounters that are billed to a third party, such as private health insurance plans—in part because of the potential opportunity for facilities to collect third-party revenue from these encounters. Among the 11 veterans’ medical records where we identified coding discrepancies, all of the discrepancies were associated with outpatient, nonbillable encounters, the coding of which, according to a VA Central Office official, is not typically conducted by VAMC medical coders—staff who are trained specifically in medical coding terminology and standards and are responsible for coding inpatient admissions and discharges—or subject to coding audits.\nDiagnostic coding in VA’s medical record system for outpatient encounters is typically performed by clinicians. VISN officials and VA medical center clinicians we interviewed said that clinicians do not place a lot of importance on selecting a more precise diagnostic code because it does not significantly change the patient care that is provided or the type of treatment prescribed. In addition, in the interest of expediency, clinicians may select a previously used or frequently used diagnostic code for depression rather than take the time to search for a more precise code. For example, within the medical record, clinicians may access a list of previous or current diagnoses applicable to the veteran (commonly referred to as the “problem list”) or a list of frequently used diagnostic codes in the facility. According to VISN and VAMC officials, the problem list is not typically kept up to date by clinicians and as a result, MDD may not be listed and readily available for clinicians to select. As a result of our review, VA Central Office officials reported that they had discovered a software mapping error in VA’s medical record system where the selection of MDD as a diagnosis when using a keyword search function may result in the selection of the depression not otherwise specified diagnostic code by mistake. Officials stated that they anticipate that the software error—which applies to all VAMCs—would be fixed by November 2014. Officials also stated that the solution would apply only to those encounters coded from that point going forward and would not retroactively correct any coding discrepancies that may have occurred before the error was addressed. VA Central Office officials could not tell us if any of the 11 coding discrepancies that we identified were a result of this software error.\nOfficials at most of the six VISNs we spoke with do not conduct reviews of medical coding done by clinicians. However, as a result of our inquiry, one VISN we interviewed reported in the late spring of 2014 that it had extracted data on MDD-related encounters and noticed the high use of depression not otherwise specified coding for the facilities within its VISN, as well as all VAMCs nationwide. Officials from this VISN said the lack of coding specificity has implications for being able to accurately examine health outcomes related to the treatment of depression and that they are planning to further analyze encounter data within their VISN to determine the appropriateness of diagnostic coding based upon medical record documentation. As of September 2014, the VISN had not reported any additional steps to address this issue.", "Based on the three CPG recommendations we selected, veterans in our review with MDD who have been prescribed antidepressants did not always receive care as recommended in the MDD CPG. Additionally, VA does not know the extent to which veterans with MDD who have been prescribed antidepressants are receiving care as recommended in the CPG, and VA Central Office has not developed mechanisms to determine the extent to which mental health care delivery conforms to the recommendations in the MDD CPG.", "We found that almost all of the 30 veterans with MDD who have been prescribed antidepressants included in our review did not receive care in accordance with the three MDD CPG recommendations we reviewed. VA policy states that antidepressant treatment must be consistent with VA’s current, evidence-based CPG. However, VA Central Office mental health officials were unable to tell us what it means to provide care that is consistent with the CPG, because, while a veteran’s treatment should be informed by the CPG recommendations, determining the extent to which the treatment is consistent with CPG recommendations would need to be done on a veteran-by-veteran basis. The CPG is intended to reduce practice variation and help improve patient outcomes, but without an understanding of the extent to which veterans are receiving care that is consistent with the CPG, VA may be unable to ensure that it meets the intent of the CPG and improves veteran health outcomes.\nThrough our review of 30 medical records from the six VAMCs we selected, we found examples of deviations from the CPG recommendations for almost all veterans in our review.depicts the specific recommendations we reviewed and the number of veterans that did not receive care consistent with the corresponding CPG recommendation.", "VA does not know the extent to which veterans are receiving care consistent with the MDD CPG. While deviations from recommended practice may be appropriate in many cases due to clinician discretion, VA has not fully assessed whether these examples are acceptable deviations from the CPG. According to the federal internal control standard for risk assessment, agencies should comprehensively identify risks, assess the possible effects, if any, and determine what actions should be taken to mitigate any significant risks. VA Central Office has not developed a mechanism to fully identify deviations that could impede veterans’ recovery that may result when VAMCs do not provide care consistent with the MDD CPG. VA Central Office officials explained that the CPG recommendations are guidelines that clinicians can use to inform and guide clinical decision making. VA officials told us that VA cannot require the use of all recommendations in all cases; rather, CPG recommendations should be applied on a case-by-case basis based on the needs of the veteran and with clinician judgment. One official also said it would be difficult to check every CPG recommendation to ensure that clinicians are providing care consistent with the CPG, but stated that VA could identify for review those recommendations that may put veterans’ health at risk if not followed. However, with no mechanism to assess whether the care provided is consistent with the CPG, VA is unable to ensure that deviations from recommended care are identified.\nWhile monitoring full compliance with CPG recommendations may be difficult, there are nevertheless ways to address the issue. In fact, VA Central Office and some VAMCs have implemented mechanisms to determine the extent to which veterans are receiving care that is consistent with some of the CPG recommendations; however, these mechanisms do not fully assess all deviations that could impede a veteran’s recovery, as illustrated by the following.\nOfficials at one VAMC we visited told us that they use a clinical tool to track veterans being treated for mental health conditions. The mental health tool includes 67,349 unique patients, and an official explained that they can run queries of the clinical tool—for example, for veterans participating in substance abuse treatment who did not return for a drug screen—by pulling both process and outcome variables including diagnostic codes, lab results, and medication lists. designed to manage the behavioral health needs of veterans through telephone or in-person visits. As part of the system, clinicians can use a structured interview—including a PHQ-9—that assesses veterans’ mental health symptoms in a way that is consistent with the CPG recommendation for follow-up assessment. Although the BHL can be used to help ensure care is provided consistent with a few of the recommendations in the CPG, the BHL is not used to monitor all veterans prescribed antidepressants. Generally, VAMCs use the BHL to monitor veterans being treated for mental health conditions, such as MDD, in primary care clinics, and to participate, veterans can be referred by their primary care clinician or request to participate.", "We found that demographic, clinical, and other data submitted to VA Central Office on veteran suicides were not always completely or correctly entered into the BHAP Post-Mortem Chart Analysis Templates— a mechanism by which VA Central Office collects veteran suicide data from VAMCs’ review of veterans’ medical records. (Figure 1 shows the number of BHAP templates we found with incomplete or inaccurate data.) Moreover, VAMCs interpreted and applied instructions for completing the BHAP templates differently. We also found that most VAMCs and VISNs we reviewed and VA Central Office did not review suicide data for accuracy.", "We found that over half of the 63 BHAP templates we examined had incomplete information.information, or other specific fields were omitted. Moreover, the data were lacking entirely for certain known veteran suicides. Incomplete data limits VA Central Office’s ability to identify information that can be used to help VA Central Office develop policy and procedures to prevent veteran deaths.\nThe data either lacked veteran enrollment Lack of veteran enrollment information. Approximately one-third (23) of the BHAP templates we reviewed did not indicate whether the veteran was enrolled in VA health care services, even though the veteran had a VA medical record.\nEight did not indicate that the veteran had received VA services when the templates were submitted by three of the VAMCs in our review, even though these VAMCs provided care to these veterans.\nFifteen BHAP templates submitted by two VAMCs in our review originally indicated that the veteran was receiving VA care; however, when we reviewed the submitted BHAP templates we received from VA Central Office for the same 15 veterans, the BHAP templates did not indicate that the veteran was being seen in the VA.\nVA Central Office used enrollment information when compiling the most recent BHAP interim report, which is part of VA Central Office’s quality improvement efforts for its suicide prevention program. Specifically, VA Central Office included clinical data in the BHAP interim report only for veterans utilizing VA services. Therefore, clinical data for the 23 veterans we identified would not be included in the interim report. Missing one-third of the data from its analysis, as was the case in our sample, could have a detrimental effect on the trends VA Central Office reports and uses to improve its suicide prevention efforts.\nRequested data was omitted. Forty of the 63 BHAP templates we reviewed included various data fields where no response was provided, resulting in incomplete data. For example, for 19 templates, VAMC staff did not enter requested data as to whether the veteran had all or some of 15 active psychiatric symptoms within 12 months prior to the veteran’s date of death. Also, 9 templates did not include an answer for the number of previous suicide attempts by the veteran. Officials from one VAMC told us that they left this field blank if the veteran did not have any previous suicide attempts, rather than entering a “0,” even though the BHAP Guide states that officials should enter the appropriate number of previous suicide attempts. Officials at one VAMC told us that fields are sometimes left blank if the standardized answers available on the BHAP template are not adequate; that is, the answer for that veteran does not fit into one of the answers provided on the BHAP template. Officials at two VAMCs stated that it is sometimes easy to overlook fields in the BHAP template, resulting in unanswered questions.\nFilling in all fields in the BHAP template, rather than leaving the field blank, is important because some blank fields are counted as “missing” or “no” in the analysis conducted by VA Central Office for the BHAP interim reports. This, in turn, could affect the suicide trends reported. For example, for the number of previous suicide attempts, blank fields are counted as “missing” in the BHAP interim report, rather than “0” previous suicide attempts as officials from one VAMC intended. In other cases, such as for psychiatric symptoms, missing fields are counted as “no,” meaning that the veteran did not have these symptoms. In at least one BHAP template, the answer for the psychiatric symptom of isolation was left blank, and would therefore be counted as negative in the interim report despite the fact that officials from the one VAMC told us that the veteran did have this symptom. See figure 2, which provides an excerpt of the fields from the BHAP template in which VAMCs provided incomplete data.\nData were lacking entirely for certain known veteran suicides. We found that VAMCs did not always submit BHAP templates for all veteran suicides known to the facility, as required by the BHAP Guide. VA Central Office does not have a process in place to determine whether it is receiving the BHAP templates for all known veteran suicides. For example, one VAMC had completed 13 BHAP templates at the time of our site visit but had not submitted them; however, neither the VAMC nor VA Central Office were aware that these templates had not been submitted until after we requested them from VA Central Office. The suicide prevention coordinator at this VAMC told us that the BHAP templates were forwarded to another official at the VAMC, rather than being submitted through VA Central Office’s process, and that the BHAP templates were never submitted. As a result of our inquiry, the VAMC submitted these templates to VA Central Office. In another example, officials at a different VAMC told us that, at the time of our site visit, they had recently begun completing and submitting BHAP templates, beginning with veteran suicides occurring in fiscal year 2014. VA Central Office officials told us that VAMCs can start submitting BHAP templates at any point, and officials are not requiring the VAMCs to go back and submit information on all suicides since October 1, 2012. However, this practice is contrary to VA policy, which states that VAMCs should submit BHAP templates for all suicides known to the facility and reported on or after October 1, 2012.", "Of the 63 BHAP templates we reviewed, we found numerous instances of inaccurate data submitted on BHAP templates, as illustrated by the following examples.\nIncorrect date of death: Six BHAP templates included a date of death that was incorrect based on information in the veteran’s medical record. The difference in the dates of death in the veterans’ medical records and the dates of death in the BHAP templates ranged from 1 day to 1 year. For example, one BHAP template indicated that the veteran died in the year after the veteran’s actual date of death. Another BHAP template appeared to use the date the suicide behavior report was completed, rather than the veteran’s actual date of death. The suicide behavior report was completed 69 days after the veteran’s date of death.in the BHAP template is important because it is used as a point of reference to calculate other fields, such as the number of mental health visits in the last 30 days.\nThe accuracy of the date of death recorded Incorrect number of mental health visits: Nine BHAP templates included the incorrect number of outpatient VA mental health visits in the last 30 days. For example, one BHAP template indicated that the veteran had five outpatient mental health visits, including three non-mental health visits that should not have been included in the total number of mental health visits for this veteran. Another BHAP template indicated the veteran had been seen once by a mental health provider in the last 30 days; however, we found in reviewing the medical records that this veteran had not been seen by a mental health provider during this time period. This veteran would be included in the BHAP interim report as having a mental health visit, and, as a result, VA’s data would include an inaccurate count of the number of veterans with mental health visits in the last 30 days.accurate information, VA cannot use this information to determine whether policies or procedures need to be changed to ensure that Without veterans at high risk for suicide are being seen more frequently by a mental health provider to help prevent suicides in the future.\nSee figure 3, which provides an excerpt of the fields from the BHAP template in which VAMCs provided inaccurate data.", "We found several situations where VAMCs interpreted and applied instructions for completing the BHAP templates differently, as illustrated in the following examples.\nWe found inconsistencies in how different VAMCs arrived at answers provided in the BHAP templates. For example, one VAMC included a visit to an immunization clinic as the veteran’s final visit, while another VAMC did not include this type of visit, even though this was the last time the veteran was seen in person. The BHAP Guide indicates that the final visit should be the last time the veteran had in-person contact with any VAMC staff, but the BHAP Guide does not identify the different types of visits that should be counted. VA Central Office officials stated that a visit to an immunization clinic should be included as the final visit with the veteran. When VAMCs do not provide consistent data, VA Central Office will receive and use inconsistent data in preparing its trend reports, such as BHAP interim reports, which are intended to be used to improve suicide prevention efforts.\nWe also found instances in which BHAP templates included information that did not conform to the instructions in the BHAP Guide on how to complete the BHAP medical record reviews.\nLast contact did not always represent the last time a VAMC official spoke with the veteran: The BHAP Guide instructions specify that the last contact recorded in the BHAP template should be the last recorded interaction with the veteran, which could be in person, through a phone call, or through email. Five of the 63 BHAP templates we reviewed did not indicate the last time an official spoke directly to the veteran. One BHAP template counted a phone call with a veteran’s spouse after the veteran’s death as the last contact with the veteran. The BHAP template also counted this phone conversation as an “in-person” interaction. The remaining four BHAP templates included a date for the last contact that was prior to the date for the veteran’s final in-person visit at the VAMC. In these instances, the veterans’ in-person visit should have been counted as the last contact. From this flawed information, VA would not be able to determine reliable trends for the amount of time between the last contact with the veteran and the veteran’s date of death for reports that it prepares, such as the BHAP interim report.\nSuicide prevention coordinator contact and referral not within BHAP time period: The BHAP Guide specifies that VAMCs should indicate in the BHAP template whether there was a suicide prevention coordinator contact or referral made within 3 months prior to the veteran’s date of death. In 3 of the 63 cases we reviewed, we found that the suicide prevention coordinators checked the box indicating that they saw the veteran or had a referral within 3 months of the veteran’s death. However, in each of these cases we found that the contact was made more than 3 months prior to the veteran’s death, so it should not have been counted. A suicide prevention coordinator from one VAMC said she was unaware of the time period requirement and a suicide prevention coordinator at another VAMC stated that time frames should be added to the BHAP template, rather than just included in the BHAP Guide. The BHAP interim reports include the number of veterans that had a suicide prevention coordinator contact or referral, and by including information on contacts or referrals that are outside the BHAP Guide time frame, these reports may be at risk of misreporting trends in this area.\nSee figure 4, which provides an excerpt of the fields from the BHAP template in which VAMCs provided inconsistent data.\nVA policy and guidance states that the BHAP template should be completed for all suicides known to the facility, but at the five VAMCs we visited, these data were not always being reported. However, the policy and instructions do not explicitly state that veterans not being seen by VA should be included, and in the absence of this declaration, some VAMCs interpreted the instructions to mean that only veterans being seen by VA should be included in the data submitted. Therefore, two VAMCs have submitted data only for veterans being treated by VA, while the others include data on all known veteran suicides—whether they have been treated by VA or not. This further adds to the inconsistencies in the information that VAMCs submit on the BHAP templates. VA Central Office officials told us that BHAP templates should be completed for both veterans utilizing VA health care services, as well as those veterans not being seen in the VA, and that this requirement has been discussed at training sessions and during conference calls with suicide prevention coordinators. For example, during a suicide prevention conference in November 2013, a VA Central Office official informed participants that the BHAP template should be completed for all suicides reported through SPAN, which VA Central Office officials previously told us includes veterans that were not receiving VA care. The inconsistency in VAMC officials’ understanding of which veterans should have a completed BHAP template results in inconsistent data being reported to VA Central Office. While VA was in the process of updating its suicide prevention coordinator manual, we brought this issue to VA’s attention. In August 2014, VA made modifications to the manual that indicated that VA is changing its policy—now requiring that the BHAP template should be completed only for veterans receiving VA services. However, the guidance continues to be unclear on whether suicide prevention coordinators should complete BHAP templates for veterans not receiving VA care.", "We found that BHAP templates are not being reviewed by VA officials at any level for accuracy, completeness, and consistency. Therefore, our findings at five VAMCs could be symptomatic nationwide and other VAMCs may also be submitting incomplete, inaccurate, and inconsistent suicide-related information and VA may not be getting the data it needs across the Department to make appropriate resource decisions and develop new policy. VA policy states that it is the VISN’s and VAMC’s decision whether to conduct reviews of BHAP data prior to submission to VA Central Office. With few exceptions, VAMCs and VISNs we visited generally do not conduct data checks on the information submitted in the BHAP templates. Additionally, VA Central Office does not review the information for accuracy and completeness in the BHAP templates it receives. This approach is inconsistent with internal control standards for the federal government, which state that agencies should have controls over information processes, including procedures and standards to ensure the completeness and accuracy of processed data.\nOfficials at one VAMC told us that VAMC staff compare the BHAP data and the veteran’s medical record prior to submitting the BHAP template to VA Central Office to ensure accuracy. In response to our review, another VAMC implemented a procedure to check the accuracy and completeness of their BHAP templates prior to submission. The procedure at this VAMC requires the suicide prevention coordinator and case manager to independently complete the BHAP template and compare their responses. The BHAP templates are then reviewed by the Assistant Mental Health Clinic Director prior to submission.\nWe also found that VA lacks sufficient controls to ensure the quality of the existing BHAP data. For example, VA Central Office officials said there are no automated data checks to ensure the accuracy of data it uses for the BHAP interim report, such as checking to ensure that the date of last contact with the veteran that is recorded in the BHAP template is not after the veteran’s date of death. Although officials removed apparent duplicates in submitted BHAP templates by matching the veteran’s name and social security number while compiling the data for the most recent BHAP interim report, they do not conduct data checks to help identify some of the incomplete or inaccurate data we found in our review.", "Given the negative effects of MDD, it is important to provide timely, evidence-based treatment for veterans with MDD, and VA’s ability to monitor these veterans is critical to ensuring positive outcomes. However, our findings demonstrate that VA may not be fully aware of the population of veterans with MDD due to a lack of coding precision by clinicians. This can limit VA’s ability to assess the Department’s performance in treating veterans as recommended in the MDD CPG and in measuring health outcomes for veterans. Additionally, VA does not have mechanisms in place to ensure that the Department is able to identify deviations from CPG-recommended care and remedy those that could impede veterans’ recovery. Even if VA did have mechanisms in place, the coding discrepancies we identified would limit VA’s ability to extract accurate data on all veterans diagnosed with MDD, therefore hindering VA’s ability to determine the extent to which veterans are receiving care consistent with the CPG recommendations for MDD. The CPG recommendations are meant to improve veteran outcomes by providing maximum relief from the debilitating symptoms of MDD, and VA cannot ensure that the care veterans receive is consistent with those recommendations.\nThe existence of incomplete, inaccurate, and inconsistent information submitted through VA’s BHAP templates limits the Department’s ability to accurately evaluate its suicide prevention efforts and identify trends in veteran suicides through the BHAP initiative. Specifically, data drawn from incomplete, inaccurate, and inconsistent BHAP templates limit the Department’s opportunities to learn from past veteran suicides and ultimately diminish efforts to improve its suicide prevention activities. VAMCs, VISNs, and VA Central Office generally lack a process to ensure that the data that are submitted and used by VA Central Office to identify trends in veteran suicides are complete, accurate, and consistent. Checking and verifying the data submitted to VA Central Office would help ensure that changes made to suicide prevention efforts by VAMCs, VISNs, and VA are based on actual trends in veteran suicides. Without clear VA Central Office instructions to guide how VAMCs and VISNs should complete BHAP templates and report suicide data, the validity of suicide data and the effectiveness of VA’s actions will be hampered.", "We recommend that the Secretary of Veterans Affairs direct the Under Secretary for Health to take the following six actions: To more accurately estimate the prevalence of MDD and identify enrolled veterans with MDD, VA should identify the extent to which there is imprecise diagnostic coding of MDD by further examining encounters with a diagnostic code of depression not otherwise specified, which could be incorporated into VAMCs’ ongoing review of diagnostic coding accuracy, and determine and address the factor(s) contributing to the imprecise coding based on the results of those examinations. For example, feedback and additional training could be provided to clinicians regarding the importance of diagnostic code accuracy, or VA’s medical record could be enhanced to facilitate the selection of a more accurate diagnostic code.\nTo ensure that veterans are receiving care in accordance with the MDD CPG, VA should implement processes to review data on veterans with MDD prescribed antidepressants to evaluate the level of risk of any deviations from recommended care and remedy those that could impede veterans’ recovery.\nTo improve VA’s efforts to inform its suicide prevention activities, VA should ensure that VAMCs have a process in place to review data on veteran suicides for completeness, accuracy, and consistency before the data are submitted to VA Central Office, clarify guidance on how to complete BHAP templates to ensure that VAMCs are submitting consistent data on veteran suicides, and implement processes to review data on veteran suicides submitted by VAMCs for accuracy and completeness.", "We provided a draft of this report to VA for comment. In its written comments, reproduced in appendix IV, VA generally agreed with our conclusions and concurred with our recommendations. In addition, VA provided information on its plans for implementing each recommendation, with estimated completion dates in calendar year 2015.\nAs 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’s date. At that time, we will send copies of this report to the appropriate congressional committees; the Secretary of Veterans Affairs; the VA Under Secretary for Health; and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions, please contact me at (202) 512- 7114 or [email protected]. 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 V.", "", "To describe the characteristics of veterans diagnosed with MDD from fiscal years 2009 through 2013, we analyzed Department of Veterans Affairs (VA) and Department of Defense (DOD) data. (See table 3.) These data included information on veterans’ demographic characteristics as well as clinical information on health care services and medications provided through VA. Veterans were classified as having a diagnosis of MDD if, in at least one fiscal year included in our review, they had two or more outpatient encounters or at least one inpatient hospital stay with a diagnosis of MDD.\nSpecifically, we examined the following:\nNumber of veterans diagnosed with MDD. We used a demographic file provided by VA to determine the number of veterans diagnosed with MDD.\nCharacteristics of veterans diagnosed with MDD. We used demographic files provided by VA and DOD to describe characteristics of veterans diagnosed with MDD. In particular, the veteran characteristics we examined included the following:\nAge. We created seven categories for veterans’ ages as of September 30, 2013—the end of fiscal year 2013, which corresponds to the last date of data we included in our analysis. These categories are as follows: (a) 18-24, (b) 25-34, (c) 35-44, (d) 45-54, (e) 55-64, (f) 65-74, and (g) 75 and older.\nEra of service. We categorized veterans as either being veterans of the recent conflicts in Iraq and Afghanistan—Operation Iraqi Freedom, Operation Enduring Freedom, and Operation New Dawn—or of other eras of service.\nSex. We categorized veterans as either being female or male.\nRace and ethnicity. We created categories to describe veterans’ race and ethnicity (Hispanic and non-Hispanic). These categories are consistent with the Office of Management and Budget’s 1997 Standards for Maintaining, Collecting, and Presenting Federal Data on Race and Ethnicity.\nExtent to which veterans diagnosed with MDD were prescribed at least one antidepressant. Using data from the Pharmacy Benefits Management database, we examined the extent to which VA providers prescribed at least one antidepressant for veterans diagnosed with MDD from fiscal years 2009 through 2013. This includes antidepressants prescribed to treat depression as well as those prescribed to treat other conditions.\nThe percentage of veterans with MDD dispensed a 12-week and a 6-month supply of an antidepressant. Using VA data we obtained from the Medical SAS Inpatient Datasets, Acute Care Dataset; Outpatient Encounter Files; Fee Basis Outpatient and Inpatient Services Files; and Pharmacy Benefits Management Database, we calculated the percentage of veterans with MDD dispensed a 12-week and a 6-month supply of an antidepressant according to statistical programming logic provided by VA. These measures are intended to assess the effectiveness of antidepressant medication management and are based on performance measures developed by the National Committee for Quality Assurance. In addition, these measures are consistent with the VA/DOD Clinical Practice Guideline for Management of Major Depressive Disorder, which indicates that continued antidepressant treatment, after acute depressive symptoms have resolved, decreases the incidence of relapse of MDD.\nWe selected six VA medical centers (VAMC) at the following locations to visit: Canandaigua, New York; Gainesville, Florida; Iowa City, Iowa; Philadelphia, Pennsylvania; Phoenix, Arizona; and Reno, Nevada. These VAMCs represent different facility complexity groups, serve populations of veterans that differ in terms of the extent of use of mental health services, and are located in different Veterans Integrated Service Networks (VISN), To gather additional perspectives, for each or regional networks of care.VAMC we visited, we selected one associated community-based outpatient clinic to visit. In particular, we visited community-based outpatient clinics in the following locations: Cedar Rapids, Iowa; Globe, Arizona; Gloucester, New Jersey; Lecanto, Florida; Fallon, Nevada; and Rochester, New York. (See table 4.) As part of our site visits, we reviewed a nongeneralizeable sample of five medical records for each of these six VAMCs for a total of 30 veterans. We reviewed these medical records to determine if the diagnostic code entered for all encounters— starting with the initial encounter in 2012 when the veteran was diagnosed with MDD and prescribed an antidepressant—was consistent with a diagnosis of MDD.\nTo select medical records for review, we completed the following steps:\nRandomly generated a list of individuals with a new prescription for an antidepressant in calendar year 2012.\nSelected the first five individuals in the list that met the following\nVeteran status.\nHad a diagnosis of MDD in calendar year 2012. For the purposes of medical record reviews, we classified a veteran as having a diagnosis of MDD if, based on how the veteran’s patient care encounters were coded or on the narrative contained in clinical notes in the veteran’s medical record, the veteran had (a) at least two outpatient encounters with a diagnosis of MDD, or (b) at least one inpatient stay with a diagnosis of MDD.\nHad a new treatment episode of antidepressants in calendar year 2012. New treatment episodes were defined as an initiation of antidepressant treatment following a period during which the veteran was either (1) not prescribed an antidepressant or (2) noncompliant with and had not picked up prescriptions for a previously prescribed antidepressant.\nTo ensure the reliability of the data we analyzed, we interviewed VA Central Office officials, reviewed relevant documentation and veterans’ medical records, and conducted electronic testing to identify missing data and obvious errors. On the basis of these activities, we determined that the data we analyzed were sufficiently reliable for our purposes. However, as discussed in the report, we described limitations of the data due to the coding discrepancies we found.", "To examine the extent to which VAMCs are providing care to veterans with MDD who are prescribed antidepressants as recommended in the CPG, we reviewed relevant VA policy documents. On the basis of that review, we found that VA policy requires all care sites, VAMCs, and community-based outpatient clinics to provide evidence-based antidepressant treatment when indicated for depression and that such care must be consistent with current VA clinical practice guidelines. The relevant VA clinical practice guideline, the VA/DOD Clinical Practice Guideline for Management of Major Depressive Disorder, provides evidence-based recommendations for providers on how to monitor veterans prescribed antidepressants; these recommendations are based on a review of depression research outcomes. These recommendations are based on available research at the time of publication of the guideline and are intended to provide information to assist providers in treatment decision-making.monitoring veterans prescribed antidepressants, we judgmentally selected three recommendations for inclusion in our review. In particular, we selected recommendations that (1) had among the highest strength of research evidence, (2) were sufficiently specific to enable us to determine the extent to which VA providers were following the recommendation, and (3) would not require clinical judgment to determine the extent to which VA providers were following the recommendation. The following recommendations were included in our review: From the guideline’s recommendations related to\nTo enhance antidepressant treatment, veterans should be educated on when to take the medication, possible side effects, risks, and the expected duration of treatment, among other things;\nStandardized assessments of depressive symptoms, such as the Patient Health Questionnaire-9, should be used to monitor treatment response at 4-6 weeks after initiation of treatment, after each change in treatment, and periodically thereafter until full remission is achieved; and\nA plan should be developed that addresses the duration of antidepressant treatment, among other things.\nAfter selecting these recommendations for our review, we examined the extent to which veterans were receiving care consistent with these CPG recommendations at the six VAMCs we visited. To do this, we interviewed VAMC clinicians to determine whether and how they were following these recommendations. At each VAMC, officials interviewed included members of the executive leadership team, primary care and mental health providers, and pharmacists.\nAdditionally, as part of our examination of the extent to which VAMCs are providing care consistent with the selected guideline recommendations, we reviewed the sample of five veterans’ medical records per VAMC used as part of our review of MDD coding. For each medical record, we reviewed documentation contained in the selected veterans’ medical records to assess the extent to which the antidepressant treatment- related care VA providers rendered was consistent with the selected CPG recommendations included in our review. Our review commenced with the encounter during which a VA clinician ordered an antidepressant to treat depressive symptoms. Our review ended after five follow-up encounters with a VA clinician, or sooner if the veteran did not have five follow-up encounters. Our review was limited to encounters during which the antidepressant treatment was reviewed, including encounters during which side effects and treatment effect were assessed, but no change was made to medication orders. We did not include, for example, an encounter with an orthopedist during which the fact that the veteran had been prescribed an antidepressant was simply noted. We provided the VAMCs with the instances where we found the medical record documentation was not consistent with the selected CPG recommendations. The VAMCs confirmed our answers or provided additional support if they believed the care was consistent with the CPG.\nTo examine VA’s oversight of the care VAMCs provide to veterans with MDD who are prescribed an antidepressant, we reviewed VA’s oversight of the Uniform Mental Health Services in VA Medical Centers and Clinics handbook and CPG requirements and evaluated whether this oversight provides VA with adequate information to identify nonconformance with recommended practices, assess the risk of any nonconformance, and address nonconformance, as appropriate. As part of this review, we reviewed VA’s oversight in the context of federal standards for internal control for risk assessment.refers to an agency’s ability to comprehensively identify risks, assess the possible effect, if any, and determine what actions should be taken to mitigate significant risks.\nThe internal control for risk assessment We then interviewed officials from VA Central Office, including officials from the Office of Mental Health Services (OMHS), the Office of Mental Health Operations, and the Office of Analytics and Business Intelligence; and the six VISNs that oversee the VAMCs we visited who are responsible for overseeing compliance with VA’s requirements, including VA’s requirement that all VA facilities provide evidence-based antidepressant treatment when indicated for depression and that such care be consistent with current VA clinical practice guidelines. Through our interviews, we obtained information on the oversight activities conducted by VA Central Office and the extent to which VA Central Office followed up with VAMCs to ensure that they corrected problems identified through these oversight activities. In addition, we obtained and reviewed relevant documents regarding VA oversight, including internal reports and VAMCs’ plans to correct problems identified through oversight activities.", "To analyze the information VA requires VAMCs to collect on veteran suicides, we first reviewed VA policies, guidance, and documents related to VA’s suicide prevention efforts to identify the mechanisms by which VA collects veteran suicide data from VAMCs. We also interviewed VA Central Office and other officials responsible for VA’s suicide prevention program, including officials from OMHS and the Center of Excellence for Suicide Prevention. We also interviewed VAMC officials and relevant staff of the six VISNs for the sites we visited to obtain information on suicide prevention initiatives.\nNext, through the site visits to six VAMCs, we obtained documents and interviewed officials regarding the collection of veteran suicide data. We obtained all completed templates from the Behavioral Health Autopsy Program (BHAP) related to VA’s collection of data on veterans that died by suicide as of the time of our site visit or at the time we requested the One VAMC had not completed any of documents for virtual site visits.these BHAP documents because they had not had a veteran die by suicide since the beginning of the program. Therefore, our analysis includes a review of documents from five of the six VAMCs we visited. Through review of the documents, we noted any fields missing data, such as a field that requires a yes or no answer but neither answer is provided.\nAdditionally, using professional judgment, we identified fields in the documents to review based on whether the field related to aspects of VA treatment—including treatment for mental health conditions—and the date of the veteran’s death. We identified these fields because they did not require clinical judgment to assess. Using the parameters in the corresponding guide for filling out these documents, including time frames, we compared these fields to information included in the veteran’s medical record and noted differences between our answers and the answers provided by the VAMCs in the documents.\nTo ensure that we received the final, submitted versions, we also requested these documents from VA Central Office for each of the five VAMCs. We compared these documents to the documents we received from the VAMCs. We used the documents from the VAMCs as the starting point; therefore, we only analyzed the templates for veterans identified by the VAMCs. that the template for these documents had changed over time. If additional fields were included in the templates obtained from VA Central Office, but were not originally included in the templates obtained from the VAMCs, we did not review these fields. We generally used the answer from the document obtained from VA Central Office, which is the final submitted version, unless a field originally had an answer in the template from the VAMC, but was blank or not answered in the template from VA Central Office. In those cases, we used the answer from the VAMC document.\nDuring the course of our review we learned We provided the VAMCs with the fields where the answers in the VAMC’s documents did not match our answers based on our review of the medical record. The VAMCs confirmed our answers or provided additional support for their original answer. Results from our review of veteran suicide data can be generalized to the VAMCs we visited, but cannot be generalized to other VAMCs.\nWe received additional templates from VA Central Office, but these were not analyzed because the VAMC had not provided us with templates for these veterans.\nWe conducted this performance audit from November 2013 to November 2014 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 Department of Veterans Affairs’ (VA) Uniform Mental Health Services in VA Medical Centers and Clinics handbook (Handbook) requires VA medical centers (VAMC) to have a suicide prevention coordinator whose responsibilities include establishing and maintaining a list of veterans assessed to be at high risk for suicide and monitoring these veterans.\nThe Handbook also requires suicide prevention coordinators to ensure that providers follow up on missed appointments for high-risk veterans to ensure patient safety and in order to initiate problem-solving about any tensions or difficulties in the veteran’s ongoing care.\nWhether a veteran is determined to be at high risk for suicide is based on clinical judgment made after an evaluation of risk factors—such as history of past suicide attempts or recent discharge from an inpatient mental health unit—protective factors—such as positive social support, positive coping skills, and positive therapeutic relationships—and the presence or absence of warning signs. Indicators that a veteran is at high risk for suicide include a current verified report or witnessed suicide attempt; identification of current serious suicidal ideation that requires an immediate change in the treatment plan, such as hospitalization; and the presence of any of the following warning signs: threatening to hurt or plan to kill oneself; looking for specific ways to kill oneself and seeking access to such means, such as pills or weapons; and talking or writing about death, dying, or suicide when these actions are out of the ordinary for the person.\nThe Handbook requires each VAMC to have a process for establishing a patient record flag to help ensure that veterans determined to be at high risk for suicide are provided with follow up for all missed mental health and substance abuse appointments. The primary purpose of the patient record flag is to communicate to staff that a veteran is at high risk for suicide and VA policy states that the presence of a flag should be considered when making treatment decisions. Suicide prevention coordinators are responsible for assessing, in conjunction with the treating clinician, the risk of suicide in individual veterans, ensuring these veterans have a “High Risk for Suicide” Patient Record Flag on their medical record, and reviewing the list of high-risk veterans at least every 90 days.\nWe interviewed suicide prevention coordinators as part of our site visits with six VAMCs to obtain information on how they track veterans determined to be at high risk for suicide. At four of the VAMCs we visited, suicide prevention coordinators used an electronic spreadsheet to track information on these veterans. For example, the spreadsheets include information such as whether the veteran has a patient record flag on their medical record and when the flag needs to be reviewed, the date for the veteran’s next scheduled follow-up appointment, whether the veteran has a safety plan, and the veteran’s assigned psychiatrist. Officials from one VAMC told us that they maintain the list daily, adding and removing veterans as necessary. Officials stated that the circumstances under which a veteran would be removed from the spreadsheet varied, but veterans are generally removed because their patient record flag has been removed and the officials no longer consider the veteran to be at high risk for suicide.\nThe two remaining VAMCs use other mechanisms to track veterans at high risk for suicide. Officials from one VAMC told us that they use the Suicide Prevention Application Network (SPAN) to query high-risk patients at the VAMC. The SPAN database contains veteran information, demographic characteristics, and information on suicide attempts and completed suicides, among other things. According to officials, the information for each veteran in SPAN includes the date the veteran was assessed as being at high risk, as well as the date that the veteran needs to be seen for follow up, if applicable. After our site visit, officials told us they plan to periodically pull a list of all veterans with an active high risk flag in VA’s medical record for the VAMC and cross-reference that list to veterans being tracked for high suicide risk by the suicide prevention coordinator in SPAN to ensure all high-risk veterans are tracked. Officials from the other VAMC told us that their case managers each have their own list of veterans that they track and the suicide prevention coordinator we spoke with stated that he does not keep a master list of all veterans that are at high risk for suicide.", "Veterans Affairs medical centers (VAMC) collect and submit data on veteran suicides to the Department of Veterans Affairs (VA) Central Office through the Suicide Prevention Application Network (SPAN) and suicide behavior reports. VAMCs also collect and report data through root cause analyses. Additionally, VA Central Office uses the data from SPAN to prepare reports that are sent to the VAMCs and Veterans Integrated VA Central Office officials stated that they Service Networks (VISN).expect VAMCs and VISNs to use these reports and collected data to improve suicide prevention efforts and program evaluation. Through site visits at six VAMCs that we conducted as part of our review and through interviews with corresponding VISN officials, we identified examples of how some VAMCs and VISNs are utilizing veteran suicide data to improve their suicide prevention efforts.\nVAMC and VISN officials have used SPAN to create initiatives based on trends in the data. For example,\nOfficials at one VAMC stated that they use the information collected in SPAN to provide data for performing statistical analyses on the outreach conducted, to study suicide attempts and completions across the VAMC catchment area, to understand the means by which veterans are dying by suicide, and to study the use of high-risk flags.\nOfficials at a VISN explained that through a review of the SPAN data about a year ago, officials learned that 60 percent of suicides in the VISN were completed using a gun. After conducting research on the subject, the VISN began a firearm safety initiative, which includes notifying veterans by mail that they can receive four gun locks each upon request, with no questions asked.\nVAMC officials have made programmatic changes to their suicide prevention efforts based on trends in the suicide data they are collecting and reviewing. For example,\nAt one VAMC, officials told us that they reviewed suicide behavior reports and, as a result of trends identified in these reports, drafted a policy for medication restriction for veterans at risk of overdosing. Specifically, over a 3-year period, five or six veterans receiving VA care repeatedly attempted suicide by overdose, typically when they were intoxicated. VAMC officials created a work group to draft policy that mitigates risk for medication overdose among high-risk veterans. At the time of our site visit, the group was exploring creating a patient record flag that would be included in the veteran’s medical record for overdose risk indicating that medication supplies should be restricted for these veterans and the possibility of using automated pill dispensers to dispense medications to these veterans.\nThrough their work reviewing suicide-related information, the suicide prevention team at another VAMC identified a trend in its suicide data. In particular, they noted that some veterans were given a 90-day supply of the same medications that the veteran recently tried to use to overdose. The suicide prevention team mentioned this to a clinical pharmacist who had also noticed this issue. The VAMC is now trying to restrict days of supply for these types of veterans, but there is no formal policy about this and no plans to craft such a policy. Additionally, officials from this VAMC stated that they have added items to the standardized suicide behavior report template to help them to collect additional useful information, such as active medications and pain score at the time of the last visit.\nOfficials from one VAMC stated that through a review of medical records and autopsy reports for veterans who died by suicide, they found that a vast majority of veterans who died by suicide were not being seen by a mental health provider. In response, officials provided education to primary care providers. VAMC officials also noticed that veterans receiving care for pain were dying by suicide at a high rate. As a result, the VAMC has started an initiative with the pain clinic, and, as part of this initiative, the chief of the pain management clinic consults with psychiatry on veterans at risk for suicide.\nOfficials at a VISN described changes made in response to the suicide data in fiscal year 2012, which showed that a percentage of veterans who completed suicide had no ongoing mental health care.\nThese veterans mainly received care from VA primary care providers. To address this, the VISN partnered with the Center of Excellence for Suicide Prevention and local university psychologists to help VA primary care providers at community-based outpatient clinics formulate mental health plans.", "", "", "Randall B. Williamson, (202) 512-7114, [email protected].", "In addition to the contact named above, Marcia A. Mann, Assistant Director; Emily Binek; Muriel Brown; Stella Chiang; Cathleen Hamann; Melanie Krause; Daniel Lee; Lisa Opdycke; Sarah Resavy; and Jennifer Whitworth made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 2, 2, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h1_full", "h3_full", "h2_full", "h0_full h3_full", "h0_full", "h0_full", "h1_full", "h1_full", "h1_full", "h2_full", "h2_full", "h2_full", "h2_full", "h2_full", "h2_full", "", "", "h4_title h3_title", "h4_full", "h4_full", "h3_full h4_full", "", "", "", "", "", "" ] }

{ "question": [ "What does GAO's analysis of VA data for fiscal years 2009 through 2013 show?", "What is MDD?", "What might GAO's discovery of diagnostic coding discrepancies indicate?", "How can MDD be treated?", "How does GAO's analysis support this claim?", "How did treatment for veterans with MDD in GAO's review differ from VA's CPG recommendations?", "What data did GAO find to support this claim?", "Why might treatment for MDD differ from VA recommendations?", "How could the lack of a system-wide process negatively affect the VA's oversight?", "What issues did GAO find with VA's data on veteran suicides?", "What steps has the VA taken to amend these issues?", "What issues did GAO discover with BHAP template data?", "What is a potential cause of inconsistency in VA's BHAP template data?", "What were these data issues exacerbated by?", "What problems might VA's lack of consistent data cause?", "What did VA estimate in 2013 regarding veterans with mental illness?", "What is MDD?", "What does the VA play a role in?", "What was GAO asked to do?", "What does this report examine?", "How did GAO collect data for this report?", "What do the results of GAO's analysis provide?" ], "summary": [ "GAO's analysis of Department of Veterans Affairs (VA) data for fiscal years 2009 through 2013 shows that about 10 percent of veterans who received VA health care services were diagnosed with major depressive disorder (MDD).", "MDD is characterized by depressed mood or loss of interest along with other symptoms for 2 weeks or more that represent a change in the way individuals function from their previous behaviors.", "Because GAO found diagnostic coding discrepancies in 11 of the 30 veterans' medical records it reviewed from six VA medical centers (VAMC), VA's data may understate the prevalence of MDD among veterans being treated through VA, to the extent that such discrepancies may permeate VA's data.", "One treatment for MDD is the use of medications such as antidepressants.", "According to GAO's analysis, 94 percent of veterans diagnosed with MDD were prescribed at least one antidepressant.", "VA policy states that antidepressant treatment must be consistent with VA's current clinical practice guideline (CPG); however, GAO's review of 30 veterans' medical records identified deviations from selected MDD CPG recommendations for most veterans reviewed.", "For example, 26 of the 30 veterans were not assessed using a standardized assessment tool at 4 to 6 weeks after initiation of treatment, as recommended in the CPG. Additionally, 10 veterans did not receive follow up within the time frame recommended in the CPG.", "GAO found that VA does not have a system-wide process in place to identify and fully assess whether the care provided is consistent with the CPG.", "As a result, VA does not know the extent to which veterans with MDD who have been prescribed antidepressants are receiving care as recommended in the CPG and whether appropriate actions are taken by VAMCs to mitigate potentially significant risks to veterans.", "The demographic and clinical data that VA collects on veteran suicides were not always complete, accurate, or consistent.", "VA's Behavioral Health Autopsy Program (BHAP) is a quality initiative to improve VA's suicide prevention efforts by identifying information that VA can use to develop policy and procedures to help prevent future suicides. The BHAP templates are a mechanism by which VA collects suicide data from VAMC's review of veteran medical records.", "GAO's review of 63 BHAP templates at five VAMCs found that 40 of the templates that VAMCs submitted to VA Central Office had incomplete data. Also, GAO found that the BHAP templates VAMCs submitted contained inaccurate data. For example, 6 BHAP templates included a date of death that was incorrect based on information in the veteran's medical record, and 9 BHAP templates included an incorrect number of outpatient VA mental health visits in the last 30 days.", "Moreover, GAO found that VAMCs submitted inconsistent information because they interpreted VA's guidance on completing the BHAP templates differently.", "This situation was further exacerbated because BHAP templates prepared by VAMCs are generally not being reviewed at any level within the Department for completeness, accuracy, and consistency.", "Lack of complete, accurate, and consistent data and poor oversight can inhibit VA's ability to identify, evaluate, and improve ways to better inform its suicide prevention efforts.", "In 2013, VA estimated that about 1.5 million veterans required mental health care, including services for MDD.", "MDD is a debilitating mental illness related to reduced quality of life and productivity, and increased risk for suicide.", "VA also plays a role in suicide prevention.", "GAO was asked to review how VA tracks veterans prescribed antidepressants and what suicide data VA uses in its prevention efforts.", "This report examines (1) VA's data on veterans with MDD, including those prescribed an antidepressant; (2) the extent that veterans with MDD who are prescribed antidepressants receive recommended care and the extent to which VA monitors such care; and (3) the quality of data VA requires VAMCs to collect on veteran suicides.", "GAO analyzed VA data, interviewed VA officials, and conducted site visits to six VAMCs selected based on geography and population served. From each of these six VAMCs, GAO also reviewed five randomly selected medical records for veterans diagnosed with MDD and prescribed an antidepressant in 2012, as well as all completed BHAP templates.", "The results cannot be generalized across VA but provide insights." ], "parent_pair_index": [ -1, 0, -1, -1, 3, -1, 0, 0, 2, -1, 0, 1, 0, 0, 0, -1, 0, 0, -1, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "State Bureaus Involved in Embassy Construction", "On-Compound Construction", "Off-Compound Construction", "Total Kabul Infrastructure Investments", "Contract Costs Have Risen and Schedule Has Been Extended Following State’s Incomplete Risk Assessment; Further Cost Increases Are Likely", "Contract Costs Have Increased by $167.5 Million or about 27 Percent", "Cost to Complete Contract Likely to Increase", "Construction Schedule Has Been Extended by Over 3 Years", "State Did Not Follow Policy on Required Cost Containment and Risk Assessment Studies, a Fact That Likely Led, in Part, to Increased Costs and Extended Schedules", "State Procedures Require Cost Containment and Risk Assessment Studies", "State Did Not Follow Its Cost Containment and Risk Assessment Policies for Either Contract", "State to Continue Use of Temporary Facilities but Lacks Specific Security Standards for Them, Contributing to Increased Costs and Extended Schedules", "Use of Temporary Facilities to Meet Interim Space Needs Expected to Continue Indefinitely", "Lack of Security Standards for Temporary Facilities Contributed to Insufficient and Differing Levels of Protection, Increased Costs, and Extended Schedule", "State Lacks Security Standards for Temporary Facilities and Applied Insufficient and Differing Security Measures", "Actions to Correct Security Disparities Increased Costs and Extended Schedules", "State Has Taken Some Actions to Improve Future Delivery of Temporary Facilities", "Lack of Strategic Facilities Planning and Policy Has Led to Coordination Challenges in Addressing Future Needs in Kabul", "Further Construction and Funding Needed to Address Unmet Post Facility Needs", "Lack of a Strategic Facilities Plan Impedes Efforts to Coordinate Construction in Kabul", "State Lacks a Strategic Facilities Plan in Kabul", "State Has Faced Challenges Coordinating Changing Facility Needs", "Existing State Coordination Tools Do Not Substitute for a Strategic Facilities Plan", "State Assigns Responsibility for Planning, but OBO Lacks Policy Governing Strategic Facilities and Master Planning", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the U.S. Department of State", "Appendix III: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments" ], "paragraphs": [ "", "OBO is responsible for the acquisition, design, construction, maintenance, utilization, and sale of U.S. government diplomatic property abroad. Through its Capital Security Construction Program, administered by OBO, State replaces and constructs diplomatic facilities to provide U.S. embassies and consulates with safe, secure, functional, and modern buildings. According to State, from fiscal years 2009 through 2014, State awarded contracts and completed construction of nine new embassy or new consulate compounds world-wide. In addition, during this period State completed 26 other embassy or new consulate compounds and also awarded contracts for 25 new embassy or new consulate compounds that are in design or construction. OBO is responsible for ensuring that such diplomatic compound construction meets specific building codes and standards.State bureaus, or U.S. agencies undertake diplomatic construction abroad, OBO provides direction and guidance to include reviewing designs, issuing building permits, and conducting inspections to ensure its standards are met.\nIn cases where overseas posts, other DS is responsible for, among other things, establishing and operating security and protective procedures at posts, developing and implementing posts’ physical security programs, and chairing the interagency process that sets security standards. Accordingly, DS is responsible for ensuring that new embassy construction meets security standards. In addition, at posts, DS regional security officers are responsible for protecting personnel and property, documenting threats and facility vulnerabilities, and identifying ways to mitigate those vulnerabilities. DS can also use its Worldwide Protective Services contract to address such vulnerabilities by establishing contractor-provided personal protection, guard, and support services at posts. In the case of Afghanistan, DS has used this contract to undertake some security-related construction, such as constructing physical security walls and guard housing. However, such construction is contingent upon relevant OBO design reviews and permitting to ensure that building codes are met.\nSCA is responsible for coordinating foreign policy related to countries in In that capacity, SCA guides the the region, including Afghanistan.operation of U.S. diplomatic missions—embassies and consulates, including Kabul—within those countries. SCA also serves as the headquarters liaison, on behalf of its assigned posts, with other State bureaus, such as OBO and DS.", "From 2002 through 2009, State took several actions to expand the U.S. embassy compound in Kabul. Initially, OBO refurbished an existing office building, built in the 1960s. OBO also constructed a new chancery office building, staff apartments, and support facilities. Additionally, OBO constructed temporary offices and housing for the U.S. Agency for International Development (USAID). As staffing increases outpaced available space, the embassy acquired hundreds of modified shipping containers for temporary housing and also compressed office space by adding more desks in the new chancery and the existing office building.\nIn fiscal years 2009 and 2010, State awarded two contracts originally worth $625.4 million in total to meet growing facility requirements at the U.S. embassy in Kabul. The first contract, awarded to Contractor 1 in September 2009 for $209.4 million, was for the design and construction of temporary and permanent structures to include office annex A, apartment building 1, cafeteria and recreation center, perimeter security and compound access facilities, warehouse addition, and utility building. temporary offices and housing, The second contract, awarded to Contractor 2 in September 2010 for $416 million, was for the design and construction of: office annex B, apartment buildings 2 and 3, expansion of existing apartment building 4, compound access and perimeter security facilities, and parking facilities—to include a vehicle maintenance facility.\nState’s plans called for sequencing construction under the two contracts and demolishing older temporary facilities to make space available for new facilities. State’s plans also entailed acquiring the Afghan Ministry of Public Health site adjacent to the compound to build parking facilities for approximately 400 embassy vehicles. In September 2011, after the U.S. and Afghan governments did not reach agreement to transfer that site, State had to remove the parking and vehicle maintenance facilities from the project.\nIn September 2011, State partially terminated elements of the first contract—specifically the permanent facilities, including office annex A and apartment building 1—for the convenience of the U.S. government, in part, due to concerns about contractor performance and schedule delays. Contractor 1 completed the temporary offices and housing units, but in September 2011, State transferred contract requirements for the permanent facilities not begun by Contractor 1 to Contractor 2’s contract.\nThe U.S. embassy compound in Kabul comprises the east and west compounds separated by Great Massoud Road, as well as a 6.17-acre site (or “6.17 site”) connected to the east compound. Our July 2014 report provides further information on the construction phasing of the current project.\nOnce the current construction is completed, the Kabul embassy’s permanent facilities—both older and newly constructed office and apartment buildings—will contain 1,487 desks and 819 beds. Those totals do not include the desks or beds in temporary offices and housing facilities, which we discuss later in the report. Figure 1 depicts the planned configuration of the compound upon completion of current construction.", "State has also acquired other real property off-compound. Major off- compound properties include Camp Sullivan, a 20.9-acre property located near Kabul International Airport; Camp Seitz, a 7-acre facility southwest of the embassy that serves as housing and office space for security contractors; and Camp Eggers, a 16.8-acre former Department of Defense (DOD) facility southwest of the embassy planned to serve as a contractor camp. The relative locations of some of these properties are shown in figure 2. In addition, State is upgrading Camp Alvarado, a property located near the airport that serves as the main aviation hub for the embassy’s air transport and counternarcotics operations.", "State’s past and planned capital construction investments in Kabul from 2002 through March 2015 total $2.17 billion in project funding, which includes awarded construction contracts and other costs State incurs that are not part of those contracts. Examples of other State project costs include federal project supervision, construction security, security equipment, and project contingencies. Figure 3 shows these investments.\nIn the case of the current Kabul embassy expansion, as of March 2015, State has allocated $1.11 billion to cover the 2009 and 2010 contract costs as well as State’s project costs outside the two contracts. The original cost of the 2009 and 2010 construction contracts was $625.4 million. When we discuss increased costs in this report, we are referring to those costs agreed to between State and its construction contractors for the 2009 and 2010 contracts.", "The costs for the 2009 and 2010 contracts are now almost 27 percent higher than the original contract costs. The completed project will be delivered just over 3 years later than originally planned. State did not follow its cost containment and risk mitigation procedures, a fact that likely contributed, in part, to increased cost and extended schedules.", "As of March 2015, the 2009 and 2010 contracts have a combined total cost of $792.9 million, which represents an increase of $167.5 million, or almost 27 percent, since contract award. At award, the 2009 and 2010 contracts were worth $209.4 million and $416 million, respectively, for a total of $625.4 million. In September 2011, State partially terminated the 2009 contract for the convenience of the government due to concerns, in part, about performance and schedule delays and reduced the contract value by $121.4 million. Two weeks later, State issued the first modification of the 2010 contract, shifting the permanent facilities from the 2009 contract and modifying some of the planned work, adding $222.5 million to that contract. Subsequent contract modifications added almost $66.5 million to the total contract value, bringing the total value of the 2010 contract to $705.5 million. The additional work included reconfiguring the existing office building’s second floor, upgrading the security measures on temporary housing, upgrading embassy perimeter walls, improving life safety measures on apartments 2 and 3, and shipping some building materials by air to avoid problematic ground shipments through Pakistan.\nSee table 1 for a summary of cost increases and decreases for the two contracts.", "As of March 2015, OBO and Contractor 2 were still negotiating the value of several contract changes that will likely result in increased costs. The changes being discussed include but are not limited to the following matters: the contractor’s assertion that site areas were not available to start construction as planned, upgrades to the compound’s electrical distribution systems, modifications to alter the height of apartments 2 and 3, and the addition of new work inside the 2006 chancery. costs to address design issues related to 2009 permanent facilities, changes to enhance some physical security measures, As of March 2015, State has allocated $1.11 billion to the project to cover the 2009 and 2010 contract costs as well as State’s project costs outside the two contracts. This figure represents originally allocated funding plus subsequent transfers from other State accounts. For example, in September 2014, State transferred, with congressional support, $40 million in funding to cover costs due to shipping disruptions and anticipated construction contingency shortfalls. Additionally, State has notified Congress of its intent to use $25 million of funds State had transferred in 2014 to cover project supervision and further replenish the project’s contingency funding. State reported that without the additional $25 million, it would be forced to stop the project in mid-2015 because of a lack of funds.", "According to State documents, State had originally planned to complete the entire Kabul construction project by summer 2014. State now estimates completion by fall 2017, although the 2010 contract has not yet been revised to reflect that date. Table 2 shows current estimated delivery dates for key buildings, compared with the estimated delivery dates in OBO’s original plan.\nFigures 4 through 6 show ongoing construction of office annexes A and B as well as apartment building 1 as of December 2014. Construction of apartments 2 and 3 has not yet begun.", "The U.S. Office of Management and Budget (OMB) and State both require cost containment studies for certain construction projects. Also, State requires OBO to assess risks posed to its construction projects. However, State did not properly follow these cost containment and risk assessment policies, a fact that likely contributed to increased costs and extended schedules in the 2009 and 2010 contracts.", "OMB policy requires federal agencies to use value engineering (referred to as cost containment in this report) as a management tool to ensure realistic budgets, control capital and operating costs, and improve and maintain acceptable quality in program and acquisition functions (e.g., in a construction project). The policy indicates that the value of cost containment is likely to be greatest when applied to the highest dollar value programs during the feasibility, planning, design, and other early phases of development and can also help to reduce overall risk. State implements this policy by requiring OBO to conduct two cost containment studies for each project costing more than $20 million: one study during the planning of the project and one study no later than the design review. OBO guidance requires the study team leader to formally record the disposition of cost containment study recommendations, identifying which will be implemented and providing a defensible rationale for rejecting other recommendations.\nIn addition, OBO’s standard operating procedures require risk assessment studies to reduce risks through identification and assessment, mitigation, and contingency planning. The procedures state that risk assessment is a necessary and prudent management task. Risk assessments should be conducted (1) early in the project planning phase (as input and guidance for initial planning), (2) again when developing budget estimates, and (3) again when developing cost estimates in support of negotiating and awarding a contract. Risks are also to be tracked during project implementation. After a risk assessment has been conducted, results should be conveyed to project stakeholders through a report and, if needed, a risk mitigation plan that outlines how the organization plans to take action to mitigate risks from occurring, or how it will respond to identified risks should they occur.", "State awarded the 2009 and 2010 contracts for construction in Kabul without following its procedures for cost containment studies and risk assessments. Between the 2009 contract and the 2010 contract, State should have conducted four cost containment studies and six risk assessments. However, for the 2009 contract, State confirmed that it did not conduct either type of assessment. Because of the value of the 2009 contract, $209.4 million, two separate cost containment studies would have been required. Also, no risk assessments were performed and no risk mitigation plan was developed.\nState completed only one required cost containment study for the second contract and combined it with a risk assessment. The study was conducted by an outside firm in March 2010 on the conceptual design for the 2010 contract, which was planned for award in September 2010; that is, the study occurred while OBO was drafting State’s request for proposals for the 2010 contract. The objective of the study was to evaluate the project from the perspective of performance, cost, schedule, and risk and to identify viable alternative concepts to enhance the project. OBO’s consultant for this effort focused primarily on phasing construction, planning risk response, and improving the project’s long-term flexibility. Because of the accelerated nature of the project, the study did not focus on the programmatic elements (e.g., staffing, floor plan, and site layout).\nDS officials were not sufficiently involved in the cost containment study, contrary to established policy. OBO policy on cost containment requires the OBO value engineering manager and the project team leader to request and coordinate review of the consultant’s recommendations with technical team members and all interested offices to determine whether to accept, reject, or modify those recommendations. DS is cited in the policy as an interested office. According to attendee lists, no one from DS participated in the meetings related to the study, and DS officials we spoke with indicated they were not aware of the study and its security recommendations.\nThe cost containment study made 31 recommendations to State to streamline construction and improve the safety and efficiency of the buildings. State provided us with a table summarizing the cost containment alternatives and indicating that State accepted 18, rejected 12, and partially accepted one. According to State, seven of the accepted recommendations were included in the request for proposals then being drafted. We did not assess the implementation of the recommendations. State’s policy states that cost containment disposition memos should include defensible rationale as to why a recommendation was rejected. The explanations for rejecting the twelve were brief. For eleven of the twelve rejected recommendations, State provided no further documentation for rejecting the proposals other than a preliminary and a final summary paper. Further, it was unclear from State’s documentation memo what construction and operating life-cycle cost savings OBO expected to achieve in relation to the consultant’s estimates and recommendations.\nThe risk assessment identified over 30 risks to the project. In particular, it identified the interface between the 2009 and 2010 contracts as a major source of risk. Specifically, the study raised concerns about how State could best coordinate the 2010 contract with the 2009 contract without sufficient information about Contractor 1’s design plans, which were still under development. The study noted that effects could be severe for apartment buildings 2 and 3 in the 2010 contract if progress on the 2009 contract was delayed. Other major risks included the following:\nThe 2009 contract might not provide adequate site utilities for the facilities in the 2010 contract, as the 2009 design was still under development.\nSite areas that State planned to acquire—such as the adjacent Afghan Ministries of Public Health and Defense sites—might not be available in time, or at all, to enable construction to proceed as planned.\nThere might be insufficient space for two contractors to stage construction concurrently.\nOn-going physical security threats in a conflict environment.\nThe consultant recommended key risk mitigation actions, which State did not act on, that aligned with the recommendations for cost containment strategies related to the two contracts:\nFacilitate greater project coordination between the 2009 contract and planned 2010 contract; the consultant recognized that implementing the recommendation might require delaying the 2010 contract award to 2011.\nDivide the 2010 contract into two separate contracts to effectively defer award of apartments 2 and 3 so that if the 2009 contract was delayed, the 2010 contract would not also be delayed due to the tight sequencing of construction.\nOne State project official indicated that, given concerns about security in Kabul and pressure to get permanent, hardened facilities built as soon as possible, State was not going to act on any recommendation that would delay getting the contracts awarded and the facilities built. Further, a senior State management official acknowledged that State did not fully follow its cost and risk policies, in part because of the urgency of the embassy’s facility needs, the security environment, and challenges in supporting the surge in embassy staffing that was occurring.to this official, had the cost containment and risk assessment study recommendations been more fully considered by senior management, there might have been a decision to delay award of the 2010 contract, which would have slowed efforts to provide facilities as quickly as possible. He also noted that budget pressures existed to get funding committed, contracts awarded, and projects started. He stated that OBO as an organization did the best it could, given the challenging circumstances. As noted in our July 2014 report, several risks eventually materialized, such as the loss of the Afghan Ministry of Health site and insufficient space that interfered with the sequencing of construction. These factors contributed to increased construction cost and extended schedule.", "Since 2002, State has spent over $100 million to construct temporary facilities on-compound in Kabul, and the post will likely continue to use some of those temporary facilities. Prior to building additional temporary facilities on the east compound, State informed Congress of its concerns about threats posed from incoming weapons fire and indicated that overhead protection was required to protect staff in existing temporary facilities on compound. However, while State has security standards for its facilities, it does not have security standards specifically tailored to temporary facility construction. As a result, State inconsistently applied alternative security measures that were insufficient and differed for temporary offices and housing. State subsequently took corrective action through contract modifications that increased the project cost and extended the schedule of the overall construction project.", "Since 2002, State has spent over $100 million to construct temporary facilities on the embassy compound to accommodate evolving staffing needs and provide temporary office and housing space as permanent facilities are built. As of February 2015, temporary facilities on the embassy compound provided nearly 1,100 desks and 760 beds.\nOBO building guidance from 2009 states that “temporary facilities” are facilities that will be occupied for no more than 5 years or until a permanent building is constructed, whichever is sooner. The guidance also indicates that temporary facilities include, but are not limited to, containerized housing/office units, modular units, modified shipping containers, and trailers.\nMost of the embassy’s temporary facilities are located on the east compound. Some of the earliest temporary facilities were built to provide office and housing space for USAID and are more than 10 years old.\nMore recent temporary office and housing facilities were built in 2011—as part of the current embassy construction—to accommodate the staffing surge that began in 2009 and to provide temporary space while permanent facilities were constructed. Those temporary facilities were built under the 2009 contract. Additionally, in 2013, State constructed additional temporary housing—built by Contractor 2—on the 6.17 site. Figure 7 shows some of the temporary facilities that the post has used to meet interim space needs.\nState intends to demolish the older USAID temporary offices and some temporary housing built in 2011 on the east compound to build permanent apartment buildings 2 and 3. According to OBO officials, State has not finalized which temporary housing facilities will be demolished and which will remain. As a result, 5 two-story temporary office buildings and an estimated 12 to 17 multiunit temporary housing structures will likely remain at the completion of the current project.\nWhile State has not made a final determination on which temporary facilities will be demolished or repurposed for other functions (such as for use by support service contractors), consist of over a third of available desks and beds on-compound after current construction is completed in fall 2017.\nTemporary office facilities that are to remain can provide space for 875 desks. By comparison, permanent office facilities (existing and newly constructed) in fall 2017 will provide 1,487 desks. That is, temporary offices will continue to provide 37 percent of the 2,362 available desks on-compound in fall 2017.\nThe number of temporary housing facilities that are to remain has not been finalized. The number of beds that are likely to remain within the temporary housing facilities will range from approximately 472 (if 12 housing facilities remain) to 640 beds (if 17 housing facilities remain.) Given this range, and the 819 permanent beds to be provided within permanent apartment facilities (existing and newly constructed) upon construction completion, temporary housing will continue to provide between 37 and 44 percent of the available beds on-compound.\nState officials report that some of the existing temporary offices may be converted to temporary housing space so that State can rehabilitate and upgrade existing staff apartment buildings in the future.\nTable 3 summarizes the numbers of desks and beds located in temporary and permanent facilities as of February 2015 and those likely to remain upon completion of the current construction project, currently estimated for fall 2017.\nState planning documents, as well as post and OBO officials, identify a continued need for some of the temporary facilities following completion of the permanent facilities in 2017. At that time, all temporary facilities on- compound will be nearly 5 years old or more, and a smaller subset on the west compound will be more than 10 years old. State officials indicated some may be used by State contractors that will provide support services following the U.S. military’s drawdown. Some facilities could also be used to relocate some of the Kabul Embassy Security Guard Force functions onto the compound. Further, State plans to invest at least $124 million in further investments in some of the east compound temporary facilities that are to remain.\nSome of those additional investments would correct what State reports as deficiencies in the temporary facilities and provide upgrades to electrical, sewer, and water systems.", "", "State has recognized the need for an established level of security protection for temporary facilities. When State requested funding to construct apartment building 1 in its fiscal year 2008 Supplemental Appropriations Justification, it reported to Congress that while some employees enjoyed the benefit of 146 permanent, hardened apartments, all other employees lived in temporary housing facilities. The 2008 justification also communicated State’s concerns about threats posed to temporary facilities from potential incoming weapons fire—amid increasing attacks around Kabul by the Taliban and al-Qaeda—and indicated that overhead protection was required to protect staff in the existing temporary facilities on-compound, such as the USAID temporary offices. State reiterated its concerns about the security of Kabul temporary facilities and threats posed to those facilities in its fiscal year 2009 Congressional Budget Justification when it requested additional funding for the current project. Also, State security standards in 2009 indicated physical housing constructed as an integral part of or adjoining the chancery (i.e., office building) should be constructed to meet chancery physical security standards.measures include features such as forced entry protection and ballistic resistance.\nExamples of some physical security However, according to DS officials, State does not have a set of minimum security standards specifically for temporary facilities it constructs. State has physical security standards governing construction of offices and housing that State seeks to meet regardless of whether a facility is permanent or temporary. For practical purposes, DS officials stated that State’s physical security standards governing new construction— regardless of whether a facility is permanent or temporary—are standards that only permanent construction can meet. temporary facilities—unlike newly constructed permanent facilities— cannot be constructed to meet all State’s security standards, State has the discretion to grant exceptions from those standards. To the extent that security criteria cannot be met, mitigating solutions (i.e., alternative security measures) must be developed in writing and approved by DS in advance of constructing new facilities.\nTemporary facilities cannot meet State security standards because the construction materials and methods used in building a temporary facility are different from those used in building a permanent facility. For example, wood or metal wall systems may be used— rather than concrete—in constructing temporary facility structures.\nIn the absence of minimal security standards (or guidance) to guide planning for temporary facility construction, State inconsistently applied alternative security measures, resulting in insufficient and different levels of security between temporary offices and housing. When awarding the 2009 contract, State did not specify that overhead protection was required for either the temporary housing or temporary offices, even though State had previously expressed to Congress concerns about the threat posed from incoming weapons fire in its fiscal year 2008 justification. The only security protection measure specified in the 2009 contract for the temporary housing was shatter-resistant window film. By comparison, State specified temporary offices were to receive forced entry and ballistic protection. DS officials we spoke with indicated that staff living on- compound should receive the same level of protection in their housing as in their offices.\nOBO and DS did not finalize the security measures for the temporary facilities before State’s award of the 2009 contract, contributing to cost increases and schedule extensions. In December 2009—3 months after award of the September 2009 construction contract—the two bureaus were still seeking to reach agreement on the security measures for temporary facilities. At that time, in a memorandum to OBO, DS stated that the physical security requirements for the new temporary facilities should comply with State’s physical security standards to as great an extent as feasible and that the temporary facilities should be designed and constructed to provide forced entry and ballistic protection as required for any other new construction.", "After awarding the 2009 contract, State had to modify contract requirements to address the insufficient and different security requirements for the temporary housing and offices, which added cost and extended the project schedule to address this disparity. State likely paid more than it would have had the security requirements been included in the original contract requirements. This is, in part, because this work was not subject to competition, as was the original contract, which can drive down price.contract to address additional security requirements led to increased cost and stated that conducting such work after the fact was difficult in limited space on an active compound.\nState officials agreed that modifying the State modified the 2009 contract in December 2009 to provide some overhead protection for all temporary offices and housing. Those changes contributed, in part, to the increased costs and extended schedule of the 2009 contract. In 2013, State further modified the 2010 contract, at a cost of $8.2 million, to develop a design to provide additional security protective measures for the temporary housing that had been constructed as part of the 2009 contract.sidewall barriers to increase the physical security protection of the temporary housing and to be more consistent with protection afforded the temporary offices.\nDS also has installed some concrete Several DS and OBO officials reported that State needs documented minimal security standards for temporary facilities in a conflict environment, and some of those officials identified “expeditionary” standards used by DOD as an example of such standards. OBO officials also commented that State only undertook the building of temporary expeditionary structures on a large scale beginning in 2010. One OBO facility engineer indicated State should study its experience managing construction in conflict environments and apply lessons learned based on experience in locations such as Afghanistan and Iraq. One OBO security engineer indicated that State would have been better able to address the temporary facility security needs in Kabul if State had had clearer standards (or guidance) for construction of such facilities. In addition, some DS management officials and project staff indicated that while State needs minimal standards to guide the construction of temporary facilities, State would still need to tailor physical security measures—such as increasing security wall heights or installing guard towers and bunkers—to specific site threats and as new threats evolve. Some DS officials we spoke with indicated that State could examine DOD’s building design criteria for temporary facilities and standardized designs for such facilities—in addition to examining DOD’s minimum security standards—as a possible model for improving delivery of such facilities.have been both security and design challenges in constructing temporary facilities in Kabul—as well as elsewhere—and opportunities to learn from those challenges and the need for making any changes to standards or developing guidance could be examined by State’s security standards committee.", "State has taken some actions that may help avoid some of the problems it encountered in constructing temporary facilities on-compound. In 2011, State awarded task order contracts to multiple firms to design and provide State with temporary, modular, containerized housing and office units (though not hardened) when tasked. This may help reduce the time it takes—from a contracting perspective—to procure such temporary facilities in the future.\nIn 2012, State also worked with the U.S. Army to develop a conceptual, standardized design for a Hardened Alternative Trailer System (hardened trailers) that a DS official stated provides an improved level of physical security protection, although not the level required for a conflict location such as Kabul, where rockets and mortars pose threats. According to DS officials, hardened trailers could be required as part of State’s containerized housing and office unit task orders. One State official identified a commercial off-the-shelf, modular protective trailer that State could consider using. One OBO official indicated this off-the-shelf solution is used by at least one U.S. ally in Afghanistan. According to product information provided by this official, it can provide protection against rockets and mortars.\nState officials stated that the challenges in constructing temporary facilities in environments such as Kabul have led DS and OBO to work together to explore physical security measure “solutions”—such as overhead protective cover and sidewall systems—that could provide more consistency in future temporary construction. They further said that these solutions would also allow other security measures—such as increasing the heights of perimeter walls or providing bunkers—to be tailored to site needs and threats. According to these officials, the temporary housing constructed in 2013 on the 6.17 site reflects some improvements State has made in constructing temporary facilities in conflict environments and could inform the development of minimal standards, guidance, or procedures to inform planning and construction of temporary facilities in the future.", "State officials indicate that additional capital construction investments are needed to address interim and future facility needs of the U.S. embassy in Kabul, both on- and off-compound. State stakeholders in Washington and at the post are working to identify, prioritize, and address the post’s facility needs through various coordination meetings and working groups. However, this effort lacks a strategic facilities planning approach, as recommended by industry standards. Without such a plan, projects may have been addressed inefficiently. Additionally, while OBO formally assigns responsibility for post-specific strategic facilities planning, OBO lacks a policy governing implementation of such planning. Without a strategic facilities plan for the embassy—supported by a policy to guide its development, content, and approval—future progress in meeting the embassy’s facility needs will likely continue to be difficult in a location that is already challenging.", "State has made or plans to make approximately $2.17 billion in infrastructure investments in Kabul. Since the embassy reopened in 2002, the dynamic and unpredictable operating environment of Afghanistan has produced changing facility needs that have continually outpaced existing capabilities at the post. This has been due to various factors such as policy and program changes, staffing fluctuations, and changes in the security environment. During this time, the post has used a variety of off- compound facilities to meet some needs that could not be met on- compound. Key facilities include Camps Alvarado, Eggers, Seitz, and Sullivan, which, as of March 2015, represent a total State investment of almost $731.4 million. In addition, State plans to use $394.9 million from its Embassy Security, Construction, and Maintenance account for additional construction to address other unmet post facility needs in fiscal year 2015, the majority of which would be used to fund facility upgrades at Camp Alvarado. State is also seeking at least $124 million in fiscal year 2016 for further facility investments, such as upgrading the remaining temporary housing. State is also planning for further potential investments in 2017, such as constructing the parking facilities that State had to remove from the current construction project.\nThe post’s current facility needs stem primarily from changing circumstances inherent to the dynamic operating environment in Afghanistan. For example, when the Afghan Ministry of Public Health site became unavailable for construction in spring 2011, OBO was forced to remove the parking garage, motor pool office, vehicle maintenance facility, and fuel point from the current project. Although the post has a temporary vehicle maintenance facility and fuel point on-compound, it is located where apartment buildings 2 and 3 will be built and must be demolished. State has explored interim solutions to provide a temporary vehicle maintenance facility at several off-compound sites, but a permanent location for the vehicle maintenance facility and other needed motor pool facilities has yet to be identified.\nChanges in the security environment in Kabul have also affected post needs. For example, changing security threats, including attacks against the compound in September 2011, led DS to request several compound security upgrades that as of March 2015 were still being finalized. In addition, security concerns were a primary factor in DS and the post’s acquisition of the Camp Seitz and Camp Eggers properties, as this would allow the relocation of both the Kabul Embassy Guard Force and the Protective Security Detail (movement protection) Guard forces to sites closer to the embassy.\nThe withdrawal of the U.S. military from Afghanistan has also produced new needs for the post, as certain support services formerly provided by DOD are eliminated. For example, this has driven recent post requests for a medical trauma facility and helicopter landing zone, as well as past and future planned upgrades at Camp Alvarado, the post’s air transport hub. In addition, as of March 2015, State continued to develop its Afghanistan Life Support Services (ALiSS) contract, with which it intends to replace support services such as food, water, fuel, medical, fire protection, and miscellaneous support services previously provided by DOD. This transition will also require further utility and infrastructure upgrades on- compound.\nAccording to State officials, this transition also presents a housing challenge on- and off-compound, depending upon the size of the DOD Office of Security Cooperation to be housed on-compound, as well as the potential ALiSS contractor footprint in Kabul. This problem will be exacerbated when some of the temporary housing on the east compound is demolished to make way for apartment buildings 2 and 3. State facilities and management officials at the post noted that the future needs of the embassy will likely exceed the available space on-compound and will require prioritization of needs as well as high-level policy and management decisions on staffing presence.\nState stakeholders in Washington and at the post are working to identify, prioritize, and address these facility needs through various coordination meetings and working groups. For example, according to State officials, representatives from the post, DS, OBO, Office of the Under Secretary for Management, SCA, SRAP, Bureau of Budget and Planning, Office of Medical Services, and Office of the Legal Adviser meet weekly via video teleconference to discuss the status of all ongoing construction projects in Kabul. There are various working groups for specific issues, such as the medical working group, which meets monthly. According to State officials, DS and OBO have begun a regular meeting on DS-specific projects in Kabul. There are two weekly management calls with the post to review progress and a bi-weekly meeting with DOD to discuss the future DOD Security Cooperation Office on-compound. Construction issues are also discussed at a weekly executive steering group meeting.", "", "State does not have a strategic facilities plan for Kabul that documents current and future embassy needs, comprehensively outlines existing facilities, analyzes gaps, provides projected costs, and documents decisions made. Lack of such a plan has inhibited coordination and undermined the continuity necessary to address emergent needs at the Kabul embassy.\nInternational Facility Management Association (IFMA), GAO, and OMB guidance recommend that an organization view all real property asset investments as a single portfolio with strategic linkages when determining the right mix of projects to undertake. IFMA describes a strategic facility plan as a 2- to 5-year facilities plan encompassing an entire portfolio of owned and/or leased properties that sets strategic facility goals based on the organization’s strategic objectives. It contains a needs statement (i.e., mission need), analysis of all real property assets and their condition (owned and leased), analysis of gaps between needs and current asset capabilities, recommendations for new spaces or buildings, and facility cost projections. IFMA also indicates the plan should document findings to include expected timelines for implementation but allow flexibility for updates, as appropriate. Similarly, GAO and OMB capital planning guidance emphasize the importance of identifying current capabilities of real property assets, determining gaps between current assets and needed capabilities, deciding how best to meet the gap by identifying and evaluating alternative approaches, documenting decisions, and making updates as needed.", "State officials responsible for embassy management, facilities, security, and construction all cited the lack of an overarching plan as an obstacle to coordination intended to address emergent post needs. According to State officials in Kabul and Washington, coordination to address the Kabul embassy’s future needs is particularly difficult due to the large number of stakeholders in Kabul and in Washington. Additionally, the constant personnel turnover caused by the 1-year tours served by most management, facilities, and security staff in Kabul results in lack of continuity in decision making. As far back as January 2006, the State Office of Inspector General also identified “the near total lack of institutional memory” stemming from the lack of staff continuity and a “never-ending” learning curve as the most serious impediment to good executive direction at the U.S. embassy in Kabul.\nState officials in Kabul noted the growing number and frequency of coordination meetings and teleconferences intended to address the embassy’s future facility needs. However, they also reported that communication at such meetings can be difficult as parties seek to reconcile planning differences on proposed projects. Without a comprehensive plan that provides a strategic framework to document mission needs, catalog existing facilities, analyze gaps, provide projected costs, and document recommendations, the competing proposals of the post’s many stakeholders are difficult to manage, prioritize, and reconcile. As a result, State officials in Kabul said that these meetings suffer from no common vision and a lack of decision making. Consequently, State has been challenged to efficiently address changing embassy needs in several instances on- and off-compound. For example: Interference with on-compound construction—OBO officials in Kabul expressed frustration that proposals for new projects would often conflict with plans previously agreed to by previous post management staff. For example, during our fieldwork, post management proposed to locate a helicopter landing zone near the embassy warehouse. However, according to OBO officials on-site, they had arranged with the previous management team to reserve that space as a staging area for the contractor to build the warehouse expansion. When asked about this, post management officials stated that they had no continuity document that informed them of this earlier decision.\nOn-compound physical security upgrades—DS first requested changes to the embassy compound’s security perimeter in December 2010 and added more requirements in response to attacks against the compound in September 2011. In February 2013, the post urged OBO to provide a project schedule and expedite the upgrades. However, that was not done and as of March 2015 OBO and DS had not reached agreement on schedules and costs for some security upgrade projects.\nCamp Seitz—In 2013, DS and post management decided to relocate the Kabul Embassy Guard Force from Camp Sullivan and the Protective Security Detail (movement protection) Guard forces from another camp to sites closer to the embassy compound due to security concerns. To facilitate this, DS initiated the acquisition of the Camp Seitz site through OBO. However, according to State officials, DS then began construction of temporary housing at Camp Seitz without submitting the design to OBO for review or applying for a building permit. After OBO became aware of the completed construction, it identified fire safety deficiencies that DS had to correct.\nCamp Sullivan, Camp Eggers, Qasemi Lot Vehicle Maintenance Facility—As part of the security contractor relocation, post management and DS proposed removing several support facilities, including a vehicle maintenance facility, from an ongoing construction project at Camp Sullivan and transferring them to Camp Eggers. Post management and DS officials stated that once the temporary vehicle maintenance facility on-compound is demolished to make way for apartment buildings 2 and 3, it would be better for security and logistics to build the replacement vehicle maintenance facility close to the compound rather than at Camp Sullivan. However, OBO proceeded to build the Sullivan vehicle maintenance facility because negotiations for the 30 leases required at Camp Eggers were not complete, and OBO was concerned that if an alternative vehicle maintenance facility was not in place, construction of apartments 2 and 3 could be delayed and their costs increased. Discussions continued among OBO, DS, and post management, and the proposed vehicle maintenance facility was shifted to Qasemi Lot, a site adjacent to Camp Seitz. OBO decided not to descope the Camp Sullivan vehicle maintenance facility until plans for a replacement facility at Qasemi Lot were approved by OBO and DS had awarded a construction contract with a scheduled completion date prior to the demolition date for the existing vehicle maintenance facility on- compound. As a result, State is funding two new, temporary vehicle maintenance facilities—one at Camp Sullivan (built by OBO) and one at Qasemi Lot (to be built by DS).\nA strategic facilities plan could have facilitated coordination in the above cases by providing a common vision of embassy needs, comprehensively cataloging existing assets and alternatives considered for meeting those needs, documenting expected timelines and projected costs, and facilitating continuity by documenting decisions made, while allowing for updates.", "When asked about strategic facilities planning, State officials provided a series of planning coordination tools as alternatives. These included OBO’s 2010 site master plan for the embassy compound, a 2014 draft update of that master plan, a 2014 interactive site plan (web-browser based) showing the phased development of the compound, and an Afghanistan project plan used by State’s facilities working group for Kabul. Although these tools did perform some coordination functions, they do not substitute for a strategic facilities plan. According to IFMA, a strategic facility plan contains a needs statement, analysis of all real property assets (owned and leased), their existing condition, analysis of gaps between needs and current capabilities, recommendations for new spaces or buildings, and facility cost projections.\nOBO’s use of the term “master plan” created some false expectations among non-OBO stakeholders in Kabul and Washington. For example, officials from post management and DS believed the 2014 master plan update would comprehensively identify the post’s needs and take into account all facilities—to include off-compound projects—when determining capabilities and alternatives for meeting those needs. However, according to IFMA, a master plan in this context is limited to illustrating the physical layout of buildings on only one specific site and may portray aesthetics of buildings and grounds, as well as construction phasing and timing for that site.\nWe found that OBO’s 2010 master plan appears to meet certain IFMA criteria for a site master plan, rather than a strategic facility plan for a portfolio of real property assets. For example, it showed how the unclassified office annex would need to be completed before the temporary USAID building could be demolished to allow apartments 2 and 3 to be built. It also showed the construction of parking facilities on the Afghan Ministry of Public Health site, which were removed from the current project in 2011. It did not address the use and future development of State’s off-compound properties, or the associated elements of a strategic facilities plan.\nIn January 2014, OBO’s Office of Project Development and Coordination (PDC) began work on an update to the 2010 master plan for the embassy compound (i.e., the 2014 Master Plan Update). The scope for this update was limited to developing a physical site plan that could incorporate the elements that OBO had planned to construct on the Afghan Ministry of Public Health site (i.e., the parking facilities) somewhere on the embassy compound. The 2014 Master Plan Update listed known needs of the embassy and broadly suggested some might be incorporated onto the east compound or the 6.17 site. When OBO presented the 2014 Master Plan Update to the post in September 2014, post officials told OBO that the site plan did not address all of the embassy’s needs. In addition, they told us that limited space on-compound requires the continued use of off- compound facilities. OBO continues to work with stakeholders in Kabul and in Washington to find ways to incorporate as many post needs on- compound as possible. While the 2014 Master Plan Update may eventually be used to inform a series of new construction projects for the compound, it remains a compound-specific document and does not address how embassy needs will be met at off-compound facilities in the interim. According to State officials, the future use of off-compound facilities is discussed routinely during stakeholder teleconferences and working groups established for Kabul embassy planning. After we inquired about the limited nature of OBO’s 2014 Master Plan Update, SCA officials stated that going forward they need a compound “master plan” and a series of “addendums” that outline future plans for off- compound sites and facilities.\nAdditionally, SCA officials in Washington presented an Afghanistan Project Plan to us, which they identified as the primary coordination and continuity document for project discussions involving off-compound facilities at the various Kabul coordination meetings, such as the Afghan Facilities Working Group. Our review of the Afghanistan Project Plan found it to be useful for tracking the status of active construction projects in Kabul and determining next steps at the project level. However, it did not catalog all existing real property assets, express interim or long-term embassy needs, or make recommendations on fulfilling those needs. Developed by SCA’s contractor in October 2014, the Afghanistan Project Plan instead depicts a broad listing of ongoing State construction projects both on- and off-compound. Each project contains sub-tasks with deadlines, progress to completion, and notes on project status. For example, SCA officials noted the lack of progress on the trauma center to be built at Camp Seitz by DS due to physical design challenges.\nFinally, OBO officials provided us with a 2014 Interactive Site Plan tool (web-browser based) that officials indicated OBO developed with the intent to provide the post with a continuity tool for the construction planned on-compound. The tool contained numerous interactive three- dimensional diagrams of the embassy compound with background information, construction timelines and phasing, preliminary space usage plans, and site utility information. Although the tool focused solely on the embassy compound, OBO officials stated that it was meant to be easily updated as circumstances demand and could have been expanded to included off-compound properties. According to OBO officials, they provided this tool to post management in February 2014 with the intent that it would be uploaded to the embassy’s internal website, where it could be viewed and updated by stakeholders. However, OBO officials with access to the post’s internal website reported the embassy never used the tool and OBO is not planning to make any further updates to it. When asked about continuity documents, post management officials directed us solely to the 2010 master plan and did not mention this interactive tool.", "According to State policy, OBO’s Office of Master Planning and Evaluations (MPE) is responsible for directing and preparing both master plans and long-range facilities plans for posts abroad, not PDC, which is OBO’s project coordination and management office. However, MPE has not been involved in PDC’s on-compound master plan update or State’s stakeholder meetings on embassy development.\nOBO, Policy and Procedures Directive PPD 01, Long Range Facility Planning Program. These criteria included such things as significant staffing changes, need to collocate State and other agencies, political changes (e.g., post openings/closings,) security issues, and posts where a significant investment was to be made. of individual projects. However, OBO produced no long-range facilities plans after 2008.\nIn December 2013, OBO rescinded its long-range facilities plans policy and procedures directive based on an explanation that the office responsible for that function no longer existed and that the function had been replaced by master planning. what master planning entailed within OBO, nor did it explain and justify how master planning could substitute for strategic facilities planning. According to OBO officials, master planning is defined and conducted via stakeholder meetings and generally accepted practices within the organization. However, OBO was unable to provide any current policy governing either post strategic facilities planning or site master planning. A senior OBO official acknowledged that MPE had generally not conducted strategic facilities planning in the past few years. Without policies that clearly define strategic facilities planning and master planning, as well as outline the content and methods to conduct such planning, it will be difficult for OBO to fulfill these responsibilities.", "According to OBO policy, a policy and procedures directive may be rescinded when replaced or superseded by a new directive or at the request of the proponent office. The responsible office must sufficiently explain and justify why the directive is no longer needed. schedule reflects the value of State’s existing risk management process for construction. As State pursues further construction to address the facility needs of the U.S. embassy in Kabul, it is imperative that it follow its current policy to contain costs and manage risk where possible.\nFuture State construction in Kabul and other high-threat posts will likely entail the continued use of temporary office or housing facilities, especially in conflict areas. However, without clear standards or guidance detailing minimal physical security measures for the temporary facilities it constructs, State is at risk of encountering security design, cost, and schedule extensions similar to what has already occurred in Kabul. While State would still require sufficient flexibility to tailor physical security protection measures to the specific and possibly changing threats encountered at different posts, State should consider establishing clear minimal standards or guidance for physical security on temporary facilities, as this could yield more consistent application of security measures at posts, more efficient procurement, and potentially contain cost increases and schedule extensions.\nFurthermore, it is clear that the changing facility needs of the Kabul embassy will require a combination of permanent and temporary construction on- and off-compound. Although State uses various coordination mechanisms to manage this effort, coordination would be further strengthened by the development of a strategic facilities plan that catalogs existing facilities, identifies embassy needs and gaps, and documents decisions made. Such a plan for Kabul would need to be tailored to the specific context of the post and would likely go through repeated updates. However, such a common framework would strengthen existing coordination and facilitate greater continuity of decision-making.\nWhile past OBO policy recognized the value of such strategic planning, it was rescinded in December 2013. No formal policy on its stated substitute—master planning—was established, even though State continues to assign responsibility for both strategic facilities planning and master planning to OBO. By establishing policies that clearly define strategic facilities planning and master planning, as well as explain the content and methods to conduct such planning, OBO can better ensure the usefulness of any such efforts undertaken in Kabul or in other posts abroad.", "To maintain State’s adherence to construction risk management policy, guide future construction of temporary facilities, strengthen coordination efforts to address facility needs of the U.S. embassy in Kabul, and clarify strategic planning policy, we recommend the Secretary of State take the following four actions:\nEnsure existing cost containment and risk assessment policies are followed in future Kabul construction projects.\nConsider establishing minimum security standards or other guidance for the construction of temporary structures, especially those used in conflict environments.\nDevelop a Kabul strategic facilities plan. Such a plan should comprehensively outline existing facilities, identify embassy needs, establish gaps between facilities and needs, and document decisions on meeting those needs.\nEstablish policy and procedure directives governing the definition, content, and conduct of post-wide strategic facilities planning and master planning.", "We provided a draft of this report to State for comment. State provided written comments that are reproduced in appendix II. State concurred with our recommendation to ensure existing cost containment and risk assessment policies are followed in future Kabul construction projects, stating that it will better administer cost containment and risk assessment by adhering to relevant OBO policies. State also concurred with our recommendation to develop a Kabul strategic facilities plan. According to State, OBO will continue to work with post and State stakeholders to formalize current and future embassy needs into a plan that outlines existing facilities, identifies embassy needs, establishes gaps between facilities and needs, and documents decisions on meeting those needs. Finally, State concurred with our recommendation to establish policy and procedure directives governing the definition, content, and conduct of post-wide strategic facilities planning and master planning. According to State, OBO is currently developing a policy and procedures directive that will outline the new master planning program and post-wide strategic facilities planning.\nState partially concurred with our recommendation to consider establishing minimum security standards or other guidance for the construction of temporary structures, especially those used in conflict environments. State does not support separate standards for temporary structures, reiterating that it aims to meet Overseas Security Policy Board security standards in all environments. Where this is not possible, State asserts it works to meet the intent of these standards through alternative security mitigation measures via its “waivers and exceptions” process. However, State does believe that there is value in documenting standard operating procedures and best practices associated with the deployment and protection of temporary structures in high-threat and conflict environments. State noted that while such documentation would not constitute security standards and would not circumvent risk management integral to its waivers and exceptions process, it would provide templates from which to base the design of future projects in exigent environments. Should State produce such documentation, we believe that this could meet the intent of our recommendation.\nState also provided technical comments, which were incorporated into the report as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of State, and other interested parties. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact either Michael J. Courts at (202) 512-8980 or at [email protected] or David J. Wise at (202) 512-5731 or at [email protected]. Contact points for our Office of Congressional Relations and Office of Public Affairs can be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.", "We reviewed State Department (State) construction efforts at the U.S. embassy in Kabul under the authority of the Comptroller General to conduct evaluations on GAO’s initiative because of broad congressional interest in the oversight and accountability of U.S. funds used in Afghanistan. In the report we examine (1) the extent to which construction cost and schedule have changed and why, (2) State’s use of temporary facilities on-compound, and (3) State’s planning for projected embassy facility needs.\nTo conduct this review, we obtained information from agency planning, funding, and reporting documents and interviewed officials from State’s Bureau of Overseas Building Operations (OBO); Bureau of Diplomatic Security (DS); Office of Acquisitions Management; Bureau of South and Central Asian Affairs (SCA); Office of the Special Representative for Afghanistan and Pakistan (SRAP); and Office of Management Policy, Rightsizing, and Innovation. Within OBO, we met with officials from Construction Management, Design and Engineering, Master Planning and Evaluations, Project Development and Coordination, Real Property Leasing, Security Management, Strategic Planning, and Financial Management. Within DS, we met with officials from High Threat Programs, Overseas Protective Operations, and Physical Security Programs.\nIn February 2014, we traveled to Kabul, Afghanistan, to observe construction progress and meet with U.S. embassy officials responsible for construction, facilities management, post management, and security. We also met with contractor officials in Kabul and in the United States. In addition, our Kabul Field Office conducted follow-up meetings with officials in Kabul and their successors through December 2014. We incorporated audit work from our February trip and relevant material gathered for our July 2014 report into this audit. In addition, we obtained State funding information on all such projects over $1 million in Kabul. We determined that these funding data were sufficiently reliable for the purposes of this report.\nTo examine the extent to which construction cost and schedule have changed and why, we collected and analyzed State and contractor documents and met with relevant officials. We analyzed contract files for the fiscal years 2009 and 2010 Kabul construction projects, including requests for proposals, site surveys, project authorization documents, design drawings, contract modifications, cost estimates, approved schedules, and other contract documentation. We also examined OBO and other State planning and oversight documents, such as space requirements programs, trip reports, rightsizing reviews, site plans, OBO briefings to State management, and progress reports. In addition, we examined Office of Management and Budget and State policy and procedures governing construction planning and implementation, including those pertaining to value engineering (cost containment) and risk assessment. We also met with relevant officials in OBO, DS, and SCA, and in Kabul to discuss the original planning of the 2009 and 2010 contracts, as well as current construction progress.\nTo examine State’s use of temporary facilities at the embassy, we inspected the temporary offices and housing currently on-compound and reviewed related State planning, design, construction, and contract documents for the temporary facilities within the 2009 contract. We also reviewed State budget justifications to Congress related to State’s use of temporary facilities and security concerns about those facilities. In addition, we examined State physical security and building standards for State-built facilities, as well as Department of Defense security and building standards for temporary facilities. We also obtained funding information from State on what it has allocated to the construction of temporary facilities in Kabul since 2002. In addition, we interviewed embassy management officials, OBO’s on-site project director for construction, and OBO facility managers in Kabul. We also met with OBO, DS, and SCA officials in Washington to discuss State’s construction, use, and plans for temporary facilities.\nTo examine State’s planning for projected embassy facility needs, we analyzed State coordination and planning documents, as well as funding proposals for new construction in Kabul. In addition, we reviewed State policy regarding master planning and strategic facilities planning. We also consulted best practices for such planning established by the International Facility Management Association (IFMA), as well as GAO and Office of Management and Budget capital planning guidance.discuss changing post facility needs and the various coordination efforts to address those needs, we met with State officials from OBO, SCA, SRAP, and DS, as well as with post officials responsible for management, facilities, and security in Kabul.\nWe conducted this performance audit from July 2014 to May 2015 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.", "", "", "Michael J. Courts, (202) 512-8980 or [email protected] David J. Wise, (202) 512-5731 or [email protected].", "In addition to the contacts named above, Michael Armes (Assistant Director, Physical Infrastructure), Leslie Holen (Assistant Director, International Affairs and Trade), David Hancock, Eugene Beye, John Bauckman, Jacob Beier, Jon Fremont, and Marc Schwartz made key contributions to this report. Technical assistance was provided by Lynn Cothern, Kristine Hassinger, Ernie Jackson, Tina Cheng, and Gwyneth Woolwine." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 3, 3, 1, 2, 2, 3, 3, 3, 1, 2, 2, 3, 3, 3, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h3_title", "h3_full", "h3_full", "", "h0_full", "h0_full", "h0_full", "", "h0_full", "h0_title", "", "h0_full", "h2_title h1_title", "h2_full h1_full", "h1_title", "h1_full", "", "", "h2_title h3_title", "h3_full", "h2_title", "h2_full", "h2_full", "", "", "", "h2_full h1_full", "h3_full", "h3_full", "", "", "", "" ] }

{ "question": [ "Why have the cost and expected time increased for the Kabul embassy construction project?", "What data did GAO collect to support this?", "What caused such increases in cost and schedule?", "What does this suggest about the efficiency of State's future projects?", "What has State spent over $100 million on since 2002?", "What will the state of these facilities be upon completion?", "What issues did State's failure to apply alternative security measures cause?", "What issues could a continued failure to apply security measures cause in the future?", "What issues has State's lack of a strategic facilities plan caused?", "How does State's approach to addressing the embassy's facility needs conflict with industry standards?", "How was this demonstrated by State's construction of a guard facility in Kabul?", "What does State lack sufficient policy in?", "What does State plan to do to address future facility needs?", "Why might this prove difficult?", "What has the U.S. embassy in Kabul experienced since reopening in 2002?", "What steps did State take to respond to this increase in staffing?", "What changes did State make to these contracts since their creation?", "What is State's Bureau of Overseas Building Operations responsible for?", "What is the purpose of this report?" ], "summary": [ "Cost and schedule have increased for the Kabul embassy construction project, in part due to incomplete cost and risk assessment.", "Cost for the 2009 and 2010 contracts has increased by about 27 percent, from $625.4 million to $792.9 million, and is likely to increase further. Projected completion has been delayed over 3 years to fall 2017.", "The Department of State (State) did not follow its cost containment and risk assessment policies, resulting in lost opportunities to mitigate risks. These risks, such as delays in the sequencing of the two contracts, eventually materialized, increasing cost and extending schedule.", "Unless State follows its policy, it may be unable to avoid or mitigate risks to cost and schedule on future projects.", "Since 2002, State has built over $100 million in temporary buildings (intended for no more than 5 years' use) to meet space needs on-compound but has no security standards tailored to those facilities.", "On completing the project in 2017, all temporary facilities will be 5 to 10 years old, and their continued use is likely.", "Without security standards or other guidance to guide temporary facility construction in conflict environments, State inconsistently applied alternative security measures that resulted in insufficient and different levels of security for temporary offices and housing, as well as increased cost and extended schedules.", "Without temporary facility security standards or guidance, future construction in conflict environments could encounter similar problems.", "State's lack of a strategic facilities plan and policies governing such planning has led to coordination challenges in addressing the embassy's future facility needs.", "Industry standards cite the value of plans that comprehensively assess existing facilities, identify needs, and document decisions on meeting those needs.", "In Kabul, however, State constructed a guard facility without proper design review or applying for a building permit, leading to fire safety deficiencies that State corrected at extra cost.", "Finally, State formally assigns responsibility for strategic facilities planning but lacks policy that governs implementation of such planning.", "State intends to make additional facility investments to address future facility needs.", "Without a strategic facilities plan and policy to guide its development, coordination to address these needs will continue to be difficult.", "Since re-opening in 2002, the U.S. embassy in Kabul, Afghanistan, has experienced a dramatic increase in staffing, followed by a gradual drawdown.", "State has invested or plans to invest a total of $2.17 billion in U.S. facilities to address current and projected space needs. State awarded two contracts in 2009 and 2010 to construct additional on-compound housing and office facilities.", "State partially terminated one contract for the convenience of the U.S. government, and expanded the construction requirements of the second, affecting cost and schedule.", "State's Bureau of Overseas Building Operations is responsible for the planning, design, and construction of U.S. embassies.", "This report updates and expands upon GAO's previous work." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 0, 2, -1, 0, 0, 0, -1, 4, -1, 0, 1, -1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 4, 4, 4, 4, 5, 5, 5, 5, 5, 5, 0, 0, 0, 0, 0 ] }

{ "title": [ "Background", "The TPCC Does Not Report or Collect Information on How Resources Align with Priorities", "National Export Strategies Outline Priorities, but Do Not Identify Associated Resources", "The Budget Data the TPCC Collects Are Not Useful for Assessing Resource Allocations", "The TPCC Collects Some High- Level Budget Data", "Conclusion", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Comments from the Trade Promotion Coordinating Committee", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "Responsibility for designing and carrying out federal export promotion programs is widely dispersed. Numerous federal agencies have offices across the country and overseas and operate a wide variety of programs that are intended, at least in part, to assist U.S. companies in entering foreign markets or expanding their presence abroad. For example, agencies provide companies with information on market opportunities and help them connect with potential buyers abroad, provide access to export financing, and negotiate with other countries to lower trade barriers.\nThe dispersion of export promotion activities among numerous agencies led us to observe in a 1992 report that “funding for … agencies involved in export promotion is not made on the basis of an explicit government- wide strategy or set of priorities. Without an overall rationale it is unclear whether export promotion resources are being channeled into areas with the greatest potential return.” In 1992, Congress passed the Export Enhancement Act of 1992, which directed the President to establish the TPCC. The TPCC is chaired by the Secretary of Commerce, and its day- to-day operations are carried out by a secretariat that is housed in Commerce’s International Trade Administration. The TPCC has 20 members, including 7 core members. Oversight of these agencies is dispersed across many congressional committees. Table 1 identifies the authorizing and appropriating subcommittees with jurisdiction over the seven core TPCC agencies.\nWe have reviewed the TPCC’s operations on several occasions since its creation in 1992. We have found that the TPCC and its member agencies have improved coordination in several areas, but we also found shortcomings in the committee’s response to the budget-related portions of its mandate. In 2002, we observed that the Secretary of Commerce, as the chair of the TPCC, made recommendations to the President, through OMB, on selected export promotion budget matters on multiple occasions. However, with no authority to reallocate resources among member agencies and occasional agency resistance to its guidance, the TPCC provided limited direction over the use of export promotion resources in support of its strategies. We also noted that the TPCC had not used its National Export Strategies to examine how agencies’ resources aligned with their goals, and we recommended that the TPCC consistently do so. The TPCC agreed with our findings and recommendation. However, in 2006 we determined that the committee had not implemented our recommendation; we found that the committee’s annual strategies did not review agencies’ allocation of resources in relation to identified priorities. In 2009, we observed that the TPCC’s most recently published National Export Strategy continued to lack an overall review of agency resource allocations relative to government-wide priorities.\nExport promotion has recently been emphasized as a high priority for the federal government. In his 2010 Executive Order announcing the NEI, the President emphasized that creating jobs and sustainable economic growth in the United States was his top priority, and that increasing exports was a critical component of those efforts. He also laid out eight priority areas to be addressed through the NEI. OMB subsequently identified the NEI’s goal of doubling U.S. exports as one of 14 interim crosscutting priority goals under the GPRA Modernization Act. Additionally, as part of his 2013 and 2014 budget proposals, the President proposed consolidating six departments and agencies involved in export promotion into one new cabinet-level department.\nIn his directives regarding the NEI, the President established a new body, the Export Promotion Cabinet, to develop and implement the initiative. The Export Promotion Cabinet is coordinated by a White House official, has most of the same member agencies as the TPCC, and is to coordinate its efforts with the TPCC. Among other things, the President tasked the Export Promotion Cabinet to work with the TPCC to determine how resources should be allocated. In particular, a February 2012 Presidential Memorandum instructed the Export Promotion Cabinet, in consultation with the TPCC, to evaluate the current allocation of federal government resources, make recommendations to the Director of OMB for their more effective allocation, and propose a unified federal trade budget, consistent with the administration’s priorities, to the Director of OMB as part of the annual process for developing the President’s budget.", "", "The Export Enhancement Act states that the TPCC’s strategies should establish a set of priorities for federal export promotion activities and propose a unified federal trade promotion budget that supports the plan. Additionally, we have previously reported that one of the six characteristics of an effective interagency national strategy is that it identifies the resources needed to carry out the strategy. Specifically, an effective national strategy should address what it will cost, the sources and types of resources and investments needed, and where resources and investments should be targeted based on balancing risk reductions with costs.\nThe most recent National Export Strategies, published in 2011 and 2012, outline federal priorities for export promotion, but provide little information on member agencies’ resources for carrying out these priorities. Both strategies outline progress made toward the eight NEI priorities and identify specific areas federal agencies will focus on in the coming year. In fact, the 2011 strategy includes the NEI recommendation to “increase the budget for trade promotion infrastructure” as one of five critical recommendations on which TPCC agencies would focus. However, these strategies do not provide summary information on the total resources available for export promotion and do not discuss how resources are currently allocated across priorities. Without this information, decision makers lack a clear understanding of the total federal resources being dedicated to export promotion activities, and it is not possible to assess the appropriate levels or allocations of export promotion resources.\nThe 2011 and 2012 strategies contain very limited discussions on agencies’ export promotion resources, consisting only of a few bullets that broadly discuss agencies’ budget requests. For example, figure 1 reproduces in its entirety the section in the 2012 report titled “The Administration’s FY2013 Trade Promotion Budget.” The section includes three bullets relating to agencies’ requested export promotion budgets for 2013, but provides no context on the total federal export promotion budget or on the budgets of the individual agencies it discusses. The first bullet, for example, notes that the President’s budget proposed $30.3 million in additional funding for the U.S. and Foreign Commercial Service’s overseas export promotion activities. However, it does not indicate what the Commercial Service’s baseline budget is, whether the increase supports specific priorities laid out in the strategy, or whether resources could be shifted from existing Commerce activities, or from other agencies, to meet these needs. The remaining bullet points do not tie specific funding requests to individual agencies. The second bullet states that the fiscal year 2013 President’s budget seeks “support” for SBA’s Office of International Trade without stating what amount of funding, if any, SBA is requesting. The final bullet point simply states that five other core TPCC agencies seek a total increase of $19 million over 2012 funding levels.\nDespite the current emphasis on export promotion as a high-priority goal, the level of detail on agencies’ budgets presented in the TPCC’s National Export Strategies has decreased. During much of the 1990s, the TPCC provided trade promotion budget information by agency and by activity, noting as it did so that presenting meaningful information across agencies was difficult because of the variety of programs involved. The strategies provided in-depth tables on how agency resources were allocated, for example, the 1997 report included 44 pages of material on this topic. After 2000, the TPCC stopped reporting budget information in such depth. The National Export Strategies from 2002 through 2008 provided only a summary budget table that presented information on each agency’s total budget authority for export promotion activities. As already noted, the most recent reports have eliminated these summary budget tables. Figure 2 compares the budget information presented by the TPCC in 1996, 2004, and 2012.\nTPCC secretariat officials acknowledged that the amount of budget information presented in the National Export Strategies has declined and that the TPCC members currently place little emphasis on displaying or discussing agencies’ resources. They noted that changes in the political and budget environment over time have affected the TPCC’s processes. First, TPCC secretariat officials said that in the early 2000s, the TPCC shifted its focus away from resources in favor of efforts to improve the management of existing programs. For example, in 2003, a TPCC secretariat memo to member agencies stated that, given the budget environment, agencies should assume their budgets would be flat. The TPCC recommended that agencies look for opportunities to leverage resources through coordination or by sharing costs. Because the TPCC anticipated that members’ appropriations would not be increasing, secretariat officials stated that the TPCC largely stopped talking about or examining resources. Officials further noted that, while the NEI has generated enthusiasm for export promotion, the TPCC’s current focus remains on better managing and coordinating existing resources. Second, TPCC secretariat officials also stated that because final appropriations have not been passed until later in the fiscal year, it has been more difficult to collect up-to-date budget data. Finally, though GPRA sought to improve agency management and reporting processes, TPCC secretariat officials indicated that, as member agencies increasingly worked to comply with the law in 1999, it hindered their ability to do crosscutting analyses. Officials found that agencies focused on their own specific core priorities and on developing agency-specific performance plans, which complicated the TPCC’s ability to obtain and track export promotion budgets.", "", "The TPCC periodically collects summary data on agencies’ total budget authority for export promotion activities with OMB’s assistance. According to OMB staff, OMB asks agencies’ budget offices to self-identify their activities that relate to export promotion and compile a summary budget number. OMB resource management offices typically review the numbers provided by the agencies to ensure they are reasonable. Table 2 below reproduces the last table publicly released by the TPCC in its 2008 National Export Strategy, including its footnotes.\nAccording to OMB staff, OMB only compiles this information when requested by the TPCC, and the committee last requested this data in the spring of 2011. Because the TPCC opted not to make these data public in that year’s National Export Strategy, OMB staff did not fully review them. Therefore, OMB staff requested that we not publish the data collected in 2011. We nevertheless examined the more recent information the TPCC provided us, which included actual budget data for the same member agencies as shown in table 2 from fiscal years 1994 through 2010 and agencies’ requested budget for fiscal years 2011 and 2012. The TPCC used the same process to collect data in 2011 that it used for the 2008 National Export Strategy. Therefore, our discussion below, which identifies several significant issues impacting the reliability and usefulness of the data, focuses on the 2011 update but also generally applies to the data presented in table 2. According to TPCC secretariat officials, the committee has initiated efforts to further update this information, but officials have not indicated whether they plan to make it public as part of a future National Export Strategy.\nThe data the TPCC collects are not useful for assessing the allocation of export promotion resources. To be useful for assessing how agencies’ resources are allocated, data should, among other things, be consistent and sufficiently comprehensive for the intended purpose. Moreover, collaborating agencies would need to use compatible methods to track funding. Additionally, we have reported on the importance of agencies providing appropriate levels of detail in budgeting documents. For example, prior to the creation of the Department of Homeland Security, we noted that crosscutting funding data provided in an OMB annual report on combating terrorism had limited utility for decision makers, in part because it did not include data on obligations or on duplication in programs for combating terrorism. We identified several issues with the TPCC’s most recent data, from 2011, and determined that the data are neither consistent across agencies nor comprehensive enough to indicate how resources are allocated across priorities or the overall cost of carrying out the National Export Strategy.\nAgencies use different definitions: According to TPCC secretariat and OMB staff, each agency independently defines export promotion and self-identifies the activities to include in its export promotion budget. The TPCC’s data include few explanatory notes about how each agency’s budget was computed, making it difficult to compare numbers across agencies or understand what activities are included for each agency. In fact, TPCC secretariat officials were not always certain what each agency’s number represented. Because agencies use different definitions, there is no assurance that TPCC’s data treat similar activities consistently. For example, SBA, OPIC, and Ex-Im all provide some form of export financing, but the TPCC’s data for these agencies represent three different aspects of their budgets. SBA’s data show the administrative expenses for its Office of International Trade, which is responsible for its export loan programs. OPIC’s data capture the agency’s total impact on the federal budget but do not provide any indication of the costs of operating its financing programs. Ex-Im’s data show the appropriations for its Office of Inspector General, but do not include any information on the costs of operating its financing programs or the agency’s total impact on the federal budget.\nThe reasons for including or excluding agencies are not always clear: An example of the lack of clarity in how the TPCC treats member agencies is that its summary budget table does not include USAID, noting that it does not do so because the agency’s activities support trade promotion indirectly. However, the TPCC’s data include OPIC, which also focuses on international development and only indirectly supports exports. Moreover, the TPCC’s table continues to include other agencies, such as the Department of the Treasury, which do not directly fund trade promotion activities. Nonetheless, as we noted in 2006, portions of several National Export Strategies continued to highlight export promotion programs involving USAID. According to TPCC secretariat officials, member agencies decide whether or not they have export promotion programs and whether to provide resource data.\nThe data are not detailed enough to align with priorities: The TPCC’s summary budget table presents data at a very high level, with one number for each agency, and provides no information on specific activities or programs. Without greater detail, it is not possible to understand whether or how agency resources are aligned with the priorities laid out in the National Export Strategy and National Export Initiative. Some TPCC member agencies conduct activities in more than one priority area. For example, among other activities, Commerce supports U.S. business in conducting trade missions and also works to reduce barriers to trade, both of which are priority areas in the National Export Initiative. Among its many activities, USDA supports the goals of increasing exports by small and medium-sized enterprises and increasing export credit available to U.S. businesses. Because it only presents information at a high level, the TPCC’s table does not allow users to understand how federal resources are being allocated across these, or other, priority areas.\nThe data are not current: The TPCC’s data are not comprehensive because they do not include current information about agencies’ resources. The TPCC last updated its information in April 2011 and that summary budget table reflected agency budget requests for fiscal year 2012. The President released his fiscal year 2013 budget request in February 2012. Nonetheless, the latest data collected by the TPCC do not reflect fiscal year 2013 requests, nor do they show actual data for 2011, or estimates for 2012. Moreover, because the TPCC opted not to include the data in its National Export Strategy, OMB staff never fully vetted the data collected in 2011. Therefore, the most recent fully vetted data on federal export promotion resources are from 2008.\nBudget authority data does not fully reflect costs of all agencies’ programs: Finally, the TPCC’s use of total budget authority data provides an incomplete picture of the costs of some agencies’ programs. For example, OPIC is self-funded through receipts collected on its financing activities and has a net negative budget authority, meaning it returns money to the U.S. government. However, it does receive annual instructions from Congress on the amount of money it can spend on administrative and program expenses for its financing programs. While the TPCC’s use of total budget authority data may accurately represent one aspect of an agency’s impact on the overall federal budget allocated for export promotion, it is not sufficiently detailed to fully understand the agency’s contributions toward export promotion. For example, the TPCC’s number does not indicate the costs associated with operating OPIC’s financing programs or how much financing its budget supports.\nWithout consistent and comprehensive information on export promotion resources, the TPCC cannot accurately assess the levels and allocation of resources among agencies. Thus, decision makers in Congress and the administration do not have full information about the U.S. government’s investment in export promotion and cannot determine whether resources are being allocated to the highest priority areas. Further, without information on export promotion resources, neither the TPCC nor the Export Promotion Cabinet can make informed recommendations about their appropriate allocation across agencies. Additionally, the Export Enhancement Act requires the TPCC to identify overlap and duplication among export promotion programs. However, as we have reported, it is difficult to gauge the magnitude of the federal commitment to a particular area of activity or assess the extent to which federal programs are duplicative without a clear understanding of the costs of implementing those programs and the activities they support.\nAccording to TPCC secretariat officials, the TPCC does not provide any guidance to agency officials on what budget information should be reported or how agencies should determine which activities should be included as export promotion. In the past, the TPCC provided guidance on the information member agencies should submit on their export promotion budgets. We reported that the data presented by the TPCC fostered a better understanding of historic and potential expenditures.\nThe lack of clear TPCC guidance makes it difficult for agencies to provide, and for the committee to collect, comparable budget information. Without clear guidance, TPCC agencies use different definitions for export promotion in compiling budget information. Many agencies’ programs have multiple objectives, some of which are directly related to export promotion and some of which are not. For example, USDA’s export promotion programs also fulfill domestic agricultural objectives. According to OMB staff, this makes it challenging to clearly determine what activities should be considered export promotion. OMB staff stated that TPCC secretariat and OMB staff have had some preliminary discussions about developing standardized definitions of what activities should be considered export promotion and how data should be reported. However, these discussions are in the early stages, and the TPCC would need to decide what information it wants to include in the National Export Strategies before moving forward.\nSimilarly, the TPCC does not supply guidance that could help clarify what level of detail agencies should provide to them. As the TPCC noted in its 2000 National Export Strategy, its ability to collect and present detailed budget information is limited by agencies’ abilities to generate comparable data within their varied accounting structures. In developing guidance, the TPCC could work with member agencies to determine a reasonable level of detail and identify the limitations of the data. For example, in 2000, the TPCC provided details on agencies’ expenditures in major federal export promotion areas, such as combating foreign export subsidies. However, they included a caveat that detailed budget numbers below the overall agency total can be difficult to validate and should only be used as an indication of the resources available for each area.\nThere are lessons to be learned from other bodies coordinating crosscutting government programs and facing similar challenges. For example, like the TPCC, the Office of National Drug Control Policy (ONDCP) has a statutory requirement to develop a national strategy and propose a consolidated budget to implement that strategy. ONDCP’s process for developing the National Drug Control Strategy and its associated budget is not a perfect comparison for the TPCC because ONDCP has different authorities for reviewing and suggesting changes to member agencies’ budgets. However, its process for collecting and compiling data can highlight the usefulness of providing clear and detailed guidance. ONDCP provides detailed guidance to relevant agencies on how to assemble budget information. Its guidance includes a sample budget table that identifies the level of detail agencies should provide, including a list of the functions, such as corrections or interdiction, agencies should report on. ONDCP’s guidance also defines those functions and identifies which activities should be included in each function. In 2011, we reported that, while drug control agency officials raised some concerns about ONDCP’s budget process, officials at 4 of 6 agencies stated that it was somewhat or very effective at providing a record of national drug control expenditures, among other things.\nClear guidance can help overcome challenges and make the data collected by interagency groups more useful for understanding how resources are currently allocated across agencies and activities, as illustrated by the ONDCP example. The TPCC’s lack of guidance impedes the collection of accurate, comprehensive, and consistent information necessary to understand how resources are allocated among priorities. Without clear guidance, TPCC agencies are using nonstandardized definitions to identify activities that relate to export promotion and are not clear about what level of detail is required.", "In announcing the National Export Initiative, the President not only reemphasized the importance of exports to the U.S. economy, but specifically highlighted the need to understand and coordinate federal resources for export promotion. However, the TPCC does not provide decision makers—including Congress and the Export Promotion Cabinet—with information that provides a clear understanding of how resources are currently allocated across the country and around the world among its member agencies or across federal export promotion priorities. In fact, the amount of information the TPCC has reported on agencies’ resources has declined. The TPCC has responded to the National Export Initiative by reporting on efforts to address established priorities and working to improve interagency coordination, but the committee currently places almost no emphasis on understanding the federal resources dedicated to implementing the National Export Strategy, as is called for in good practices. In the absence of clear guidance, the data the TPCC collects are not comparable across agencies and not comprehensive enough to allow the TPCC to determine how resources are currently allocated in support of priority activities. Furthermore, without better resource data, neither the TPCC nor the Export Promotion Cabinet can make informed recommendations about how federal resources should be allocated. As policymakers review the success of the NEI and consider the President’s request for authority to consolidate trade agencies in a single department, it is important to understand how federal resources are being spent. Without consistent and comprehensive information on export promotion resources—presented transparently through the TPCC’s annual strategies—decision makers in Congress and the administration cannot determine whether the return on the federal investment in export promotion is adequate or make informed decisions about future resource allocations.", "To improve the consistency, comprehensiveness, and transparency of information provided to Congress and policymakers on the federal investment in export promotion programs, the Secretary of Commerce, as chair of the TPCC, should 1. develop and distribute guidance for member agencies on what information they should provide the TPCC on the resources they spend on export promotion activities, and 2. report in its National Export Strategies on how resources are allocated by agency and aligned with priorities.", "We provided drafts of this report to the Secretary of Commerce, as chair of the TPCC, and to OMB. In written comments reprinted in appendix II, the Director of the TPCC Secretariat generally concurred with our recommendations on behalf of the Secretary and stated that they intend to work with TPCC member agencies and the Export Promotion Cabinet to implement them. In particular, they plan to create a new TPCC Budget Working Group to establish a robust TPCC role in assessing the appropriate levels and allocation of resources among agencies, as called for in its mandate. TPCC Secretariat officials provided technical comments and suggested corrections and clarifications that we incorporated, when appropriate. Nevertheless, the Director noted the TPCC’s limited authority over budget reporting and resource allocations, including its inability to compel member agencies to provide budget and resource information. He gave examples of some challenges they face, including shifts in the political and budgetary landscape and how different Administrations and Congresses have emphasized different priorities over time. However, he said the TPCC Secretariat will work within its existing authorities with TPCC agencies to address our recommendations.\nWe support the establishment of a TPCC Budget Working Group and note that implementing the requirements of the Export Enhancement Act of 1992 is the responsibility of the committee, as comprised of the member agencies, under the leadership of the Chair and with the support of the secretariat. TPCC member discussions that improve the consistency, comprehensiveness, and transparency of information provided to Congress and policymakers can help overcome such challenges, facilitate well-informed resource decisions, and better support the National Export Initiative and the Export Promotion Cabinet.\nWe also requested comments on a draft of this report from OMB. On June 21, OMB’s Office of General Counsel provided us with comments via e-mail. OMB noted that, while export promotion budgetary data have not been presented in a public document since the 2008 National Export Strategy, OMB annually compiles and reviews current and proposed resources across TPCC agencies that are devoted to export promotion and trade activities, as part of the development of the President’s budget. OMB further stated that it uses these data to ensure prudent government- wide allocation of export promotion-related resources and strong support for the President’s export promotion agenda, but that because these data are internal, pre-decisional, and deliberative, OMB does not share the cross-agency table outside of OMB, nor does it publish this information as part of the President’s budget or related materials. However, OMB commented that it consults with a number of officials, including the Assistant to the President and Deputy National Security Advisor for International Economics, as head of the Export Promotion Cabinet, when recommending export-promotion related resources in the President’s budget.\nWe acknowledge that OMB conducts a review as part of the annual agency budget formulation process. However, this activity is distinct from the TPCC’s budget-related requirements in the Export Enhancement Act. As OMB notes, its activities are internal and deliberative and not shared outside OMB, including with the TPCC Secretariat or its member agencies. Thus, OMB’s process is not transparent to Congress or to other relevant parties and does not benefit from activities that could improve the consistency or comprehensiveness of this information.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 28 days from the report date. At that time, we will send copies to the Secretary of Commerce (in her capacity as Chairman of the TPCC), as well as the Director of OMB, interested congressional committees, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at 202-512- 8612 or [email protected]. 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 IV.", "This report assesses the extent to which the Trade Promotion Coordinating Committee (TPCC) currently compiles and reports information on how budgetary resources are aligned with established export promotion priorities.\nTo address this objective, we analyzed the laws and presidential directives that define what is required of the TPCC as an interagency coordinating body. These included the Export Enhancement Act of 1992, which directed the President to establish the TPCC; the 1993 Executive Order which established the TPCC in accordance with the 1992 act; the 2010 Executive Order announcing the National Export Initiative (NEI); and a subsequent (2012) Presidential Memorandum providing further instruction on Export Promotion Cabinet and TPCC collaboration to maximize the effectiveness of Federal trade programs. We also reviewed GAO’s guidance regarding data reliability and examined alternate models and good practices for coordinating and managing multi-agency initiatives as described in other GAO reports, including those covering the Government Performance and Results Act (GPRA) of 1993 and the GPRA Modernization Act of 2010. We reviewed the annual “National Export Strategy” reports to Congress that the TPCC has produced since its inception, focusing in particular on those prepared since the NEI was announced in 2010, as well as TPCC memoranda documenting efforts to compile and report budget information and develop a federal trade promotion budget. We also interviewed staff of the TPCC Secretariat, which is housed in the Department of Commerce, and staff of the Office of Management and Budget (OMB).\nTo assess the reliability and usefulness of budget data collected by the TPCC, we took a number of steps, including (1) reviewing the data for internal consistency; (2) comparing TPCC’s data table with select agency budget documents, including Congressional Budget Justifications, appropriations bills, and agency financial or annual reports; (3) reviewing past GAO work on the TPCC’s budget; and (4) interviewing knowledgeable TPCC secretariat and OMB staff. Based on this assessment, we identified numerous issues with the TPCC’s data, as discussed in detail in this report. We present the TPCC’s data in the report only to illustrate our assessment of the data.\nWe conducted this performance audit from February 2013 to July 2013 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, Adam Cowles, Assistant Director; Michael McAtee, Analyst-in-Charge; Kara Marshall; and Karen Deans made key contributions to this report.", "Export Promotion: Small Business Administration Needs to Improve Collaboration to Implement Its Expanded Role. GAO-13-217. Washington, D.C.: January 30, 2013.\nNational Export Initiative: U.S. and Foreign Commercial Service Should Improve Performance and Resource Allocation Management. GAO-11-909, Washington, D.C.: September 29, 2011.\nInternational Trade: Effective Export Programs Can Help In Achieving U.S. Economic Goals. GAO-09-480T. Washington, D.C.: March 17, 2009.\nExport Promotion: Trade Promotion Coordinating Committee’s Role Remains Limited. GAO-06-660T. Washington, D.C.: April 26, 2006.\nExport Promotion: Mixed Progress in Achieving a Governmentwide Strategy. GAO-02-850. Washington, D.C.: September 4, 2002.\nExport Promotion: Federal Agencies’ Activities and Resources in Fiscal Year 1999. GAO/NSIAD-00-118. Washington, D.C.: April 10, 2000.\nExport Promotion: Issues for Assessing the Governmentwide Strategy. GAO/T-NSIAD-98-105. Washington, D.C.: February 26, 1998.\nNational Export Strategy. GAO/NSIAD-96-132R. Washington, D.C.: March 26, 1996.\nExport Promotion: Governmentwide Plan Contributes to Improvements. GAO/T-GGD-94-35. Washington, D.C.: October 26, 1993.\nExport Promotion: Initial Assessment of Governmentwide Strategic Plan. GAO/T-GGD-93-48. Washington, D.C.: September 29, 1993.\nExport Promotion Strategic Plan: Will It Be a Vehicle for Change? GAO/T-GGD-93-43. Washington, D.C.: July 26, 1993.\nExport Promotion: Governmentwide Strategy Needed for Federal Programs. GAO/T-GGD-93-7. Washington, D.C.: March 15, 1993.\nExport Promotion: Federal Programs Lack Organizational and Funding Cohesiveness. GAO/NSIAD-92-49. Washington, D.C.: January 10, 1992." ], "depth": [ 1, 1, 2, 2, 3, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h0_full h2_full", "h0_title h1_title", "h0_full", "h0_title h1_title", "h0_full h1_full", "h0_full h1_full", "", "", "h2_full", "", "", "", "", "h0_full" ] }

{ "question": [ "What does the TPCC fail to compile information on?", "What does this result in?", "What issues has GAO previously reported regarding TPCC operations?", "What steps did the TPCC take to amend the issues GAO highlighted?", "How has this been demonstrated by recent strategies?", "What did the TPCC last compile data on in 2011?", "Why is the TPCC's data not useful?", "What may be causing inconsistency in the TPCC's data?", "How could the TPCC make its data more sueful?", "How does useless data negatively impact the TPCC's operations?", "What was the President's goal in launching the NEI?", "Why did Congress direct the President to establish the TPCC?", "What was the TPCC required to develop a strategic plan for?", "What was the TPCC required to report on?" ], "summary": [ "The interagency Trade Promotion Coordinating Committee (TPCC) neither reports nor compiles information on how federal export promotion resources align with government-wide priorities.", "As a result, decision makers lack a clear understanding of the total resources dedicated across the country and around the world by TPCC member agencies to priority areas, such as increasing exports by small- and medium-sized businesses.", "GAO has previously reported that effective national strategies should address costs and has found shortcomings in the committee's response to the budget-related portions of its mandate.", "While the TPCC's National Export Strategy reports issued since initiation of the National Export Initiative (NEI) outline government-wide priorities and progress in achieving them, they do not discuss how resources are allocated in support of these priorities.", "Despite the current emphasis on export promotion as a high-priority goal, recent strategies have provided less information on budget resources than have previous strategies, as shown below. The TPCC last publicly reported a summary budget table in 2008. TPCC secretariat officials acknowledged that the TPCC agencies currently place little emphasis on displaying or discussing agencies' resources in the National Export Strategy.", "The TPCC last compiled high-level data on member agencies' budget authority in 2011, but this information is not useful for assessing resource allocations.", "To be useful, data should, among other things, be consistent and sufficiently complete for the intended purpose. However, the TPCC's data are inconsistent across agencies and not detailed enough to facilitate an understanding or comparison of how resources are allocated among priorities.", "TPCC agencies do not use a common definition of export promotion, so it is unclear why some agencies are included in the TPCC's data and others are not, and the TPCC's data are not current.", "Although agency accounting systems and budget processes differ, which presents challenges, clear guidance for agencies on what information they should provide the TPCC could improve the quality of the data.", "Without better information on agencies' export promotion resources, decision makers cannot determine whether the federal investment in export promotion is being used effectively or make informed decisions about future resource decisions.", "In 2010, the President launched the NEI with the goal of doubling U.S. exports over 5 years.", "More than 2 decades ago, Congress directed the President to establish the TPCC to provide a unifying framework for federal efforts in this area.", "Among other things, Congress directed the TPCC to assess the appropriate levels and allocations of resources and develop a government-wide strategic plan that identifies federal export promotion priorities, reviews current programs in light of these priorities, and proposes to the President a federal trade promotion budget that supports the plan.", "Congress also required the TPCC to submit annual reports to Congress describing the required strategic plan." ], "parent_pair_index": [ -1, 0, -1, 2, 3, -1, 0, 1, 0, 0, -1, -1, 1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Selected Agencies’ Assessment Methodologies Do Not Fully Align with the ISC’s Risk Management Standard", "Selected Agencies Reported Facing Challenges in Conducting Security Assessments and Monitoring Results", "Agencies Have Not Conducted Timely Security Assessments", "Data Limitations Affect Agencies’ Ability to Fully Monitor Security Activities", "Selected Agencies Vary in Addressing Recommended Corrective Actions", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Selected Facilities GAO Visited", "Appendix III: The Interagency Security Committee’s Undesirable Events", "Appendix IV: Comments from the Department of Homeland Security", "Appendix V: Comments from the Department of Transportation", "Appendix VI: Comments from the Department of Agriculture", "Appendix VII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Risk management, as applied to security of federal facilities, entails a continuous process of applying a series of mitigating actions—assessing risk through the evaluation of threats, vulnerabilities, and consequences; responding to risks with appropriate countermeasures; and monitoring risks using quality information (see fig. 1).\nIn 1995, Executive Order 12977 established the ISC after the bombing of the Oklahoma City Alfred P. Murrah Federal Building in April 1995. The ISC’s mandate is to enhance the quality and effectiveness of security in and protection of federal facilities in the United States occupied by federal employees for nonmilitary activities. The order directs the ISC to develop and evaluate security standards for federal facilities, develop a strategy to ensure executive agencies and departments comply with such standards, and oversee the implementation of appropriate security measures in federal facilities. The ISC has released a body of standards, including the ISC Standard, designed to apply to the physical security efforts of all federal, non-military agencies. The ISC Standard prescribes a process for agencies to follow in developing their risk assessment methodologies (see fig. 2).\nMost federal departments and agencies are generally responsible for protecting their own facilities and have physical security programs in place to do so. The ISC Standard requires executive departments and agencies to follow the risk-management process when conducting risk assessments for each of their facilities. That process begins with determining the facility security level, ranging from level I (lowest risk) for facilities generally having 100 or fewer employees to level V (highest risk) for the most critical facilities and generally having greater than 750 employees. The security level designation determines the facility’s baseline countermeasures. For each facility, departments and agencies are required to (a) consider all of the “undesirable events” that could pose a risk to their facilities— such as active shooters, vandalism, and explosions—and (b) assess three factors of risk (threats, vulnerabilities, and consequences) to specific undesirable events. Subsequently, agencies are to combine all three factors to yield a measurable level of risk for each undesirable event (see app. III). Based on the results of these assessments, agencies should customize (either increase or decrease) the countermeasures to adequately reflect the assessed level of risk.\nIn addition, as part of planning for physical security resources within an agency’s budget process, the ISC has identified the need to balance allocations for countermeasures with other operational needs and with competing priorities. The ISC Best Practices have some similarities with leading practices in capital decision-making. For example, both state that the allocation of resources should be integrated into the agency’s mission, objectives, goals, and budget process. However, beyond the ISC Best Practices, the Office of Management and Budget and we have developed more comprehensive leading practices in capital decision- making that provide agencies with guidance for prioritizing budget decisions such as for countermeasure projects. The Office of Management and Budget and our guidance also emphasize evaluating a full range of alternatives, informed by agency asset inventories that contain condition information, to bridge any identified performance gap. Furthermore, the guidance calls for a comprehensive decision-making framework to review, rank, and select from among competing project proposals. Such a framework should include the appropriate levels of management review, and selections should be based on the use of established criteria.\nThe following describes the mission and physical security program characteristics for the agencies in our review:\nCBP, the nation’s largest law enforcement agency, has responsibility for securing the country’s borders. It also has responsibility for conducting security assessments at about 1,200 facilities, including approximately 215 federally owned and agency-controlled higher-level facilities (facility security levels III and IV). These facilities include border patrol stations with holding cells for people detained at the border, office buildings, and canine-training centers. CBP conducts these assessments.\nFAA’s mission is to provide a safe and efficient aerospace system for the country. According to agency data, FAA has 55 federally owned and agency-controlled higher-level facilities—including critical air traffic control towers. According to FAA officials, FAA specialists conduct security assessments.\nARS conducts research related to agriculture and disseminates information to ensure high-quality safe food and to sustain a competitive agricultural economy. According to agency data, ARS has security responsibility for four domestic federally owned and agency- controlled higher-level facilities—including laboratories for research to improve food and crop quality, office buildings, and warehouses. ARS security personnel have responsibility for conducting security assessments.\nThe Forest Service sustains the health, diversity, and productivity of the nation’s forests and grasslands. According to agency officials, the Forest Service has one federally owned and agency-controlled higher- level facility—a regional headquarters office building. The Forest Service’s security officials have responsibility for conducting security assessments, but at the time of our review, USDA security officials conducted the assessment at Forest Service’s one higher-level facility.", "None of the four selected agencies’ security assessment methodologies fully aligned with the ISC Standard. The ISC gives agencies some flexibility to design their own security-assessment methodologies for identifying necessary countermeasures as long as the chosen methodology adheres to fundamental principles of a sound risk- management methodology. Specifically, methodologies must: consider all of the undesirable events identified in the ISC Standard as possible risks to federal facilities, and assess three factors of risk (threats, vulnerabilities, and consequences) for each of the events.\nFurthermore, the ISC Standard requires executive departments and agencies to document decisions that deviate from the ISC Standard. Agencies’ policies and methodologies reference the ISC Standard. However, none of the agencies’ methodologies considered all of the undesirable events during assessments although they used some type of risk assessment methodology. In addition, the agencies did not always adhere to these principles of risk management (see table 1).\nAt the time of our review, CBP’s methodology did not fully align with the ISC Standard because it did not consider all of the 33 undesirable events nor assess threat and consequence. CBP security specialists assessed vulnerabilities at building entrances and exits, in interior rooms, and around the perimeter using a yes/no checklist during the assessment process. However, assessment reports showed that specialists did not assess the threats and consequences of undesirable events at each facility. According to security officials, the gap occurred because they designed the checklist to meet requirements in the 2009 CBP Security Policy and Procedures Handbook, which predates the first edition of the ISC Standard issued in 2010. CBP officials told us that as of January 2017, they began using an improved methodology to assess the threats, vulnerabilities, and consequences for 30 of 33 undesirable events— omitting three now identified in the November 2016 revision to the ISC Standard. However, CBP has not yet updated its handbook to align with the ISC Standard, even though it started this effort over 3 years ago in December 2013. CBP officials did not provide a draft of its updated handbook, but they provided a plan with milestone dates for issuing the handbook by September 2018. CBP officials also told us that updates to the handbook may have to wait due to competing priorities, including efforts to address the backlog of assessments (which we discuss later in this report). Delays in updating the handbook mean that CBP’s policy will continue to not align with the ISC Standard. Furthermore, although CBP security officials told us that all of the agency’s security specialists have been trained to use the improved assessment methodology, without documentation of the methodology in agency policy, there may be greater risk of its inconsistent application. Standards for Internal Control emphasize the importance of agencies developing and documenting policies to ensure agency-wide objectives are met. Documentation serves to retain institutional knowledge over time when questions about previous decisions arise. Without an updated policy handbook that requires a methodology that assesses all undesirable events consistent with the ISC Standard, CBP cannot reasonably ensure that its facilities will have levels of protection commensurate to their risk.\nFAA’s methodology does not fully align with the ISC Standard because it does not consider all of the 33 undesirable events nor does it assess all three factors of risk. FAA security specialists assess vulnerabilities to the site perimeter, entryways, and interior rooms using a yes/no checklist, but the checklist does not assess the consequences from each of the undesirable events at each facility. With respect to threat, FAA applies the ISC’s baseline threat—a general federal facilities threat level that relates directly to a set of baseline countermeasures—across all its higher-level facilities because FAA policy states that there is no agency-specific threat that exceeds the current baseline threat. According to FAA officials, the baseline threat standardizes the security needs across their facilities rather than addressing the security needs of individual facilities from specific threats. When necessary, FAA policy allows specialists to modify countermeasures based on an evaluation of conditions at the facility.\nFAA realized that this approach was no longer appropriate given the agency-wide goal to make risk-based decisions, a review of the assessment process after a 2014 Chicago fire incident that destroyed critical FAA equipment, and an awareness of ISC initiatives to assess compliance. To address the resulting methodological gaps, FAA hired a contractor to design, develop, test, and validate an improved risk- assessment methodology. Subsequently, FAA improved its methodology in January 2017 to assess the threats, vulnerabilities, and consequences for 30 of the 33 undesirable events identified in the November 2016 revision to the ISC Standard —and tested the methodology at lower- and higher-level facilities. This revised methodology addresses the need to assess individual facility needs rather than using a standardized baseline approach. In April 2017, FAA officials told us of their plan for implementing this methodology and provided tentative milestone dates to conduct further testing, training, and analysis before deciding to use the improved methodology, which they expect to complete by January 2018. However, their plan lacks the necessary information to ensure successful implementation, such as detail on how many facilities they will test and how they will use the results of testing, training, and analysis to implement the improved methodology within the identified 9-month time frame. Furthermore, the improved methodology does not address undesirable events for which ISC issued countermeasures in May 2017. Without a detailed implementation plan to assess the methodology’s impact on its security program, FAA cannot reasonably ensure that its facilities have the proper countermeasures. With ongoing changes to its security program, FAA has an opportunity to fully align its improved methodology with the ISC Standard by including all 33 undesirable events and to update its policy requiring the use of such a methodology.\nUnlike CBP and FAA—which developed their own methodologies separate from their parent departments (Department of Homeland Security (DHS) and Department of Transportation (DOT), respectively)— ARS and the Forest Service follow an assessment methodology developed by USDA. USDA’s methodology does not fully align with the ISC Standard because it does not consider all of the 33 undesirable events for which ISC issued countermeasures in May 2017. Security specialists from USDA headquarters typically assess ARS’s and the Forest Service’s higher-level facilities using a risk-based methodology that considers the 31 undesirable events listed in the previous version of the ISC Standard dated August 2013. However, until recently, USDA did not assign ratings to each of the three risk factors—threat, vulnerability, and consequence—and then combine these ratings to yield a measurable level of risk for each undesirable event. USDA security officials said that they have revised the assessment-reporting format to include this risk calculation and trained their specialists to measure risk in this way. USDA officials provided us with a new assessment template that addresses all 33 undesirable events and includes measuring risk. Additionally, USDA officials said that they are revising their outdated physical security manual and expect to complete it by April 2018. With a revised manual and application of the new assessment template, USDA should be better positioned to assess risk at its facilities.\nWhen agencies do not use methodologies that fully align with the ISC Standard, they could face deleterious effects, ranging from facilities having inappropriate levels of protection to agencies having an inability to make informed resource allocation decisions for their physical security needs. Specifically, the ISC Standard states that facilities may face the effect of either having (1) less protection than needed resulting in inadequate security or (2) more protection than needed resulting in an unnecessary use of resources. The ISC Standard also states that these effects can be negated by determining the proper protection according to a risk assessment. Identified excess resources in one risk area then can be reallocated to underserved areas, thus ensuring the most cost- effective security program is implemented. As an illustration of such potential effects, we found that two agencies assessing two higher-level facilities came to two different conclusions in terms of their need for X-ray machines to screen for guns, knives, and other prohibitive items in federal facilities. Specifically, one agency based its decision on a policy that does not deviate from the ISC’s baseline set of countermeasures, and the other agency based its decision on professional judgement that deviated from the ISC’s baseline set of countermeasures. Neither agency based its decision on a risk assessment nor documented its decision—both ISC requirements, specifically:\nWithout conducting a risk assessment, FAA recently expanded a policy requirement calling for all higher-level facilities to have X-ray machines and magnetometers. This new requirement poses a potentially sizeable investment for the agency with an estimated cost of X-ray machines of about $24,000 and magnetometers of about $4,000 each. FAA may need such equipment at all its higher-level facilities. However, the ISC Standard requires that agencies conduct risk assessments first to justify their needs. Without conducting risk assessments, FAA managers could unnecessarily use resources by installing such equipment in all higher-level air traffic facilities when there may be higher priority needs\nA USDA security specialist decided, despite an ISC baseline requirement that higher–level facilities have X-ray machines, not to recommend an X-ray machine at a higher-level Forest Service facility. The specialist reasoned that unlike other federal buildings with numerous unknown visitors, this facility receives mostly known individuals and a limited number of visitors. The ISC Standard allows for professional judgement; however, the ISC requires that agencies document deviations from the baseline set of countermeasures. Reducing the facility’s level of protection without documenting an assessment of risk could result in no record of the basis of the decision for current and future facility managers and security officials to review or use as justification in the case of a question of compliance.\nIn another case, we found that one higher-level facility did not have access control for employees or visitors nor did it have armed guard patrols. The facility manager told us that intelligence and a history without incidents gave leadership reason to believe that these measures were not needed and that therefore the agency did not require and would not fund such protective measures for this facility—in effect, accepting the risks to the facility. Security officials said they also had the same understanding and did not document the matter in the assessment report even though agency policy and the ISC Standard require written documentation when officials deviate from the baseline requirement.\nWithout security assessments that fully align with the ISC Standard and provide measureable levels of risk, agencies do not have the information they need to determine priorities and make informed resource allocation decisions. For example, they may not be able to assess whether to acquire or forego costly physical-security countermeasures—such as, X- ray machines, access control systems, and closed-circuit television systems—for facilities. Additionally, after determining the need to acquire a countermeasure, agencies must fund the countermeasure. As previously discussed, leading practices in capital decision-making include a comprehensive framework to review, rank, and select from competing project proposals for funding. In conducting risk assessments that do not fully align with the ISC Standard (i.e., not assessing threats, vulnerabilities, and consequences and measuring risks), agencies miss the opportunity for more informed funding decisions. Three of the four agencies (CBP, ARS, and the Forest Service) currently prioritize funding for operational needs over physical security needs (see table 2) when agencies’ priorities might be different if they based their decisions on an aligned risk assessment.", "", "Standards for Internal Control state that agencies should use quality information on an ongoing basis as a means to monitor program activities and take corrective action, as necessary. The ISC requires that agencies assess higher-level facilities at least once every 3 years—an interval requirement to identify and address evolving risks. We found that three of the four agencies (CBP, ARS, and the Forest Service) did not meet this requirement. Officials reported various challenges including (1) assessments competing with other security activities, (2) an insufficient number of qualified staff to conduct assessments when compared to the number of facilities, or (3) not knowing of the required assessment schedule.\nAn “information system” is the people, processes, data, and technology that management organizes to obtain, communicate, or dispose of information. that had not been reassessed since 2010. CBP security officials attributed the backlog to (1) having too few security specialists assigned to assess about 1,200 facilities and (2) the specialists working on competing priorities, such as revising the security handbook, conducting technical inspections, and reviewing new construction designs and renovation projects. According to CBP security officials, they have developed a plan to eliminate the backlog by the end of fiscal year 2018 by prioritizing the completion of assessments. While we found the plan comprehensive, the schedule did not seem feasible. For example, the plan assumes that one specialist can complete six assessments in 3 consecutive days and that another specialist can complete three assessments in 1 day. In contrast, security officials told us specialists take about 20 work hours (or 2½ days) to conduct an on-site assessment of one facility. CBP officials said that they believe they can meet the time frames of the plan because they have set aside other priorities and have a thorough understanding of the scope of work involved at the facilities. They added that it will not be easy to meet the timeline, but they can accomplish it with a motivated and committed workforce, adequate financial resources, and absent activities that would otherwise require shifting of resources. We question the feasibility of setting aside important priorities, such as updating the policy manual and reviewing physical security elements in new construction designs, as well as the workload assumptions for completing the assessments. Further, these other priorities are also key to securing facilities. Without balancing assessments with competing priorities, CBP’s time frames for completing the assessments by the end of fiscal year 2018 may not be feasible and may also result in the agency’s not addressing other important physical security responsibilities.\nSince the ISC issued its standard in 2010, ARS and the Forest Service have assessed their higher-level facilities at least once. However, these agencies have not reassessed all of their higher-level facilities within the 3-year interval requirement. Specifically, security specialists have not conducted required reassessments of two ARS and one Forest Service higher-level facilities. The ARS headquarters official explained that the agency had not reassessed the two facilities due to competing priorities and insufficient internal resources. During the course of our review, ARS headquarters officials said they began assessing one of the two ARS facilities in May 2017 and will begin assessing the second facility in October 2017. The Forest Service official explained that the agency missed its security reassessment of the regional office because the facility staff had not requested one. During our visit, facility staff responsible for security told us that they were not aware of the ISC’s 3- year interval requirement. Facility staff requested a reassessment, and security officials told us that they expected to complete it by mid-June 2017. Completing this one-time assessment may address the facility’s security needs temporarily. However, ARS and the Forest Service have not implemented a long-term schedule with key milestones and lack a means to monitor completion of assessments of higher-level facilities at least once every 3 years. Consequently, these agencies cannot reasonably ensure that they have full knowledge of the risks to their facilities.\nFAA data from 2010 through 2016 show that FAA has assessed its 55 higher-level facilities at least once every 3 years. FAA policy requires that specialists schedule assessments of higher-level facilities every 12– 18 months depending on whether the facility has met FAA physical security standards.", "The ISC Standard states that to make appropriate resource decisions, agencies need information, such as what is being accomplished, what needs management attention, and what is performing at expected levels. We found that agencies’ methods of collecting and storing security information had limitations that affected agency and facility officials’ oversight of the physical security of their facilities (see table 3).\nWithout having long-term, agency-wide information to monitor whether assessments are conducted on schedule, ARS and the Forest Service may not meet the ISC Standard, resulting in not adequately protecting their facilities and employees.\nThe ISC Standard also states that agencies should measure their security program’s capabilities and effectiveness to demonstrate the need to fund facility security and to make appropriate decisions for allocating resources. However, the agencies in our review were unable to demonstrate appropriate oversight of their physical security programs because:\nCBP’s handbook does not include requirements for data collection and analysis for monitoring physical-security program activities. Facility managers and security officials do not enter assessment results, such as the countermeasures recommended for facilities, in the real property database. Consequently, they do not have comprehensive data to manage their security program, assess overall performance, and take any necessary corrective actions. A CBP official told us that a comprehensive database would allow CBP to set priorities for addressing countermeasures. Without including data collection and analysis requirements in its updated handbook, CBP may be unable to monitor the performance of its physical security program.\nFAA’s policy does not require ongoing monitoring of physical security information, such as the status of recommended countermeasures or assessment schedules. As a result, FAA officials do not proactively use physical security information to assess the overall performance of its physical security program and take corrective actions before an incident occurs. Without a policy requiring ongoing monitoring of information—an internal control activity, FAA may be unable to assess the overall performance of its security program and take necessary corrective actions.\nUSDA has a decentralized security program and places the responsibility on agencies to create their physical security programs. Security officials from ARS and the Forest Service told us that USDA does not have a policy for collecting and managing agency-wide information; however, they said that USDA is drafting a new departmental regulation and manual that will specify (1) the roles and responsibilities of agency and facility managers and (2) electronic- data-reporting requirements for monitoring the performance of the physical security program. USDA officials provided a draft of USDA’s regulation and manual for our review. The draft regulation did not mention data reporting and monitoring, while the draft manual only contained a table of contents that included a section entitled “Facility Tracking Database.” USDA officials expect to issue new policies sometime between October 2017 and April 2018. In the absence of new departmental regulation and manual, USDA and Forest Service officials told us that they have begun to develop a Forest Service system for storing electronic copies of agency-wide assessments and that they plan to expand the use of this system to track site specific assessment dates and status of recommended countermeasures. Forest Service officials provided milestone dates and described the capabilities for a future information system, which they expect to complete in September 2017. However, we could not determine whether the manual will have information system requirements to monitor agencies’ physical security program, an internal control activity. Without USDA’s including data collection and analysis requirements in its manual, its agencies may not be able to monitor the performance of their physical security programs.", "Without agencies having information to monitor security activities, they were unable to provide us information on the status of countermeasures across their entire portfolio. In order to better understand the status of countermeasures implemented and facilities’ experiences when implementing countermeasures, we determined the status of countermeasures at 13 facilities we visited.\nAs previously noted, risk management, as it pertains to physical security, involves agency officials monitoring their physical security programs. During our visits to 13 selected facilities, we found the four agencies differed in the number of countermeasures that they had not implemented. Facility officials provided us with some information on why countermeasures had not been implemented, specifically:\nCBP had a significant number of recommended countermeasures from 2010 through 2016 that remained open at the eight selected CBP facilities. CBP facility officials gave reasons why recommended countermeasures had not been implemented. At one facility, officials did not know about the recommended countermeasures from its last 2010 assessment because the individuals previously knowledgeable about the assessments left the organization without communicating the results. By taking action to improve facility security, they implemented some needed countermeasures. However, at the time of our review, a large number of the recommendations remained open. At another facility, officials told us that they too had not known (for the same reason mentioned above) of their 2010 assessment, which contained recommended countermeasures. However, these officials told us that they submitted a funding request a few weeks before our visit to address all except one of the open countermeasures. In other cases, facilities have not implemented needed countermeasures due to resource constraints or physical site limitations.\nFAA had a large number of recommended countermeasures from 2010 through 2016 that remained open at the time of our review for the two FAA facilities visited. In this case, the most recent security assessment, completed in late 2016, resulted in one facility’s having little time to implement countermeasures by the time we conducted our analysis.\nWhile ARS had closed almost all recommended countermeasures at two facilities at the time of our review, one Forest Service facility had not yet implemented a recommendation (to secure its entrance doors) that was identified in a 2013 security assessment (see bottom center photo, fig. 3). This countermeasure remained open because facility officials said they continued to explore alternatives to address the recommendation.\nFigure 3 shows examples of countermeasures not fully implemented at selected facilities we visited.\nDuring our site visits and discussions with facility staff, we found that physical site limitations or other priorities can make it difficult for facility managers to implement countermeasures. For example, a countermeasure might involve correcting a clear zone violation—that is, moving an object (such as a brick wall) a certain distance away from the facility’s perimeter fence to prevent a potential intruder from using the object to climb over the fence. However, when the object near the fence is a building and the property outside of the fence is not federally owned (see bottom right photo, fig. 3), it may not be cost effective to correct the clear zone violation. In this situation, the agency bears the responsibility for exploring ways to address the vulnerability. In following the ISC Standard, as previously noted, managers are required to justify and document why they could not implement recommended countermeasures—what the ISC calls risk acceptance.", "Selected agencies carry a great responsibility for protecting facilities that support border protection activities, provide safe and efficient air traffic around the country, and protect the quality of the nation’s food supply. With this responsibility comes the need to appropriately assess risk to ensure the security of these agencies’ facilities. However, 7 years after the ISC issued its initial risk-management process standard, each of four selected agencies continued to use assessment methodologies that did not fully align with this standard. During our review, agencies improved their methodologies to better align with the ISC Standard, but the agencies had not yet incorporated the methodologies into their policies and procedures. Without updated policies and procedures requiring a methodology that adheres to the ISC Standard (including all 33 undesirable events now identified in the November 2016 revision to the ISC Standard), agencies may not collect the information needed to assess risk and determine priorities for improved security. This situation could hamper the agencies’ ability to make informed resource allocation decisions or to recommend countermeasures commensurate to the needs at specific facilities. To address challenges in conducting timely assessments, agencies that had a backlog developed plans to address them, but the assumptions used in CBP’s plans and time frames did not appear to fully reflect the agency’s competing priorities and actual experience. Additionally, ARS and Forest Service have not implemented a long-term assessment schedule with key milestones to ensure that higher-level facilities are reassessed at least once every 3 years. Further, in cases where the agencies may have had risk assessment information, CBP, ARS, and the Forest Service lack the means to collect, store, and analyze this information in order to monitor the status of a facility’s security. Without these key aspects of a comprehensive security program—a methodology that meets the standard, policies, and procedures that incorporate that methodology; the ability to complete assessments on time; and information to perform monitoring—agencies remain vulnerable to substantial security risks.", "To improve agencies’ physical security programs’ alignment with the ISC Risk Management Process for Federal Facilities and Standards for Internal Control in the Federal Government for information and monitoring, we recommend that the Commissioner of U.S. Customs and Border Protection take the following three actions: with regard to the updated Security Policy and Procedures Handbook, the ISC’s Risk Management Process for Federal Facilities requirement to assess all undesirable events, consider all three factors of risk, and document deviations from the standard, and data collection and analysis requirements for monitoring the performance of CBP’s physical security program. revise the assumptions used in the plan to address the backlog to balance assessments with competing priorities, such as updating the policy manual and reviewing new construction design, to develop a feasible time frame for completing the assessment backlog.\nSecretary of Transportation direct the FAA Administrator to take the following three actions: develop a plan that provides sufficient details on the activities needed and time frames within the date when FAA will implement an improved methodology; update FAA’s policy to require the use of a methodology that fully aligns with the ISC’s Risk Management Process for Federal Facilities for assessing all undesirable events, considering all three factors of risk, and documenting all deviations from the standard countermeasures; and update FAA’s policy to include ongoing monitoring of physical security information.\nSecretary of Agriculture take the following two actions: include data collection and analysis requirements for monitoring the performance of agencies’ physical security programs, in the department’s revised physical-security manual, and direct the Administrator of the Agricultural Research Service and the Chief of the Forest Service to implement and monitor a long-term assessment schedule with key milestones to ensure that higher-level facilities are reassessed at least once every 3 years.", "We provided a draft of this report to the Departments of Homeland Security, Transportation, and Agriculture for review and comment. All three departments agreed with the findings and recommendations for their respective agencies. DHS agreed with our recommendations and provided actions and timeframes for completion. With regard to our recommendation to update the Security Policy and Procedures Handbook, DHS stated that CBP is updating the handbook to include: (1) a discussion and diagram of the ISC risk management process and its application within CBP’s assessment processes; (2) specific guidance for conducting risk assessments in accordance with the ISC’s Risk Management Process for Federal Facilities; and (3) a requirement and guidance for data collection and analysis in support of a robust physical security program. With regard to our recommendation to revise the assumptions used in the plan to address the assessment backlog, DHS stated that CBP has reevaluated current priorities and believes the current plan to eliminate the risk assessment backlog by the end of fiscal year 2018 is achievable. DHS also provided technical comments, which we incorporated as appropriate. DHS’s official written response is reprinted in appendix IV.\nDOT also agreed with our recommendations and by e-mail requested that we publish the response to the sensitive version of this report. DOT stated that FAA continues to refine its policy and develop processes that address the ISC threats, vulnerabilities, and consequences. Further, DOT stated that FAA would either validate that current mitigation strategies address those risks or apply additional appropriate countermeasures. DOT stated that it will provide a detailed response to each recommendation within 60 days from the date of this report. DOT’s official written response is reprinted in appendix V.\nUSDA agreed with our recommendations and provided the agency-wide actions for completion. USDA provided a plan to ensure compliance with the ISC’s Risk Management Process for Federal Facilities by development of a standard physical-security assessment process and by initiation of a compliance program to track assessments and monitor the installation of countermeasures. In an e-mail, USDA provided milestone dates and planned completion by January 2019. USDA’s official written response is reprinted in appendix VI.\nIf you or your staff has any questions about this report, please contact me at (202) 512-2834 or [email protected]. GAO staff who made key contributions to this report are listed in appendix VI.", "This report examines: (1) how selected agencies’ assessment methodologies align with the Interagency Security Committee’s (ISC) risk management standard for identifying necessary countermeasures and (2) what management challenges, if any, selected agencies reported facing in conducting physical security assessments and monitoring the results.\nTo determine how selected agencies’ assessment methodologies align with ISC standards for identifying the necessary countermeasures, we identified federal executive branch departments and agencies reported by the Department of Homeland Security (DHS) to have received delegations of authority to protect their own buildings. We reviewed the Federal Real Property Council’s data on the Federal Real Property Profile to identify federally owned and agency-controlled buildings. We determined that these data were sufficiently reliable for the purpose of our reporting objectives based upon our recent report that reviewed these data fields. We selected four agencies based upon their large quantity of reported federally owned and agency-controlled buildings: DHS, U.S. Customs and Border Protection (CBP); Department of Transportation (DOT), Federal Aviation Administration (FAA); United States Department of Agriculture (USDA), Agricultural Research Service (ARS) and USDA’s United States Forest Service (Forest Service). This methodology purposely does not include federal buildings protected by FPS and under the control of the General Services Administration as well as other agencies that we reported on in our previous work. We obtained and reviewed one particular ISC standard, The Risk Management Process for Federal Facilities (the ISC Standard) and its related appendices for assessing physical security and providing recommended countermeasures at federal facilities. We obtained and analyzed the selected departments’ and agencies’ facility-security policies and procedures for a risk assessment methodology. According to the ISC Standard, agencies’ risk assessment methodologies must: consider all of the undesirable events identified in the ISC Standard as possible risks to federal facilities as listed in appendix III; assess the threat, consequences, and vulnerability to specific produce similar or identical results when applied by various security provide sufficient justification for deviations from the ISC-defined security baseline.\nWe limited the scope of this review to the first two standards above because agencies’ adherence to these standards could be objectively verified by reviewing and analyzing agency documentation and interviewing agency officials, and their adherence to the two additional standards could not be verified in this manner. We did not conduct risk assessments with independent security professionals to evaluate: 1) the results from prior agency evaluations and 2) the sufficiency of justifications for deviations from the ISC-defined security baseline, as both evaluations were outside of the scope of the engagement. Therefore, for the purposes of this report, risk assessment policies, procedures and resulting methodology that align with ISC standards are those that consider all of the undesirable events and assess the threats, consequences, and vulnerabilities to specific undesirable events. We reviewed and analyzed information to answer the following five questions: 1. Do the policies and procedures mention the ISC standards? 2. Do the policies and procedures consider all of the undesirable events? 3. Do the policies and procedures assess the threat of specific undesirable events? 4. Do the policies and procedures assess the consequences of specific undesirable events? 5. Do the policies and procedures assess the vulnerability to specific undesirable events?\nWe answered each of these questions as either a “Yes” or “No” for our selected agencies. The “No” answer to questions 3, 4, and 5 includes the following two possibilities: (a) the agency’s threat, consequence, or vulnerability ratings are not tied to specific undesirable events, or (b) the agency does not have a framework or formalized steps within which it collects and analyzes threat-, consequence-, or vulnerability-related information. If the answer to each of the five questions was “Yes,” then the agency’s overall risk assessment methodology aligns with ISC risk assessment standards for the purposes of this report. If the answer to one or more of the five questions was “No”, then the agency’s methodology does not to align with ISC standards for the purposes of this report.\nWe interviewed security officials at ISC; three departments (DHS, DOT, and USDA); and four agencies (CBP, FAA, ARS, and the Forest Service). We obtained and analyzed agency guidance on prioritizing physical security needs and interviewed agencies’ facility maintenance and budget officials. We reviewed the ISC’s best practices for planning for physical security resources within an agency budget process. Additionally, we reviewed the Office of Management and Budget’s and our leading practices in capital decision-making that provide agencies with guidance for prioritizing budget decisions such as “countermeasure projects.” We also reviewed Standards for Internal Control in the Federal Government because internal controls play a significant role in helping agencies achieve their mission-related responsibilities. Our findings from our review of the selected agencies are not generalizable to all ISC member agencies, but provide insight into and illustrative examples about selected agencies’ facility risk-assessment methodologies.\nTo determine what management challenges selected agencies reported facing in conducting physical security assessments and monitoring results, we interviewed agencies’ security, maintenance, and budget officials. We requested agency security officials to provide portfolio- wide data on facility security assessments for our review in order to select sites to visit and analyze data for dates of assessments and the status of findings. We assessed the reliability of this data through interviews with knowledgeable agency staff and a review for completeness and any unexpected values. We compiled information from physical security assessments when no portfolio-wide agency data were available. We determined that these data were sufficient for the purpose of our reporting objectives and selected geographically dispersed sites with buildings with higher reported security levels per the ISC Standard, as these higher security levels have greater requirements and therefore the potential for greater resource needs. See appendix II for the 13 sites we selected. For these selected sites, we interviewed agency staff concerning the assessment process, site-specific findings, recommendations, justification for deviations from ISC’s baseline standards, and management challenges faced in addressing physical security needs. We observed and photographed the status of the findings from the site physical security assessments. We did not independently determine what constitutes a management challenge or a physical security finding. Rather, we relied on these stakeholders to determine these physical security concerns as defined in their own standards and guidance. The information from our selected sites is illustrative and cannot be generalized to sites agency- wide.\nThe performance audit upon which this report is based was conducted from June 2016 to August 2017 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 subsequently worked with DHS, DOT and USDA from August 2017 to October 2017 to prepare this version of the original report for public release. This public version was also prepared in accordance with these standards.", "", "", "", "Error! No text of specified style in document.", "Error! No text of specified style in document.", "Appendix VII: GAO Contact and Staff Acknowledgments Error! No text of specified style in document.", "", "In addition to the contact named above, Amelia Shachoy (Assistant Director), Steve Martinez (Analyst-in-Charge), Jennifer Clayborne, George Depaoli, Geoffrey Hamilton, Joshua Ormond, Alison Snyder, Amelia Michelle Weathers, and Elizabeth Wood made key contributions to this report." ], "depth": [ 1, 1, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_full h2_full h1_full", "h2_title h1_title", "h2_full h1_full", "h2_full", "", "", "", "", "h0_full h2_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What did GAO's review of the CBP, FAA, ARS, and the Forest Service reveal?", "What does the ISC Standard require?", "How are the four agencies' methodologies similar?", "How do the four agencies' methodologies differ?", "What steps are agencies taking to improve their methodologies?", "Despite improvements, what issues still exist?", "What did all four agencies report facing challenges in?", "How does the data GAO analyzed support this?", "How is this demonstrated by the agencies' plans to address backlogs?", "How is this issue exacerbated by the agencies' lack of data or information systems?", "What issues might a lack of monitoring cause?", "How does this report differ from its sensitive counterpart?" ], "summary": [ "None of the four agencies GAO reviewed—U.S. Customs and Border Protection (CBP), the Federal Aviation Administration (FAA), the Agricultural Research Service (ARS), and the Forest Service—used security assessment methodologies that fully aligned with the Interagency Security Committee's Risk Management Process for Federal Facilities standard (the ISC Standard).", "This standard requires that methodologies used to identify necessary facility countermeasures—such as fences and closed-circuit televisions—must:", "All four agencies used methodologies that included some ISC requirements when conducting assessments.", "CBP and FAA assessed vulnerabilities but not threats and consequences. ARS and the Forest Service assessed threats, vulnerabilities, and consequences, but did not use these factors to measure risk. In addition, the agencies considered many, but not all 33 undesirable events related to physical security as possible risks to their facilities.", "Agencies are taking steps to improve their methodologies. For example, ARS and the Forest Service now use a methodology that measures risk and plan to incorporate the methodology into policy.", "Although CBP and FAA have updated their methodologies, their policies do not require methodologies that fully align with the ISC standard. As a result, these agencies miss the opportunity for a more informed assessment of the risk to their facilities.", "All four agencies reported facing management challenges in conducting physical security assessments or monitoring assessment results.", "Specifically, CBP, ARS, and the Forest Service have not met the ISC's required time frame of every 3 years for conducting assessments. For example, security specialists have not conducted required reassessments of two ARS and one Forest Service higher-level facilities.", "While these three agencies have plans to address backlogs, CBP's plan does not balance conducting risk assessments with other competing security priorities, such as updating its policy manual, and ARS and the Forest Service lack a means to monitor completion of future assessments.", "Furthermore, CBP, ARS, and the Forest Service did not have the data or information systems to monitor assessment schedules or the status of countermeasures at facilities, and their policies did not specify such data requirements. For example, ARS and the Forest Service do not collect and analyze security-related data, such as countermeasures' implementation. FAA does not routinely monitor the performance of its physical security program.", "Without improved monitoring, agencies are not well equipped to prioritize their highest security needs, may leave facilities' vulnerabilities unaddressed, and may not take corrective actions to meet physical security program objectives.", "This is a public version of a sensitive report that GAO issued in August 2017. Information that the agencies under review deemed sensitive has been omitted." ], "parent_pair_index": [ -1, 0, -1, 0, 0, 2, -1, 0, 0, 0, 3, -1 ], "summary_paragraph_index": [ 3, 3, 6, 6, 6, 6, 7, 7, 7, 7, 7, 7 ] }

{ "title": [ "Background", "FIAR Guidance", "Navy FBWT Audit Readiness Strategy, Milestones, and Events", "Navy Did Not Fully Implement Certain FBWT FIP Tasks in Accordance with the FIAR Guidance", "Process Analysis", "Other Audit Readiness Issues within the Navy’s FBWT Process Analysis", "Prioritization of Audit Readiness Efforts", "Prioritization of Audit Readiness Efforts for the FBWT Process", "Prioritization of Audit Readiness Efforts for Information Technology Systems", "Internal Control Assessment and Testing", "Evaluate Key Supporting Documentation", "Conclusions", "Recommendations for Executive Action", "Process Analysis", "Prioritization of Audit Readiness Efforts", "Internal Control Assessment and Testing", "Supporting Documentation", "Agency Comments", "Appendix I: Objective, Scope, and Methodology", "Appendix II: FIAR Guidance for Reporting Entities", "Appendix III: Navy’s FBWT Process and Data Flow System Descriptions", "Appendix IV: Navy’s FBWT Reconciliations", "Appendix V: DOD and Navy Suspense Accounts", "Appendix VI: Comments from the Department of the Navy", "Appendix VII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The National Defense Authorization Act (NDAA) for Fiscal Year 2010 requires that DOD develop and maintain the FIAR Plan. The FIAR Plan must include specific actions to take and the costs associated with correcting the financial management deficiencies that impair DOD’s ability to prepare reliable and timely financial management information and ensure that its financial statements are validated as ready for audit by September 30, 2017. Further, the NDAA for Fiscal Year 2014 mandates an audit of DOD’s fiscal year 2018 department-wide financial statements and submission of those results to Congress by March 31, 2019. Since DOD management relies heavily on budget information for day-to-day management decisions, the DOD Comptroller designated the SBR as an audit priority.\nIn response to difficulties encountered in preparing for an SBR audit, DOD reduced the scope of initial SBR audits beginning in fiscal year 2015 to focus on current-year budget activity reported on a Schedule of Budgetary Activity. This is an interim step toward achieving an audit of multiple-year budget activity required for an audit of the SBR.\nIn the last quarter of fiscal year 2014, each military service, including the Navy, asserted audit readiness on its General Fund Schedule of Budgetary Activity. The fiscal year 2015 Schedule of Budgetary Activity reflects the balances and associated activity related only to budgetary authority on or after October 1, 2014. In December 2014, DOD contracted with an IPA, for the audit of the Navy’s fiscal year 2015 Schedule of Budgetary Activity. In February 2016, the IPA issued a disclaimer of opinion on the Navy’s Schedule of Budgetary Activity and identified pervasive control deficiencies in the Navy’s decentralized financial management and information technology environment. Navy management concurred with the findings in the IPA’s report and stated that it will develop and execute corrective actions to address the IPA’s recommendations, including those related to FBWT.", "In May 2010, the DOD Comptroller issued the FIAR Guidance to provide a standard methodology for DOD components to follow in developing an audit strategy and implementing FIPs. The FIAR Guidance defines DOD’s strategy, goals, roles and responsibilities, and procedures for the components to become audit ready. Specifically, the guidance provides a standard methodology that DOD components are required to follow in developing and implementing FIPs. These plans, in turn, provide a framework for planning, performing, documenting, and monitoring efforts to achieve auditability. To manage their improvement efforts, components may develop multiple FIPs, including plans related to specific assessable units, which can be information systems supporting financial statement line items or other discrete portions of the program.\nThe FIAR Guidance describes the five audit readiness phases and activities that DOD reporting entities (including the Navy) should include in their FIPs. The five audit readiness phases are Discovery, Corrective Action, Assertion/Evaluation, Validation, and Audit. Each phase includes multiple tasks and activities that reporting entities should complete and the corresponding required deliverables. (App. II identifies the detailed FIAR tasks and required deliverables for each of these phases.) Most of the audit readiness process occurs in the Discovery and Corrective Action phases. In the Discovery phase, entities document their processes and identify, test, and assess their controls and evaluate and confirm the existence of documentation supporting relevant financial statement assertions. In the Corrective Action phase, entities develop and execute plans to address identified deficiencies and verify implementation of corrective actions. In the last three phases, a reporting entity (1) asserts its audit readiness, (2) has its assertion independently validated, and (3) employs an IPA firm to perform a financial audit. The Navy asserted audit readiness but did not complete the Corrective Action phase or validate the assertion because of time constraints and moved directly into an audit of its Schedule of Budgetary Activity by an IPA firm.", "The Navy’s FBWT FIP provides a framework for planning, executing, and tracking essential steps with supporting documentation to achieve audit readiness for its FBWT. Figure 1 shows important milestones and events in Navy’s FBWT FIP and overall audit readiness efforts.\nIn April 2013, the Navy asserted that its FBWT process was audit ready. The scope of the Navy’s audit readiness assertion began with the feeder systems that provide collection and disbursement transactions and extended through posting these transactions to DFAS’s Defense Departmental Reporting System - Budgetary (DDRS-B). At the time of the Navy’s assertion in April 2013, the Navy reported that 21 of 33 key controls that it had identified for FBWT were operating effectively. The Navy further reported that it had developed corrective action plans for the remaining 12 controls and the corrective actions were under way.\nSubsequent to the Navy’s assertion, in May 2013, the DOD OIG initiated a review of the Navy’s FBWT assertion to determine audit readiness. Because of the significance of its findings, including that the Navy did not include in its assertion all significant systems affecting the FBWT line item, the DOD OIG did not complete its review. In August 2013, the DOD OIG provided the Navy with informal feedback, including areas for improving its FBWT audit readiness. In February 2014, in response to the DOD OIG’s feedback and to support the FBWT-related line items on its financial statements, the Navy expanded the scope of its FBWT audit readiness efforts to include all systems affecting the financial statement line items, including the Defense Departmental Reporting System - Audited Financial Statements (DDRS-AFS) system. Although the Navy expanded the scope of FBWT audit readiness efforts through financial statement compilation and reporting, it did not reassert FBWT audit readiness.\nIn March 2014, the DOD OIG began another engagement, which involved a review of the Navy’s FBWT reconciliations. A DOD OIG official told us that this engagement did not include a review of the Navy’s FBWT assertion, but rather was to determine whether the Navy’s FBWT reconciliation was effective, supportable, and sustainable.\nIn September 2014, DOD officials announced that all military services and many defense agencies had asserted General Fund Schedule of Budgetary Activity audit readiness. In December 2014, a contract was signed with an IPA to audit the Navy’s fiscal year 2015 General Fund Schedule of Budgetary Activity. For fiscal year 2015, the Navy’s Schedule of Budgetary Activity and FBWT were based on funding from 19 General Fund appropriation accounts. The IPA was to determine whether the Schedule of Budgetary Activity and related notes were fairly presented, in all material respects, in accordance with U.S. generally accepted accounting principles.\nIn January 2015, after the Navy performed additional internal control testing, it reduced the total number of key internal controls for FBWT from 33 to 31. At that time, the Navy reported that 25 of the 31 controls were deemed to be operating effectively and that corrective actions were under way for the remaining 6 key controls.\nIn April 2015, the DOD OIG issued a report on the process the Navy uses to reconcile its FBWT accounts. Reconciling FBWT activity records with the Department of the Treasury (Treasury) is similar to reconciling a checkbook to a bank statement. The Treasury Financial Manual requires agencies to reconcile their FBWT accounts to Treasury balances on a monthly basis. In its report, the DOD OIG noted several findings, including that the Navy (1) did not use general ledger data as source data for FBWT reporting, (2) had difficulty identifying the universe of transactions supporting the FBWT balance, and (3) may have used unreliable computer-processed data from two FBWT-related systems with reported significant deficiencies in internal controls.\nFurther, in February 2016, the IPA issued a disclaimer of opinion on the Navy’s Schedule of Budgetary Activity and identified material weaknesses in internal control. One of the material weaknesses included controls over FBWT reporting and reconciliations, including the Navy’s related controls over its third-party service provider. As noted above, Navy management concurred with the findings in the IPA’s report and stated that it will develop and execute corrective actions to address the IPA’s recommendations.\nGoing forward, DOD’s goals are to assert audit readiness for existence and completeness of its mission-critical assets by June 2016 and to assert full financial statement audit readiness by September 30, 2017. FBWT audit readiness is a step in achieving full financial statement audit readiness.", "Although the Navy included all the required audit tasks for the Discovery phase in developing its FBWT FIP, it did not fully implement certain required activities within these tasks in accordance with the applicable FIAR Guidance. These included activities in all four key tasks of the Discovery phase, which requires the Navy to (1) perform statement-to- process (process) analysis, (2) prioritize audit readiness efforts, (3) assess and test internal controls, and (4) evaluate supporting documentation. The purpose of these tasks is to improve financial information for Navy management and provide information to support the financial statement audit. Completion of these tasks remains important because FBWT collections and disbursements are integral to the Navy’s Schedule of Budgetary Activity, which is currently undergoing a second year audit for fiscal year 2016. Further, the FBWT line item is included on the Navy’s balance sheet, which is expected to be audited when the Navy undergoes the full financial statement audit planned for fiscal year 2018.", "The FIAR Guidance states that reporting entities are to perform a process analysis. We found that the Navy did not implement certain tasks for documenting the FBWT process, as required by the FIAR Guidance. The process analysis includes tracing from a summary amount, such as a line item on a financial statement, to underlying support, such as accounts in the general ledger, and support for those accounts, such as subledgers and transactions.\nOne of the purposes of the process analysis is to provide information on the flow of data through the various systems to the financial statements. To develop the process analysis, reporting entities are to identify assessable units, business processes, systems, and other characteristics associated with amounts reported in financial statement line items. A process analysis describes the process, such as military pay, and includes a system analysis depicting asset or transaction classes, underlying processes, assessable units and subunits, and associated systems. The Navy prepared two process analyses for the FBWT assertion package, one in April 2013 and the second in February 2014, when it expanded the scope of its FBWT audit readiness efforts to include DDRS-AFS and the FBWT-related financial statement line items. The Navy’s April 2013 process analysis identified collections and disbursements as assessable units for the FBWT process and the Navy’s general ledgers as sub-assessable units. While both of these analyses identify the key systems involved in the FBWT process, neither fully documents the flow of data through the various systems to the financial statements.\nAlthough the Navy provided narratives that describe the FBWT systems, the narratives did not include certain significant events in the flow of collection and disbursement transactions from feeder systems into the financial statements. Among the events not included was the reversal of general ledger amounts and other entries. Navy officials told us that the narratives they provided in the FBWT assertion were based on the original April 2013 FBWT scope, that is, from feeder systems to DDRS- B. In February 2014, in response to DOD OIG concerns regarding the lack of agreement of FBWT financial statement amounts to the general ledger and supporting transactions, the Navy expanded the scope of the FBWT audit readiness efforts through the financial statement line item. Navy officials said that they did not apply FIAR methodology to any new items included in the expanded scope of the FBWT audit readiness efforts. Because of the limited time remaining until the audit of the fiscal year 2015 Schedule of Budgetary Activity, the Navy did not pursue an additional FBWT validation of assertion.\nIn the Navy’s case, the process analysis is particularly important for understanding the FBWT financial reporting process because the Navy’s transactions do not follow the typical flow of data used to produce financial statements. Generally, the flow is from subsidiary ledger to general ledger to trial balance to financial statements. Without a complete FBWT process analysis and system narratives, internal controls and risks for each of the systems in the process may not be readily identified and appropriately tested.\nAs shown in figure 2, the Navy’s FBWT financial reporting process is complex, incorporates multiple information systems, and is based on systems originally created for budgetary reporting and support of other business functions. Figure 2 and the related narrative provide an overview of the Navy’s FBWT data flow for financial reporting. A more detailed description of the Navy’s FBWT data flow is included in appendix III.\nThe original systems include subsidiary ledgers (Program Budget Information System (PBIS) and Defense Cash Accountability System (DCAS)), a budgetary reporting system (DDRS-B), and its general ledger systems. These systems were modified over time to provide financial reports and data for financial statement compilation.\nOur analysis found that the Navy’s FBWT process relies on subsidiary ledgers PBIS and DCAS to distribute (allocate) the Navy’s funds to the general ledgers; distribute collection and disbursement transaction information to the forward summary data to the DFAS budgetary reporting system (DDRS-B) for inclusion in the DFAS audited financial statements system (DDRS-AFS), which ultimately creates the Navy’s consolidated financial statements.\nAnother important activity in the process analysis is the quantitative drilldown, which provides the sources to support a summarized amount, such as a financial statement line item. The FIAR Guidance requires the preparation of a level I and level II quantitative drilldown depicting dollar activity or balances for each assessable unit.\nA level I quantitative drilldown provides the first level of data sources, the assessable units, that make up the summarized amount on a financial statement.\nA level II quantitative drilldown provides the sub-assessable units that make up the amounts in the level I quantitative drilldown.\nNavy officials told us that they did not prepare a level I quantitative drilldown for the Navy’s FBWT assessable units, showing how FBWT amounts are summarized for financial reporting, as they did not think this requirement was applicable for FBWT. The FIAR Directorate, in its review of the Navy’s FBWT assertion package, also determined that the quantitative drilldowns called for in the FIAR Guidance were not applicable. A FIAR Directorate official noted that the quantitative drilldown is intended to prioritize and disaggregate assessable units at the early stages of FIAR execution. A comprehensive reconciliation of the detailed transactions to the financial statements occurs later on. The FIAR Directorate official further noted that quantitative drilldowns by assessable unit were not necessary in this FIP because assessable units, such as military pay or contracts, are covered in other FIPs. Although the Navy and the FIAR Directorate said that a quantitative drilldown was not applicable, a level I quantitative drilldown for FBWT is critical for determining all the sources of transactions, including journal vouchers, comprising the population of transactions, as well as for prioritizing audit efforts. For example, system-generated entries and journal vouchers occur within DDRS-B. These journal vouchers are a source of activity affecting FBWT that according to FIAR Guidance, should be prioritized for testing. Without identification and an understanding of the entire population of transactions, including journal vouchers and other system- specific entries that a drilldown will help identify, Navy management and the auditor will not have information important for an understanding of the source of transactions, which is necessary to assess risk and determine the level of audit work necessary.", "Other audit readiness issues resulting from the Navy’s FBWT process are its reconciliations and transactions posted to suspense accounts. The Navy’s FBWT reconciliation process is both complex and time- consuming. The Navy has 19 general funds (appropriations) and a FBWT account for each general fund, each of which the Treasury Financial Manual requires to be reconciled monthly to Treasury accounts. The diverse nature of the numerous feeder systems provides a large volume of transactions, and the Navy’s complex FBWT process complicates the reconciliation process. The Navy’s reconciliation process is further described in appendix IV. Suspense accounts have been a long-standing problem at DOD. For example, in fiscal year 2003, Congress authorized DOD to write off long-standing debit and credit transactions reported in suspense accounts. DOD subsequently reported that it wrote off transactions with an absolute value of $35 billion. In April 2014, we reported that DOD had recorded billions of dollars of disbursement and collection transactions in suspense accounts over the years because the proper appropriation accounts could not be identified and charged, generally because of coding errors. More recently, in March 2015, the DOD OIG withdrew its opinion on the USMC fiscal year 2012 Schedule of Budgetary Activity because of suspense accounts held at Treasury that contained USMC transactions that had not been posted to valid appropriations. Appendix V provides more information on the issues and extent to which DOD and the Navy use suspense accounts.", "The Navy did not prioritize certain FBWT audit readiness efforts required by the FIAR Guidance to provide reasonable assurance that its audit readiness efforts were adequate. Because assessable units provide the focus for financial improvement efforts, FIAR Guidance requires the prioritization of audit readiness efforts, including ranking assessable units in order of quantitative materiality and developing qualitative factors affecting audit readiness. The FIAR Guidance also requires documenting the audit readiness strategy. However, the Navy did not prioritize its FBWT audit readiness efforts, quantitatively or qualitatively, or fully implement its audit readiness prioritization and strategy for key information systems prior to assertion. Without prioritization, the Navy cannot reasonably assure that it will first address the highest-risk areas within the FBWT process and information technology.", "Navy officials told us that they did not produce a prioritization and audit strategy document because they considered FBWT systems complete, as they each contained 100 percent of the transactions. DOD’s FIAR Directorate reviewed the Navy’s FBWT assertion documentation and agreed with Navy officials, indicating that the “comprehensive nature of the FBWT FIP assertion” (1) did not lend itself to prioritization within the SBR assessable unit or audit segment and (2) did not require any follow- up prior to examination. However, certain activity is unique to each system, including system-generated entries, adjustments to reconcile to Treasury, and consolidation and elimination entries. As previously noted, a level I quantitative drilldown is critical for audit readiness and would show how each FBWT system is unique and the extent of system-specific activity, and would allow each FBWT system to be prioritized for audit purposes and assessed for risk. The FIAR Guidance states that agencies should rank each assessable unit in terms of risk and in order of quantitative materiality, with largest dollar activity being the highest priority. Further, in connection with performing a financial statement audit, government auditing standards state that the auditor gains an understanding of the operating environment and assesses key controls over information systems. While the same or similar transactions flow through each of the Navy’s FBWT systems, each system also includes unique activity. For example, DDRS-B includes system-generated entries that are not in the lower-level system of DCAS. In addition, qualitative factors, such as system ownership, can affect risk to varying degrees. By assigning the same priority to all of the FBWT systems, without regard to quantitative and qualitative factors and their effects on risk, the Navy cannot reasonably assure that it initiates audit readiness efforts and corrective actions for the higher-risk systems first.", "For an audit readiness plan for key information technology systems, the Navy provided a schedule that identified 22 relevant systems, 16 of which the Navy deemed key FBWT systems. For these 16 systems, the Navy noted that to assess audit readiness, 11 systems would receive self- assessments, 4 systems would receive independent assessments, and for 1 system the assessment type had not yet been determined. However, the Navy indicated that only 6 of the self-assessments and all 4 of the independent assessments were completed. For the remaining 6 key FBWT systems, the Navy did not provide planned start dates or expected completion dates or indicate when it would obtain audit readiness assurance for these systems. Navy officials thought the systems inventory schedule provided with the assertion package met the FIAR requirement for prioritization of systems. However, in our view, the Navy’s schedule did not meet the FIAR Guidance requirement to prepare an assessable unit strategy document listing all assessable units prioritized by quantitative rank and adjusted for significant qualitative factors and scoping out legacy systems and processes that will not be part of the audit-ready environment. The Navy’s lack of prioritization of key information technology systems used in the FBWT process limits management’s ability to focus audit readiness efforts on the most important systems. Further, such a prioritization would also provide information to auditors on the effectiveness of controls for these systems.\nFurther, we noted that independent reports and reviews of key FBWT systems identified serious internal control deficiencies with reporting (DDRS-B), accounting (DCAS), and budgetary systems (PBIS). Statement on Standards for Attestation Engagement No 16 reports on controls for a service organization incorporating DDRS-B included an adverse opinion for the period March 1 to November 30, 2014, and a qualified opinion for the period December 1, 2014, to July 31, 2015, due primarily to ineffective controls. The reviews of DCAS and PBIS identified significant deficiencies in internal controls. Without effective controls over key systems involved in the FBWT process, management may not have reasonable assurance that this financial statement line item is audit ready.", "The Navy did not fully implement certain FBWT internal control and assessment activities required by the FIAR Guidance. Specifically, the Navy did not document information technology general computer controls for significant systems or the hardware and software interfaces as required by the FIAR Guidance. In addition, as previously noted, the Navy did not sufficiently complete FIAR-required data flowcharts and system narratives. This includes an understanding of how data are processed and transferred in the various systems and how they interact with other data sources through the FBWT process to the financial statements.\nAn important activity required in the key FIAR task of assessing and testing controls is the preparation of systems documentation to include or describe system narratives and flowcharts; risk assessments and internal control worksheets documenting its financial statement assertion risks; control activities and information technology general computer controls for significant systems, applications, or microapplications; system certifications or accreditations; system, end user, and systems documentation locations; and hardware, software, and interfaces.\nWhile the Navy prepared system narratives, flowcharts, financial reporting objectives, and control activities and included them in the FBWT assertion package, it did not prepare documentation of general computer controls for significant systems; system certifications or accreditations; system, end user, and systems documentation locations; or a description of hardware, software, and interfaces as required by the FIAR Guidance. Also, the system narratives and flowcharts the Navy provided did not sufficiently disclose the flow of data. This includes the Navy’s collection and disbursement activity through the financial statement line items, including FBWT on the balance sheet and outlays on the SBR. For example, as previously noted, the narratives did not include discussion of the reversal of general ledger transactions or other entries within DDRS-B.\nNavy officials told us that some of the missing systems documentation items might have been included in another audit segment or assertion package. However, the Navy did not provide evidence to support that claim, and no reference to another assertion package was made in the FBWT assertion package. According to the FIAR Guidance, documentation of performance of the required procedures for each FIP task must be completed and included in each applicable assertion package. Once the scope of the FBWT FIP was expanded to include all systems through the financial statement line item, FBWT audit readiness officials did not ensure that all required audit readiness procedures within the expanded scope were performed and the documentation supporting the procedures was available for auditors. Complete and accurate system narratives and flowcharts, and documentation of general computer controls, help to provide management and the auditor with information on the systems environment and data flow, which they use to prioritize audit efforts.\nFurther, in preparing its April 2013 internal control assessment, the Navy identified key internal controls in the FBWT process, but it did not identify those controls by assessable unit as required by FIAR Guidance. The FIAR Guidance for this task requires (1) preparing an internal control assessment document for entity-level controls and for each assessable unit and (2) summarizing control activities that are appropriately designed and in place. Navy officials told us that several years ago they assembled a matrix of controls to be assessed. They organized the controls by the FBWT area that the controls supported or by control owner, and they thought that this met the FIAR Guidance requirement. Some of the internal controls the Navy identified and tested may be related to an assessable unit. However, the Navy did not identify controls for each assessable unit. Identifying controls by assessable unit is important for determining whether assessable units, sub-assessable units, and associated systems are producing reliable information and helps link systems and controls to the transaction flows. As a result, the Navy is missing an opportunity to identify and correct control deficiencies for the key systems that could affect its FBWT audit readiness. For example, DCAS is the primary subledger used to process the universe of collection and disbursement transactions for FBWT. Although the Navy did identify some controls involving DCAS, it did not identify internal controls by system or assessable unit. Therefore, the Navy does not have assurance that DCAS is operating as intended and that output from the system is reliable.", "The Navy’s substantive testing for key supporting documents may not provide sufficient evidence that its efforts to produce supporting documentation are sustainable for future audits. FIAR-required activities for this task include preparation of the transaction population, reviews of unusual or invalid transactions, and identification of key supporting documents. The FIAR Guidance also requires developing a test plan, selecting random samples from the population of transactions, and testing individual transactions and balances to confirm the existence and evaluate the quality of supporting documentation for relevant financial statement assertions. An evaluation of key supporting documentation is important for determining whether the Navy would be able to support amounts presented in the financial statements and provide an external auditor with sufficient and appropriate evidence to perform the audit.\nIn the first round of substantive testing, the Navy identified significant deficiencies that resulted in the test failing. The Navy then performed another round of substantive testing, which, although it passed, may not provide sufficient evidence of the Navy’s ability to produce needed documentation in a sustained manner for future audits. In the second round of testing, the Navy completed 13 procedures, 3 of which involved statistical sampling while the other 10 relied on analytic or non-random sampling procedures. In both rounds of testing, documentation was limited to a 3-month period, which, even if successful, may not provide sufficient evidence of the consistent availability of supporting documentation for a 12-month period, or the ability to timely produce needed documentation over a sustained period.\nBecause the Navy performed two rounds of substantive tests, Navy officials considered this FIAR task implemented. Further, Navy officials told us that after they asserted audit readiness, they anticipated that they would be under audit by an IPA soon thereafter, so time constraints did not permit further testing. However, lack of supporting documentation has historically been an issue on DOD audits. This was also the case in the audit of the Navy’s fiscal year 2015 Schedule of Budgetary Activity, in which the IPA disclaimed an opinion, in part, because the Navy could not provide sufficient, appropriate audit evidence to support transactions. Without performing adequate substantive testing, the Navy does not have reasonable assurance of the availability of key documentation to support amounts presented in the financial statements.\nFurther, none of the procedures tested the supporting documentation for supplemental quarterly reconciliations. Supplemental quarterly reconciliations provide a secondary check on the accuracy of monthly reconciliations and on other monitoring procedures. Both monthly and quarterly reconciliations are key internal controls for FBWT and testing for these reconciliations provide reasonable assurance that supporting documentation is maintained and available for financial statement audits. In addition, the Navy did not perform reviews to identify unusual, invalid, or missing data as required by the FIAR Guidance. Specifically, the FIAR Guidance requires such reviews on the universe of transactions to identify and address (1) unusual or invalid transactions and (2) abnormal balances or missing data fields. Navy officials stated that these FIAR Guidance tasks were not performed because they thought these tasks would be performed in another FIP. However, we were not provided with evidence that such tasks were included in another FIP and no reference to another FIP was made in the FBWT assertion package. FIAR Guidance requires that documentation of performance of the required procedures for each FIP task be completed and included in each applicable assertion package. Without this testing, there is increased risk that errors may not be detected.", "The Navy has made progress in performing its key audit readiness activities, including the development of its FBWT FIP to help guide implementation of its General Fund SBR improvement efforts. However, the Navy did not fully complete certain tasks in accordance with the FIAR Guidance prior to asserting audit readiness for FBWT, a significant account for the Navy’s as well as DOD’s department-wide SBR auditability. FIAR Guidance Discovery phase tasks that the Navy did not fully complete include the FBWT process analysis, system narratives, quantitative and qualitative drilldowns, prioritization of audit readiness efforts, and documentation of general computer controls. In addition, although the Navy performed substantive tests for supporting documentation, such testing may not provide sufficient evidence of the Navy’s ability to produce needed documentation in a sustained manner for future audits.\nFor the most part, the Navy did not complete these tasks because Navy officials believed that their efforts had satisfied the FIAR Guidance requirement, that certain tasks did not apply to the FBWT effort, or that time constraints prevented completion of the tasks. However, it is critical that FBWT tasks are adequately evaluated and documented. Although required audit readiness procedures for FBWT were not fully completed, the Navy decided to go forward with an audit of its Schedule of Budgetary Activity. The IPA’s fiscal year 2015 audit resulted in a disclaimer of opinion and the reporting of material weaknesses in internal control and related recommendations, including several recommendations pertaining to FBWT. Recommendations made in this report are in addition to the recommendations made in the IPA’s audit report. Successful completion of the FIAR Discovery phase tasks for FBWT may identify additional deficiencies that affect the auditability of the Navy’s financial statements. By not fully identifying and remediating its deficiencies specific to the FBWT effort, the Navy’s ability to achieve audit readiness and remediate internal control weaknesses is hindered. Resolution of these deficiencies is crucial to the Navy’s and DOD’s efforts to meet the September 30, 2017, statutory target date for validating audit readiness of DOD’s full financial statements.", "To improve the Navy’s implementation of the FIAR Guidance for its General Fund FBWT FIP and facilitate efforts to achieve SBR auditability, we recommend that the Secretary of the Navy direct the Assistant Secretary of the Navy, Financial Management and Comptroller, to take the following seven actions in the Discovery phase.", "Update FBWT data flowcharts and narratives to fully describe the flow of data from the Navy’s receipt of collection and disbursement transaction information through the financial statement line items, including the reversal of general ledger trial balance data generated by the automated system and other entries made within DDRS-B.\nPrepare a level I quantitative drilldown in accordance with the FIAR Guidance.", "To prioritize audit readiness efforts for the key FBWT systems, prepare an audit strategy that identifies for each system (1) the Navy’s plan for assessing the system to gain assurance that the system can be relied on; (2) the assessment types, including prioritizing the assessments based on qualitative and quantitative factors for each system; and (3) planned start and completion dates of these assessments for each system.", "Prepare, in accordance with FIAR Guidance, the documentation of control activities and information technology general computer controls for significant systems; system certifications or accreditations; system, end user, and systems documentation locations; and hardware, software, and interfaces.\nPrepare an internal control assessment document for each assessable unit, summarizing control activities that are appropriately designed and in place.", "Perform sufficient testing for supporting documentation to reasonably determine whether such documentation, including that for key reconciliations, is available in a sustainable manner for future audit efforts.\nFor each fiscal year expected to be under audit, identify and address unusual and invalid transactions, abnormal balances, and missing data fields in the universe of collection and disbursement transactions.", "We provided a draft of this report to the Navy for review and comment. In its written comments, reprinted in appendix VI, the Navy concurred with our seven recommendations. In response to our recommendations, the Navy stated that it has actions planned, taken, or under way to (1) develop procedures and documentation that describe the processes associated with the flow of data; (2) prepare a quantitative drilldown; (3) prioritize audit readiness efforts for key FBWT systems; (4) document control activities, information technology general computer controls for significant systems, systems documentation locations, and hardware, software, and interfaces; (5) prepare an internal control assessment document; (6) test effectiveness of FBWT controls, which includes assessing the availability of supporting documentation; and (7) obtain monthly data from DFAS on invalid FBWT transactions. The Navy also provided technical comments, which we have incorporated as appropriate.\nWe are sending copies of this report to the Secretary of Defense; the Deputy Chief Management Officer; the Under Secretary of Defense (Comptroller/Chief Financial Officer); the Deputy Chief Financial Officer; the Director, Financial Improvement and Audit Readiness; the Secretary of the Navy; the Assistant Secretary of the Navy; the Chief Management Officer of the Navy; the Directors of the Defense Finance and Accounting Service and Defense Finance and Accounting Service, Cleveland; the Director of the Office of Management and Budget; and interested congressional committees. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-9869 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff members who made key contributions to this report are listed in appendix VII.", "The objective of our review was to determine the extent to which the Navy developed and implemented the Discovery phase for its General Funds’ Fund Balance with Treasury (FBWT) financial improvement plan (FIP) in accordance with the Financial Improvement and Audit Readiness (FIAR) Guidance. This objective was applied to FBWT for three of the Navy’s general ledgers—the Standard Accounting and Reporting System – Field Level, the Standard Accounting and Reporting System – Headquarter Claimant Module, and the Navy Enterprise Resource Planning. We excluded from our review the Navy’s fourth general ledger, Navy Systems Management Activity, because of its classified activity. To address our objective, we analyzed the Navy’s FBWT FIP to determine whether it contained the applicable elements and tasks to be performed for the Discovery phase of audit readiness as required by the FIAR Guidance. We identified and reviewed the Navy’s FBWT FIP key deliverables required by the FIAR Guidance, such as system narratives and flowcharts, internal control assessments, and the Navy’s test results. We performed a site visit to the Defense Finance and Accounting Service (DFAS), Cleveland, and walked through the FBWT process, reconciliations, and related systems. We interviewed Navy, DFAS, and FIAR Directorate officials within Department of Defense’s (DOD) Office of the Under Secretary of Defense (Comptroller) to obtain explanations and clarifications on documentation we reviewed. In addition, we reviewed the results of DOD’s Office of Inspector General audits as well as independent public accountant examinations of audit readiness efforts related to the Navy’s FBWT.\nWe conducted this performance audit from April 2014 to August 2016 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 objective.", "Table 1 presents the reporting entity methodology in the Financial Improvement and Audit Readiness Guidance, which the Navy is required to follow in implementing its Fund Balance with Treasury financial improvement plan.", "The Navy’s Fund Balance with Treasury (FBWT) financial reporting process incorporates multiple information systems and is based on systems originally created for budgetary reporting and support of other business functions. The original systems include transaction-processing budget and reporting systems and its general ledger systems. These systems were modified over time to also provide financial reports and data for financial statement compilation. As a result, as shown in figure 2, the flow of the Navy’s transactional data does not follow the typical flow of data from subsidiary ledger to general ledger to trial balance to financial statements. The FBWT process relies on subsidiary ledgers to distribute and record the Navy’s funds and to record collection and disbursement transaction information to the general ledgers. Data are forwarded from subsidiary ledgers to the budgetary reporting system for inclusion in the financial statement system, which ultimately creates the Navy’s consolidated financial statements.\nThis process results in some transactions flowing to the financial statements that are not posted in any of the general ledgers. This bypass of the general ledgers for financial statement preparation represents a significant audit challenge because the general ledgers do not agree with the Navy’s financial statements for FBWT. General ledgers are typically an entity’s primary system of record, where all transactions are recorded and from which financial statements are prepared. In an audit, for supporting FBWT financial statement line item amounts, it is essential that the Navy reconcile any differences between the financial statements and the general ledgers, and between the general ledgers and underlying transactions, to assure that all transactions in the financial statements are recorded in the general ledgers. Specifically:\nAccording to the Navy, the Defense Cash Accountability System (DCAS) contains the universe of collection and disbursement transactions, except for timing difference transactions. The Navy’s FBWT process begins when collection and disbursement transaction information from the Navy’s multiple disbursement feeder systems is posted to DCAS. When DCAS edit checks identify a transaction with missing or incorrect account coding information, the transaction is not distributed to the general ledgers and remains in DCAS as an “undistributed” transaction until it can be investigated and the necessary information obtained. DCAS distributes all other transactions to one of the Navy’s general ledgers. Each month, DCAS transmits summary collection and disbursement information, including undistributed transactions, to the Defense Departmental Reporting System - Budgetary (DDRS-B). DCAS is also used for the Navy’s fund balance reconciliation process with the Department of the Treasury’s (Treasury) Central Accounting Reporting System (CARS).\nDDRS-B has historically been used as a budgetary reporting tool for numerous Navy commands and Navy headquarters, but it has also been adapted for financial reporting. It receives budgetary information from the Program Budgetary Information System and proprietary information from DCAS. DDRS-B also receives summary information from the general ledgers. To avoid duplication of transactions, system-generated journal entries are made within DDRS-B that are intended to reverse the general ledger transactions, which were also posted by DCAS. The general ledger is typically the system of record for an entity’s financial reporting. However, since DCAS is considered to contain the universe of the Navy’s collection and disbursement transactions, DCAS transactions—not the summary transaction information from the general ledgers—flow through DDRS-B to the financial statements. Also, within DDRS-B, journal entries (forced- balance entries) are prepared and posted to temporarily make the balances in the Navy’s FBWT equal to the balances in Treasury’s CARS, until such differences can be reconciled as required by the Treasury Financial Manual. Navy officials said that forced-balance journal entries are eventually reconciled to transaction detail and are reversed in the following period; they are not posted to the Navy’s general ledgers. As a result, the Navy’s general ledger balances do not directly agree with the Navy’s financial statements.\nThe Defense Departmental Reporting System - Audited Financial Statements (DDRS-AFS) receives an adjusted trial balance from DDRS-B. Consolidation and elimination entries are posted in DDRS- AFS to produce the Navy’s financial statements. For the Navy, net expenditure amounts on the Schedule of Budgetary Activity and financial statements are supported by DDRS-AFS, then DDRS-B, then DCAS, and then numerous feeder systems, while the general ledgers are omitted from this drilldown process. Journal entries posted in DDRS-B and undistributed transactions in DCAS are not posted in the Navy’s general ledgers, but are reflected in financial statement FBWT line item balances.", "The Navy’s Fund Balance with Treasury (FBWT) reconciliation process requires investigating thousands of undistributed transactions. The Navy has 19 general funds (appropriations) and a FBWT account for each general fund, which the Treasury Financial Manual requires to be reconciled monthly to Department of the Treasury (Treasury) accounts. The diverse nature of the numerous feeder systems providing the transaction information also complicates the FBWT reconciliation process. The Navy receives transaction information from both centralized and decentralized disbursement feeder systems, including the Centralized Automated Disbursing System, Intra-Governmental Payment and Collections, Mechanization of Contract Administrative Services, and other component reporting through the Defense Finance and Accounting Service (DFAS) Disbursing Station Symbol Numbers (DSSN) by Navy Shore DSSNs and Navy Ship DSSNs.\nThe complexity of the overall financial reporting process leads to difficulties in the FBWT reconciliation process. With multiple systems used in the process and the Navy’s unique process flow, additional reconciliations are required. Consequently, each month the Navy completes four reconciliations for each of its 19 general funds. Each quarter, the Navy prepares reconciliations for each of the 19 general funds as well as consolidating schedules and reconciliations between financial systems. As of March 2015, it was taking the Navy from 2 to 3 months from the end of each fiscal quarter to complete its FBWT reconciliations.\nIn the first quarter of fiscal year 2015, DFAS processed, through the Defense Cash Accounting System (DCAS), an average of 1.6 million nonpayroll Navy transactions per month. Of those transactions processed, an average of about 22,000 per month required intervention by DFAS and Navy FBWT reconciliation staff for them to be posted appropriately to a general ledger account. A transaction registered in the Navy’s DCAS and not distributed to one of the Navy’s general ledgers is a variance that requires human investigation and adjustment so it can be distributed and posted in one of the Navy’s general ledgers.\nTwo types of variances are a recurring part of the Navy’s FBWT reconciliation process: (1) forced balance entries, which are necessary to agree the Navy’s balances with Treasury’s balances until timing difference transactions can be resolved, and (2) undistributed transactions, which come from feeder systems and contain insufficient or incorrect coding. Reconciling forced balance entries and investigating undistributed transactions contribute to the labor and time required to reconcile the Navy’s FBWT. Figure 3 shows the reconciliation of Navy Treasury accounts to the Navy’s general ledger for each of the quarters for fiscal year 2014 and the variance at the end of each quarter.\nAs noted in figure 3, at the end of fiscal year 2014, the total of net forced balance entries and net undistributed transactions was $777 million, (1.0 percent of the Navy’s total net expenditures for the year).", "In fiscal year 2003, Congress authorized the Department of Defense (DOD) to write off long-standing debit and credit transactions that occurred before March 31, 2001, and could not be cleared from the department’s books because DOD lacked the supporting documentation necessary to record the transactions to the correct appropriations. DOD subsequently reported that it wrote off an absolute value of $35 billion, or a net value of $629 million, of suspense account amounts and check payment differences using this authority.\nCongress required GAO to review and report on DOD’s use of this write- off authority. DOD reported that as of December 31, 2004, after the write-off of $35 billion, it still had more than $1.3 billion (absolute value) of suspense amounts that were not cleared for more than 60 days, and DOD acknowledged that its suspense reports were incomplete and inaccurate. Our June 2005 audit report concluded that without compliance with existing laws and enforcement of its own guidance for reconciling, reporting, and resolving amounts in suspense and check differences on a regular basis, the buildup of current balances would likely continue, the department’s appropriation accounts would likely remain unreliable, and another costly write-off process could eventually be required.\nIn April 2014, we reported that DOD had recorded billions of dollars of disbursement and collection transactions in suspense accounts because the proper appropriation accounts could not be identified and charged, generally because of coding errors. (Table 2 shows a comparison of the Navy’s suspense account balances compared to total DOD suspense account balances based on data in our April 2014 report.)\nIn a letter dated March 23, 2015, the DOD Office of Inspector General (DOD OIG) withdrew its opinion on the U.S. Marine Corps’ (USMC) fiscal year 2012 Schedule of Budgetary Activity because of suspense accounts held by the Department of the Treasury (Treasury) that contained USMC transactions that had not been posted to valid appropriations. Because these suspense accounts contained unrecorded transactions from all DOD components, the DOD OIG was unable to quantify the number and dollar amount of USMC transactions that resided in the accounts and whether those transactions were material to the fiscal year 2012 USMC Schedule of Budgetary Activity. In addition to the variances identified in the Navy’s reconciliation process presented in figure 3, figure 4 identifies other transactions posted to Navy general ledger suspense accounts and other fund suspense account transactions not yet identified as belonging to Navy.\nIn addition to the undistributed transactions and forced-balance amounts shown in figure 3, the Navy has two types of suspense accounts:\nGeneral ledger suspense accounts represent unmatched transactions for expenditures and collections. These transactions are distributed from the Defense Cash Accounting System and are recorded in a general ledger against valid fund accounts but lack sufficient information to match them with another data element, such as an obligation.\nFund suspense accounts represent temporary holding accounts used to record unidentifiable general, revolving, special, or trust fund expenditures or collections that are not included in the Navy’s general ledgers. Fund suspense accounts can also include deposit accounts used to record money that the federal government owes to others, including state and local income taxes, security deposits, civilian pay allotments, foreign taxes, and estates of deceased service members.\nBalances in Navy suspense accounts totaled $191 million as of September 30, 2014, and represented only 0.3 percent of the Navy’s total net expenditures. The balances reported are net, meaning increases and decreases are added together, and do not reflect the gross amount in suspense accounts or the age of individual transactions.", "", "", "", "In addition to the contact named above, the following individuals made key contributions to this report: Francine DelVecchio, Doreen Eng, Maxine Hattery, Jason Kelly, Richard Kusman, Roger Stoltz (Assistant Director), and Chevalier Strong." ], "depth": [ 1, 2, 2, 1, 2, 3, 2, 3, 3, 2, 2, 1, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full h4_full h0_title", "h0_full h3_full", "h3_full", "h0_title h2_title h1_full", "h0_full", "", "", "", "", "h0_full h1_full", "h2_full", "", "h2_title", "", "", "", "h2_full", "", "h4_full", "", "h0_full", "", "", "", "", "", "" ] }

{ "question": [ "In what way did the Navy's analysis fail to document its FBWT process?", "Why is FBWT process analysis crucial for naval transactions?", "What are the dangers of proceeding without a complete FBWT process analysis?", "In what ways did the Navy fail to document information regarding their digital infrastructure?", "How did the FBWT assertion package fail to evaluate financial information systems?", "Why is it important to evaluate financial information systems, particularly by unit?", "What are the limits of the Navy's audit readiness efforts?", "Why is an evaluation of supporting documentation important for an auditing effort?", "What does the National Defense Authorization Act for Fiscal Year 2014 require?", "What guidance did the DOD Comptroller issue in line with the National Defense Authorization Act?", "What is the relationship between the Navy's General Fund FIP for FBWT and the General Fund SBR?", "What was the Navy's audit process from 2014 to 2016?", "What is the role of federal accountability in the U.S. government's financial workings?", "What was GAO's objective in their report on the Navy?", "What did GAO analyze in their report?" ], "summary": [ "The Navy did not fully document its FBWT process in system narratives and flowcharts. For example, the Navy's analysis did not explain the complex process that occurs within the Defense Departmental Reporting System - B, including merging data and deleting duplicative transactions.", "In the Navy's case, the process analysis is particularly important because the Navy's transactions do not follow the typical flow of data used to produce financial statements.", "Without a complete FBWT process analysis and system narratives, internal controls and risks for each of the systems in the process may not be readily identified and appropriately tested.", "Within the FBWT assertion package, the Navy did not document information technology general computer controls for significant systems or the hardware and software interfaces, as required.", "Also, the Navy did not identify internal controls by assessable units (e.g., information systems supporting financial statement line items or other discrete portions of the program).", "Identifying controls by assessable unit is important for determining whether assessable units, sub-assessable units, and associated systems are producing reliable information and helps link systems and controls to the transaction flows.", "Evaluate supporting documentation. Although the Navy performed substantive tests for supporting documents, such testing may not provide sufficient evidence of the Navy's ability to produce documentation in a substantive manner for future audits.", "An evaluation of key supporting documentation is important for determining whether the Navy would be able to support amounts presented in the financial statements or provide an external auditor with sufficient and appropriate evidence to perform the audit.", "The National Defense Authorization Act for Fiscal Year 2014 mandates an audit of DOD's fiscal year 2018 department-wide financial statements.", "To help achieve this, the DOD Comptroller issued the FIAR Guidance to provide a standard methodology for DOD components to follow to improve financial management and achieve audit readiness, and designated the SBR as an audit priority.", "Full implementation of the Navy's General Fund FIP for FBWT is essential to achieving audit readiness for its General Fund SBR.", "The Navy asserted Statement of Budgetary Activity (SBA) audit readiness as of September 30, 2014, and in February 2016 received a disclaimer of opinion on the audit of its SBA for fiscal year 2015.", "GAO is mandated to audit the U.S. government's consolidated financial statements, which cover activities and balances of executive branch agencies, including DOD.", "GAO's objective in this report was to determine the extent to which the Navy developed and implemented the Discovery phase of its General Fund FBWT FIP in accordance with the FIAR Guidance.", "GAO analyzed the Navy's FBWT FIP to determine whether it contained the tasks and activities required by the FIAR Guidance for the Discovery phase. GAO also reviewed the Navy's FBWT FIP key deliverables, such as process narratives and flowcharts, internal control assessments, and test results." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 1, -1, -1, -1, 0, -1, -1, -1, 0, 1 ], "summary_paragraph_index": [ 3, 3, 3, 5, 5, 5, 6, 6, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "Definition and Types of FGM/C", "Causes and Consequences of FGM/C", "Prevalence of FGM/C", "International Response to FGM/C", "State and USAID Strategies and Policies Related to FGM/C", "U.S. and UN Studies Have Identified Factors Contributing to the Persistence of FGM/C and Approaches to Address It", "Factors Contributing to the Persistence of FGM/C", "Influential Social Norm", "Religious Obligation", "Medicalization", "Law Enforcement Challenges", "Approaches to Addressing FGM/C", "Increasing Awareness and Enforcement of FGM/C Laws", "Community Education on Ending FGM/C", "Engaging Religious Leaders, Males, and Elders in Dialogue", "Media Campaigns", "Including FGM/C in Broader Gender Equality and Human Rights Efforts", "Alternative Rites of Passage", "State’s and USAID’s Efforts to Address FGM/C Abroad Are Limited", "State Provides Limited Assistance to Combat FGM/C", "State Has One Standalone FGM/C Program", "State Supports Projects Addressing Gender-Based Violence in Refugee Settings That May Include FGM/C", "U.S. Contributions to UNFPA and UNICEF Have Not Supported Their Joint Program on FGM/C", "Embassies Engage in Diplomatic Efforts to Raise Awareness about FGM/C", "State Human Rights Reporting Addresses FGM/C", "USAID’s Assistance Efforts to Combat FGM/C Are Limited", "Competing Priorities Limit USAID Funding for FGM/C", "USAID Had One Standalone FGM/C Program in 2014", "Some USAID Missions Identified Broader Programming That Includes FGM/C", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Percentage Distribution of Girls Who Have Undergone Female Genital Mutilation/Cutting by Type of Procedure", "Appendix III: List of Countries Where Female Genital Mutilation/Cutting Is Concentrated with Decrees or Legislation Related to the Practice, According to the United Nations Children’s Fund", "Appendix IV: GAO Contacts and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "FGM/C comprises all procedures that involve partial or total removal of the external female genitalia, or other injury to the female genital organs for non-medical reasons. The World Health Organization (WHO) classifies FGM/C into four major types:\nType I (clitoridectomy) partially or totally removes the clitoris and/or the skin around it;\nType II (excision) partially or totally removes the clitoris and the labia minora, with or without excision of the labia majora;\nType III (infibulation) narrows the vaginal opening through the creation of a covering seal formed by cutting and repositioning the labia minora and/or labia majora, sometimes through stitching, with or without removal of the clitoris; and\nType IV (other) includes all other harmful procedures, including pricking, piercing, incising, and scraping the genital area for non- medical purposes.\nAccording to the WHO, it is estimated that 90 percent of cases are Types I, II, or IV; 10 percent are Type III, the most extreme form of FGM/C.\nThe type of FGM/C commonly practiced varies by country, according to survey data presented by UNICEF. For example, survey data show that more than 20 percent of girls who underwent FGM/C in Djibouti, Eritrea, Niger, Senegal, and Somalia, experienced Type III (infibulation), whereas Type III represented 1 or 2 percent of cases in other countries, such as Egypt. Appendix II presents UNICEF data showing the percentage distribution of girls subjected to FGM/C by type of procedure in countries where data were available.", "The WHO notes that in every society where it is practiced, FGM/C is a manifestation of gender inequality that is deeply entrenched in traditional social, economic, and political structures. The practice is often considered a necessary part of raising a girl properly, and a way to prepare her for adulthood and marriage. FGM/C is often motivated by beliefs about what is considered proper sexual behavior and is linked to premarital virginity and marital fidelity.\nFGM/C has no health benefits and can have numerous short- and long- term adverse health consequences, according to the WHO. Short-term consequences can include severe pain, swelling, delayed or incomplete healing, and shock, as well as infections and excessive bleeding, which can lead to death. Long-term consequences may include chronic pain and infections, scar tissue, and menstrual and urinary tract problems. In addition, FGM/C can lead to sexual problems and obstetric complications, which increase the need for Caesarean sections and risks to the health of newborns. Transmission of HIV remains a longer-term risk because of increased risk of bleeding during intercourse as a result of FGM/C.", "Available data from nationally representative surveys show that FGM/C is concentrated in 30 countries and at least 200 million girls and women alive today have undergone some form of FGM/C, according to UNICEF (see fig. 1). Evidence suggests that FGM/C exists in some places in South America, such as Colombia, and elsewhere in the world including in India, Malaysia, Oman, Saudi Arabia, and the United Arab Emirates; however, no nationally representative data on FGM/C were available for these countries, according to UNICEF. The practice is also found in Europe, Australia, and North America, which are destinations for migrants from countries where the practice still occurs. UNICEF also estimates that more than 3 million girls annually are at risk for FGM/C in Africa. In some countries, including Djibouti, Guinea, and Somalia, the percentage of girls and women, aged 15 to 49, who have undergone FGM/C is over 90 percent. In most of the countries with available data, the majority of girls are cut before the age of 5, according to UNICEF. However, in Somalia, Egypt, Chad, and the Central African Republic, at least 80 percent of girls who have undergone FGM/C were cut between the ages of 5 and 14.\nUNICEF data show that the practice is becoming less common in many high-prevalence countries. For example, in Kenya and Tanzania, women aged 45 to 49 are approximately three times more likely to have undergone FGM/C than girls aged 15 to 19. In most countries where FGM/C is practiced, the majority of girls and women think it should end, and the percentage of females who support FGM/C is substantially lower than the share of girls and women who have undergone the procedure, according to UNICEF.\nIn addition, UNICEF reported in 2013 that 24 countries where FGM/C is prevalent have enacted legislation related to FGM/C (see app. III). These laws reportedly vary in their scope. UNICEF reports that some ban the practice only in medical facilities; others ban the practice anywhere.", "In 1993, the World Conference on Human Rights in Vienna recognized violence against women as a human rights violation, and the UN General Assembly included FGM/C in the definition of violence against women, stating that it violates women’s right to be free from cruel, inhuman, or degrading treatment. FGM/C also deprives girls and women from making the decision about a procedure that has a lasting effect on their bodies and infringes on their autonomy and control over their lives, according to the WHO.\nIn December 2012, the UN General Assembly adopted a resolution urging member states to condemn and work to eliminate all harmful practices that affect women and girls, in particular FGM/C, and to take all necessary measures, including enacting and enforcing legislation to prohibit FGM/C. Two years later, the UN General Assembly adopted another resolution calling upon member states to develop, support, and implement comprehensive and integrated strategies for the prevention of FGM/C, including training of medical personnel, social workers, and community and religious leaders to ensure that they provide competent, supportive services and care to women and girls who are at risk of or who have undergone FGM/C.\nIn September 2015, the UN General Assembly formally adopted the 2030 Agenda for Sustainable Development, along with a set of 17 Sustainable Development Goals and 169 associated targets. One of the 17 goals is “achieve gender equality and empower all women and girls” and one of the targets for this goal is to “eliminate all harmful practices, such as child, early and forced marriage and female genital mutilation.”\nIn 2008, UNFPA and UNICEF established the Joint Program on FGM/C, which represents the largest international effort to accelerate abandonment of this practice. The UNFPA-UNICEF Joint Program brings together both agencies’ expertise, often with grassroots community organizations, using a human rights-based approach to engage communities to act collectively to abandon the practice. The Joint Program also supports health and protective services for those who have undergone FGM/C. Donor countries make annual contributions directly to the Joint Program.\nDuring phase I of the Joint Program (2008-2013), 15 countries participated (see fig. 2). According to the 2013 evaluation of the Joint Program, funding limitations reduced the number of countries involved during phase 1. The overall budget for phase I was about $41 million over its 5 years. Phase II (2014-2017) currently is under way in 17 countries— the original 15 countries, as well as Yemen and Nigeria. Phase II aims for a 40 percent decrease in prevalence among girls 14 and younger in at least 5 countries, with at least 1 country declaring total elimination of the practice, by the end of 2017. The Joint Program estimated its budget for phase II to be $54 million over 4 years.", "Under the U.S. foreign policy framework, FGM/C is identified as a form of gender based-violence. In March 2012, USAID released its Gender Equality and Female Empowerment Policy, which provides guidance on incorporating gender issues—including gender-based violence—into development programming. In addition, State and USAID jointly developed the U.S. Strategy to Prevent and Respond to Gender-Based Violence Globally, released in August 2012. These two documents identify FGM/C as a form of gender-based violence but do not provide any specific guidance on assistance related to FGM/C. In addition, the Secretary of State announced in March 2016 the release of the United States Global Strategy to Empower Adolescent Girls, which includes the goal of reducing girls’ vulnerability to gender-based violence. The strategy highlights FGM/C as a form of gender-based violence.\nState’s and USAID’s set of standard indicators, developed to assess foreign assistance, includes nine standard indicators related to gender issues. Three of the nine indicators cover gender-based violence, which includes FGM/C; however, the indicators do not specify the type of gender-based violence addressed.\nIn 2000, USAID released guidance on FGM/C, incorporating this issue into its development agenda. USAID updated the guidance in February 2016, during the course of our review. The guidance recognizes FGM/C as a harmful, traditional practice that reflects deep-rooted gender inequalities and constitutes an extreme form of discrimination against women. The guidance states that USAID will support the integration of efforts to combat FGM/C into all aspects of the USAID program cycle where feasible and appropriate. It also states that USAID will assist countries in implementing their laws prohibiting FGM/C and support community-based programming to raise awareness of the harmful effects of this practice to reduce demand. USAID officials stated that the agency also plans to develop a resource guide on FGM/C that provides information for USAID missions and staff on how best to incorporate efforts to address FGM/C into their programming.", "", "FGM/C has persisted into the 21st century despite UN resolutions condemning this practice and the passage of laws banning it in many countries where it is prevalent, as UNICEF has reported. Recent U.S. and UN studies of efforts to address FGM/C have identified several factors contributing to its prevalence, including its power as a social norm, the belief that FGM/C is a religious obligation, the medicalization of the practice, and challenges enforcing existing laws.", "FGM/C is a powerful social norm—what communities believe and how they act and expect other members of that community to act—making its abandonment difficult, according to PRB and UNICEF. FGM/C is embedded in the culture and beliefs of many communities and ensures membership in these communities, according to PRB. If most families in a community practice FGM/C, it is difficult for an individual family to abandon the practice, according to UNICEF. UNICEF also reported that, among surveyed girls and women aged 15 to 49, the most commonly reported benefit of FGM/C is that it ensures social acceptance.\nBecause some communities view FGM/C as a social norm, it is viewed as a caring act. Parents may believe that FGM/C is in the best interest of their daughter, despite the physical harm it causes, in order to avoid social exclusion, according to UNICEF. In addition, the practice is exacerbated by poverty and poor education. FGM/C may signal that a girl is ready for marriage, which can spare a family the girl’s school expenses. Parents also may rely on the money received for marriages, according to an evaluation of the UNFPA and UNICEF Joint Program on FGM/C. In addition, prevalence is highest among daughters of women with no education and declines as the mother’s education level rises, according to UNICEF.", "The common belief that FGM/C is a religious obligation is a misconception, but one that contributes to its continued use, according to UNICEF. UNICEF notes that FGM/C is not mandated in any religious texts and predates the birth of Islam and Christianity. Scholars and activists have concentrated on demonstrating the lack of support within scriptures. However, the religious motivation for FGM/C is often intertwined with social norms and tradition, according to UNICEF. In addition, some communities believe the practice is a religious requirement that makes a girl spiritually “pure,” according to UNICEF. Thus, many who continue practicing FGM/C often cite religion as their motivation. In 4 of 14 countries surveyed, more than 50 percent of girls and women aged 15 to 49 regard FGM/C as a religious obligation, according to UNICEF. These countries were Mali, Eritrea, Mauritania, and Guinea.", "Another challenge in encouraging abandonment of FGM/C is the medicalization of the practice, which contributes to its perceived legitimacy, according to PRB. Medicalization refers to the performance of FGM/C by health care providers rather than traditional practitioners. According to PRB, 18 percent of girls and women worldwide who have been cut had the procedure performed by medical professionals. UNICEF reports that this percentage can be much higher in certain countries; for example, 77 percent of girls in Egypt and 41 percent of girls in Kenya who underwent FGM/C were cut by medical professionals. UNICEF found that medicalization of FGM/C may have increased as a result of the assistance community’s earlier focus on the harmful health risks of the practice to encourage abandonment of FGM/C without also framing it as a human rights issue. Thus, early FGM/C prevention campaigns may have inadvertently contributed to the perception that FGM/C would be acceptable if performed by medical professionals, thus institutionalizing the practice within the medical community, according to UNICEF.", "Although many countries have passed laws addressing FGM/C, enforcing these laws is a challenge, according to the Joint Program evaluation. The evaluation found that in many countries, there is a lack of resources, difficulty reaching remote areas, and limitations on the capacities of law enforcement agents. In addition, the implementation of anti-FGM/C laws may be undermined by a lack of awareness by local officials and law enforcement, and a lack of community buy-in, according to PRB. Further, the threat of social exclusion from being uncut may be more influential than the threat of legal punishment, according to UNICEF.", "U.S. and UN studies have identified a variety of approaches to accelerating FGM/C abandonment. These include efforts to increase awareness and enforcement of laws against FGM/C; establish community education programs; and provide outreach to a variety of community members, including religious leaders, elders, men and boys, and medical practitioners. Studies also highlight the importance of incorporating FGM/C into broader gender equality and human rights programs, and encouraging community actions such as alternative rites of passage and public declarations for abandonment.", "The existence of a law can help abandonment efforts, but other interventions at the community level must also be undertaken for the law to be effective, according to PRB and UNICEF. PRB noted that resources are needed after the adoption of anti-FGM/C policies to ensure awareness and enforcement of the law. For example, in Burkina Faso, the Joint Program helped raise awareness of FGM/C laws for personnel in the justice sector, informing them about current policies and their implications for their work. In addition, in Uganda, the Joint Program supported six community policing sessions that provided communities with information on existing laws and helped ensure their implementation. The growing interest and understanding of the law within the communities led to the arrest of two cutters, according to the program’s focal point in Uganda.", "Education is an important way to raise awareness about the dangers of FGM/C and its impact as a social norm. Community education programs play an essential role in encouraging communities to reconsider the practice, according to UNICEF. A community education project could last for a number of years and include a wide range of participants such as government officials, media, health professionals, and at-risk girls. Communities are encouraged to reflect on the role of women and girls and how FGM/C affects their lives. Educational activities and community dialogues create a safe, non-threatening environment where people can evaluate their beliefs regarding FGM/C, according to the Joint Program evaluation. Events may focus on FGM/C specifically or may combine information on FGM/C with information on health, religion, or human rights.", "Efforts to abandon FGM/C are strengthened when a wide range of actors—including religious leaders, and boys and men—are included in community education, according to PRB. Because religion is often cited as a reason for continuing the practice, engaging religious leaders in public education can be effective in encouraging abandonment, according to a Joint Program evaluation. Religious leaders often already have the community’s respect and can be a powerful influence on dispelling the belief that there is a religious obligation. Religious leaders in one Ethiopian community participated in public discussions about abandonment, according to a UNICEF study. By the end of the sessions, six of seven villages pledged to abandon the practice, and religious leaders led a special prayer binding the decision. Working with religious leaders is a core strategy and a critical component of community engagement in the Joint Program as well. For example, the Joint Program reported that, through its efforts, 304 religious leaders were educated about FGM/C in Mauritania.\nInvolving boys and men in outreach efforts is also essential in ending FGM/C. In about half of the countries where FGM/C is prevalent, men outnumber women in their opposition to FGM/C, according to a Joint Program report. For example, 42 percent of boys and men in Guinea think FGM/C should stop, compared to 19 percent of girls and women, according to UNICEF. The Joint Program increased its efforts to engage men and boys in 2014, resulting in their voices against FGM/C becoming more prominent on social media, according to a Joint Program report. For instance, male advocacy emerged in Somalia where men have posted their support of uncut women on Facebook, stating, “Don’t do it for us.” Often, women are misinformed about their husbands’ opinions on FGM/C. Men may not talk about FGM/C because it is considered a “women’s issue.” Open dialogue between the sexes could reduce this ignorance, according to UNICEF.\nIntergenerational dialogue is another approach to changing behaviors, according to PRB. This approach recognizes that the older generations’ full engagement is needed, given their role as decision-makers and gatekeepers, and because they are likely to feel threatened by changing traditions. For example, the Grandmother Project in Senegal increased participants’ appreciation of positive cultural traditions and changing attitudes towards harmful traditions, according to PRB. Because senior women are viewed as valuable cultural resources and influential members of their communities, communities are more comfortable with an approach that includes dialogue between elders and youth, according to PRB.", "Media campaigns can also educate the public on the harmful effects of the practice and can shape the public discourse around FGM/C, according to the Joint Program evaluation. They can help spread information on decreasing support for FGM/C. Radio, in particular, enables the dissemination of information to remote villages and illiterate populations. Forums for discussion can include talk shows, documentaries, and educational TV. Social media is particularly effective with adolescents and can be instrumental in spreading information. In all 15 countries in the Joint Program’s first phase, programs used media to increase awareness of the practice’s harmful effects and encourage abandonment. Media campaigns, like other approaches, have the greatest impact when they are part of a larger effort, according to PRB. Figure 3 shows a road sign promoting the campaign against FGM/C in Uganda.\nEducation and training for medical professionals can encourage them to help prevent FGM/C and also prepare them to provide appropriate treatment for those who have undergone FGM/C procedures. In response to medicalization, the Joint Program began working with the WHO to ensure medical professionals’ support for FGM/C abandonment. The Joint Program’s first phase prioritized integrating FGM/C prevention into antenatal and neonatal care and immunization services in countries where a large portion of girls are cut between birth and age 5. Specifically, during phase I, a total of 5,571 health facilities integrated FGM/C prevention into their antenatal and postnatal care, and more than 100,000 doctors, midwives, and nurses have participated in training on integrating FGM/C prevention, response, and care into their services. In all 15 Joint Program countries, medical staff were trained on the negative consequences of FGM/C and, in many cases, how to treat medical complications from the practice. Such training has strengthened the medical community’s capacities for preventing and responding to FGM/C. In 2014, about 200,000 girls and women received prevention, protection, or care services relating to FGM/C through the Joint Program, according to the Joint Program report. The report also noted that, as a result of an initiative led by the Joint Program, Djibouti is the first African country where girls are physically examined for evidence of FGM/C during routine check-ups.", "FGM/C should be addressed as part of broader efforts to promote gender equality and female empowerment, according to PRB. In the Joint Program, FGM/C is approached as one of many forms of gender-based violence. In addition, the Joint Program highlights the intersection between FGM/C, women’s reproductive health, and girls’ education. By addressing the practice as part of broader issues, interventions are able to address how existing practices negatively affect opportunities for women and girls. When FGM/C is incorporated into programming that challenges assumptions about gender relationships, it directly advances broader goals of reducing gender inequality and gender-based violence, according to UNICEF.\nIncreasingly, discussions about FGM/C have been shaped within a human rights approach, which can lead to public declarations against FGM/C in thousands of communities, according to UNICEF. Human rights vocabulary needs to be adapted for use by its program participants and it should include relevant symbols, narratives, or religious language so that it resonates with the local community. The Joint Program incorporates issues of gender equality and human rights in the design and implementation of its efforts. It has simultaneously conceptualized FGM/C as an abuse of human rights and a form of gender-based violence while also seeking to be culturally sensitive to the value the practice holds in many communities.", "A Joint Program report highlighted alternative rites of passage as an effective means of abandoning FGM/C. In certain communities, rites of passage have for centuries marked the transition from child to adult, according to the Joint Program evaluation. For girls, that rite of passage is often combined with FGM/C. Some communities may be reluctant to abandon FGM/C because they are reluctant to give up this rite of passage ceremony. In Kenya, thousands of girls have participated, since 2008 in alternative rites of passage to encourage abandonment while preserving this tradition, according to a Joint Program report. The effort typically involves sending the girls away for a week to an orientation program that includes teaching about the harmful effects of FGM/C. The Joint Program report noted that in Kenya in 2014, the Joint Program supported an alternative rites of passage program for more than 1600 girls. This program involved final celebrations that included certificates of recognition for the commitment to stay uncut. Figure 4 shows an alternative rite of passage ceremony in Kenya.\nExpressing public commitment to stop the practice of FGM/C is a promising approach to abandonment, according to several studies. Village-level declarations are one way to measure a program’s impact on FGM/C, according to PRB. Public declarations encouraged by the Joint Program are typically preceded by community discussions and engagement with community leaders and members. Public declarations do not guarantee a change in behavior, but they do have an influence on social norms, according to the Joint Program evaluation. A public commitment applies social pressure that makes it difficult to return to old behaviors. In Egypt and Senegal, public commitments to end FGM/C occurred only after human rights discourse was introduced into basic education curricula, according to UNICEF. A 2008 UNICEF evaluation of a public declaration program in Senegal found that prevalence dropped by more than half in villages that had taken public pledges to abandon the practice. Since 2008, when the Joint Program was established, nearly 10,000 communities in 15 countries, representing about 8 million people, have renounced the practice.", "State and USAID currently have limited international assistance efforts to address FGM/C. In 2014, State and USAID each had one active standalone project to address FGM/C. In addition, we identified projects with broader goals that included components to address FGM/C but we were unable to determine the full extent of FGM/C-related efforts because State and USAID do not specifically track these efforts. USAID has competing development priorities, which leaves little funding available for FGM/C-related efforts, according to USAID officials. The largest current international assistance effort to address FGM/C is the UNFPA/UNICEF Joint Program on FGM/C. State provides funding to UNFPA and UNICEF but, to date, has not contributed to this Joint Program. However, if the general restrictions for UNFPA funding are met, there are currently no specific legal restrictions that would prohibit U.S. funding provided to UNFPA from being available for the Joint Program on FGM/C.", "", "State’s one standalone FGM/C program is in Guinea, where 97 percent of girls and women aged 15 to 49 have undergone FGM/C. This program is funded by about $1.5 million in grants from the Full Participation Fund, an initiative created by State and funded through various appropriations accounts to support gender integration efforts. It began in the fall of 2014 and will run through April 2016, according to State officials.\nThrough partnerships with the government of Guinea, UNICEF, and 26 local civic and human rights organizations, the U.S. Embassy in Conakry established nationwide educational and media campaigns that engage policymakers, health professionals, traditional excisors, religious leaders, and the general public to abandon FGM/C. Activities include establishing a National Strategic Plan to abandon FGM/C in line with existing legal frameworks, capacity building and specialized training of institutions and individuals combating FGM/C, and support of multimedia information and communication awareness campaigns.\nU.S. embassy staff are responsible for monitoring the project, which has 13 performance indicators. Examples of the performance indicators include the number of girls and women identified as abandoning FGM/C practices; the reduction in the number of group excision ceremonies held in targeted districts and villages; and the number of people trained by the U.S.-funded intervention providing gender-based violence services relating to FGM/C (e.g., law officers, judges, teachers, excision practitioners, health workers, religious leaders, policymakers, and potential victims). State reported in July 2015 that the campaign had led to approximately 265 villages in Guinea voluntarily and publicly denouncing this harmful practice since the start of 2015. State plans to conduct a separate impact evaluation in 2017, according to State officials.", "State provides funding to international organizations and non- governmental organizations to provide assistance to vulnerable populations in refugee settings overseas to meet their basic needs, including programs providing water and sanitation, shelter, and healthcare, as well as programs to prevent and respond to gender-based violence. In fiscal year 2014, State’s Bureau of Population Refugees and Migration (PRM) awarded about $35.7 million for 93 cooperative agreement awards to projects focused on or including gender-based violence activities. State officials told us that some of these projects may include assistance related to FGM/C; however, State does not capture this level of programmatic detail for these projects.\nWe contacted project implementers for nine of the largest gender-based violence projects in countries where FGM/C is prevalent and found that two of them provided assistance related to FGM/C. One of these projects, which received $800,000 from State in fiscal year 2014, provided gender-based violence assistance to Central African Republic Refugees and Chadian returnees in Southern Chad, including education and awareness-raising about FGM/C with project beneficiaries and local law enforcement authorities. The project also provided specialist referral services to individuals who have undergone FGM/C. The other project, which received $1,000,000 from State in fiscal year 2014, was focused on prevention and response to gender-based violence for refugees in Uganda. This project included focus group discussions and interviews with selected members of the Somali refugee community in Uganda to raise awareness about the negative effects of FGM/C.", "State provides annual funding to UNFPA and UNICEF but, to date, none of this funding supports the Joint Program on FGM/C, the largest international effort to address FGM/C. In fiscal year 2014, the U.S. government provided funding to UNFPA and UNICEF that included general contributions to be used at the UN agencies’ discretion in support of their overall missions, as well as contributions pledged to specific projects such as humanitarian relief efforts, according to State officials.\nCongress routinely places restrictions on U.S. funding in annual appropriations for UNFPA. However, if the general restrictions for UNFPA funding are met, there are currently no specific legal restrictions that would prohibit U.S. funding provided to UNFPA from being available for the Joint Program on FGM/C. State and UNFPA officials agree that the restrictions on UNFPA funding would not stop the U.S. government from funding the Joint Program if it chose to devote funds to it. State officials told us that the Joint Program, which is a long-term effort, may not have been considered for targeted contributions to UNFPA because those funds are generally provided in response to short-term humanitarian appeals. However, on March 15, 2016, the Secretary of State announced that State intends to contribute to the UNFPA – UNICEF Joint Program on FGM/C.", "State depends on its embassies to use diplomacy to encourage abandonment of FGM/C, according to State officials. State officials from the Bureau of African Affairs provided several examples in which U.S. embassies engaged diplomatically with local communities to raise awareness or provide training about FGM/C. For example, in Chad, Central African Republic, Ethiopia, and Niger, U.S. embassies hosted a screening of a film about FGM/C for student or women’s groups to encourage abandonment of this practice. Some of these screenings were held to commemorate the International Day of Zero Tolerance for FGM/C, which occurs every year on February 6th. In Eritrea, the embassy held a Zero Tolerance Day event, displaying posters and distributing brochures on FGM/C.", "Since 2012, State’s annual Country Reports on Human Rights Practices have included information on FGM/C, according to State. State is required to report on the status of internationally recognized human rights for all countries receiving assistance and all United Nations member states. Since 2012, State has expanded the reports’ coverage to include multiple forms of gender-based violence, including FGM/C and child, early, and forced marriage. Among other things, the 2014 human rights reports we reviewed identified countries’ prevalence rates of FGM/C, common types of FGM/C, legal restrictions of FGM/C, and educational efforts undertaken to raise awareness about the dangers of this practice. Tracking host government actions and policies related to FGM/C as part of human rights reporting helps State build the knowledge necessary to diplomatically encourage actions to end this practice, according to State officials. In addition, State officials noted that the Department of the Treasury relies on this information to advise the United States Executive Director of each international financial institution, such as the World Bank, regarding whether they should support loans to countries where FGM/C is practiced.", "", "USAID has competing development priorities, which leave little funding available for FGM/C-related efforts, according to USAID officials. For example, all Global Health Programs account funds are programmed to achieve outcomes in three priority areas in the health sector—ending preventable child and maternal deaths, creating an AIDS-free generation, and protecting communities from other infectious diseases. In addressing these goals, funds are used first for programs expected to have the greatest impact in achieving them, according to USAID officials.\nCongressional reports accompanying appropriations laws for USAID funding included specific funding for FGM/C in 2000 and 2005, but no such report language currently exists. In 2000, a conference report included language directing USAID to make $1.5 million available to develop educational programs aimed at eliminating FGM/C. In 2005, the Senate Committee on Appropriations recommended that USAID spend $5 million to expand community-based efforts to combat FGM/C in high-prevalence countries. Recent congressional committee reports have directed that USAID provide funding to address obstetric fistula, which often occurs among populations of girls also at risk of FGM/C.", "We identified one free-standing FGM/C program that was active during calendar year 2014. USAID supported the start-up of Nairobi University's Africa Coordinating Center for the Abandonment of FGM/C (ACCAF) to advocate, educate, and create a supportive environment for cultural change; support networking and knowledge exchange between researchers, health professionals, and community workers on the abandonment of FGM/C; identify knowledge gaps and support and stimulate research in the field of FGM/C; and improve health care for women and children who have undergone FGM/C.\nThe program runs from October 1, 2013, through September 30, 2016, and has a total funding level of $429,000 from the Global Health Programs appropriations account, according to USAID officials. It was funded as a subaward to the University of Nairobi from an existing implementing partner in Kenya. The Center carried out four community trainings in fiscal year 2014 involving 114 community leaders, community professionals, health care providers, FGM/C practitioners, FGM/C survivors, and youths, according to its 2014 annual report. These 2-day training sessions addressed the different dimensions of FGM/C and helped prepare community members to advocate FGM/C abandonment to the broader community. The Center also supported advocacy of FGM/C abandonment in the media, as well as networking between researchers and health professionals, and has initiated studies of various aspects of the issue.\nAs required in the subaward agreement, the ACCAF developed a performance monitoring plan that included 20 indicators. Examples of these indicators include “number of advocacy teams created” and “number of community-based providers…trained or supported.” In addition, the award agreement requires the ACCAF to produce, among other things, an impact assessment within 90 days after the project end date, which includes a summary of lessons learned, success stories, and conclusions about areas in need of future assistance.", "We found several examples of USAID projects—active in calendar year 2014—addressing broader Global Health or Democracy and Governance objectives that had intervention elements related to FGM/C. USAID officials told us, however, that they could not separate the level of funding for FGM/C efforts from other project activities. In addition, USAID could not verify the extent to which these examples represented all FGM/C- related efforts undertaken by missions in high-prevalence countries. USAID’s systems for tracking funding and programming gender-based violence efforts do not capture subactivities as specific as FGM/C efforts, according to USAID officials. For example, standard indicators developed by USAID and State to track the performance of assistance efforts include three indicators on gender-based violence prevention and response but do not specify the type of gender-based violence, such as FGM/C. Table 1 shows countries where USAID missions identified having projects active in calendar year 2014 with FGM/C-related efforts.\nUSAID created a publicly available e-learning course on FGM/C designed for those implementing interventions to address this practice, including the staff of U.S. government agencies and nongovernmental organizations. The 2-hour and 30-minute course provides an overview of FGM/C, including definitions, medical risks from undergoing the procedure, prevalence, promising interventions, and lessons learned from studies of intervention efforts to prevent and respond to FGM/C. The course was first published in October 2008 and was last updated in October 2015.", "We provided a draft of this report to State and USAID for their review. State and USAID did not provide formal comments but each provided technical comments that we incorporated as appropriate.\nAs agreed with your office, unless you publicly announce the contents of the report earlier, we plan no further distribution until 30 days after the report date. At that time, we will send copies of this report to interested congressional committees, the Secretary of State, and the USAID Administrator. We will also provide copies to others on request. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-3149 or [email protected]. 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.", "This is the first of two reports examining U.S. agencies’ efforts to address Female Genital Mutilation/Cutting (FGM/C) at home and abroad. This report (1) summarizes findings from recent U.S. and United Nations (UN) studies about the factors contributing to FGM/C and approaches to addressing this practice internationally and (2) examines the Department of State’s (State) and the United States Agency for International Development’s (USAID) current efforts to address FGM/C abroad. A second report will review U.S. efforts to address FGM/C domestically.\nTo identify factors contributing to FGM/C and current approaches to addressing this practice, we reviewed recent U.S. and UN studies of international efforts to accelerate the abandonment of FGM/C and respond to victims of the practice. We selected studies that examined assistance efforts to accelerate abandonment of FGM/C in countries where this practice is concentrated. The studies were published in 2010 or later. We examined a USAID-funded Population Reference Bureau study, released in an evaluation of the United Nations Population Fund (UNFPA)-United Nations Children’s Fund (UNICEF) Joint Program on FGM/C, released in 2013; a summary report of the first phase of the UNFPA-UNICEF Joint Program released in 2014; a UNICEF statistical overview of FGM/C, released in 2013; and a UNICEF review of efforts to accelerate FGM/C abandonment in five African countries, released in 2010.\nTo determine State’s and USAID’s current efforts to address FGM/C abroad, we analyzed applicable strategy and policy documents and interviewed State and USAID officials involved in issues related to FGM/C. These strategies and policies include:\nUSAID’s Gender Equality and Female Empowerment Policy, March\nState’s and USAID’s United States Strategy to Prevent and Respond to Gender-Based Violence Globally, August 2012;\nUSAID’s Child, Early, and Forced Marriage Resource Guide,\nUSAID’s USAID Guidance on Female Genital Mutilation/Cutting, updated February 2016; and multiple agencies’ United States Global Strategy to Empower Adolescent Girls, March 2016.\nTo identify State’s efforts, we interviewed State officials in the Office of Global Women’s Issues, and key bureaus including the Bureaus of Population, Refugees, and Migration; Democracy, Human Rights, and Labor; African Affairs; and Near Eastern Affairs. We reviewed documents related to a State-funded FGM/C prevention program in Guinea. We also reviewed a list of 54 projects addressing gender-based violence in refugee settings overseas that received State funding in fiscal year 2014. We identified the 10 largest of these projects (with State funding of $500,000 or more) in countries where FGM/C is prevalent. For 9 of these projects, we contacted project implementers via e-mail to determine if the projects had any FGM/C-related components. We were unable to contact the project implementers for 1 of the 10 projects. We also met with officials from UNFPA and UNICEF to discuss U.S. funding for these agencies and their Joint Program on FGM/C. In addition, we reviewed State’s Country Reports for Human Rights to determine how they addressed FGM/C issues.\nTo identify USAID’s efforts, we interviewed USAID’s Senior Coordinator for Gender Equality and Women's Empowerment and officials in key USAID bureaus including Global Health; Democracy, Conflict, and Humanitarian Assistance; Africa; and the Middle East. We also collected information on projects with FGM/C components from USAID’s overseas missions in countries where FGM/C is prevalent. To obtain this information, we worked with USAID staff in the Office of the Senior Gender Coordinator to ask relevant USAID missions via e-mail to identify any FGM/C-related programming that was active in calendar year 2014. While 12 missions reported having programs with FGM/C components in 2014, we only presented information on the 5 projects that we were able to independently confirm as having FGM/C-related components through searches on websites of USAID’s missions or implementing partners. At the time of our request, Indonesia had not been identified as a country where FGM/C was prevalent, and therefore, the USAID mission there was not included among those contacted.\nWe conducted this performance audit from June 2015 to April 2016 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 type of female genital mutilation/cutting (FGM/C) commonly practiced varies by country, according to data presented by the United Nations Children’s Fund, based on surveys of mothers about FGM/C performed on their daughters (see table 2). For example, more than 20 percent of girls who underwent FGM/C in Somalia, Eritrea, Niger, Djibouti, and Senegal experienced infibulation (Type III)—the most radical form of FGM/C. In other countries, infibulation was uncommon. For example, in Egypt, mothers reported that infibulation represented 2 percent of cases.", "The United Nations Children’s Fund (UNICEF) reported in 2013 that 24 countries where Female Genital Mutilation/Cutting (FGM/C) is prevalent have enacted legislation related to FGM/C. These laws reportedly vary in their scope. UNICEF reports that some ban the practice only in medical facilities; others ban the practice anywhere.", "", "", "In addition to the contact named above, Leslie Holen (Assistant Director), Ashley Alley, Lynn Cothern, Howard Cott, Jill Lacey, and Nancy Santucci made significant contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 2, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 1, 2, 3, 3, 3, 3, 3, 2, 3, 3, 3, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "h2_full", "", "h2_full", "h2_full", "", "h0_title", "h0_title", "h0_full", "", "h0_full", "", "h0_full", "", "", "", "", "", "", "h1_full", "h1_title", "", "", "h1_full", "", "", "", "", "", "", "", "h0_full", "", "h0_full", "", "", "" ] }

{ "question": [ "What have the US and UN determined regarding female genital mutilation/cutting (FGM/C)?", "Why does FGM/C remain common?", "What legal steps have been taken to prevent FGM/C?", "Beyond legal actions, what steps have been taken to address FGM/C?", "To what extent has the US attempted to address FGM/C through federal agencies?", "To what extent has the US attempted to address FGM/C through funding?", "How do these attempts intersect with congressional funding restrictions?", "Why has the US committed only limited funding to FGM/C prevention efforts?", "What is FGM/C?", "To what extent is FGM/C a widespread practice?", "Why has FGM/C attracted international attention?", "What actions have human-rights organizations taken to address FGM/C?" ], "summary": [ "U.S. and United Nations (UN) studies since 2010 have identified a variety of factors contributing to the persistence of female genital mutilation/cutting (FGM/C).", "In many communities where FGM/C is prevalent, FGM/C is an influential social norm that ensures social acceptance and is commonly perceived as a religious obligation. In addition, medicalization of the practice— when it is performed by health care providers rather than traditional practitioners—increases the perception of legitimacy in some countries.", "Although the United Nations Children's Fund (UNICEF) reports that many countries where FGM/C is prevalent have passed laws banning the practice, enforcement is a challenge.", "The studies also have identified key approaches to addressing FGM/C, including efforts to implement community education programs, outreach and training for medical professionals, and the inclusion of FGM/C in broader gender equality and human rights programs.", "U.S. assistance efforts to address FGM/C are limited. The Department of State (State) and the U.S. Agency for International Development (USAID) each had one active standalone project in 2014, and the agencies also undertook some FGM/C-related efforts as components of projects with broader assistance goals.", "In addition, the U.S. government provides funding to the United Nations Population Fund (UNFPA) and UNICEF but, to date, has not contributed funds to the UN agencies' Joint Program on FGM/C.", "If congressional restrictions for UNFPA funding (such as the requirement for UNFPA to maintain U.S. funds in a separate account) are met, there are currently no specific legal restrictions that would prohibit U.S. funding provided to UNFPA from being available for the Joint Program on FGM/C.", "Competing development priorities, such as HIV/AIDS, leave little funding specifically for FGM/C, according to USAID officials.", "FGM/C comprises all procedures that involve partial or total removal of the external female genitalia, or other injury to the female genital organs.", "More than 200 million girls and women alive today have undergone FGM/C in the 30 countries where available data show this harmful practice is concentrated. More than 3 million girls are estimated to be at risk for FGM/C annually in Africa.", "It is rooted in the cultural traditions of many communities but has several adverse health consequences and the UN identifies it as a violation of human rights.", "In 2015, the UN General Assembly adopted a set of 17 Sustainable Development Goals for 2030 that included the elimination of FGM/C among its targets. UNFPA and UNICEF implement the Joint Program on FGM/C in 17 countries—the largest current international assistance effort to address FGM/C. State and USAID include FGM/C as part of their global strategy to respond to gender-based violence." ], "parent_pair_index": [ -1, -1, -1, 2, -1, -1, 1, 1, -1, 0, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Economic Impact of a Declining Current Account Deficit", "The Recent Decline in the CA Deficit and the Financial Crisis", "Historical Parallels", "A Review of Five Estimates", "Conclusion" ], "paragraphs": [ "", "America's current account (CA) (exports less imports plus net income payments and net unilateral transfers) has been in deficit every year but one since 1982. After a year in surplus in 1991, it steadily rose as a share of gross domestic product (GDP) to a record high of 6.1% of GDP in 2005 and 2006. It fell slightly in 2007 and 2008, and reached 3% of GDP in 2009 (see Figure 1 ). The 2009 CA relative to GDP still exceeded the share reached in most years before the 2000s. By accounting identity, the CA deficit is equal to net inflows of foreign capital to the United States and reflects the imbalance between domestic saving and investment.\nIf the CA deficit continued its decline since 2007, it would soon reach a sustainable level. The decline may be attributed to cyclical causes that are short-lived, however. As a result of the recession and financial crisis, domestic saving is higher, domestic private investment is lower, and so the need to borrow from abroad has diminished. As the economy returns to normal, domestic saving may fall and domestic investment is expected to rebound, either of which would increase the reliance on foreign borrowing. Further, the large increase in the federal budget deficit since 2007 requires financing—if maintained—from foreign or domestic sources. Without fundamental changes in underlying saving and investment patterns, the decline in the CA deficit will only be temporary.\nSome observers have questioned whether the CA deficit is sustainable. It has not prevented the economy from generally attaining full employment—the United States has run large CA deficits since the mid-1990s, yet unemployment has remained low in most of those years. The CA deficit has both positive and negative effects on the economy. Production of exports and import-competing goods is arguably lower than it would be in the absence of a CA deficit, but interest rates are also lower than they would be in the absence of foreign capital inflows. As a result, interest-sensitive spending on capital investment, residential investment, and consumer durables (e.g., automobiles and appliances) is higher.\nThose expressing concern about the CA deficit typically define unsustainability to mean that the United States would have difficulty financing the CA deficit at some point in the near future, and the resulting adjustment process would harm the U.S. economy. Basically, the CA deficit is sustainable as long as foreigners are willing to continue buying American assets. It is not enough for foreigners to reduce their demand for U.S. assets, since this would cause yields on U.S. assets to automatically rise until the market once again cleared. But if the desirability of U.S. assets were to change rapidly (due to a loss in confidence in the U.S. economy, for example), foreign capital inflows and the value of the dollar could decline quickly; at a minimum, foreigners would require significantly higher interest rates than they do at present for inflows to continue. For the U.S. to literally be unable to continue financing its current account deficit, foreign demand would have to fall so much that asset yields could not rise enough for foreigners to be willing to hold U.S. assets again.\nBut what would make foreign investors change their minds about U.S. assets? Federal Reserve Chairman Ben Bernanke has argued that foreigners will continue to increase their holdings of U.S. assets as long as a \"global savings glut\" remains that leaves them with few other desirable investment alternatives. If both lender and borrower are rational, many economists believe that the CA deficit can be mutually beneficial—it allows the lender to enjoy a higher rate of return than could be enjoyed at home and allows the borrower to operate with a larger capital stock than could be financed from domestic saving. As long as those investments yield a high enough rate of return to service the debt, borrowing should not reduce future domestic income in absolute terms.\nSome economists, however, doubt this interpretation and are concerned that the large CA deficit is symptomatic of wider economic imbalance. They argue that a country cannot persistently rely on foreign borrowing to finance its investment needs, so the United States must eventually raise its low saving rate. They maintain that by financing a large budget deficit and housing boom (until 2006), much of the foreign borrowing is being used in ways that do not expand the economy's productive capacity, and therefore such borrowing does not enhance our ability to service foreign debt. Because foreign borrowing is not sustainable, they argue, Americans will eventually be forced to significantly increase their saving (equivalently, to reduce their consumption) and reduce their investment rates, and the U.S. economy will slow. As a long-term solution, these economists prescribe policy measures to raise saving and reduce overall spending as the appropriate response to an excessively large CA deficit. This could be done through microeconomic policies, such as policies to encourage higher private saving, and macroeconomic policies, such as a tightening of monetary and fiscal policy, although this response would risk inducing the same recession that they fear the CA deficit may eventually cause (particularly if the economy were weak already).\nAs a consequence of large CA deficits, a growing share of the U.S. capital stock is owned by foreigners and a rising fraction of U.S. income will need to be diverted overseas in the form of interest and dividends to foreigners. The process cannot continue indefinitely, or else foreigners would eventually hold a larger share of American assets in their portfolios than they desire. But though economists may feel confident that the CA deficit will decline in the long run, long run predictions do not offer much help in predicting short-term trends. Foreigners may wish to increase their holdings of American assets (in which case the CA deficit would persist) in the near term. One common assumption is that the CA deficit would, at most, continue until the share of American assets held in foreign portfolios equaled America's share of world output; by this measure, foreigners still hold too few American assets. For example, citizens of the euro area hold an estimated 53% of their wealth in euro-denominated assets and 19% in U.S. dollar-denominated assets, whereas the Japanese hold an estimated 63% of their wealth in yen-denominated assets and 4% in dollar-denominated assets. This is referred to as a \"home bias\" in saving because all countries hold more of their own assets, and fewer foreign assets, than optimal portfolio diversification would suggest. This bias is considered unlikely to disappear entirely, in which case CA deficits will ease before this benchmark is met. In any case, the reason why home bias would decline for foreigners but not Americans, as continuing CA deficits would imply, remains unclear. On the other hand, if the U.S. economy grows faster than the rest of the world in the future, then (small) CA deficits would be needed for foreigners to maintain U.S. asset holdings equal to the U.S. share of world GDP.\nOne reason that U.S. imports cannot exceed exports indefinitely (and the dollar could eventually fall) is that today's CA deficits have a consequence for future trade balances. The accumulation of net debt that Americans owe to foreigners will need to be serviced in the future, and debt service will take the form of a payment from the United States. To offset the payment, the United States must export more or borrow more. But, all else equal, foreigners will only be induced to buy more exports if the dollar depreciates. Net investment income payments make up a small fraction of the CA deficit today, but economist Edwin Truman estimates that if CA deficits continued to equal 6% of GDP, net income payments would eventually reach 4.5% of GDP, leaving a trade deficit of only 1.5% of GDP. In other words, a constant trade deficit would imply a growing CA deficit because of growing net investment income payments.\nIn 2008, the United States had a net foreign debt of $3.5 trillion, but received net investment income of $126 billion from the rest of the world. What is surprising about these data is that the United States still consistently has positive net investment income despite its large net debt, and shows no long-term downward trend as the foreign debt grows. That is because U.S. holdings of foreign assets have earned a higher rate of return than U.S. debt owed to foreigners. Between 1981 and 2008, the United States earned an average estimated real rate of return of 3.1% more on its foreign assets than its foreign liabilities. This estimated rate of return differential has prevented foreign borrowing from becoming burdensome and suggest that the U.S. net foreign debt could become significantly larger before debt payments would become burdensome. Kouparitsas estimates that if these rate-of-return differentials were to continue, the United States could maintain a current account deficit of 0.9-1.3% of GDP indefinitely without any increase in its net foreign debt. However, this favorable rate-of-return differential may not continue in the future if foreigners believe that the dollar will depreciate and demand a higher rate of return on U.S. borrowing as compensation. If U.S. interest rates rose, the debt could become burdensome quickly.", "Although some reduction in the CA deficit is inevitable (although not necessarily in the near future), it need not be sudden. It should be emphasized that economic theory suggests that a slow decline in the CA deficit and dollar would not be troublesome for the overall economy. In fact, a slow decline could have an expansionary effect on the economy, because the increase in net exports could have a more stimulative effect on aggregate demand in the short run than the decrease in investment and other interest-sensitive spending caused by lower capital inflows. More realistically, the trade deficit would not decline exogenously, but in response to a slowing of overall domestic demand. Therefore, a falling trade deficit may tend to coincide with slower economic growth in practice, but that does not indicate that a falling trade deficit has caused growth to slow.\nHistorical experience seems to support the idea that a slow decline in the trade deficit need not be harmful to the economy—the dollar declined by about 40% in real terms and the CA deficit declined continually in the late 1980s, from 2.8% of GDP in 1986 to nearly zero during the early 1990s. Yet economic growth was strong throughout the late 1980s. (More recent experience is considered in the next section.)\nA potentially serious short-term problem would emerge if foreigners suddenly decided to reduce the fraction of their saving that goes to the United States in the form of a capital inflow, or if they suddenly decided to repatriate part of their liquid financial assets. The initial effect could be a sudden and large depreciation in the value of the dollar, as the supply of dollars on the foreign exchange market increased, and a sudden and large increase in U.S. interest rates, as an important funding source for investment and the budget deficit was withdrawn from the financial markets. Most likely, the direct trade effects of these shifts in lending patterns by foreigners would not cause a recession because the dollar depreciation would lead to a trade surplus (or smaller deficit), which expands aggregate demand. (Empirical evidence suggests that the full effects of a change in the exchange rate on traded goods takes time, so the dollar may have to \"overshoot\" its eventual depreciation level in order to achieve a significant adjustment in trade flows in the short run.) However, the indirect interest rate effects, which typically only partially offset the direct effects, could cause a recession if the change is sudden. Large increases in interest rates could cause problems for the U.S. economy, as these increases reduce the market value of debt securities, cause prices on the stock market to fall, and jeopardize the solvency of various debtors and creditors. Resources may not be able to shift quickly enough from interest-sensitive sectors to export sectors to make this transition fluid. The Federal Reserve could mitigate the interest rate spike by reducing short-term interest rates, although this reduction would influence long-term rates only indirectly and could increase inflation.\nIs a scenario where the dollar crashes a likely one? Economic theory typically assumes that financial market participants act rationally. If the rationality assumption is a good one, then the potential for a sudden decline is slim. After all, foreigners would be demanding high rates of return to buy U.S. assets today if they could foresee that the foreign currency value of these assets is likely to fall sharply in the near future. Of course, financial markets do not always seem driven by rational behavior in practice, but as a result, theory has little predictive power of the timing or likelihood of a \"sudden stop.\" Given the traditional role the United States has played as an investment safe haven, sudden capital outflows seem unlikely. On the contrary, investment might be attracted to U.S. assets in a liquidity crisis because the U.S. offers more liquid financial markets (e.g., U.S. Treasury bond markets) than do most foreign counterparts.", "As discussed above, a destabilizing interruption in the financing of the CA deficit would likely be triggered by some sudden change in investor sentiment about U.S. assets. The financial crisis, beginning in August 2007 with the illiquidity of the U.S. subprime mortgage market and deepening in September 2008, would seem to be a good test case for how a large change in investor sentiment would affect the CA deficit. Overall, the CA to GDP ratio declined by about half between 2007 and 2009, but this did not lead to sharp changes or negative effects for the dollar or interest rates that could be harmful to the economy. The dollar continued its long and gradual downward trend until April 2008, before it started rising—through the worst of the crisis—until March 2009. Interest rates on U.S. Treasuries fell to extremely low levels during the crisis despite the large increase in the budget deficit, as U.S. Treasuries continued to be seen as a desirable destination during the \"flight to quality.\" Other interest rates generally fell along with U.S. Treasury yields, although risk premiums on private assets rose and some private borrowers were shut out of credit markets entirely because of the crisis. Problems recently experienced in U.S. financial markets have been widely viewed as \"once in a lifetime\" events. If these events failed to cause a sudden flight from U.S. assets and an inability to finance the CA deficit, it is hard to imagine what would.\nWhile the overall data provides little evidence to support fears of a \"sudden stop\" in financing the CA deficit, a closer look at the data is less reassuring. The crisis led to a large decline in private capital flows in 2008—both foreign purchases of U.S. assets and U.S. purchases of foreign assets that had countervailing effects on the CA balance. (Private foreign demand for Treasuries was high in 2008 and 2009, but foreigners sold private U.S. securities on net.) In 2009, private U.S. net purchases of foreign assets returned to half of their pre-crisis level, but private foreigners continued to sell U.S. assets on net. Were the U.S. reliant on private purchases alone, the CA would have seen a large swing from deficit in 2008 to surplus in 2009, all else equal. Had such a large swing occurred, interest rates and the dollar may not have been as stable as they were.\nInstead, the CA remained in deficit because of large purchases of U.S. assets from official sources (foreign governments or international institutions). This trend was not new—the steady financing of the CA deficit has depended heavily on official capital inflows since 2002. Official capital inflows have exceeded $200 billion per year since 2003, and $400 billion since 2006. Had these central banks decided not to increase their dollar-denominated foreign reserves, the CA deficit and the value of the dollar might have fallen precipitously. Further, the 25% fall in the dollar from 2002 to 2008 was larger than average against some trading partners who do not intervene in foreign exchange markets, and very small against trading partners who do intervene.\nGoing forward, some analysts fear that official capital inflows could prove unreliable or provide foreign governments with leverage that would undermine U.S. policy aims. Because official inflows are likely financed by considerations other than rate of return, it is difficult to predict how they will evolve in the future. (In the past few years, official inflows have proven much steadier than private.) But given the importance of the United States as a foreign export market, deliberately taking a step that could potentially precipitate a U.S. economic crisis could be against a foreign country's economic self-interest, and reduce the value of the U.S. assets already owned by the country. The financial crisis has demonstrated that foreign governments, desiring to maintain the status quo, have been willing to increase their purchases of U.S. securities while others are reducing their U.S. holdings.\nThe story told in this section is based on capital flow data, but these data should be viewed with caution during the financial crisis. Private capital flows are hard to track. Individual entries in the capital accounts have shown large swings from quarter to quarter during the crisis that raise issues of reliability, and the statistical discrepancy in 2008 and 2009 was about half the size of the current account deficit. Furthermore, there is a problem of causality in interpreting these results. The instability in the economy and international capital flows are generally viewed as being caused by the financial crisis, but causality could also run in the other direction, making it hard to distinguish to what extent the financial crisis should be attributed to movements in international capital flows.", "Problems with financing large budget and CA deficits in Greece from 2009 to 2010 are a reminder that problems around the world with CA sustainability are not unusual. But the usefulness of most comparisons to historical experience abroad is limited by the fact that the United States economy and financial system are so much larger than those of other countries. As a result, an economic occurrence in the United States has ramifications for the world economy that could have feedback effects for the U.S. economy, whereas changes in the CA balance of most small countries will most likely not affect the world economy. It also means that the amount of borrowing required to finance the U.S. CA deficit is a much larger share of world saving. Another difference is the role that the dollar plays as the world's \"reserve currency.\" Because the dollar is the world's preferred currency for a store of value, medium of exchange, and unit of account, holders may be less willing to abandon it than they would any other currency. If so, the United States may be able to run higher sustainable CA deficits than other countries.\nIn the developing world, a large CA deficit has often been a leading indicator of financial and currency crisis. This was the case in many recent crises, including Mexico, East Asia, Turkey, Brazil, and Argentina. The applicability of these experiences to the United States may be limited, however, because of three key differences between the United States and these countries. First, the United States has a flexible exchange rate regime. Countries with fixed exchange rates can be forced into crisis when their foreign exchange reserves are exhausted by \"speculators\" betting against the currency; similar bets are harder to make against flexible exchange rates. Second, the United States has traditionally been seen as a \"safe haven\" for investment. Third, unlike developing countries, the United States is able to borrow in its own currency, so that depreciation reduces rather than increases the burden of servicing its debt. Therefore, historical comparisons have tended to focus on the experience of other industrialized countries.\nEconomist Sebastian Edwards found that since 1970, only two other industrialized countries, Ireland and New Zealand, had high CA deficits that were long-lasting (seven and five years, respectively). He found that large countries that experienced sharp declines in their CA also saw per capita GDP growth decline by 3.6% to 5.0%.\nEconomists at Goldman Sachs, a financial firm, analyzed all episodes in industrialized countries since 1980 where the CA improved by more than 2% of GDP. It found 31 cases where the adjustment occurred under circumstances of economic disruption and 13 where there was no comparable disruption. In the disruption episodes, the economy typically started from a position of overheating and the output gap (the difference between actual and potential output) worsened by an average of 3.6% of GDP, whereas in the benign episodes, the economy started from a position of excess capacity and the output gap improved by 1.9%. The fact that the economy was initially overheating in the disruption episodes suggests that causality may run in the opposite direction—the CA shift may be a symptom rather than a cause of economic slowdown. In the disruption cases, there was little real exchange rate depreciation; in the benign cases, it averaged 5.1%. In most cases, the adjustment took several years. In all cases, consumption growth was negative on average and (surprisingly) interest rates on average fell. In only two cases (Portugal in the early 1980s and Finland in the early 1990s) was the CA decline associated with a severe recession. (The recession and CA decline in Finland were widely attributed to the collapse of the Soviet Union, among other factors.) Some of these cases may not be applicable to the U.S. experience, however, because the sample includes countries that had a small CA deficit or CA surplus. Only eight of these episodes involved a larger CA deficit as a share of GDP than the U.S. deficit today, and all eight episodes involved small countries.\nThe International Monetary Fund conducted a similar study. It found 42 cases where an advanced economy had an initial CA deficit of at least 2.5% of GDP, and the CA deficit subsequently declined by at least 50%. It found, on average, that the real exchange rate declined by a cumulative 12.2%, causing a shift in the CA of 5.7% of GDP over the next 4.6 years, moving the CA from deficit to surplus (on average). GDP growth fell by an annual average of 1.4% during the reversal, causing the output gap to deteriorate by an average of 3% of GDP, from peak to trough of the business cycle. In 11 of these cases, the slowdown in economic growth was large, but, unlike the United States, 9 of these 11 did not have a floating exchange rate. In 10 other cases, there was no slowdown in growth following the CA reversal.\nHowever, not all cases of large CA deficits end in a reversal. Besides the United States, the IMF identified five other advanced economies that have had large CA deficits that have persisted to date: Australia (which has run a CA deficit of more than 2% since 1980), Greece (since 1996), New Zealand (1989), Portugal (1996), and Spain (1999). All except Australia have had CA deficits that were considerably larger than the U.S. in recent years. Greece, Portugal, and Spain have fared badly in the recent economic downturn, but Australia and New Zealand have fared relatively well.\nIn a similar study, economists Debelle and Galati found little evidence that CA adjustments historically lead to significant disruption in financial markets. They found little change in the composition of capital flows before adjustment, which they argue is evidence that current account adjustment is caused by, rather than the cause of, broader macroeconomic imbalances.\nEconomists Hung and Kim use statistical regressions to estimate the probability of an exchange rate crash based on several macroeconomic variables across many industrialized countries over time, and estimate that the United States had a 9% probability of a dollar crash in 2006. They find that the current account balance (and the regression overall) has relatively little predictive power for a currency crash.\nThe size of the CA deficit in any given year may be less important in determining sustainability than how persistent CA deficits increase a country's net foreign debt over time. Economists Maurice Obstfeld and Kenneth Rogoff found that in 2003 the net debt owed to foreigners was about 23% of GDP for the United States, near an all-time high. (It was about 24% of GDP in 2008.) Were CA deficits to continue at more than 5% of GDP per year, U.S. net debt to foreigners would reach 70% of GDP within 30 years. Although this implies a relatively small yearly debt service burden, many countries that have experienced CA reversals in the postwar period had smaller net foreign debt-to-GDP ratios, between 20% and 80% of GDP. Obstfeld and Rogoff identify only one country (Ireland) with a net foreign debt-to-GDP ratio that has exceeded 80%. Thus, the authors conclude that large U.S. CA deficits cannot be sustained indefinitely.\nSimilarly, simulations by Federal Reserve economists Bertaut et al. suggest that the net foreign debt could increase to 60% of GDP by 2020, but this would result in annual net investment income payments of only 0.5% of GDP. They found net foreign debt of 20% of GDP to be fairly typical by international standards, found 16 countries where net investment income payments exceeded 1% of GDP, and found five other countries with net debt around 60% of GDP. The authors found econometric evidence that countries with high net foreign debt had modestly higher interest rates and mixed effects on the exchange rate.", "Five recent academic papers address the sustainability issue. In the papers, the models used to estimate changes in the dollar and CA are not empirically derived; they are simulations based on theoretical assumptions meant to be consistent with reality.\nObstfeld and Rogoff have estimated how much the dollar would need to depreciate in order to make the CA deficit disappear. In their model, shocks to aggregate demand or shifts in the demand or supply of tradeable goods could cause the CA deficit to decline; their model does not allow for exogenous changes in the demand for U.S. assets to affect the CA deficit. They estimate that the real exchange rate would depreciate between 14.7% and 33.6% if a CA deficit equal to 5% of GDP were eliminated by a change in aggregate demand, and between 9.8% and 25.5% if eliminated by a change in the supply of tradeable goods. They estimate that depreciation would be accompanied by a 3.9% to 7.1% decline in the terms of trade. The predicted dollar depreciation is so large because about three-quarters of U.S. output is nontradeable, production cannot be quickly shifted into tradeable goods to take advantage of the depreciation, and import and export prices change much more slowly than the exchange rate. This model does not predict how much larger the CA deficit could get or how quickly it will eventually fall.\nEconomists Blanchard, Giavazzi, and Sa explicitly allow asset demand to influence the exchange rate, and they assume that assets from different countries are not perfect substitutes. In their model, a CA deficit would eventually decline because demand for U.S. assets is finite. Although an increase in the demand for U.S. assets would initially cause the dollar to appreciate, they argue, it would later depreciate to finance debt service (though it would remain above its pre-appreciation value). They estimate that a 15% decline in the dollar would be associated with a decline in the CA deficit equal to 1.4% of GDP. About one-third of the decline in the CA deficit results from U.S. debt being denominated in U.S. dollars, because a depreciation reduces its value. Blanchard et al. estimate that stabilizing the net-debt-to-GDP ratio at 2003 levels would require the dollar to immediately depreciate by 56% and the CA deficit to decline to 0.75% of GDP. However, assuming foreigners desire to maintain holdings of U.S. assets at their current share, their model predicts that the depreciation would be stretched over a few decades, depreciating by 2.7% a year, at most. If foreigners decided to reduce their holding of U.S. assets, the model predicts a larger, but still gradual, depreciation.\nEdwards uses a similar model to simulate how much the dollar would depreciate from its 2004 level depending on different assumptions about the foreign demand for U.S. assets. Unlike Blanchard et al., he projects fairly rapid declines in the CA deficit and dollar in the future. Under his optimistic scenario, in which he assumes that the U.S. net debt will rise to 60% of GDP by 2010 and then remain constant, the CA deficit would peak at 7.3% of GDP in four years, before eventually declining to 3.2% of GDP (with most of the decline occurring in the first four years after the peak). The real value of the dollar would appreciate while the deficit was increasing, but it would decline 21% in the first three years after the deficit began falling. If net debt were to decline to 50% of GDP after 2010 instead of remaining at 60% of GDP, which would still be about double its current level, the decline in the CA deficit and dollar would be greater. Edwards calculates that the deficit would fall by 5.3% of GDP and the dollar would depreciate by 28% after three years, which would bring both measures close to their long-term projected levels.\nEconomists Roubini and Setser simulate what would happen to the net foreign debt over the next 10 years under three scenarios. In the first scenario, imports and exports continue to grow at historical rates. The CA deficit would exceed 12.8% of GDP and the net foreign debt would exceed 80% of GDP by 2012. In this scenario, the authors do not believe it is plausible to assume that foreigners would be willing to finance borrowing of this magnitude, and use this scenario to argue that the current path is unsustainable. In the second scenario, the trade deficit stabilizes at 5% of GDP. The CA deficit would still increase to 8.8% of GDP in 2012 (because of higher net investment income payments), at which point the net foreign debt would exceed 70% of GDP. Servicing a debt of this size, they estimate, would cost 3% of GDP in 2012. To reduce the trade deficit to 5% of GDP, they estimate that the dollar would need to depreciate by about 10% from its 2004 level. This scenario (and the first scenario) is not sustainable in the long run because the net foreign debt would grow continuously. In the third scenario, the trade deficit declines by the end of the projection to the point where the net foreign debt stabilizes as a share of GDP. They estimate that the net foreign debt would stabilize with a trade deficit of 0.8% and a CA deficit of 1.3% of GDP. If the CA deficit gradually declined to this level in 2012, the net foreign debt would stabilize at nearly 60% of GDP, which would cost an estimated 1.75% of GDP to service in 2012. To achieve a reduction in the CA deficit of this magnitude, they estimate that the dollar would need to depreciate substantially and the federal budget would need to be balanced. All of these scenarios assume that relative interest rates remain similar to past values as the net foreign debt rises; if foreigners demanded higher interest rates, then this would feed through to a much larger CA deficit and debt path than simulated.\nEconomist Paul Krugman estimates that the dollar would need to depreciate by at least 35% from its 2005 value in real terms in the long run for the trade deficit to be reduced to zero. He looks for evidence of whether this depreciation will happen gradually or abruptly. For the depreciation to be smooth, Krugman argues that it must be anticipated by rational investors, in which case they would currently require a rate of return premium to hold U.S. assets (to offset the loss suffered from the future dollar depreciation). To determine how large the premium would have to be, he considers two hypothetical paths for the dollar. In one path, the dollar declines by 1.75% annually, and net foreign debt peaks at 118% of GDP, or at least one-third of the total U.S. capital stock. If foreigners are unwilling to hold that much U.S. debt, the dollar would have to depreciate more rapidly. In the other path, the dollar declines by 3.5% annually, and net foreign debt peaks at 58% of GDP. Yet he finds no evidence of a rate of return premium anywhere near the magnitude of either 1.75% or 3.5%—after adjusting for inflation, U.S. interest rates are very close to foreign rates. This implies that foreigners do not foresee any significant dollar depreciation in the future. Therefore, he argues that when investors eventually realize how much the dollar will depreciate, they will likely sharply reduce their demand for U.S. assets, causing the dollar to plummet.\nRecent experience suggests that the dollar depreciation required to put the CA deficit on a sustainable path may indeed be large. From 2002 to 2006, the dollar depreciated by 16% in inflation-adjusted terms. Despite the depreciation, the CA deficit continued to rise, both in dollar terms and as a share of GDP, from 4.5% of GDP in 2002 to 6.1% of GDP in 2006. In response to the weaker dollar, exports rose rapidly from 2004 onward, but this did not lead to a lower current account deficit because imports also continued to rise rapidly. This experience points to the fact that external factors, which can be held constant in the models discussed in this section, also influence the CA and the dollar in reality. The CA deficit began declining in 2007, along with the continued decline in the dollar through 2008. Paradoxically, the largest decline in the CA deficit has occurred in 2009, although the real value at the end of 2009 was nearly the same as the value at the end of 2007.\nThe wide dispersion of estimates on the dollar depreciation associated with a decline in the CA deficit points to the complex and imperfectly understood factors that determine the dollar's value, the lack of a consensus exchange rate model that performs well empirically, and the sensitivity of theoretical models to changes in uncertain empirical parameters. Further complicating model-based projections, the path of CA adjustment is also subject to non-market forces, such as the accumulation of foreign reserves by central banks. Furthermore, no model reliably answers the underlying question of how much and how quickly the CA deficit will potentially decline.", "In the long run, running a CA deficit at current trend levels (i.e., growing faster than GDP) would result in net foreign debt continually growing relative to GDP. This is unsustainable if foreigners have a limited appetite for U.S. assets. Thus, in the long run, the CA deficit will most likely decline, although it need not decline to zero to stabilize the net foreign debt relative to GDP. Relative to GDP, the CA deficit declined by about half between 2007 and 2009. It is too soon to say whether this decline is being caused by temporary cyclical factors or represents the beginning of a long-term adjustment process. To date, the net foreign debt has placed no burden on the U.S. economy because U.S.-owned foreign assets have earned more than foreign-owned U.S. assets.\nWhether policymakers should be concerned about a future decline in the CA deficit depends on whether the decline were to happen in an orderly or disruptive way. There is little reason to think that a gradual decline would have a deleterious effect on the overall economy. But a sudden decline, brought on by a sudden reduction in foreign capital inflows, could be disruptive to U.S. financial markets, causing negative spillover effects for the broader economy. While a sudden reduction in foreign capital inflows cannot be ruled out—it has happened to foreign countries—it seems highly unlikely. The United States is different in a number of ways from the countries that have experienced CA crises—it is much larger, its financial markets and economy are highly developed, it has a floating exchange rate, and it is seen as a safe haven in times of financial turmoil. Nonetheless, even if the risk of a sudden CA reversal is small, it is arguably worth policy consideration since it could be highly costly to the U.S. economy.\nThe recent financial crisis in the United States bears resemblance to the sort of scenario envisioned by economists concerned about a sudden, destabilizing outflow of capital. Yet when the crisis worsened in September 2008, the dollar began appreciating and heightened demand for certain U.S. assets, such as U.S. Treasuries, drove their prices up to unusually high levels. A large and potentially destabilizing net withdrawal of private foreign capital in 2008 and 2009 was offset by official capital net inflows (primarily purchase of U.S. assets by foreign governments), however." ], "depth": [ 0, 1, 1, 1, 1, 1, 1 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h0_full h4_full h2_full", "h0_full h3_full h2_full", "h0_full h4_full h1_full", "h0_full h3_full h2_full", "h4_full h2_full", "h1_full" ] }

{ "question": [ "How did the US's current account deficit trend between 1991 and 2009?", "How is the CA deficit financed?", "What are the problems with financing the CA deficit with foreign capital?", "What do economists predict will happen with America's CA deficit?", "Why is the 2008 financial crisis informative for current analyses of the CA deficit?", "What was the impact of the recession on the CA deficit?", "What background about the CA deficit is necessary to understand its response to the 2008 recession?", "What's an example of a consequence of the ongoing CA deficit?", "Why are economists concerned about a large CA deficit?", "What do economists predict for the future of the CA deficit?", "What has been the recent pattern of debt service?", "Why has debt service remained tenable to date?", "What are the economic consequences of a declining CA deficit?", "What is the relationship between a declining CA deficit and serve disruptions in the economy?", "What are the pitfalls of comparing small countries to the United States on an economic basis?", "What could be required to restore the CA deficit's sustainability?", "What has been the historical outcome of depreciations of the dollar?" ], "summary": [ "America's current account (CA) deficit (the trade deficit plus net income payments and net unilateral transfers) rose as a share of gross domestic product (GDP) from 1991 to a record high of about 6% of GDP in 2006. It began falling in 2007, and reached 3% of GDP in 2009.", "The CA deficit is financed by foreign capital inflows.", "Many observers have questioned whether such large inflows are sustainable. Even at 3% of GDP, the deficit is probably still too large to be permanently sustained, and many economists fear that the decline is temporary and caused by the recession. Further, a large share of the capital inflows have come from foreign central banks in recent years, and some are concerned about the economic and political implications of this reliance.", "Some fear that a rapid decline in capital inflows would trigger a sharp drop in the value of the dollar and an increase in interest rates that could lower asset values and disrupt economic activity. However, economic theory and empirical evidence suggest that the most plausible scenario is a slow decline in the CA deficit, which would not greatly disrupt economic activity because production in the traded goods sector would be stimulated.", "The financial crisis that worsened in September 2008 would seem to be a good test case of the type of event that could lead to the feared \"sudden stop\" in foreigners' willingness to finance the CA deficit.", "While the recession deepened following the crisis, it has not been via a sudden decline in the dollar or a sudden broad spike in U.S. interest rates. On the contrary, the dollar appreciated in value in the months after the crisis and foreign demand for U.S. Treasury bonds has risen since the crisis worsened.", "On the other hand, there was a large decline in private foreign capital inflows beginning in 2008; had it not been for foreign government purchases of U.S. securities, the CA would have been in surplus in 2009, all else equal.", "One long-term consequence of large and chronic CA deficits has been the growing foreign ownership of the U.S. capital stock.", "A large CA deficit is not sustainable in the long run because it increases U.S. net debt owed to foreigners, which cannot rise without limit. A larger debt can be serviced only through more borrowing or higher net exports. For net exports to rise, all else equal, the value of the dollar must fall.", "This explains why many economists believe that both the dollar and the CA deficit will fall further at some point in the future.", "To date, debt service has not been burdensome.", "Because U.S. holdings of foreign assets have earned a higher rate of return than U.S. debt owed to foreigners, U.S. net investment income has remained positive, even though the United States is a net debtor nation.", "Since 1980, most episodes of a declining CA deficit in industrialized countries have been associated with slow economic growth.", "Only two episodes were associated with a severe disruption in economic activity.", "Because most of the episodes involved small countries, these cases may differ in important ways from any corresponding episode in the United States. Historically, a few other countries have had a higher net foreign debt-to-GDP ratio than the United States has at present; however, if CA deficits continue at current levels, the U.S. net foreign debt could eventually be the highest ever recorded.", "Some of the studies suggest that a large dollar depreciation could eventually be required to restore sustainability.", "But the inflation-adjusted 25% depreciation of the dollar from 2002-2008 had little effect on the CA deficit, which kept growing until 2007. The CA deficit did not decline rapidly until after the financial crisis of September 2008—a period with little trend movement in the dollar." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, 0, -1, -1, -1, -1, 3, -1, 0, -1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 4, 4 ] }

{ "title": [ "Background", "DOD Strategy to Lower Costs Also Reduced Synergy among Systems", "Airborne Electronic Attack Acquisition Strategy Has Evolved", "Acquisitions May Not Produce Sufficient Results", "Investments in New Airborne Electronic Attack Systems Have Yielded Mixed Results to Date", "Planned Systems May Offer Capabilities That Overlap, Presenting Opportunities to Consolidate Acquisition Efforts", "Planned Systems Will Not Fully Address Capability Gaps", "Improvements to Tactics, Techniques, and Procedures and Investments in Science and Technology Are Helping to Bridge Gaps", "Changing Tactics, Techniques, and Procedures for Existing Systems Can Mitigate Gaps in the Near Term", "DOD Focusing Science and Technology Investments to Close Gaps in the Long Term, but Coordination Remains a Concern", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Analyses of Select Airborne Electronic Attack Systems", "Appendix III: Comments from the Department of Defense", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "DOD invests in electronic warfare capabilities as a means to maintain unimpeded access to the electromagnetic spectrum during war and selectively deny adversary use of the spectrum. Traditionally, electronic warfare has been composed of three primary activities:\nElectronic attack: Use of electromagnetic, directed energy, or antiradiation weapons to attack with the intent of degrading, neutralizing, or destroying enemy combat capability.\nElectronic protection: Passive and active means taken to protect personnel, facilities, and equipment from the effects of friendly or enemy use of the electromagnetic spectrum.\nElectronic warfare support: Actions directed by an operational commander to search for, intercept, identify, and locate sources of radiated electromagnetic energy for the purposes of immediate threat recognition, targeting, and planning, and the conduct of future operations.\nAirborne electronic attack—a subset of the electronic attack mission— involves use of aircraft to neutralize, destroy, or temporarily degrade (suppress) enemy air defense and communications systems, either through destructive or disruptive means. These capabilities are increasingly important and complex as networked systems, distributed controls, and sophisticated sensors become ubiquitous in military equipment, civilian infrastructure, and commercial networks— developments that complicate DOD’s ability to exercise control over the electromagnetic spectrum, when necessary, to support U.S. military objectives.\nAirborne electronic attack systems increase survivability of joint forces tasked to enter denied battlespace and engage anti-access threats or high-value targets,a potential near-peer adversary or in irregular warfare. They also enable access to the battlespace for follow-on operations. Aircraft executing airborne electronic attack missions employ a variety of mission systems, such as electronic jammers, and weapons, such as antiradiation missiles and air-launched expendable decoys. These aircraft also rely on aircraft self-protection systems and defensive countermeasures for additional protection. All four services within DOD contribute to and rely upon airborne electronic attack capabilities using a variety of different aircraft. Each service is also separately acquiring new airborne electronic attack systems. whether involved in major combat operations against Section 1053 of the National Defense Authorization Act for Fiscal Year 2010 requires that for each of fiscal years 2011 through 2015, the Secretary of Defense, in coordination with the Joint Chiefs of Staff and secretaries of the military departments, submit to the congressional defense committees an annual report on DOD’s electronic warfare strategy. department’s electronic warfare strategy and organizational structures for oversight; (2) a list and description of all electronic warfare acquisition programs and research and development projects within DOD; and (3) for the unclassified programs and projects, detail on oversight responsibilities, requirements, funding, cost, schedule, technologies, potential redundancies, and associated capability gaps, and for the classified programs and projects, a classified annex addressing these topics, when appropriate. In response to this requirement, DOD submitted its first Electronic Warfare Strategy of the Department of Defense report in October 2010. The department produced its second electronic warfare strategy report in November 2011.\nPub. L. No. 111-84, § 1053 (a) (2009).", "DOD’s strategy for meeting airborne electronic attack requirements— including both near-peer and irregular warfare needs—centers on acquiring a family of systems, including traditional fixed wing aircraft, low observable aircraft, unmanned aerial systems, and related mission systems and weapons. Department analyses dating back a decade have identified capability gaps and provided a basis for service investments in airborne electronic attack capabilities. However, budget realities and lessons learned from operations in Iraq and Afghanistan have driven changes in strategic direction and program content. Most notably, the department canceled some acquisitions, after which services revised their operating concepts for airborne electronic attack. These decisions saved money, allowing the department to fund other priorities, but reduced the planned level of synergy among airborne electronic attack systems during operations. As acquisition plans for these systems have evolved, operational stresses upon the existing inventory of weapon systems have grown. These stresses have materialized in the form of capability limitations and sustainment challenges for existing systems, prompting the department to invest in improvements to these systems to mitigate shortfalls.", "Key DOD analyses completed since 2002 identified capability gaps, provided a basis for service investments in airborne electronic attack systems, and supported an overarching acquisition strategy for achieving these requirements. The department outlined its findings in reports that included an analysis of alternatives, a capabilities-based assessment, and initial capabilities documents. Figure 1 highlights a chronology of these analyses and identifies key airborne electronic attack components of each report.\nThe 2002 Airborne Electronic Attack Analysis of Alternatives established the primary framework by which the department began investing in new airborne electronic attack capabilities. The analysis focused on those capabilities needed to suppress enemy air defenses from 2010 to 2030. The study identified two primary components required to provide a complete and comprehensive airborne electronic attack solution:\nCore component: A recoverable platform or combination of platforms operating in enemy airspace. The core component provides the airborne electronic attack detection and battle management capabilities for reactive jamming.\nStand-in component: An expendable air platform providing critical capabilities against certain advanced threat emitters and employed in threat environments not accessible to the core component.\nSubsequent to this analysis, DOD developed a system of systems strategy for meeting airborne electronic attack mission needs. A system of systems is a set or arrangement that results when independent and useful systems are integrated into a larger, connected and interdependent system that delivers unique capabilities during military operations. The system of systems strategy established specific roles and operating responsibilities among the military services in a joint environment and expanded the basic core and stand-in component needs into four major capability areas for airborne electronic attack:\nStand-off: Jamming occurring outside of defended airspace. Planned stand-off systems included the Air Force’s EC-130H Compass Call aircraft and development of an electronic attack variant of the Air Force’s B-52.\nModified escort: Jamming occurring inside defended airspace, but outside of the range of known surface-to-air missiles. Planned modified escort systems included the Navy’s EA-18G Growler and EA-6B Prowler aircraft.\nPenetrating escort: Jamming occurring inside the intercept range of known surface-to-air missiles. The department planned to rely on aircraft equipped with active electronically scanned array (AESA) radars, including the F-22A Raptor and F-35 Lightning II aircraft to perform this jamming function.\nStand-in: Jamming occurring inside the “no escape range” of known surface-to-air missiles. The department planned to rely on development of recoverable Joint Unmanned Combat Air Systems (J- UCAS) and the Air Force’s Miniature Air Launched Decoy—Jammer (MALD-J) to provide this function.\nAs time progressed, budget issues and lessons learned from operations in Iraq and Afghanistan drove changes to the strategy and program content. Most notably, the department canceled development of two major components of the system of systems—the B-52 Standoff Jammer and J-UCAS—in 2005 and 2006, respectively, citing higher-priority needs and budget constraints. The B-52-based jamming concept was later rejuvenated through the Air Force’s Core Component Jammer initiative, but that program was similarly canceled in 2009. Following these developments, the department revised operating concepts and joint service responsibilities, moving away from its system of systems plans in favor of a family of systems strategy for airborne electronic attack.\nA family of systems is fundamentally different from a system of systems. Under a family of systems construct, independent systems—using different approaches—together provide capability effects to support military operations. Unlike the synergy found in a system of systems, a family of systems does not acquire qualitatively new properties or necessarily create capability beyond the additive sum of the individual capabilities of its members. The member systems may not even be connected into a whole. In the case of airborne electronic attack, DOD officials stated that a system of systems would have employed a dynamic, networked capability to share data in real-time among platforms—a concept known as electronic warfare battle management. Under the family of systems strategy, officials stated that this process is less automated and the parts are less connected. Therefore, in making this strategy change, the department traded some unique, synergistic capabilities that the system of system’s interdependent components might have provided in favor of near-term budget savings and other priorities.\nFigure 2 outlines the department’s current family of systems strategy for countering near-peer adversaries. This family of systems includes traditional fixed wing aircraft, low observable aircraft, and related mission systems and weapons.\nDOD’s 2009 electronic warfare capabilities analysis identified the growth of irregular warfare in urban areas as presenting challenges to military operations. The analysis noted that irregular adversaries can exploit civilian and commercial communications infrastructure to minimize detection and subsequent attack. According to the department, precise electronic attack planning and execution are required to ensure that these threats are defeated while avoiding interruption to U.S. communications capabilities.\nThe department has used existing airborne electronic attack systems, such as the EA-6B and EC-130H, to meet its near-term irregular warfare needs in Iraq and Afghanistan. However, officials report that these platforms are optimized for countering high-end, near-peer threats, and their use against irregular warfare threats is inefficient and costly. Consequently, the department has begun investing in new, less expensive airborne electronic attack systems tailored to counter irregular warfare threats. These systems are fielded from both traditional fixed- wing aircraft and from unmanned aerial vehicles. Figure 3 illustrates operations involving these systems.\nAs DOD’s acquisition plans for airborne electronic attack systems have evolved, operational stresses upon the current inventory of systems have grown. These systems date back to the 1970s and 1980s and were originally designed to counter Cold War era threats. Many of the department’s existing airborne electronic attack systems face capability limitations, requiring the department to pursue modernization efforts to increase the effectiveness of the systems or to identify and develop replacement systems. Further, existing systems face sustainment challenges from age, parts obsolescence, and increased operational stresses from lengthy and sustained operations in Iraq and Afghanistan. According to Air Force and Navy officials, these challenges have reduced the availabilities of some systems to warfighters. Table 1 identifies the department’s existing airborne electronic attack systems and related characteristics, including future replacement systems identified to date.\nDOD is taking actions to address capability limitations and sustainment challenges across several key systems, such as the following:\nEA-6B Prowler: Since its introduction in the 1970s, the Navy and Marine Corps have made significant upgrades to the EA-6B Prowler. The latest of these upgrades—the Improved Capability electronic suite modification (ICAP III) provides the Prowler with greater jamming capability and is designed to improve the aircraft’s overall capability as both a radar-jamming and HARM platform. By the end of fiscal year 2012, 32 EA-6Bs will be upgraded to the ICAP III configuration. Navy officials told us that persistent operations in Iraq and Afghanistan, however, have degraded the condition of EA-6B aircraft. In addition, we have previously reported that parts obsolescence presents the biggest challenge to the EA-6B’s ability to fulfill its mission role. We noted that although the Navy has made several structural upgrades to the EA-6B fleet, it is actively tracking a number of key components, including cockpit floors, side walls, fin pods, bulkheads, actuators, engine components, landing gear, and avionics software—all of which are at increasing risk for costly replacement the longer the aircraft remains in service.\nHARM: According to Navy officials, even though HARM has undergone various block upgrades to provide increased capabilities since fleet introduction in 1983, advancements in enemy radar technology have rendered the weapon somewhat ineffective for typical Navy targets. As a result, the Navy is fielding a major technological upgrade to HARM through its AARGM acquisition program. AARGM provides a new multimode guidance section and modified control section mated with existing HARM propulsion and warhead sections. The Air Force, similarly, is pursuing modifications to HARM control sections on missiles in its inventory—a process that will provide a global positioning system receiver to those units. Air Force officials stated that they have long sought this receiver component addition because of vulnerabilities in the HARM targeting method. This effort is being pursued in conjunction with other modernization efforts for Air Force F-16CM aircraft.\nTALD and ITALD: Navy officials stated that advancements in enemy integrated air defense systems have decreased the effectiveness of both TALD and ITALD units. According to program officials, newer radars can discern from the TALD/ITALD flight profile that the system is a decoy and not a valid target. The Navy has begun evaluating TALD/ITALD replacement options under its Airborne Electronic Attack Expendable program initiative.\nEC-130H Compass Call (Baselines 0 and 1): Although the Air Force initially fielded the EC-130H Compass Call as a communications jammer supporting suppression of enemy air defenses, the system has evolved to include irregular warfare missions and radar jamming. Air Force officials told us that the Compass Call is the most utilized aircraft within the C-130 family and has been continuously deployed since 2003 supporting operations in Iraq and Afghanistan, accelerating the need for the Air Force to replace the center wing box on each of the 14 aircraft in the Compass Call fleet. Further, Air Force officials told us that they are increasing the size of the fleet by one aircraft to alleviate stress on current aircraft and to increase the availability of airborne electronic attack capability to the Air Force. According to a fleet viability assessment completed in 2010, the current size of the fleet is insufficient to meet combatant commander taskings for Compass Call.\nAN/ALQ-99 Tactical Jamming System: The Navy’s Low Band Transmitter upgrade to the AN/ALQ-99 system is intended to replace three aging legacy transmitters that suffer from obsolescence and reliability problems. According to Navy officials, persistent use of these transmitters in support of operations in Iraq and Afghanistan has exacerbated system shortfalls. Navy officials told us that they are also identifying options for improving reliability and resolving obsolescence issues with the mid and high bands of the AN/ALQ-99 system. However, Navy officials project that even with these improvements, system capabilities will be insufficient to counter anticipated evolutions in threat radars and missiles beginning in 2018. This shortfall is expected to be addressed by the new Next Generation Jammer.\nAN/ALQ-131 and AN/ALQ-184 Pod Systems: The Air Force has identified obsolescence issues and capability shortfalls affecting these systems, which provide tactical aircraft self-protection. The Air Force is pursuing a replacement/upgrades program designed to move the Air Force to a single, self-protection pod system for its F-16 and A-10 aircraft.", "DOD is investing in new airborne electronic attack systems to address its growing mission demands and to counter anticipated future threats. However, progress acquiring these new capabilities has been impeded by developmental and production challenges that have slowed fielding of several planned systems. Some programs, including the Navy’s EA-18G Growler and the Air Force’s EC-130H Compass Call modernization, are in stable production and have completed significant amounts of testing. On the other hand, the Navy’s AARGM, the Air Force’s Miniature Air Launched Decoy (MALD), and other programs have required additional time and money to resolve technical challenges. In addition, certain airborne electronic attack systems in development may offer capabilities that overlap with one another—a situation brought on in part by the department’s fragmented urgent operational needs processes. As military operations in Iraq and Afghanistan decrease, opportunities exist to consolidate current acquisition programs across services; however, this consolidation may be hampered by leadership deficiencies affecting the department’s electronic warfare enterprise. Furthermore, current and planned acquisition programs, even if executed according to plan, will not fully address the materiel-related capability gaps identified by the department—including some that date back 10 years.", "DOD investments to develop and procure new and updated airborne electronic attack systems are projected to total more than $17.6 billion from fiscal years 2007 through 2016. These systems represent the department’s planned mix of assets for (1) countering near-peer, integrated air defense and communications systems and (2) providing communications and radio frequency jamming against irregular warfare threats. Table 2 outlines the department’s recent and planned investments toward developing and acquiring several of these systems.\nAs table 2 shows, several airborne electronic attack systems are in an advanced stage of funding. However, under current estimates, over $6.0 billion in funding is still required to fully deliver these new systems to the warfighter. Further, the department has not yet identified the full amount of funding required for certain key systems, such as the Next Generation Jammer, which could require billions of additional dollars to field.\nCorrespondent to their different funding profiles, the department’s new systems are also in various stages of development, with some progressing more efficiently than others. Table 3 identifies the mission role(s), developmental status, and fielding plans for these systems. In addition, appendix II provides additional details on the status of several of these programs.\nSome airborne electronic attack acquisition programs have reached stable production with limited cost growth or schedule delays. Two primary examples include the following:\nEA-18G Growler: Acquisition of the EA-18G Growler—a modified escort jamming platform designed to carry AN/ALQ-99 and future Next Generation Jammer pods—achieved initial capability in September 2009, consistent with its 2007 baseline schedule. Additionally, program costs per aircraft increased less than one-half of 1 percent from 2003 to 2010—an outcome partially attributable to quantity increases from 90 to 114.\nEC-130H Compass Call (Baselines 2 and 3): Modernization of the EC-130H Compass Call is on schedule for fielding a new increment of capability, Baseline 2, in 2014 within available funding limitations. Baseline 2 introduces several new capabilities, including reactive radar response and the Joint Tactical Radio System terminal that has been delayed because of testing challenges. However, Compass Call program officials do not expect the radio system delay to affect the program’s fielding plans for Baseline 2 aircraft. According to the Air Force, cost considerations are a primary criterion in developing EC- 130H capability requirements. The program office does not entertain potential aircraft improvements unless those improvements are accompanied by full funding. The Air Force is initiating technology development activities for a subsequent phase of the modernization program, Baseline 3, and plans to begin production of these aircraft in 2014, with initial fielding scheduled for 2017.\nOur previous work has shown that good acquisition outcomes are achieved through the knowledge-based approach to product development that demonstrates high levels of knowledge before significant commitments are made.This model relies on increasing knowledge when developing new products, separating technology development from product development, and following an evolutionary or incremental approach to product development. In this approach, developers make investment decisions on the basis of specific, measurable levels of knowledge at critical junctures before investing more money and before advancing to the next phase of In essence, knowledge supplants risk over time. acquisition. The good outcomes on the EA-18G and EC-130H programs can be attributed, in part, to acquisition strategies embodying elements of best practices.\nOther airborne electronic attack acquisition programs have not progressed as efficiently, however. These systems have proceeded through product development with lower-than-desired levels of knowledge and subsequently faced technical, design, and production challenges, contributing to significant cost growth, fielding delays or both. Most notably, these systems entered—or are on track to enter—production before completing key development activities, including achievement of stable designs. We previously reported that concurrency in development and production activities limits the ability of an acquisition program to ensure that the system will work as intended and that it can be manufactured efficiently to meet cost, schedule, and quality targets.\nMALD/MALD-J: MALD was authorized for low rate initial production in June 2008 with an initial plan for 300 low rate initial production units in two lots, beginning in March 2009. However, testing failures in 2010 and 2011—coupled with a desire to avoid a potentially costly break in production—prompted the Air Force to extend MALD low rate initial production by two additional lots and increase total quantities under contract to 836. In September 2011, citing “successful completion of MALD-J engineering and manufacturing development activities,” the Air Force exercised a priced option to upgrade 240 of its planned MALD units to the MALD-J configuration, subsequently decreasing MALD quantities to 596. Because all future production lots are now planned as jammer-configured decoys (MALD-J), the 596 total represents the full MALD procurement—without the program having ever met the criteria necessary to proceed into full rate production. Since the MALD and MALD-J designs are identical—except for the addition of a jammer module to MALD-J—the absence of a proven manufacturing process for MALD introduces schedule risk to production of MALD-J. This risk is accentuated by continuing deficiencies affecting the MALD and MALD-J designs, which have required the Air Force to schedule additional developmental flight tests for each system in February 2012 to test corrective fixes. To the extent that this retesting phase shows a need for additional design changes, the Air Force may be forced to revisit its planned May 2012 production start for MALD-J.\nAARGM: The Navy authorized low rate initial production of AARGM units in September 2008 with initial deliveries scheduled to begin in January 2010. A total procurement objective of 1,919 units was set and an initial operational capability scheduled for March 2011. However, as a result of intermittent hardware and software failures in testing, the program was decertified for initial operational test and evaluation in September 2010, and low rate initial production deliveries were delayed until June 2011. The missile has subsequently reentered testing, but significant concerns about the system’s reliability remain. Further, Navy officials stated that the current program schedule is oriented toward success with virtually no margin to accommodate technical deficiencies that may be discovered during operational testing. In the event operational testing reveals new or lingering major deficiencies, program officials report the planned April 2012 fielding date will be at risk, and the Navy may be forced to revisit its commitment to the program.\nIDECM: From December 2000 to June 2010, the Navy authorized six different low rate initial production lots of IDECM Blocks 2 and 3, providing system improvements to the jammer and decoy components. Block 2 production units delivered ahead of schedule, but early Block 3 units encountered operational testing failures; later resolved, these failures drove production delays to remaining units. In Block 4, the Navy is introducing significant hardware design changes to the ALQ-214 jammer component. Ground and flight testing to prove out these design changes is scheduled concurrent with transition to production in April 2012, increasing risk that initial Block 4 units will require design changes and retrofits.concurrency is necessary in order to maintain an efficient production line transition from Block 3 to Block 4 and to meet the desired June 2014 fielding date. They further noted that transition to Block 4 production will initially be for 19 systems, with production rates increasing to as many as 40 per year following completion of testing.", "Certain airborne electronic attack systems in development may offer capabilities that unnecessarily overlap with one another. This condition appears most prevalent with irregular warfare systems that the services are acquiring under DOD’s fragmented urgent operational needs processes. For example, the Marine Corps, Army, and Air Force have all separately invested to acquire unique systems intended to jam enemy communications in support of ground forces. Further, Navy and Air Force plans to separately invest in new expendable decoy jammers—systems intended to counter near-peer adversaries—also appear to overlap. Declining military operations in Iraq and Afghanistan—coupled with recent changes in the Air Force’s MALD-J program—afford opportunities to consolidate current service-specific acquisition activities. The department’s ability to capitalize on these opportunities, however, may be undermined by a lack of designated, joint leadership charged with overseeing electronic warfare acquisition activities.\nDOD is investing millions of dollars to develop and procure airborne electronic attack systems uniquely suited for irregular warfare operations. Services are acquiring these systems under both rapid acquisition authorities as well as through the traditional acquisition process. These systems overlap—at least to some extent—in terms of planned mission tasks and technical challenges to date. Yet, they have been developed as individual programs by the different services. Table 4 highlights overlap among three of these systems.\nAccording to DOD officials, airborne electronic attack limitations in recent operations, urgent needs of combatant commanders, and the desire to provide ground units with their own locally controlled assets have all contributed to service decisions to individually develop their own systems to address irregular warfare threats. For example, one Marine Corps official told us that his service is focused on increasing its airborne electronic attack capacity to meet Marine Air-Ground Task Force requirements in combat. Marine Corps systems typically equipped to perform these tasks—especially the EA-6B Prowler aircraft—have reached their capacity limits responding to combatant commander taskings. Similarly, Air Force officials stated that ground warfighter requests for airborne electronic attack capabilities sometimes go unfulfilled or are delayed because of the overall constrained capacity during current operations. Further, Army and Marine Corps officials see operational benefits to providing ground unit commanders with smaller airborne electronic attack assets—permanently integrated within the unit—to free up Air Force and Navy assets for larger-scale missions. In addition, the capabilities offered by current jamming pods, such as the AN/ALQ-99, are often overkill for the irregular warfare mission needs— such as counter-improvised explosive device activities—facing ground unit commanders.\nRequirements for several of these irregular warfare systems were derived from DOD urgent needs processes—activities aimed at rapidly developing, equipping, and fielding solutions and critical capabilities to the warfighter in a way that is more responsive to urgent requests than the department’s traditional acquisition procedures. As we previously reported, the department’s urgent needs processes often lead to multiple entities responding to requests for similar capabilities, resulting in potential duplication of efforts. Even under these circumstances, the services have shown it is possible to take steps to share technical information among the different programs and services. For instance, the Army’s CEASAR pod is derived from the AN/ALQ-227 communications jammer used on the Navy’s EA-18G—an attribute that Army officials state reduced design risk in the program and provided opportunities for decreased sustainment costs and reuse of jamming techniques between the two services. Similarly, Air Force efforts to develop electronic attack pods flown on MQ-9 Reaper unmanned aerial vehicles (prior to that program’s cancellation) leveraged previous technology investments for the canceled B-52-based stand-off jammer.\nAs military operations in Iraq and Afghanistan wind down—and the services evaluate whether to transition their current urgent needs programs over to the formal weapon system acquisition process— opportunities may exist to consolidate program activities, such as the Intrepid Tiger II and CEASAR systems that are still demonstration programs whose transitions to formal acquisition programs have not yet been determined.\nThe potential for unnecessary overlap in efforts within the airborne electronic attack area is not limited to irregular warfare systems. With respect to near-peer systems, both the Air Force and Navy are separately pursuing advanced jamming decoys—the Air Force through its MALD-J program, and the Navy through its planned Airborne Electronic Attack Expendable initiative.\nThe two services have held discussions with one another about combining efforts toward a joint solution, including a meeting between Navy and Air Force requirements offices and acquisition officials in December 2010, but they have not yet reached resolution on a common path forward. According to Navy officials, relatively minor design and software modifications to what was a planned second increment to the Air Force’s MALD-J system could produce a system that satisfies both services’ mission requirements. However, Air Force officials stated that accommodating the Navy’s mission requirements within the system would increase program costs and delay planned fielding of the Increment II system, essentially rendering the planned program unexecutable. Subsequently, Air Force officials stated that unless Increment II, in its planned configuration, sufficiently met Navy requirements, they did not expect the Navy to have any formal role in the program. In July 2011, however, the Air Force suspended MALD-J Increment II activities because of a lack of future funding availability. In February 2012, the Air Force’s fiscal year 2013 budget submission officially canceled the program. This cancellation affords an opportunity for continued dialogue between the two services on the potential benefits and drawbacks to pursuing a common acquisition solution.\nIn 2009, DOD completed a capabilities analysis that cited electromagnetic spectrum leadership as the highest priority among 34 capability gaps identified. The study concluded, in part, that leadership deficiencies, or its absence, significantly impede the department from both identifying departmentwide needs and solutions and eliminating potentially unnecessary overlap among the services’ airborne electronic attack acquisitions. Specifically, the department lacks a designated, joint entity to both coordinate internal activities and represent electronic warfare activities and interests to outside organizations. Acknowledging this leadership gap, and its relation to acquisition activities, the department has initiated efforts to organize the Joint Electromagnetic Spectrum Coordination Center under the leadership of U.S. Strategic Command. In addition, officials representing the Office of the Assistant Secretary of Defense for Research and Engineering stated that they are considering actions they might take to improve leadership and oversight of electronic warfare acquisition activities across the services. In a separate report, we intend to evaluate planned and existing electronic warfare governance structures within DOD.", "Notwithstanding the considerable investment over the years in new and enhanced airborne electronic attack systems and subsystems, capability gaps, some identified a decade ago, are expected to persist, or even increase, through 2030 as adversary capabilities continue to advance. In a series of studies since 2002, DOD identified existing current and anticipated gaps in required capabilities. Some have persisted for years— for example, deficiencies in certain jamming capabilities to provide cover for penetrating combat aircraft. The analyses found that, in many cases, new materiel solutions were required to close these gaps. Table 5 outlines primary findings from three major analyses.\nThe 2002 analysis identified needs for stand-in and core component jamming capabilities and suggested numerous ways to meet these. The 2004 study revalidated these gaps and outlined 10 potential materiel solutions to fill those gaps. It also acknowledged the existence of both near-peer and irregular warfare threats requiring airborne electronic attack solutions. The Army and Marine Corps requested that the analysis address irregular warfare threats because of the growing concern over improvised explosive devices in Iraq and Afghanistan and the suboptimal application of existing systems in the inventory to defeat those threats. The Air Force concluded in its analysis that fulfilling airborne electronic attack mission needs would require developing and fielding multiple new systems.\nThe most recent study, U.S. Strategic Command’s Electronic Warfare Initial Capabilities Document, identified additional capability gaps affecting airborne electronic attack. This 2009 analysis built upon a capabilities- based assessment completed a year earlier and outlined mitigation strategies to address these gaps instead of merely prescribing specific platform solutions. This approach was consistent with the analysis’s charter to guide and inform the services’ acquisition programs. However, the analysis did recommend specific capabilities and system attributes for the Next Generation Jammer program to consider that would assist in mitigating some of the gaps identified in the 2009 analysis. The analysis also concluded that new systems would be needed to close nearly half of the gaps identified in airborne electronic attack capabilities.", "To supplement its acquisition of new systems, DOD is undertaking other efforts to bridge existing airborne electronic attack capability gaps. In the near term, services are evolving their tactics, techniques, and procedures for operating existing systems to enable them to take on additional mission tasks. These activities maximize the utility of existing systems and better position operators to complete missions with equipment currently available. Longer-term solutions, however, depend on the department successfully capitalizing on its investments in science and technology. DOD has recently taken actions that begin to address long- standing coordination shortfalls in this area including designating electronic warfare as a priority area for investment and creating a steering council to link capability gaps to research initiatives. However, these steps do not preclude services from funding their own research priorities ahead of departmentwide priorities. DOD’s planned implementation roadmap for electronic warfare offers an opportunity to assess how closely component research investments are aligned to the departmentwide electronic warfare priority.", "The refinement of tactics, techniques, and procedures can position the services to maximize the capabilities of existing systems while new capabilities are being developed. As Navy airborne electronic attack operators stated, when a capability gap requiring a new system is identified, warfighters generally do not have the luxury of waiting for the acquisition community to develop and field a system to fill that gap. In the interim, tactics, techniques, and procedures for existing systems must evolve to provide at least partial mitigation to the threat being faced. Development and refinement of new ways to use existing equipment allow the services to maximize the utility of their airborne electronic attack systems and leave them better positioned to complete missions with the assets they have available. The following two systems provide examples where operator communities have refined tactics, techniques, and procedures to meet emerging threats:\nAN/ALQ-99 Tactical Jamming System: Navy officials told us that threats encountered in Iraq and Afghanistan operations have driven significant changes to how the AN/ALQ-99 Tactical Jamming System is employed. In essence, tactics, techniques, and procedures for the system had to evolve to maximize the system’s capabilities against irregular warfare threats. According to Navy officials, however, these adaptations represent only a temporary solution as their application— coupled with increased operational activity—has caused jamming pods to degrade and burn out at an increasing rate, subsequently increasing maintenance requirements for the system.\nEC-130H Compass Call: According to Air Force officials, EC-130H tactics, techniques, and procedures have rapidly evolved to encompass dynamically changing electronic attack threats, which include irregular warfare. These changes include modifications to both how the operator employs the aircraft as well as to the range of threats targeted by mission planners.\nBoth Navy and Air Force officials emphasized that sustained investments in tactics, techniques, and procedures offer considerable return on investment and can provide important, near-term solutions to longer-term, persistent threats. According to these officials, these investments position operators to “do more with less”—in effect, offer them the opportunity to mitigate or counteract a threat without the required new system. However, limits exist to the extent to which refinements to current operating approaches for existing systems can bridge capability gaps. For example, it is increasingly difficult to further optimize AN/ALQ-99 jamming pods to counter advanced, integrated air defense systems. Specifically, Navy officials stated that the AN/ALQ-99 has reached its limit in terms of the underlying architecture’s capability to grow to counter new, sophisticated types of threats.", "Investment in the science and technology research base is a longer-term approach DOD uses to address capability gaps in mission areas. Electronic warfare, including airborne electronic attack, is supported by research investments in fields such as sensors, apertures, power amplifiers, and unmanned aircraft technology that may help address existing capability gaps. Service components categorize research investments differently from one another, which complicates efforts to clearly define funding devoted to airborne electronic attack. Table 6 identifies some of DOD’s current airborne electronic attack-related research investments.\nHowever, not all investments in these fields will necessarily improve airborne electronic attack capabilities. Research officials identify the transition to system development and procurement as one of the primary goals of defense research programs, but acknowledge, reasonably, that not every program will successfully develop a transitionable product. Some acquisition programs, such as the Next Generation Jammer and the MQ-9 Reaper Electronic Attack Pod, invest directly in research to guide the transition process and increase the likelihood of success. But even with this direct attention, technology maturation and development for Next Generation Jammer is expected to last 8 to 9 years. Consequently, current science and technology initiatives represent a long-term investment in future capabilities and are less suited to meeting existing needs.\nDOD analyses during the past decade have identified coordination deficiencies that constrain the department’s ability to capitalize on its science and technology investments. For instance, a 2005 Naval Research Advisory Committee report found that within the Navy, research and development efforts were unduly fragmented, with one laboratory or development activity often being unaware of what another was doing. Further, this study highlighted the lack of a long-range science and technology investment planning process within the Navy. Similarly, in 2007, the Defense Science Board reported that although relevant and valuable science and technology activity was occurring, an overarching, departmentwide strategic technology plan with assigned responsibility, accountability, and metrics did not exist. According to the board, DOD’s science and technology activities and investments should be more directly informed by the department’s strategic goals and top-level missions—an objective that would require a closer coupling of technologists and users, including requirements and capabilities developers. A 2010 Naval Research Advisory Committee report built on previous findings noted that stewardship of long-term naval capabilities was “vague at best” and lacked specific organizational assignment. The report recognized the Navy as having the lead role within DOD for electronic warfare, but identified sporadic and uncoordinated execution across the technical community—noting little evidence of engagement among the science and technology community at large. Further, the report advised that closer coordination between operational and technical communities was essential for the realization of desired long-term capabilities.\nDOD has recently taken actions that begin to address these shortfalls, including formalizing existing investment processes for several key science and technology areas. Most notably, in April 2011 the Secretary of Defense designated electronic warfare as one of seven priority areas for science and technology investment from fiscal years 2013 through 2017. According to officials from the Office of the Assistant Secretary of Defense for Research and Engineering (ASD(R&E)), this designation carries the promise of increased research funding and has prompted chartering of the interdepartmental Electronic Warfare Priority Steering Council. This council is made up of research officials from ASD (R&E), the services, and various defense science and technology groups, such as the Defense Advanced Research Projects Agency, and is charged with effectively evaluating electronic warfare capability gaps and linking them with research initiatives necessary to fill them. To support this process, the council is developing an implementation roadmap to guide coordination of investments within the electronic warfare area. The council also facilitates ASD(R&E) coordination with requirements teams and service/external research offices to determine the specific fields of inquiry that will be needed to support planning for future electronic warfare capability needs. Previously, this coordination was handled informally, whereas the new council provides authority and visibility to the discussions and decisions made.\nNotwithstanding these important steps, services may inevitably face situations where they have to choose between funding their own, service- specific research priorities and funding departmentwide priorities. As the Assistant Secretary of Defense for Research and Engineering testified in 2011, DOD’s seven priority areas for science and technology investment are meant to be in addition to the priorities outlined by individual components (i.e., service research agencies and DARPA). In other words, departmentwide science and technology priorities do not necessarily supplant service priorities. Absent strategic direction, however, services have generally been inclined to pursue their own research interests ahead of departmentwide pursuits. DOD’s planned implementation roadmap for electronic warfare offers opportunities to assess how closely component research investments are aligned to the departmentwide electronic warfare priority and to coordinate component investments in electronic warfare.", "The rapidity of evolving threats, together with the time and cost associated with fielding new systems, creates a major challenge to DOD and its capacity to fill all of its capability gaps. This dynamic makes it imperative that the department get the most out of its electronic warfare investments. At this point, that does not appear to be the case. The systems being acquired have problems and will not deliver as expected; potential overlap, to the extent that it leads to covering some gaps multiple ways while leaving others uncovered, drains buying power from the money that is available; and DOD acknowledges a leadership void that makes it difficult to ascertain whether the current level of investment is optimally matched with the existing capability gaps.\nWithin the airborne electronic attack mission area, budgetary pressures and related program cancellations prompted the department to change its acquisition strategy from a system of systems construct—as underpinned by the 2002 analysis of alternatives—to a potentially less robust, but more affordable, family of systems. In addition, new systems, including AARGM and MALD, that are designed to replace or augment legacy assets have encountered technical challenges while in acquisition, subsequently requiring the services to delay fielding plans within each program. Other acquisition programs, including IDECM and MALD-J, are structured with a high degree of concurrency between development, production, and testing that position them for similar suboptimal outcomes. Although individual service decisions to delay or cancel underperforming or resource-intensive programs may be fiscally prudent, the cumulative effect of these decisions creates uncertainty as to when, or if, current departmentwide airborne electronic attack capability gaps can be filled. At present, even if the department successfully acquires the full complement of systems outlined in its family of systems strategy, some capability gaps identified a decade ago may persist. As such, the department can benefit from reevaluating its capability gaps—using structures like the new Electronic Warfare Priority Steering Council—to identify which ones are highest priorities for science and technology investment and to determine areas where it is more willing to accept mission risk. This analysis, when coupled with an examination of current service-specific science and technology investments, can position DOD to realize improved efficiencies in its electronic warfare research activities and better align constrained budgets with highest-priority needs. Additionally, because underperformance in acquisition programs exacerbates existing capability gaps, realistic assessments of higher-risk programs can provide needed insight into what capabilities each platform is likely to deliver and when. Shortfalls in acquisition should not be the deciding factor on which capability gaps the department accepts.\nAt the same time, services continue to pursue and invest in multiple separate airborne electronic attack systems that potentially overlap with one another. This overlap is most evident in irregular warfare systems, including the Marine Corps’s Intrepid Tiger II and the Army’s CEASAR systems, but is also present in Air Force and Navy efforts to develop expendable jamming decoys through their respective MALD-J and Airborne Electronic Attack Expendable initiatives. Pursuing multiple separate acquisition efforts to develop similar capabilities can result in the same capability gap being filled twice or more, can lead to inefficient use of resources, and may contribute to other warfighting needs going unfilled. Leveraging resources and acquisition efforts across services— not just by sharing information, but through shared partnerships and investments—can simplify developmental efforts, can improve interoperability among systems and combat forces, and could decrease future operating and support costs. Such successful outcomes can position the department to maximize the returns it gets on its airborne electronic attack investments.", "We recommend that the Secretary of Defense take the following five actions:\nGiven airborne electronic attack programmatic and threat changes since 2002, complete the following:\nConduct program reviews for the AARGM, IDECM, MALD, and MALD-J systems to assess cost, schedule, and performance and direct changes within these investments, as necessary.\nDetermine the extent to which the most pressing airborne electronic attack capability gaps can best be met—using the assets that are likely to be available—and take steps to fill any potential gaps.\nAlign service investments in science and technology with the departmentwide electronic warfare priority, recognizing that budget realities will likely require trade-offs among research areas, and direct changes, as necessary.\nTo ensure that investments in airborne electronic attack systems are cost-effective and to prevent unnecessary overlap, take the following actions:\nReview the capabilities provided by the Marine Corps’s Intrepid Tiger II and Army’s CEASAR systems and identify opportunities for consolidating these efforts, as appropriate.\nAssess Air Force and Navy plans for developing and acquiring new expendable jamming decoys, specifically those services’ respective MALD-J and Airborne Electronic Attack Expendable initiatives, to determine if these activities should be merged.", "We provided a draft of this report to DOD for comment. In its written comments, which are reprinted in appendix III, DOD concurred with three of our recommendations and partially concurred with two recommendations. DOD also provided technical comments that we incorporated into the report, as appropriate.\nDOD concurred with our first recommendation to conduct program reviews for the AARGM, IDECM, MALD, and MALD-J systems and direct changes within these investments, as necessary, identifying a March 2012 Navy review of the IDECM program and planned July 2012 Navy review of the AARGM system. For MALD and MALD-J, DOD plans to conduct a program review in early 2014, which will coincide with a planned full rate production decision for MALD-J. In the interim, DOD intends to continue low rate initial production of MALD-J units. However, because MALD has experienced significant technical challenges within the past 2 years, and because DOD plans to invest an additional $176.9 million toward MALD-J production through fiscal year 2014, we believe an earlier review may be warranted. In its written comments, DOD also stated that the Deputy Assistant Secretary of Defense for Strategic and Tactical Systems will chair a meeting to review AARGM, IDECM, MALD, and MALD-J with the Navy and Air Force to verify progress, but it did not provide a timetable for this review.\nDOD also concurred with our second recommendation to determine the extent to which the most pressing airborne electronic attack capability gaps can best be met—using the assets that are likely to be available— and take steps to fill any potential gaps. Most notably, DOD cited plans for U.S. Strategic Command to annually assess all DOD electronic warfare capabilities—including current requirements, current and planned future capabilities, and the supporting investment strategy—and present this assessment to the Joint Requirements Oversight Council. Further, DOD concurred with our third recommendation to align service investments in science and technology with the departmentwide electronic warfare priority, noting in its written comments that it expects implementation roadmaps for priority areas (including electronic warfare) will serve to coordinate component investments and accelerate the development and delivery of capabilities.\nDOD partially concurred with our two recommendations related to potentially unnecessary overlap among airborne electronic attack systems, identifying through its written comments plans for the Deputy Assistant Secretary of Defense for Strategic and Tactical Systems to review the Intrepid Tiger and CEASAR systems with the Marine Corps and Army to investigate the efficacy of additional coordination as future acquisition plans are evaluated. Similarly, DOD noted that following the expected March 30, 2012, completion of a new Air Force plan related to developing and procuring an Increment II variant of MALD-J, the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics; Office of the Director, Cost Assessment and Program Evaluation; and Joint Staff would review Air Force and Navy plans and assess opportunities for coordination among the MALD-J and Airborne Electronic Attack Expendable initiatives, should funding be allocated for a future expendables program. However, the basis for DOD’s partial agreement on these two recommendations appears to stem from its desire to achieve efficiencies through increased coordination among programs—not through consolidation of systems possessing similar capabilities. We emphasize that coordination is not a substitute for consolidation—particularly in the current constrained budget environment—and we encourage DOD to expand the scope of its planned reviews to include assessments of potential unnecessary redundancies within these two sets of systems.\nAdditionally, DOD commented that our draft report overstated the acquisition duplication among airborne electronic attack systems. Most notably, DOD pointed to its cancellations of the MQ-9 Electronic Attack Pod and MALD-J Increment II programs, as outlined in its fiscal year 2013 budget submission, as evidence that duplication was being managed. These cancellations were announced after we had completed our work and drafted the report. During the period that our draft report was with the agency for comment, we revised our report and recommendations, in coordination with DOD, to account for these recent changes. Most notably, we revised our fourth and fifth recommendations to remove the newly canceled MQ-9 Electronic Attack Pod and MALD-J Increment II systems, respectively, as additional platforms where DOD may identify opportunities for consolidation. DOD’s written comments were subsequently crafted in response to our revised set of recommendations. As noted above, opportunities to reduce duplication further remain. We also briefly introduced the Marine Air Ground Task Force Electronic Warfare concept, in response to DOD’s comments, while further clarifying that our report did not evaluate ground- or ship-based electronic warfare systems.\nDOD also commented that our characterization of the family of systems strategy for airborne electronic attack was misleading, stating that the system of systems synergies envisioned in 2002 continue to be pursued. We acknowledge that DOD is considering options to field additional systems against high-end threats, but we believe that the current acquisition strategy and its distributed approach is very much in line with the definition of a family of systems, as outlined by DOD. When DOD embarked on the system of systems strategy in 2002, it envisioned fielding certain major systems, such as B-52 Standoff Jammer and J-UCAS, which were later canceled. Without these planned elements, there is no evidence to suggest that the remaining systems together possess capability beyond the additive sum of the individual capabilities of its members—a characteristic fundamental to a system of systems.\nWe are sending copies of this report to interested congressional committees, the Secretary of Defense, the Secretary of the Army, the Secretary of the Navy, and the Secretary of the Air Force. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-4841 or [email protected]. 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 IV.", "This report evaluates the Department of Defense’s (DOD) airborne electronic attack capabilities and investment plans. Specifically, we assessed (1) the department’s strategy for acquiring airborne electronic attack capabilities, (2) progress made developing and fielding systems to meet airborne electronic attack mission requirements, and (3) additional compensating actions taken by the department to address capability gaps, including improvements to tactics, techniques, and procedures and investments in science and technology.\nTo assess the department’s strategy for acquiring airborne electronic attack capabilities, we analyzed DOD’s documents outlining mission requirements and acquisition needs, including the 2002 Airborne Electronic Attack Analysis of Alternatives, 2004 Initial Capabilities Document for Denying Enemy Awareness through Airborne Electronic Attack, 2008 Electronic Warfare Capabilities-Based Assessment, 2009 Electronic Warfare Initial Capabilities Document, and 2010 Electronic Warfare Strategy of the Department of Defense report to Congress. We also reviewed platform-specific capabilities documents, service roadmaps related to airborne electronic attack, and budget documents to understand how the family of systems construct evolved over time. To identify capability limitations and sustainment challenges facing current airborne electronic attack systems, we reviewed program briefings and acquisition documentation related to these systems. To further corroborate documentary evidence and obtain additional information in support of our review, we conducted interviews with relevant DOD officials responsible for managing airborne electronic attack requirements and overseeing the related family of systems, including officials in the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics; Office of the Director, Cost Assessment and Program Evaluation; Office of the Assistant Secretary of the Navy for Research, Development and Acquisition; Office of the Chief of Naval Operations— Information Dominance and Air Warfare directorates; Office of the Assistant Secretary of the Air Force for Acquisition; Air Force Office of the Deputy Chief of Staff for Operations, Plans, and Requirements— Electronic Warfare division; Air Force Air Combat Command; Army Office of the Deputy Chief of Staff for Operations, Plans, and Training— Electronic Warfare division; Marine Air-Ground Task Force Electronic Warfare; U.S. Strategic Command; and Joint Staff. We also held discussions with DOD officials responsible for sustaining current airborne electronic attack systems, including officials in (1) Navy program offices for Airborne Electronic Attack, Advanced Tactical Aircraft Protection Systems, Direct and Time Sensitive Strike, and Aerial Target and Decoy Systems and (2) Air Force offices, including the F-22A Raptor and F- 16CM program offices and Warner Robins Air Logistics Center.\nTo assess progress made developing and fielding systems to meet airborne electronic attack mission requirements, we analyzed documents outlining acquisition plans, costs, and performance outcomes, including capabilities documents, program schedules, test reports, budget submissions, system acquisition reports, and program briefings. These same materials afforded information on key attributes of individual airborne electronic attack systems, which we used to assess potential overlap among systems in development. Further, we identified persisting airborne electronic attack capability gaps by reviewing the 2009 Electronic Warfare Initial Capabilities Document, along with earlier analyses related to airborne electronic attack requirements, and compared the capability needs identified in those documents with current DOD investments in airborne electronic attack capabilities. To supplement our analyses and gain additional visibility into these issues, we conducted interviews with relevant DOD officials responsible for managing airborne electronic attack requirements, including officials in the Office of the Chief of Naval Operations—Information Dominance and Air Warfare directorates; Office of the Assistant Secretary of the Air Force for Acquisition; Air Force Office of the Deputy Chief of Staff for Operations, Plans, and Requirements—Electronic Warfare division; Air Force Air Combat Command; Army Office of the Deputy Chief of Staff for Operations, Plans, and Training—Electronic Warfare division; Marine Air- Ground Task Force Electronic Warfare; U.S. Strategic Command; and Joint Staff. We also held numerous interviews with DOD officials primarily responsible for developing, acquiring, and testing airborne electronic attack systems, including officials in the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics; Office of the Director, Operational Test and Evaluation; Office of the Deputy Assistant Secretary of Defense for Developmental Test and Evaluation; Office of the Assistant Secretary of the Navy for Research, Development and Acquisition; Office of the Assistant Secretary of the Air Force for Acquisition; Navy program offices for Airborne Electronic Attack, F/A-18 and EA-18G, Direct and Time Sensitive Strike, and Advanced Tactical Aircraft Protection Systems; Army Rapid Equipping Force; and Air Force program offices for MALD/MALD-J and MQ-9 Reaper Electronic Attack Pod.\nTo assess additional compensating actions taken by the department to address airborne electronic attack capability gaps, we reviewed service documents outlining recent improvements and refinements to tactics, techniques, and procedures for EA-18G and EC-130H aircraft. We corroborated this information through interviews with officials from the Naval Strike and Air Warfare Center and Air Force Office of the Deputy Chief of Staff for Operations, Plans, and Requirements—Electronic Warfare division charged with refining tactics, techniques, and procedures for EA-18G and EC-130H aircraft. We also reviewed broad agency announcements to understand ongoing science and technology activities related to airborne electronic attack. We supplemented this documentation review with discussions with officials engaged in science and technology work tied to airborne electronic attack, including officials in the Office of the Assistant Secretary of Defense for Research and Engineering, Office of Naval Research, Air Force Research Laboratory, and Defense Advanced Research Projects Agency.\nWe conducted this performance audit from February 2011 to March 2012 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 provides analyses of 10 selected airborne electronic attack systems. Figures 4 through 13 show images of each system; tables 7 through 16 provide budget data on each system.\nEstimated end of service life: 2020 Mission description: The primary mission of the Prowler is the suppression of enemy air defenses in support of strike aircraft and ground troops by interrupting enemy electronic activity and obtaining tactical electronic intelligence within the combat area. The EA-6B uses the AN/ALQ-99 radar jamming pod for non-lethal protection by jamming air defense systems and its AGM-88 High Speed Anti-Radiation Missile for lethal physical attack of air defense systems.\nStatus: In 2010, we reported that the Navy had started replacing its EA- 6B aircraft with EA-18G Growlers and expected all Prowlers to be out of its inventory by 2012. However, the Navy projects Prowlers to remain in service until 2016 to further meet the joint expeditionary need. According to the Navy, this is subject to additional change contingent on the fiscal year 2013 budget. The Marine Corps plans to retire its Prowlers by 2020. In addition, the most recent upgrade program for the EA-6B—the third Improved Capability electronic suite modification (ICAP III)—is nearing completion. ICAP III provides the Prowler with greater jamming capability, including the ability to perform selective reactive jamming.\nBudget: See the following table for budget information.\nEstimated end of service life: Mid-band: 2024 Low-band: 2026 High-band: 2028 Mission description: The AN/ALQ-99 Tactical Jamming System is an airborne electronic warfare system carried on the EA-6B and EA-18G to support the suppression of enemy air defenses. The system is capable of intercepting, automatically processing, and jamming received radio frequency signals.\nStatus: Obsolescence issues and advances in adversary technology have reduced the AN/ALQ-99’s ability to counter emerging threats. The Navy is developing its Next Generation Jammer program to replace the AN/ALQ-99 and plans to begin fielding the system in 2020. In the interim, the Navy is currently replacing three aging legacy low-band transmitters to resolve obsolescence and reliability problems.\nBudget: See the following table for budget information.\nEstimated end of service life: 2053 Mission description: The EC-130H Compass Call is an airborne, wide area, persistent stand-off electronic attack weapon system able to disrupt and deny adversary use of the electronic battlespace using offensive radio frequency countermeasures. Its primary mission is to deny or disrupt command and control of enemy integrated air defenses, air defense surface-to-air missile and anti-aircraft artillery threats. Its secondary mission is to support ground and special operations forces by denying enemy communications and defeating improvised explosive devices.\nStatus: The Air Force has evolved the Compass Call since it was first fielded in 1982 to meet modern and emerging threats, including commercial communications, early warning radars, and improvised explosive devices. Upgrades and modernization efforts are completed during regularly scheduled depot maintenance. In 2003, as a response to Operation Enduring Freedom, these upgrades transitioned from “Block” upgrades to “Baseline” upgrades to allow for smaller and more focused modernization efforts. Currently, the Air Force is completing Baseline 1 upgrades, beginning Baseline 2 efforts, and developing Baseline 3 requirements. In addition, the Air Force is also replacing the center wing box on all 14 Compass Call aircraft, which will extend the service life of the fleet. Compass Call has been on continuous deployment in support of operations in Iraq and Afghanistan since 2003; which has accelerated the need to replace the center wing boxes. Finally, to further alleviate stress on the fleet, the Air Force plans to procure an additional aircraft, increasing the size of the fleet to 15 aircraft by fiscal year 2016.\nBudget: See the following table for budget information.\nEstimated end of service life: Not available Mission description: The F-22A is the Air Force’s fifth-generation air superiority fighter that incorporates a stealthy and highly maneuverable airframe, advanced integrated avionics, and a supercruise engine. Originally developed as an air-to-air fighter, additional capabilities will allow the F-22A to perform multiple missions including destruction of enemy air defenses, air-to-ground attack, electronic attack, and intelligence surveillance and reconnaissance.\nStatus: The F-22A, along with the F-35, is expected to fulfill the Air Force’s requirement for penetrating escort jamming capability. The Air Force initiated a formal F-22A modernization and reliability improvement program in 2003 to incrementally develop and deliver increasing capabilities over time. These increasing capabilities would allow the F- 22A to provide penetrating escort jamming, as envisioned in the airborne electronic attack family of systems strategy. However, fielding of these capabilities has been delayed because of reductions in program funding. In addition, we have previously reported on schedule delays within the modernization and reliability improvement program and their effect on fielding additional capabilities within expected time frames. Further delays in fielding these planned capabilities may affect the Air Force’s ability to provide sufficient penetrating escort jamming, increasing mission risk.\nBudget: See the following table for budget information.\nMission description: The EA-18G Growler replaces the EA-6B Prowler as DOD’s tactical electronic attack aircraft. Like the Prowler, the EA-18G will provide full-spectrum electronic attack to counter enemy air defenses and communication networks. The EA-18G incorporates jamming capabilities, such as the AN/ALQ-99 Tactical Jamming System, and the use of onboard weapons such as the High Speed Anti-Radiation Missile, for the suppression of enemy air defenses. The Growler is the Navy’s platform to fulfill modified escort jamming capability needs.\nStatus: The Growler program entered full rate production in 2009, with a planned acquisition of 88 aircraft. However, in 2009, the Office of the Secretary of Defense directed the Navy to buy an additional 26 aircraft, bringing the total units to be acquired to 114. Through fiscal year 2011, the Navy placed 90 of 114 planned EA-18G aircraft under contract for production. Production is slightly ahead of schedule and has incorporated the increase in total units with limited per-unit cost growth.\nIn 2010, the Director, Operational Test and Evaluation, declared the Growler operationally effective, but also found that the aircraft was unsuitable for operations based on maintainability concerns. Since then, the Navy has taken steps to improve the EA-18Gs suitability through software fixes, and the system recently completed follow-on operational test and evaluation. In addition, initial deployment of the aircraft in support of operations in Iraq, Libya, and Afghanistan recently concluded, and the Navy is assessing the aircraft’s performance, including the remaining challenges mitigating electromagnetic interference with the AN/ALQ-99. Additional software improvements are planned through fiscal year 2018.\nBudget: See the following table for budget information.\nEstimated fielding date: 2012 Mission description: AARGM is an air-to-ground missile for carrier- based aircraft designed to destroy enemy radio-frequency-enabled surface-to-air defense. AARGM is an upgrade to the AGM-88 High Speed Anti-Radiation Missile (HARM) and will utilize existing HARM propulsion and warhead sections with new guidance and modified control sections.\nStatus: The Navy authorized AARGM production in September 2008, with deliveries scheduled to begin in January 2010. A total of 1,919 units were planned, with initial operational capability scheduled for March 2011. The program began operational testing in June 2010 after a 9-month delay owing, in part, to concerns about the production representativeness of test missiles. The Navy halted operational testing in September 2010 after hardware and software deficiencies caused a series of missile failures.\nThese testing challenges prompted the Navy to delay AARGM’s planned initial operational capability date and undertake corrective actions to the system. These actions included an evaluation of the AARGM system through laboratory, ground, and flight tests from November 2010 through June 2011. Following this testing, Navy officials concluded that previous testing anomalies were successfully corrected but that the system was at high risk of not meeting suitability requirements during operational testing. The Navy found that insufficient system reliability and manufacturing quality controls remain open deficiencies that will likely result in an excessive number of system failures experienced by operational units, which could prevent the Navy from effectively executing planned missions. To address reliability concerns, the Navy instituted a “fly before you buy” program to screen poor weapons prior to government acceptance. As of July 2011, one-third of missiles delivered for testing were returned to the factory for repair.\nRecently, the AARGM system resumed operational testing. The Navy now plans to field the system beginning in April 2012 and make a full rate production decision and contract award in June and July 2012, respectively.\nBudget: See the following table for budget information.\nEstimated fielding date: 2014 (Block 4)\nMission description: IDECM is a suite of self-protection countermeasure systems designed for the F/A-18E/F, including onboard jamming and off- board decoy jamming capabilities. The Navy has fielded IDECM in different blocks dating back to 2002 (Block 1), 2004 (Block 2), and 2011 (Block 3). Each block improved the system’s jamming capabilities, decoy capabilities, or both. Block 4—the phase of production currently in development—extends IDECM onboard jamming capabilities to F/A- 18C/D aircraft.\nStatus: IDECM Block 4 entered development in 2009 and includes redesign of the ALQ-214 onboard jammer from the component design used for earlier blocks. This redesign is driven by the need to reduce weight in order to accommodate the IDECM onboard system on F/A- 18C/D aircraft. Essentially, the new ALQ-214 will perform the same onboard jammer function as found in IDECM Blocks 2 and 3 but with a different form and fit. The Navy expects to transition current IDECM Block 3 full rate production to Block 4 units by April 2012. This production transition will occur concurrent with ground and flight testing of the Block 4 system—a strategy that could drive costly design changes, retrofits, or both to units in production, in the event that the ALQ-214 redesign effort does not materialize on schedule. To mitigate this risk, Navy officials stated that Block 4 full rate production will initially be for 19 systems, with production rates increasing to as many as 40 per year following completion of testing. Further, DOD officials report that Block 4 production will be executed under a firm fixed-price contract—a strategy that DOD officials state will place the financial burden of any retrofits on the vendor.\nBudget: See the following table for budget information.\nEstimated fielding date: 2020 (Mid-band on EA-18G)\nMission description: The Next Generation Jammer will be an electronic warfare system to support the suppression of enemy air defenses, replacing and improving the capability currently provided by AN/ALQ-99 Tactical Jamming System. The Navy’s EA-18G will employ the Next Generation Jammer as the electronic attack payload. In a separate increment of capability, the Navy plans to integrate the Next Generation Jammer onto the F-35B, which will eventually replace Marine Corps EA- 6B Prowlers. Each increment of capability will be divided into developmental blocks—Block 1 for mid-band, Block 2 for low-band, and Block 3 for high-band frequencies.\nStatus: The Next Generation Jammer is nearing completion of technology maturation activities performed by four different contractors before the program’s entry into the technology development phase. The Navy plans to enter the technology development phase in the third quarter of fiscal year 2013, with an engineering and manufacturing development contract planned for 2015. The Navy has adopted an evolutionary block approach to fielding the Next Generation Jammer. Initial operational capability for Block 1, on the EA-18G aircraft, is scheduled for 2020. The Navy expects to field Blocks 2 and 3 on the EA- 18G in 2022 and 2024, respectively. Fielding dates for the F-35 increment’s blocks are currently undetermined.\nBudget: See the following table for budget information. 2012 (MALD—actual) 2012 (MALD-J—estimated)\nMission description: MALD is an expendable decoy able to represent small, medium, or large aircraft in order to saturate or degrade enemy air defense systems. MALD-J is a variant of MALD that adds jamming capability to the decoy and forms the stand-in jamming component for the airborne electronic attack family of systems. The Air Force plans to acquire a total quantity of 596 MALD and 2,404 MALD-J units.\nStatus: The Air Force approved MALD for low rate initial production in 2008. The Air Force expected to procure 300 MALD units in low rate production before transitioning to full rate production. However, following flight testing failures in summer 2010—attributable, in part, to design issues with the fuel filter—and a later test failure in February 2011 caused by foreign object debris in the fuel line, the MALD system was decertified, and remaining initial operational testing and evaluation activities were suspended. After additional corrective actions by the program office to the MALD design, the system reentered operational testing in July 2011, with test shots fired in late August 2011. According to Air Force testing officials, during the last test shot in the August series (OT-8), the engine for one decoy never started after it detached from the host aircraft, causing that MALD unit to crash. This operational testing event was the final one scheduled for MALD, and DOD officials report that, in January 2012, the Air Force Operational Test and Evaluation Center delivered the MALD initial operational test and evaluation report assessing system performance.\nAs a result of MALD’s testing shortfalls, the Air Force authorized additional low rate initial production purchases for MALD quantities—to the extent that the Air Force will now purchase the entire 596 unit inventory of MALD quantities under low rate initial production, without ever authorizing or achieving full rate production. Technical deficiencies and design changes during low rate initial production prevented demonstration of an efficient manufacturing capability, which in turn prevented MALD from meeting the department’s criteria to enter full rate production. DOD policy states that in order for a system to receive full rate production approval, the system must (1) demonstrate control of the manufacturing process and acceptable reliability, (2) collect statistical process control data, and (3) demonstrate control and capability of other critical processes. Because the MALD and MALD-J designs are identical—except for the addition of a jammer module to MALD-J—the absence of a proven manufacturing process for MALD introduces cost and schedule risk to production of MALD-J.\nDeficiencies affecting the MALD vehicle have already contributed to MALD-J program delays. The MALD-J low rate initial production decision review—previously planned for September 2009—was delayed until September 2011. Operational testing has subsequently been delayed and is now expected to begin in May 2012. To mitigate this schedule delay, the Air Force has moved to compress MALD-J operational testing from 15 months to 7 months, which program officials report reflects an increase in test range priority and decrease in data turnaround time. According to DOD officials, however, test range execution issues such as aircraft and test equipment availability could potentially extend MALD-J operational testing beyond the currently projected completion date. In addition, the Air Force delayed, and later canceled, plans to develop a second increment of capability for MALD-J—one intended to provide more advanced jamming capabilities. Prior to these decisions, the Air Force’s fiscal year 2012 budget submission outlined plans to budget $54.8 million in research, development, testing, and evaluation funding to MALD-J Increment II in fiscal year 2013. According to DOD, the Air Force is to provide a new plan for developing and procuring an Increment II variant of MALD-J and report to the Deputy Secretary of Defense by March 30, 2012.\nBudget: See the following table for budget information.\nEstimated fielding date: To be determined Mission description: The F-35 Joint Strike Fighter is a family of fifth- generation strike aircraft to replace and complement existing Navy, Air Force, and Marine Corps aircraft, such as the F-16 and the F/A-18. The F-35, along with the F-22A, is expected to fulfill DOD’s requirement for penetrating escort jamming capability.\nStatus: The F-35 program entered low rate initial production in 2007, with a planned baseline acquisition of 2,886 aircraft. The program experienced development challenges, including delays in testing, leading to a program-wide review. Based on this review, DOD restructured the program in 2010, increasing the time and funding for development. This restructure triggered a breach of the critical Nunn-McCurdy cost growth threshold. Presently, the program plans to procure 2,457 aircraft, and the services are still reviewing scheduled plans for operational capability and fielding.\nBudget: See the following table for budget information.", "", "", "", "In addition to the contact named above, key contributors to this report were Bruce Fairbairn, Assistant Director; Christopher R. Durbin; Laura Greifner; James Kim; Scott Purdy; Sylvia Schatz; Brian Smith; and Roxanna Sun." ], "depth": [ 1, 1, 2, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full", "h0_full", "h0_full", "h1_full", "", "h1_full", "", "h2_full h1_title", "", "h1_full", "h1_full", "", "h4_full", "h3_full", "", "", "", "", "" ] }

{ "question": [ "What does the Department of Defense's DOD strategy for meeting airborne electronic attack requirements entail?", "What has driven DOD priorities in the past decade?", "What has been the effect of tightened military budgets?", "How has the DOD responded to their budget limitations?", "How is DOD responding to growing mission demands?", "How has progress on the airborne electronic attack systems proceeded?", "What consolidation opportunities arise from slowing conflict in Iraq and Afghanistan?", "What are the limitations of DOD's consolidation efforts?", "How is DOD attempting to address gaps in its airborne electronic attack capability?", "What might be a longer-term solution in addressing this problem?", "How is DOD addressing long-standing coordination shortfalls?", "What does airborne electronic attack entail?", "What has contributed to the acceleration of new weapons designed to encounter the US's airborne electronic attack capabilities?", "What was GAO asked to assess?", "How did GAO assess the DOD's airborne electronic attack capabilities?", "What does GAO recommend for DOD?", "To what extent did DOD agree with GAO's recommendations?" ], "summary": [ "The Department of Defense’s (DOD) evolving strategy for meeting airborne electronic attack requirements centers on acquiring a family of systems, including traditional fixed wing aircraft, low observable aircraft, unmanned aerial systems, and related mission systems and weapons.", "DOD analyses dating back a decade have identified capability gaps and provided a basis for service investments, but budget realities and lessons learned from operations in Iraq and Afghanistan have driven changes in strategic direction and program content.", "Most notably, DOD canceled some acquisitions, after which the services revised their operating concepts for airborne electronic attack. These decisions saved money, allowing DOD to fund other priorities, but reduced the planned level of synergy among systems during operations.", "As acquisition plans have evolved, capability limitations and sustainment challenges facing existing systems have grown, prompting the department to invest in system improvements to mitigate shortfalls.", "DOD is investing in new airborne electronic attack systems to address its growing mission demands and to counter anticipated future threats.", "However, progress acquiring these new capabilities has been impeded by developmental and production challenges that have slowed fielding of planned systems. Some programs, such as the Navy’s EA-18G Growler and the Air Force’s modernized EC-130H Compass Call, are in stable production and have completed significant amounts of testing. Other key programs, like the Navy’s Advanced Anti-Radiation Guided Missile, have required additional time and funding to address technical challenges, yet continue to face execution risks. In addition, certain systems in development may offer capabilities that overlap with one another—a situation brought on in part by DOD’s fragmented urgent operational needs processes. Although services have shared technical data among these programs, they continue to pursue unique systems intended to counter similar threats.", "As military operations in Iraq and Afghanistan decrease, opportunities exist to consolidate current acquisition programs across services.", "However, this consolidation may be hampered by DOD’s acknowledged leadership deficiencies within its electronic warfare enterprise, including the lack of a designated, joint entity to coordinate activities. Furthermore, current and planned acquisitions will not fully address materiel-related capability gaps identified by DOD—including some that date back 10 years. Acquisition program shortfalls will exacerbate these gaps.", "To supplement its acquisition of new systems, DOD is undertaking other efforts to bridge existing airborne electronic attack capability gaps. In the near term, services are evolving tactics, techniques, and procedures for existing systems to enable them to take on additional mission tasks. These activities maximize the utility of existing systems and better position operators to complete missions with equipment currently available.", "Longer-term solutions, however, depend on DOD successfully capitalizing on its investments in science and technology.", "DOD has recently taken actions that begin to address long-standing coordination shortfalls in this area, including designating electronic warfare as a priority investment area and creating a steering council to link capability gaps to research initiatives. These steps do not preclude services from funding their own research priorities ahead of departmentwide priorities. DOD’s planned implementation roadmap for electronic warfare offers an opportunity to assess how closely component research investments are aligned with the departmentwide priority.", "Airborne electronic attack involves the use of aircraft to neutralize, destroy, or suppress enemy air defense and communications systems.", "Proliferation of sophisticated air defenses and advanced commercial electronic devices has contributed to the accelerated appearance of new weapons designed to counter U.S. airborne electronic attack capabilities.", "GAO was asked to assess (1) the Department of Defense’s (DOD) strategy for acquiring airborne electronic attack capabilities, (2) progress made in developing and fielding systems to meet airborne electronic attack mission requirements, and (3) additional actions taken to address capability gaps.", "To do this, GAO analyzed documents related to mission requirements, acquisition and budget needs, development plans, and performance, and interviewed DOD officials.", "GAO recommends that DOD conduct program reviews for certain new, key systems to assess cost, schedule, and performance; determine the extent to which the most pressing capability gaps can be met and take steps to fill them; align service investments in science and technology with the departmentwide electronic warfare priority; and review capabilities provided by certain planned and existing systems to ensure investments do not overlap.", "DOD agreed with three recommendations and partially agreed with the two aimed at reducing potential overlap among systems. DOD plans to assess coordination among systems, whereas GAO sees opportunities for consolidation, as discussed in the report." ], "parent_pair_index": [ -1, -1, 1, 2, -1, -1, -1, 2, -1, 0, -1, -1, -1, -1, 2, -1, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 0, 0, 0, 0, 4, 4 ] }

{ "title": [ "", "Introduction", "Title I: General Provisions", "Definitions—Section 101 (50 U.S.C. § 3911).", "Jurisdiction and applicability of act—Section 102 (50 U.S.C. § 3912).", "Protection of persons secondarily liable—Section 103 (50 U.S.C. § 3913).", "Extension of protections to citizens serving with allied forces—Section 104 (50 U.S.C. § 3914).", "Notification of benefits—Section 105 (50 U.S.C. § 3915).", "Information for members of the Armed Forces and their dependents on rights and protections of the Servicemembers Civil Relief Act—Section 105a (50 U.S.C. § 3916).", "Extension of rights and protections to Reserves ordered to report for military service and to persons ordered to report for induction—Section 106 (50 U.S.C. § 3917).", "Waiver of rights pursuant to written agreement—Section 107 (50 U.S.C. § 3918).", "Exercise of rights under act not to affect certain future financial transactions—Section 108 (50 U.S.C. § 3919).", "Legal representatives—Section 109 (50 U.S.C. § 3920).", "Title II: General Relief", "Protection of servicemembers against default judgments—Section 201 (50 U.S.C. § 3931).", "Stay of proceedings when servicemember has notice—Section 202 (50 U.S.C. § 3932).", "Fines and penalties under contracts—Section 203 (50 U.S.C. § 3933).", "Stay or vacation of execution of judgments, attachments, and garnishments—Section 204 (50 U.S.C. § 3934).", "Duration and term of stays; co-defendants not in service—Section 205 (50 U.S.C. § 3935).", "Statute of limitations—Section 206 (50 U.S.C. § 3936).", "Maximum rate of interest on debts incurred before military service—Section 207 (50 U.S.C. § 3937).", "Child custody protection—Section 208 (50 U.S.C. § 3938).", "Annual notice regarding child custody protection— (50 U.S.C. § 3938a).", "Title III: Rent, Installment Contracts, Mortgages, Liens, Assignments, Leases, Telephone Service Contracts", "Evictions and distress—Section 301 (50 U.S.C. § 3951).", "Protection under installment contracts for purchase or lease—Section 302 (50 U.S.C. § 3952).", "Mortgages and trust deeds—Section 303 (50 U.S.C. § 3953).", "Settlement of stayed cases relating to personal property—Section 304 (50 U.S.C. § 3954).", "Termination of residential or motor vehicle leases—Section 305 (50 U.S.C. § 3955).", "Termination of telephone service contracts, multichannel video programming, and internet access service contracts —Section 305a (50 U.S.C. § 3956).", "Protection of life insurance policy—Section 306 (50 U.S.C. § 3957).", "Enforcement of storage liens—Section 307 (50 U.S.C. § 3958).", "Extension of protections to dependents—Section 308 (50 U.S.C. § 3959).", "Title IV: Life Insurance", "Definitions—Section 401 (50 U.S.C. § 3971).", "Insurance rights and protections—Section 402 (50 U.S.C. § 3972).", "Application for insurance protection—Section 403 (50 U.S.C. § 3973).", "Policies entitled to protection and lapse of protections—Section 404 (50 U.S.C. § 3974).", "Policy restrictions—Section 405 (50 U.S.C. § 3975).", "Deduction of unpaid premiums—Section 406 (50 U.S.C. § 3976).", "Premiums and interest guaranteed—Section 407 (50 U.S.C. § 3977).", "Regulations—Section 408 (50 U.S.C. § 3978).", "Review of findings of fact and conclusions of law—Section 409 (50 U.S.C. § 3979).", "Title V: Taxes and Public Lands", "Taxes respecting personal property, money, credits, and real property—Section 501 (50 U.S.C. § 3991).", "Rights in public lands—Section 502 (50 U.S.C. § 3992).", "Desert-land entries—Section 503 (50 U.S.C. § 3993).", "Mining claims—Section 504 (50 U.S.C. § 3994).", "Mineral permits and leases—Section 505 (50 U.S.C. § 3995).", "Perfection or defense of rights—Section 506 (50 U.S.C. § 3996).", "Distribution of information concerning benefits of title—Section 507 (50 U.S.C. § 3997).", "Land rights of servicemembers—Section 508 (50 U.S.C. § 3998).", "Regulations—Section 509 (50 U.S.C. § 3999).", "Income taxes—Section 510 (50 U.S.C. § 4000).", "Residence for tax purposes—Section 511 (50 U.S.C. § 4001).", "Title VI: Administrative Remedies", "Inappropriate use of act—Section 601 (50 U.S.C. § 4011).", "Certificates of service; persons reported missing—Section 602 (50 U.S.C. § 4012).", "Interlocutory orders—Section 603 (50 U.S.C. § 4013).", "Title VII: Further Relief", "Anticipatory relief—Section 701 (50 U.S.C. § 4021).", "Power of attorney—Section 702 (50 U.S.C. § 4022).", "Professional liability protection—Section 703 (50 U.S.C. § 4023).", "Health insurance reinstatement—Section 704 (50 U.S.C. § 4024).", "Guarantee of residency for military personnel and spouses of military personnel—Section 705 (50 U.S.C. § 4025).", "Business or trade obligations—Section 706 (50 U.S.C. § 4026).", "Title VIII: Civil Liability115", "Enforcement by the Attorney General—Section 801 (50 U.S.C. § 4041).", "Private right of action—Section 802 (50 U.S.C. § 4042).", "Preservation of remedies—Section 803 (50 U.S.C. § 4043)." ], "paragraphs": [ "", "The Soldiers' and Sailors' Civil Relief Act of 1940 (SSCRA) provided civil protections and rights to individuals based on their service in the U.S. Armed Forces. Congress enacted the Servicemembers Civil Relief Act (SCRA) in 2003 in response to the increased deployment of Reserve and National Guard military and as a modernization and restatement of the protections and rights previously available to servicemembers under the SSCRA. The SCRA has been amended since its initial passage, and Congress continues to consider amendments from time to time. Most recently, Congress has enacted amendments to extend certain benefits to the spouses of servicemembers.\nCongress has long recognized the need for protective legislation for servicemembers whose service to the nation compromises their ability to meet obligations and protect their legal interests. For example, Congress tolled all judicial actions during the Civil War, civil and criminal, for persons who \"by reason of resistance to the execution of the laws of the United States, or the interruption of the ordinary course of judicial proceedings,\" were beyond the reach of legal process. During World War I, Congress passed the Soldiers' and Sailors' Civil Relief Act of 1918, which, unlike many state laws of the Civil War era, did not create a moratorium on legal actions against servicemembers, but instead directed trial courts to apply principles of equity to determine the appropriate action to take whenever a servicemember's rights were implicated in a controversy. During World War II, Congress essentially reenacted the expired 1918 statute as the Soldiers' and Sailors' Civil Relief Act of 1940, and then amended it substantially in 1942 to take into account the new economic and legal landscape that had developed between the wars. Congress enacted amendments to the SSCRA on several occasions during subsequent conflicts, including in 2002, when the benefits of the SSCRA were extended to certain members of the National Guard.\nThe SCRA is an exercise of Congress's power to raise and support armies and to declare war. The purpose of the act is to provide for, strengthen, and expedite the national defense by protecting servicemembers, enabling them to \"devote their entire energy to the defense needs of the Nation.\" The SCRA protects servicemembers by temporarily suspending certain judicial and administrative proceedings and transactions that may adversely affect their legal rights during military service. The SCRA does not provide forgiveness of all debts or the extinguishment of contractual obligations on behalf of active-duty servicemembers, nor grant absolute immunity from civil lawsuits. Instead, the SCRA provides for the suspension of claims and protection from default judgments against servicemembers. In this way, it seeks to balance the interests of servicemembers and their creditors, spreading the burden of national military service to a broader portion of the citizenry. Courts are to construe the SCRA liberally in favor of servicemembers, but retain discretion to deny relief in certain cases.\nMany of the SCRA provisions are especially beneficial for Reservists activated to respond to a national crisis, but some provisions are also useful for career military personnel. One measure that affects many who are called to active duty is the cap on interest at an annual rate of 6% on debts incurred prior to a person's entry into active-duty military service. Other measures protect military families from being evicted from rental or mortgaged property ; from cancellation of life insurance ; from taxation in multiple jurisdictions ; from foreclosure of property to pay taxes that are due ; and from losing certain rights to public land.\nThis report provides a section-by-section summary of the SCRA.", "", "For the purposes of the SCRA, the following definitions apply:\n'Servicemember' —Persons covered by the SCRA include members of the \"uniformed services\" found in 10 U.S.C. § 101(a)(5), which include the Army, Navy, Air Force, Marine Corps, Coast Guard, and the commissioned corps of the National Oceanic and Atmospheric Administration and the Public Health Service.\n'Military Service' —\"Military service\" includes \"active duty\" as defined in 10 U.S.C. § 101(d)(1); National Guard service as service under a call to active service authorized by the President or the Secretary of Defense for a period of more than 30 consecutive days under 32 U.S.C. § 502(f) for purposes of responding to a national emergency declared by the President and supported by federal funds; for officers of the Public Health Service or the National Oceanic and Atmospheric Administration, \"active service\" (not further defined); and any period during which a servicemember is absent from duty on account of sickness, wounds, leave, or other lawful case.\n\"Active duty\" for armed services is defined in 10 U.S.C. § 101(d)(1) as \"full-time duty in the active military service of the United States ... [including] full-time training duty, annual training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned.\" \"Active military service\" is not further defined in Section 101 of Title 10, U.S. Code , although \"active service\" is given the meaning \"service on active duty or full-time National Guard duty,\" in 10 U.S.C. § 101(d)(3).\nUnder the SSCRA, the definition of \"military service\" included language referring to \"periods of training or education under the supervision of the United States preliminary to induction into military service.\" Under the SCRA, persons on active duty and attending a service school are covered, while persons attending training prior to entering active duty, such as officer candidates, may not be covered. It is unclear, for example, whether \"active military service\" under 10 U.S.C. § 101(d) covers training as a member of the Reserve Officer Training Corps or attendance at a military academy.\nThe SCRA does not cover servicemembers who are absent without leave (AWOL). It apparently does not protect individuals who are in a delayed entry status. Nor does it cover personnel entered on the temporary disability retirement list (TDRL). It does not cover civilian contractor employees who are deployed to serve alongside the Armed Forces.\n'Period of military service' —A servicemember's \"period of military service\" begins when she enters military service and ends on the date of release from military service or upon death during military service.\n'Dependent' —\"Dependent\" is defined as a servicemember's spouse or child (as defined for purposes of veterans' benefits, in 38 U.S.C. § 101 ), or another individual for whom the servicemember provided more than one-half of the support in the 180 days prior to an application for relief under the act. This language appears to codify courts' treatment of the term \"dependent\" as relating to financial dependency rather than strict familial relationships.\n'Court' —The term \"court\" includes federal and state courts and administrative agencies, whether or not a court or agency of record.\n'State' —\"State\" includes commonwealth, territory, or possession of the United States and the District of Columbia.\n'Secretary Concerned' —With respect to a member of the Armed Forces, \"secretary concerned\" refers to the meaning in 10 U.S.C. § 101(a)(9) with respect to commissioned officers of the Public Health Service, the Secretary of Health and Human Services; and with respect to commissioned officers of the National Oceanic and Atmospheric Administration, the Secretary of Commerce.\n'Motor Vehicle' —\"Motor vehicle\" is a vehicle driven or drawn by mechanical power and manufactured primarily for use on public streets, roads, and highways, but does not include a vehicle operated only on a rail line (as defined in 49 U.S.C. § 30102(a)(7)).\n'Judgment' —\"Judgment\" includes any judgment, decree, order, or ruling, final or temporary.", "The SCRA applies everywhere in the United States, including the District of Columbia, and in any territory \"subject to the jurisdiction of\" the United States. It applies to any civil judicial or administrative proceeding in any court or agency in any jurisdiction subject to the act; however, it does not apply to criminal proceedings.", "The SCRA extends protection to persons who share a debt with one or more covered servicemembers or have secondary liability as a \"surety, guarantor, endorser, accommodation maker, co-maker, or other person who is or may be primarily or secondarily subject to the obligation or liability\" at issue. If the SCRA provisions are invoked as to the servicemember, the court has discretion to grant a stay, postponement, or suspension of the proceedings against such persons, or to set aside or vacate a judgment. Whether a court grants such relief appears to be influenced by equitable considerations, including whether the servicemember is able to appear in court, whether the servicemember's presence is necessary for the defense, and whether an unjust forfeiture could otherwise result. If the servicemember is only nominally a party to the suit, as in cases of negligence where the insurance company might be considered the \"true defendant,\" the modern trend is to deny a stay. Courts do not have the discretion to grant a stay to a co-debtor if the servicemember has not been granted a stay.\nThe act added the term \"co-maker\" to the list of persons who may be entitled to a stay in an action that has been stayed with respect to a servicemember. This effectively codifies courts' interpretations of the previous version of the SCRA.\nBail bondsmen who are unable to procure the appearance of the principal due to that person's active-duty service receive protection under the act. In such a case, the court hearing the charge may not enforce the bond during the period of military service of the accused, and has the discretion to return the bail in its entirety to the bail bondsman in the interest of equity and justice. While some courts have interpreted this subsection to allow for no discretion, others have required sureties to make a further showing that the appearance of the principal was in fact prevented due to military service and that the surety made an effort to secure the appearance of the principal in court.\nPersons who are primarily or secondarily liable on the obligation of a person in military service may waive their rights under the SCRA, but such a waiver must be executed in a separate instrument from that which creates the obligation. If the individual executes the waiver and then enters active military service, the waiver as applied to the individual, or to the dependents of the person, is invalidated. In the event that the waiver is executed after the person receives orders to active duty, but before entering active service, the waiver remains valid.", "The SCRA protects citizens of the United States who serve in the Armed Forces of allies of the United States in the prosecution of a war or military action, as long as such service is similar to the service in the U.S. Armed Forces.", "Military authorities are required to provide servicemembers with written information describing their rights and benefits under the SCRA.", "Military authorities must provide servicemembers with pertinent information on rights and protections available under the SCRA during initial orientation or, in the case of reserve servicemembers, during initial orientation and when mobilized. Additionally, military authorities may provide pertinent information to the adult dependents of servicemembers on the rights and protections available to the servicemembers and dependents.", "Benefits under Titles I, II, and III of the SCRA are applicable to servicemembers during the period of time between the date they receive their induction or activation orders and the date they report for active duty. The coverage ends in the event the orders to active duty are revoked.", "Servicemembers may waive some of the benefits of the SCRA by agreeing to modify or terminate a contract, lease or bailment, or an obligation secured by a mortgage, trust, deed, lien, or other security in the nature of a mortgage. In order for the waiver to be effective, it must be executed during or after the servicemember's period of active military service. The written agreement must specify the legal instrument to which the waiver applies and, if the servicemember is not a party to that instrument, the identity of the servicemember concerned. This section extends the protections to servicemembers covered under Section 106 of the act (reservists ordered into active duty and persons ordered to report for induction).\nCongress amended the SCRA in 2004 to include two additional requirements for a waiver to be effective. The first requirement is that it must be executed separately from the legal instrument to which it applies. The second is that it must be printed in at least 12-point type.", "The SCRA protects servicemembers from any penalty imposed solely due to their invocation of rights. In other words, a lender cannot revoke a covered person's credit card or exercise foreclosure rights because the servicemember requests that the rate of interest be capped at 6% pursuant to the SCRA. The SCRA provides that no stay, postponement, or suspension of any tax, fine, penalty, insurance premium, or other civil obligation or liability applied for, or received by, a person in military service can be the sole basis for any of the following:\n1. a determination by a lender (or other person) that the servicemember is unable to pay the civil obligation or liability; 2. a decision by a creditor to deny or to revoke credit; to change the terms of an existing credit arrangement; or to refuse to grant credit in substantially the amount, or on substantially the terms, requested; 3. an adverse creditworthiness report by, or to, a consumer credit information enterprise; 4. an insurer's refusal to sell insurance coverage; 5. an annotation by the creditor or a credit reporting agency to reference the servicemember's reserve or National Guard military status on her credit report; or 6. a change in the terms offered or conditions required for issuance of insurance.\nCreditors may, however, take adverse action against a servicemember who fails to comply with obligations after they are adjusted by reason of the act. The act does not appear to preclude insurers or creditors from offering different terms or conditions, denying credit, or taking other adverse actions based solely on the servicemember's status in anticipation that the servicemember might later invoke a right under the act.", "Legal representatives, such as attorneys or persons possessing a power of attorney, may assert the benefits of the act when acting on the servicemember's behalf.", "Sections 201 through 208 describe the general relief available in most kinds of court actions. They serve to suspend civil liabilities of military personnel and preserve causes of action either for or against them.", "In a civil lawsuit, the failure of the defendant to appear in court may result in the award of a default judgment on behalf of the plaintiff. The SCRA protects servicemembers from default judgments in civil actions when they are unable to appear in court due to military service. An amendment to the act in 2008 added language clarifying that civil lawsuits include child custody proceedings.\nBefore a court can grant a default judgment, a plaintiff must file an affidavit stating that the defendant is not on active duty in military service showing necessary facts to support the affidavit or that the plaintiff was unable to determine whether or not the defendant is in military service. A false affidavit is punishable by imprisonment for up to one year, a fine of up to $1,000, or both.\nThe court, before entering a default judgment, must also appoint an attorney to represent the person on active duty in order to protect her legal rights and interests. However, if the attorney appointed to the case cannot locate the servicemember, actions by the attorney do not waive any defenses or otherwise bind the servicemember. Additionally, if the court is unable to determine if a defendant is in military service, the court may require a bond which may later be used to indemnify the defendant if it is determined that she was in military service and the judgment against the defendant is set aside or vacated in part. Moreover, if a court enters a default judgment against a servicemember, the court may set aside its judgment if the servicemember files a motion within 60 days after leaving active military service and can demonstrate that military service prejudiced her availability to appear in court and that there are meritorious or legal defenses to the suit.\nThis section does not provide a means to challenge judgments resulting from cases in which the servicemember made an appearance before the court. Some courts have found that a communication to the court regarding the servicemember's military status, and the resulting applicability of the SCRA to the suit, constitutes an appearance and bars asserting certain defenses and negates the right to petition to have the judgment overturned. An informal communication, such as a letter or a telegram to the court asking for protection under the SCRA should not be counted as an appearance, but some courts have found that a letter from a legal assistance attorney constitutes an appearance, waiving the servicemember's protection against a default judgment. An appearance by defendant's counsel may also waive protection, unless the counsel was appointed pursuant to this section.\nSubsection (h) contains a provision to protect the rights of a bona fide purchaser by stating that vacating, setting aside, or reversing any judgment under the SCRA will not impair any right or title acquired by any bona fide purchaser for value under the judgment. Therefore, it may be impossible to recover property that had been attached to satisfy a default judgment, although the servicemember would have the right to damages for the value of the property.", "A court may stay further proceedings in civil litigation, including any child custody proceeding, where the servicemember's ability to participate in the litigation, as either the plaintiff or the defendant, is materially affected by absence due to military service. It applies to servicemembers who are in military service or within 90 days after termination or release from military service. The court must grant a stay of at least 90 days upon receipt of a qualifying application by the servicemember. The court may also grant a stay with respect to co-defendants who are not themselves protected under the SCRA.\nIn an application for a stay under this section, the servicemember must set forth facts stating the manner in which current military duty requirements materially affect her ability to appear, and state a date when she will be able to appear. Additionally, the servicemember must submit a letter from her commanding officer certifying that leave is not authorized to attend proceedings at that time. While a stay is considered under the SCRA as a reasonable imposition upon an individual citizen on behalf of those discharging their obligations to the common defense, it is not available to shield wrongdoing or lack of diligence or to postpone relief indefinitely, or to be used to stay proceedings in matters where the interests or safety of the general public may be at stake. Courts may deny a stay in cases involving purely legal issues or where the servicemember is not the true party in interest or in which the presence of the individual is not essential.\nA request for a stay under this section does not constitute an appearance for jurisdictional purposes or a waiver of any substantive or procedural defense. Therefore, a servicemember may apply for relief without waiving the right, for example, to assert that the court has no jurisdiction in the case. Moreover, additional stays may be granted based on continuing material effect of military duty. If additional stays are denied, the court must appoint counsel to represent the servicemember. A servicemember who is unsuccessful in securing a stay under this section is precluded from seeking the protections against default judgments granted under Section 201. This section is inapplicable to Section 301 (protection from eviction or distress).", "Whenever an action is stayed by the court pursuant to the SCRA, penalties that would otherwise accumulate against the person for failing to carry out the terms of a contract cannot be imposed for the period the stay remains in effect. Even without a stay, courts have the discretion to reduce or waive any fines or penalties imposed on a servicemember for failure to carry out the terms of a contract, but only if the servicemember's ability to perform those obligations was impaired by military service. This provision would cover penalties such as early termination fees or fines for late payments.", "If a servicemember is materially affected by reason of service from complying with a court judgment or order, the court may, on its own motion, and must, on the application of the servicemember, stay the execution of any judgment or order against the servicemember and vacate or stay an attachment or a garnishment of property, money, or debts in the possession of the person on active duty for actions or proceedings commenced against the servicemember. This section applies to actions brought against the servicemember before or during the period of military service or within 90 days after termination of service.", "Stays granted by courts under the SCRA can remain in effect for the entire period of a servicemember's military service plus 90 days, or any part thereof. As a practical matter, however, courts do not look favorably on protracted stays, and expect most military members to make themselves available to participate in proceedings within a reasonable period of time, especially during peacetime if the servicemember is not stationed abroad. With the court's approval, suits against any co-defendants not in military service may proceed even if the suit has been stayed with respect to the person in the military. This section does not apply to Sections 202 (stays for actions for which the defendant has notice) and 701 (anticipatory relief). These sections contain their own rules for determining the maximum length of a stay.", "This section tolls the time period applicable for bringing any action by a covered servicemember for an amount of time equal to the person's period of military service. There is no discretion for the court to deny the tolling of an action. The time of service is not counted in determining the servicemember's deadline, for example, for exercising the right to redeem real estate that has been sold or forfeited to enforce an obligation, tax, or assessment. The section applies not just to an action or proceeding in a court but also to any federal or state board, commission, or agency, and may be exercised by the servicemember's heirs, executors, administrators, or assigns, regardless of whether the right or cause of action arose prior to or during the person's period of military service. There is no need to show that military service adversely affected the servicemember's ability to meet relevant obligations. The section does not toll the statute of limitations with respect to federal tax laws.", "This section caps the maximum interest charged on any debt incurred by a servicemember individually or with the servicemembers' spouse jointly prior to entering active duty at a rate of interest no higher than six percent (6%) a year, if the servicemember's ability to pay is materially affected by active-duty status. The interest above the 6% cap is to be forgiven by the creditor and does not accrue to be owed after the debtor's release from active duty. The monthly payments of an obligation or liability covered by this section are to be reduced by the amount in excess of the 6%, but the terms of the original obligation are to remain the same. The 6% cap is not automatic. The servicemember must provide written notice to the creditor along with a copy of her military orders or other appropriate indicator of military service not later than 180 days after the servicemember is released from military service. A court may grant a creditor relief from this section if, in the opinion of the court, the ability of the servicemember to pay an interest rate in excess of 6% is not materially affected by the military service.\nA servicemember who wrongly receives an adverse credit report or has her credit limit reduced or further credit denied after invoking the 6% interest cap provision may seek relief through the Fair Credit Reporting Act (FCRA) provisions for \"adverse actions\" and consumer remedies for \"willful or negligent noncompliance by credit reporting agencies upon consumer showing of causal connection between inaccurate credit report and denial of credit or other consumer benefit.\"\nHistorically, federally guaranteed student loans were not eligible for the 6% interest rate cap. Section 428(d) of the Federal Family Education Loan Program, which addressed the applicability of usury laws to federally guaranteed student loans, excluded these loans from the SCRA interest rate limitation. In 2001, the Higher Education Opportunity Act amended Section 428(d) to permit explicitly application of the SCRA interest rate cap to federally guaranteed student loans. As of August 14, 2008, federally guaranteed student loans are treated like all other debts incurred prior to entering active duty. Loans disbursed prior to enactment of the amendment are not covered and therefore are not subject to the 6% interest rate limitation. Additionally, servicemembers currently on active duty who received student loans prior to entering active duty will not be able to claim the 6% cap, but may be entitled to defer repayment or pursue benefits under other laws.\nIn 2008, the Veterans' Benefits Improvement Act added two new subsections to the SCRA addressing penalties for violation of Section 207. Section 207, as amended, closely mirrors the penalty and preservation of remedies provisions found in other sections of the SCRA. Anyone who violates the maximum interest prohibition may be fined or imprisoned for not more than one year. An individual claiming protection under this section may also be awarded consequential or punitive damages.\nThe 6% cap does not apply to loans made after entry into military service; however, Congress has enacted legislation to protect servicemembers and their dependents from certain practices of so-called payday lenders.", "Added in 2014, Section 208 provides protections to servicemembers in connection with child custody proceedings beyond the stay provisions discussed above. If a court enters a temporary change in custody based solely on the deployment or anticipated deployment of a servicemember, the order must expire no later than the conclusion of a period of time justified by the deployment. The section also prohibits a court from considering deployment or possible deployment of the custodial parent as the sole factor in determining the best interest of the child when contemplating a permanent change in custody. Finally, the section does not create a right to remove the child custody dispute to a federal court; and it does not preempt state law that provides greater protections for deploying servicemembers.", "This provision, added in 2016, requires the secretaries of each military department to ensure that servicemembers receive annually, and prior to deployment, notice of the child custody protections under the SCRA.", "Sections 301 through 308 provide protections from eviction and loss of other benefits or rights due to the failure of a servicemember to meet payments on rent, loans, mortgages, or insurance policies. Unlike the other parts of the SCRA, the rights described in these sections can be asserted by a servicemember's dependents in their own right.", "Under this section as it was enacted in 2003, unless a court orders otherwise, a landlord or person with \"paramount title\" may not evict a servicemember or her dependents from a rented home (such as an apartment, a trailer, or a house occupied as a residence by the servicemember or dependents) if the rent is $2,400 per month or less. Nor can the property be subject to distress without a court order during the servicemember's period of service. Traditionally, the rent ceiling is adjusted annually for inflation, and in 2018 the amount was $3,716.73.\nIn a case where the landlord seeks a court order for the eviction of a servicemember or her dependents, the court is obligated to stay the proceedings for up to three months if the servicemember requests it. In the alternative, the court may adjust the obligation under the lease to preserve the interests of all the parties. Section 202 (stay of proceedings when servicemember has notice) of the act is not applicable to this section.\nThe section provides that anyone who knowingly takes part in an eviction or distress in violation of this section can be punished by imprisonment for up to one year, a fine as provided in Title 18, U.S. Code , or both.\nAdditionally, courts are allowed to grant landlords, or other persons with \"paramount title,\" equitable relief in cases where a stay is granted. For example, a court might reduce the monthly rent for the duration of a servicemember's deployment but require the servicemember to make up the difference over time after her return. If the court orders payment to the landlord, Subsection (d) authorizes the Secretary concerned to make an allotment from the servicemember's military pay to satisfy the terms of the order.", "Except by court order, no one who has collected a deposit as partial payment for property, where the remainder of the price is to be paid in installments, can repossess the property or cancel the sale, lease, or bailment because of the failure to meet the terms of the contract, if the buyer enters active-duty military service after paying the deposit and subsequently breaches the terms of the contract. A violation of this section is punishable by imprisonment for up to one year, a fine as provided in Title 18, U.S. Code , or both. A court may order the cancellation of the installment sale, mandating the return of the property to the seller as well as the return of paid installments to the buyer, or the court may stay the proceedings, or order such other disposition of the property the court deems equitable. This section does not permit a servicemember unilaterally to terminate a contract, although the servicemember may be able to bring an action under Section 701 for anticipatory relief, as discussed further below.", "This section covers servicemembers who, prior to a period of active military service, entered into a property transaction subject to a mortgage, a trust deed, or other security loan. The sale, foreclosure, or seizure of property during a servicemember's period of military service, and one year after, is prohibited unless such action is taken under a court order issued prior to foreclosure on the property, or pursuant to an agreement under Section 107 of the act. A federal appeals court has held that the prohibition on foreclosure bars the charging of fees associated with a notice of foreclosure, even though no foreclosure took place. If the servicemember's ability to comply with the terms of the obligation is materially affected by military service and the servicemember thereby breaches the terms of a mortgage, trust deed, or other loan, the court may adjust the obligation to preserve the interests of all parties, or may stay any proceeding against the servicemember for a period of time as justice and equity require.\nProperty foreclosure or other similar action against a servicemember protected by this section taken without benefit of a court order is punishable by imprisonment of up to one year, a fine as provided by Title 18, U.S. Code , or both.", "If a court stays an action for foreclosure on property, repossession, or the cancellation of a sales contract against a servicemember, the court can appoint three disinterested persons to appraise the property and, on the basis of the appraisal, order the amount of the servicemember's equity to be paid back to the person on active duty as a condition for allowing the foreclosure, repossession, or cancellation. The court is required to consider whether its action would cause undue hardship to the servicemember's dependents—for example, through loss of use of the property.", "Military persons who live in rental property are allowed to terminate leases to which they are a party early under certain circumstances. This section applies to (1) property leased for a dwelling or for professional, business, or farm use, or other similar purpose, where the person leasing the property later enters active duty in military service, or where the servicemember executes the lease while in military service and thereafter receives military orders for a permanent change of duty station (PCS) or to deploy with a military unit for a period of at least 90 days; and (2) motor vehicle leases for personal or business transportation where the person later enters active military service of not less than 180 days or where the servicemember executes the lease while in military service and thereafter receives PCS orders outside of the continental United States or to deploy with a military unit for at least 180 days. Servicemembers who rent premises are advised to ensure the rental agreement contains a \"military\" clause to allow for early termination of a lease in case of military orders to deploy. In 2004, this right to terminate leases early was expanded to also apply to joint leases. The added language specifies that any lease terminated pursuant to this section also terminates any obligation a dependent of the lessee may have under the lease. In 2018, the right to terminate leases was extended to include the spouse of a servicemember who dies while in military service or performing full-time National Guard duty, active Guard and Reserve duty, or inactive-duty training. The spouse must exercise the right within one year after the death of the servicemember.\nThe servicemember may terminate a property lease early by delivering by hand, private business carrier, or mailing return receipt requested, a written notice and a copy of her military orders to the lessor or its agent. As for a residential lease, if the lease called for monthly rent, then cancellation takes effect 30 days after the next due date for rent following the day the written notice is sent. For all other property leases, the cancellation is considered effective at the end of the month following the month in which the written notice is sent. Any unpaid rent prior to the effective cancellation must be paid to the landlord on a prorated basis. The servicemember is entitled to a refund of any prepaid rent for time after the lease is canceled within 30 days of the termination of the lease. The 2010 amendment to the act prohibits the lessor from charging an early termination fee, but the servicemember is liable for any taxes, summonses, or other obligation in accordance with the terms of the lease. A court can make adjustments if the landlord petitions the court for an \"equitable offset\" prior to the date the lease is effectively canceled.\nTo terminate a motor vehicle lease early under this section, the servicemember must return the motor vehicle to the lessor or its agent no later than 15 days after the date of delivery of the written notice. The cancellation is considered effective on the day on which the vehicle is returned to the lessor. The lessor cannot impose early termination fees on a servicemember, but the servicemember is still responsible for taxes, summonses, title and registration fees, and any other obligation and liability under the lease, including reasonable fees for excessive wear, use, and mileage.\nAnyone who knowingly seizes personal effects, withholds a security deposit, or otherwise interferes with the return of any other property belonging to a person who has lawfully canceled a lease pursuant to this section is subject to punishment. Specifically, anyone who seizes or otherwise interferes with the removal of property in order to satisfy a claim for rent due for any time after the date of the effective cancellation of the lease may be punished by imprisonment for up to one year, a fine as provided in Title 18, U.S. Code , or both.", "Originally added to the SCRA by the Veterans' Benefits Improvement Act of 2008, this section was replaced in its entirety by the Veterans' Benefits Act of 2010. Under the new Section 305a, a servicemember is able to terminate a contract for telephone exchange service, in addition to the previously covered cellular phone service, in certain circumstances. In 2018, Congress added cable and internet services. To be eligible, the servicemember must receive orders to relocate for a period of at least 90 days to a location that does not support the contract, and the contract must have been entered into prior to receiving the orders. The telephone service provider is required to cancel the contract without assessing an early termination charge and, in the case of a period of relocation less than three years in duration, allow the servicemember to retain the phone number previously terminated. Additionally, dependents of the servicemember may also terminate their cellular telephone service if they accompany the servicemember to an area that does not support the service contract. If the servicemember re-subscribes to the carrier within 90 days of returning from relocation, the service provider is prohibited from charging a reinstatement fee, but may charge ordinary fees for equipment installation or acquisition. A servicemember who terminates any service must return provider-owned equipment to the service provider within ten days after service is disconnected.", "If a person entering military service has used a life insurance policy as collateral to secure a debt, she is protected from foreclosure on the policy to satisfy the debt unless the assignee first obtains a court order, except where the assignee is the insurance company itself (in which case the debt amounts to a policy loan). A court may refuse to grant the order if it determines that the servicemember's ability to repay is materially affected by military service. This rule applies during the entire time the insured is on active duty plus one year. The rule does not apply in three cases: (1) if the insured gives her written permission to let a creditor make a claim against the policy in order to satisfy the debt involved; (2) if any premiums required under the life insurance policy are due and unpaid (excluding premiums guaranteed under Title IV of this act); or (3) if the person whose life is insured has died. Anyone who knowingly takes or attempts action contrary to this section shall be punished by imprisonment for up to a year, or a fine as provided in Title 18, U.S. Code , or both.", "A servicemember with property or effects subject to a lien, including liens for storage, repair, or cleaning of property, is protected from foreclosure or enforcement of the lien during the period of military service plus three months unless a court finds that the servicemember's ability to meet the obligation is not materially affected by military service. A court can also stay the proceedings in these types of enforcement actions or order some other disposition of the case it deems equitable to the parties. This section does not affect the scope of Section 303 (mortgages and trust deeds). Anyone who knowingly takes any action contrary to the provisions shall be punished by imprisonment up to one year, a fine as provided by Title 18, U.S. Code , or both. Servicemembers whose property is seized and sold in order to satisfy a lien may recover damages.", "The benefits of the rules provided under Title III (50 U.S.C. §§ 3951-59) of the SCRA are extended to dependents of active-duty personnel in their own right. A dependent must petition a court for permission to take advantage of those rules, and the court is not required to grant permission if it determines that the ability of the applicant dependent to comply with the terms of the obligation, contract, lease, or bailment has not been materially impaired by the military service of the person upon whom the applicant is dependent.", "Title IV provides relief from insurance premiums and guarantees servicemembers' continued coverage under certain commercial life insurance policies. A servicemember who applies for protection under this title will eventually have to pay all of the premiums due, either to the insurer or to the government, in the event the United States pays the delinquent premiums. In this way, servicemembers may defer payments of insurance premiums without losing coverage. There is no need to show that military service materially affects the servicemember's ability to pay.", "For the purposes of Title IV of the SCRA, the following definitions apply:\n'Policy' — \"Policy\" includes any individual contract for whole, endowment, universal, or term life insurance (other than group term life insurance), or benefit similar to life insurance that comes from membership in any fraternal or beneficial association that satisfies all of the following conditions:\n1. the policy does not include a provision limiting the amount of insurance coverage based on the insured's military service; 2. the policy does not require the insured to pay higher premiums if she is in military service; 3. the policy does not include a provision that limits or restricts coverage if the insured engages in any activity required by military service; and 4. the policy is \"in force\" (premiums have to be paid on time before any benefit guaranteed by these sections of the law can be claimed) for at least 180 days before the insured enters military service.\n'Premium' —\"Premium\" is the amount specified in the policy to be paid to keep the policy in force.\n'Insured' —\"Insured\" is defined as a servicemember who owns a life insurance policy.\n'Insurer' —\"Insurer\" includes any firm, corporation, partnership, association, or business that can, by law, provide insurance and issue contracts or policies.", "Either the person insured, an insured's legal representative, or, when the insured person is outside the United States, a beneficiary of the insurance policy must apply for protection of a covered policy under the act. The written application must be submitted to the insurer with a copy sent to the Secretary of Veterans Affairs. The total amount of policies covered is limited to the greater of $250,000, or an amount equal to the maximum limit of the Servicemember's Group Life Insurance (SGLI). The maximum limit of SGLI currently is $400,000.", "In order to invoke protection for the policies covered under this part of the SCRA, the servicemember, her legal representative, or beneficiary must submit an application in writing identifying the policy and insurer, with an acknowledgment that the insured's rights under the policy are subject to and modified by the provisions of Title IV of this act. The Secretary of Veterans Affairs may require the parties to provide additional information as necessary. The insurer then reports the action to the Department of Veterans Affairs as required by regulation (found in 38 C.F.R. Part 7). By making an application for the protection guaranteed by these sections of the law, the insurer and insured are deemed to have accepted any necessary modifications to the terms of the life insurance policy.", "The Secretary of Veterans Affairs determines whether a policy is entitled to the protection guaranteed by these sections, and is responsible for notifying the insurer and the insured of that determination. Once the policy is deemed qualified for protection, it may not lapse or otherwise be terminated or be forfeited for the nonpayment of a premium, or interest or indebtedness on a premium. This protection applies during the time the insured person is in military service and for two years after she leaves military service.", "The approval of the Secretary of Veterans Affairs is necessary for a policyholder to make certain withdrawals and other payments or credits under a policy protected by this part of the SCRA. If such approval is not obtained, rather than paying dividends to the insured or reinvesting them to purchase additional coverage, the insurer must add dividends to the value of the policy to be treated as a credit. The insured is not permitted to take out loans against the policy or cash it in while it is protected without the approval of the Secretary of Veterans Affairs. However, the insured retains the right to modify the designation of beneficiaries.", "If a covered policy matures due to the death of the insured, the insurance company must reduce its settlement with the beneficiaries by the amount of any unpaid premiums (plus interest). If the rate of interest is not specified in the policy, it will be the same rate applied to policy loans in other policies issued at the time when the insured's policy was issued. Deductions must be reported to the Secretary of Veterans Affairs.", "In the event the insured fails to pay any premiums owed on a policy at the time the guarantee period expires and the cash surrender value of the policy is less than the amount due, the insurance company may terminate the policy and the United States will pay the insurance company the difference between the cash surrender value and the amount of the outstanding debt. The amount paid to the insurer becomes a debt owed by the insured to the United States that is not dischargeable in bankruptcy. Any funds collected from the insured are added to appropriations for the payment of guaranteed premiums under this part of the SCRA. If the unpaid premiums do not exceed the policy's cash surrender value, the insurer will treat them as a policy loan.", "The Secretary of Veterans Affairs is responsible for promulgating regulations to carry out the provisions of Title IV, which are found in 38 C.F.R. Part 7.", "The findings of fact and conclusions of law made by the Secretary in administering these sections are subject to review by the Board of Veterans' Appeals and the U.S. Court of Appeals for Veterans' Claims. Judicial review is permitted only to the extent provided by chapter 72 of Title 38, U.S. Code , which sets forth the scope of review and procedures to be followed.", "The fifth broad category of provisions of the SCRA provides certain rights regarding public lands and relieves servicemembers from having to pay certain taxes to multiple jurisdictions. It also prevents the attachment of certain personal or real property in order to satisfy tax liens.", "A servicemember's personal property (including motor vehicles) and real property used by the servicemember as a home, a business, or for agriculture—as long as the property continues to be occupied by the servicemember's family or employees—cannot be sold to collect unpaid taxes or assessments (other than income taxes) without a court order. A court may stay an action to force the sale of property belonging to a person in military service for the collection of unpaid taxes if it finds that the debtor's ability to pay the taxes is materially affected by her military service. In the event a servicemember's property is sold to satisfy tax liabilities, the servicemember has the right to redeem the property for up to six months after the person leaves military service unless a longer period is provided by state or local law. If a servicemember fails to pay a tax or assessment on property covered by this section when due, the amount unpaid and due shall accrue interest at 6%, but no other penalties or interest may be assessed. Additionally, real and personal properties owned jointly by a servicemember and her dependents are covered by this section. However, properties owned through a separate business entity such as a limited liability company may not be covered by this section, even if the servicemember is the sole owner.", "Servicemembers cannot be deemed to have forfeited any right (including mining and mineral leasing rights) they had for the use of public lands of the United States prior to entering military service based on absence from the land or failure to perform required maintenance or other improvements. Holders of permits and licenses for grazing livestock on public lands who subsequently enter military service may suspend the licenses for the duration of military service plus six months, allowing the servicemember to obtain a reduction or cancellation of fees for the duration of that time.", "Servicemembers with claims to desert lands prior to entering military service may not have those claims contested or canceled for failing to expend required amounts in improvements annually, or for failing to effect the reclamation of the claim during the period of service or during hospitalization or rehabilitation due to an injury or disability incurred in the line of duty. The protection is in force during and for six months after she leaves military service or is released from hospitalization. An honorably discharged servicemember whose line-of-duty disability prevents her reclamation of land or ability to pay may apply for a patent for the entered or claimed land. To qualify for this protection, notice must be given to the appropriate land office within six months after entering military service.", "Certain requirements for maintaining a mining claim are suspended during the holder's period of active military service and for six months thereafter or for the duration of hospitalization due to wounds or disability suffered while in the line of duty. During this period, the mining claim cannot be forfeited due to nonperformance of the requirements of the lease. To qualify for this protection, the servicemember must notify the appropriate claims office of commencement of military service within 60 days after the end of the assessment year in which the service began.", "Any person who holds a permit or a lease under the federal mineral leasing laws who enters military service is allowed to suspend all operations during military service (plus six months), in which case the period of service is not counted as part of the term of the person's permit or license and the holder is not required to pay rentals or royalties during that time. However, to qualify for these privileges, the servicemember has six months after entry into military service to notify the Bureau of Land Management of her entry into service.", "Nothing in Title V of the SCRA prevents a person in military service from taking any action authorized by law or regulations of the Department of the Interior to assert, perfect, or protect the rights covered in those sections. A servicemember may submit any evidence required to assert this right in the form of affidavits or notarized documents. Affidavits provided pursuant to this section are subject to 18 U.S.C. § 1001.", "The Secretary of the Interior is responsible for providing military authorities with information explaining the benefits of this Title (except those pertaining to taxation) as well as related application forms for distribution among servicemembers.", "Protection of land rights under this Title are extended to servicemembers under the age of 21. Residency requirements related to the establishment of a residence within a limited time will be suspended for six months after release from military service for both the servicemember and her spouse.", "The Secretary of the Interior has the authority to issue regulations necessary to carry out Title V of the act, other than the sections that concern taxes.", "The collection of federal, state, and local income taxes (excluding Social Security (FICA) taxes) a servicemember owes, either before or after entering service, must be deferred during the period of service and for up to six months after release, if her ability to pay the taxes is materially affected by military service. No interest or other penalty may be imposed on a debt deferred under this section. The statute of limitations for paying the debt is tolled for the length of the person's period of service plus nine months.", "In order to prevent multiple state taxation on the property and income of military personnel serving within various tax jurisdictions by reason of military service, this section provides that servicemembers neither lose nor acquire a state of domicile or residence for taxation purposes when they serve at a duty station outside their home state in compliance with military orders. A servicemember who conducts other business while in military service may be taxed by the appropriate jurisdiction for any resulting income. However, a tax jurisdiction cannot include the military compensation earned by nonresident servicemembers to compute the tax liability imposed on the non-military income earned by the servicemember.\nSpouses of servicemembers neither lose nor acquire a state of domicile or residence for taxation purposes when they are present in any tax jurisdiction solely to be with the servicemember in compliance with the servicemember's orders. However, the guarantee of residency is contingent on the spouse having the same original residence or domicile as the servicemember. As amended in 2018, the section provides that in the tax year during which the marriage takes place, the spouse may elect to use the same residence for tax purposes regardless of the date of marriage. The section further provides that income earned by a spouse while in a duty-station tax jurisdiction, other than her original residence or domicile, solely to be with the servicemember may not be taxed by that tax jurisdiction.\nPersonal property of a servicemember and her spouse will not be subject to taxation by a jurisdiction other than their domicile or residence while stationed at a duty station outside of their home state. However, relief from personal property taxes does not depend on whether the property is taxed by the state of domicile. Property used for business is not exempt from taxation. An Indian servicemember whose legal residence or domicile is a federal Indian reservation will pay taxes only under the laws of the federal Indian reservation and not to the state where the reservation is located.\n\"Tax jurisdiction\" is defined to include \"a State or a political subdivision of a State,\" which includes the District of Columbia and any commonwealth, territory, or possession of the United States (Section 101(6)). \"Taxation\" includes licenses, fees, or excises imposed on an automobile that is also subject to licensing, fees, or excise in the servicemember's state of residence. \"Personal property\" includes intangible and tangible property including motor vehicles.", "Title VI provides courts the authority to deny remedies to servicemembers that would abuse the purpose of the SCRA. It also indicates how a servicemember's military and financial status can be established in court, and covers other procedural requirements.", "A court may deny a servicemember the protections of the act with respect to a transfer it finds was made with the intent to exploit the provisions of the act, in order to delay enforcement of the contract, to obtain reduced interest rates, or to avoid obligations with respect to property that was the subject of the transaction.", "A certificate signed by the Secretary concerned serves as prima facie evidence in an action under the SCRA that the individual is in the military service, the date of induction or discharge, residence at time of induction, rank and rate of pay, and other facts relevant to asserting rights under the SCRA. A servicemember who is missing in action is presumed to continue in military service until she is accounted for or her death has been reported to the Department of Defense or determined by a court or board with the authority to make such determination.", "Courts may revoke, modify, or extend any interlocutory orders they issued pursuant to the SCRA.", "Title VII of the SCRA provides a means for servicemembers to petition for relief without having to wait until a creditor brings an enforcement action against them. It also treats powers of attorney and provides relief from liability insurance premiums for servicemembers who need to maintain such policies for their civilian occupations.", "A servicemember may initiate an action for relief prior to defaulting on any pre-service obligation or liability, including tax obligations, rather than waiting for the creditor to commence proceedings. Dependents do not have independent protection under this section as they do for the provisions of Title III.\nCourts may grant the following relief:\n1. if the obligation involves payments of installments for the purchase of real estate (like a mortgage), the court can stay enforcement of the obligation by adding a period of time, no greater than the period of military service, to the remaining life of the contract, subject to the payment of the balance of principal and accumulated interest that remains unpaid at the termination of the applicant's military service, in equal installments over the duration of the extended life of the contract; and 2. for any other type of obligation, liability, tax, or assessment, the court can stay enforcement, for a period of time equal to the petitioner's period of military service, subject to payment of the balance of principal due plus accumulated interest in equal installments over the duration of the stay.\nIf a stay has been granted under this section, no fine or penalty can be imposed for its duration as long as the servicemember complies with the terms and conditions of the stay. This provision allows servicemembers who are not yet in default on an obligation, but whose ability to make payments is materially affected by military service, to petition the court in effect to rewrite the contract by extending its life, allowing the servicemember to pay down the amount in arrears with equal installments over a longer of period of time. The servicemember must resume making regular payments on the debt after leaving active duty, in addition to the payments to make up for the smaller payments she made while on active duty.", "A valid power of attorney for a person who is declared to be missing in action is automatically extended for the entire period the person remains in a missing status, unless it expressly provides a date of expiration. The extension is limited to documents that designate the servicemember's spouse, parent, or named relative as the servicemember's attorney in fact. The power of attorney must have been executed during the servicemember's military service or before entry into active service but after receiving an order to report for military service or a notification from the Department of Defense that such an order could be forthcoming.", "Certain persons who, prior to being called to active duty, were furnishing health care, legal, or any other services which the Secretary of Defense determines to be professional services and who had in effect a professional liability (i.e., malpractice) insurance policy may suspend payment of premiums on their liability insurance while they serve on active duty without losing any coverage. The section covers insurance policies that, according to their terms, would not continue to cover claims arising prior to a lapse in coverage unless the insured continues to pay premiums.\nDefinitions — \"Profession\" is defined in Subsection (i) to include \"occupation.\" Similarly, the expression \"professional\" includes the term \"occupational.\" Neither \"occupation\" nor \"occupational\" is defined. Subsection (i) also defines \"active duty,\" adopting the definition used in Section 101 of Title 10, U.S. Code . However, the provision is further limited to persons called to active duty (other than for training) under 10 U.S.C. §§ 688 (retired members of regular Armed Forces, members of the Retired Reserves, and members of the Fleet Reserve or Fleet Marine Corps Reserve); 12301(a) (activation of Reserves during war or national emergency declared by Congress); 12301(g) (member of Reserve component in captive status); 12302 (Ready Reserve); 12304 (Selected Reserve and certain Individual Ready Reserve members called to active duty other than during war or national emergency); 12306 (Standby Reserve); 12307 (Retired Reserve); and, if any of the preceding sections are invoked, Section 12301(d) (volunteer member of a Reserve component).\nSuspension of coverage —Professional liability insurance policies covered by this section are suspended from the time the insurer receives a request for protection until the insured requests in writing to have the policy reinstated. In the case of a joint insurance policy, no suspension of coverage is required for the policyholders who are not called to active duty. For example, if several physicians jointly purchase a group policy of malpractice insurance, and only one of them is called to active duty, the coverage of those not called to active duty need not be suspended by the insurer.\nPremiums —The insurer may not charge premiums for coverage that is suspended. The insurer must either refund any amount already paid for coverage that is suspended or, if the insured professional person chooses, apply the amount toward payment of any premium that comes due after coverage is reinstated.\nLiability during suspension —The insurer is not obligated to pay any claim that is based on a professional's actions (or inaction) during a period when a policy is suspended. In the case of claims involving obligations imposed by state law on a professional person to assure that her patients or clients will receive professional assistance in her absence to serve on active duty, the section clarifies that the failure of the professional person to satisfy such an obligation will generally be considered to be a breach that occurred before the professional person began active duty. In such a situation, the insurer would be liable for the claim. In the event a claim arises while the patient is receiving alternate care as arranged by the servicemember for patients during her absence, the insurer would not be liable for the claim.\nActions against policyholder during suspension of coverage —In the event a malpractice suit (or administrative action) is filed during the period when the insurance is suspended, the litigation will be stayed until the end of the suspension period. The stay applies only where the malpractice is alleged to have occurred before the suspension began, and would thus be covered by the policy. Litigation stayed under this rule is deemed to be filed on the date the suspended insurance is reinstated. The period of any stay granted under this provision is not counted when computing whether or not the relevant statute of limitations has run.\nIn the event that a professional person whose malpractice insurance coverage has been suspended should die during the period of the suspension, any stay of litigation or administrative action against the person under this section is lifted. In addition, the insurer providing the coverage that was suspended is to be liable under the policy just as if the deceased person had died while covered by the policy but before the claim was filed.\nReinstatement of coverage —The insurer is required to reinstate the insurance coverage on the date the servicemember transmits a written request for reinstatement, which must occur within 30 days after the covered servicemember is released from active duty. The insurer must notify the policyholder of the due date for payment of any premium required for reinstatement of the policy, and that the premium must be paid within 30 days after the notice is received by the professional person. The section also limits the premium that the insurer can charge for reinstated coverage to the rate that would have applied if the servicemember had not been deployed. The insurer is not allowed to recoup missing premiums by charging higher rates for reinstated coverage. The insurer may charge higher rates for reinstated coverage if it raised the rates for all policyholders with similar coverage, provided that the servicemember would have had to pay a higher premium even if she had not suspended coverage.", "This section grants servicemembers who were called to military service, as described in § 703(a)(1), the right, upon termination or release from military service, to reinstatement of any health insurance policy that was in effect on the day before the servicemember entered military service, and that terminated at any time during her service. Servicemembers must apply for reinstatement within 120 days of termination or release from active duty. An insurer may not impose new exclusions from coverage or waiting periods for reinstatement of coverage with respect to conditions arising prior to or during the servicemember's period of military service, if such an exclusion or waiting period would not have applied during regular coverage and the condition has not been determined to be a disability incurred in the line of duty under 38 U.S.C. § 105. The section does not apply to employer-sponsored health insurance plans covered by the provisions of the Uniformed Services Employment and Reemployment Rights Act (USERRA). Insurance plans covered by USERRA are subject to similar protections under 38 U.S.C. § 4317.\nIn 2006, Congress added language to Section 704 limiting the ability for insurers to charge a servicemember premium increases on a health insurance policy covered by the section. The amount of the premium may not be increased, on a policy being reinstated for the balance of the period for which the coverage would have continued had it not been terminated, above an amount that would have been charged before termination. In the event that the premiums for similarly covered individuals increased during the terminated period, the increased premium may be assessed to the servicemember upon reinstatement of the policy.", "Military personnel and their spouses are not deemed to have changed their state of residence or domicile for the purpose of voting for any federal, state, or local office, solely because of their absence from the respective state in compliance with military or naval orders. As amended in 2018, the section provides that a spouse may elect to use the same residence regardless of the date of marriage.", "The assets of a servicemember are protected from attachments to satisfy business debts for which the servicemember is personally liable, as long as the assets sought to be attached are not held in connection with the business. The obligor would have the right to apply to the court for a modification of the servicemember's relief when warranted by equitable considerations.", "Title VIII provides the Attorney General the authority to bring civil actions against violators of the SCRA. Servicemembers who are aggrieved by a violation can join an action brought by the Attorney General or can initiate their own civil action against a violator.", "This section authorizes the U.S. Attorney General to commence a civil action in U.S. district court for violations of the SCRA by a person who (1) engages in a pattern or practice of violating the act; or (2) engages in a violation that raises an issue of significant public importance. Courts may grant any appropriate equitable or declaratory relief, including monetary damages. Additionally, courts, in order to vindicate the public interest, may assess a civil penalty up to $55,000 for a first violation, and up to $110,000 for subsequent violations. Finally, individuals alleging violations of the SCRA, for which the Attorney General has commenced an action, are authorized to intervene in previously commenced cases as a plaintiff.", "In addition to the right to join a previously commenced case, persons aggrieved by a violation of the SCRA have the ability to commence a civil action in their own right. The court may grant appropriate equitable or declaratory relief, including monetary damages. The court is also authorized to award the costs of the action and reasonable attorney fees to an individual who prevails in a civil action under this section.", "This section provides that Sections 801 and 802 do not preclude or limit any other remedies available under the law, including consequential or punitive damages for violations of the SCRA." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h0_title h2_title", "h0_full", "", "", "", "h0_full", "", "", "", "h2_full", "", "h2_title h1_title", "", "", "", "", "", "h2_full", "h1_full", "", "", "h2_title", "", "", "", "", "h2_full", "", "", "", "", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h2_title", "h2_full", "", "", "", "", "", "h2_title", "h2_full", "", "" ] }

{ "question": [ "How does Congress respond to the needs of compromised servicemembers?", "What is the purpose of the SCRA?", "How does the SCRA protect servicemembers?", "What are the benefits and limitations of the SCRA's protection of servicemembers?", "What are the contingencies of the SCRA's protections of servicemembers?", "For whom are the SCRA provisions important?", "What SCRA measures are particularly important in helping individuals?", "What SCRA measures protect families?", "How does the SCRA protect the rights of servicemembers regarding property?", "How does the SCRA protect servicemembers' legal rights?", "How do courts enforce servicemembers’ rights under the SRCA?" ], "summary": [ "Congress has long recognized the need for protective legislation for servicemembers whose service to the nation compromises their ability to meet obligations and protect their legal interests.", "The SCRA is an exercise of Congress's power to raise and support armies and to declare war. The purpose of the act is to provide for, strengthen, and expedite the national defense by protecting servicemembers, enabling them to \"devote their entire energy to the defense needs of the Nation.\"", "The SCRA protects servicemembers by temporarily suspending certain judicial and administrative proceedings and transactions that may adversely affect their legal rights during military service.", "The SCRA does not provide forgiveness of all debts or the extinguishment of contractual obligations on behalf of active-duty servicemembers, nor does it grant absolute immunity from civil lawsuits. Instead, the SCRA provides for the suspension of claims and protection from default judgments against servicemembers. In this way, it seeks to balance the interests of servicemembers and their creditors, spreading the burden of national military service to a broader portion of the citizenry.", "Some protections are contingent on whether military service materially affects the servicemember's ability to meet obligations, while others are not. Courts are to construe the SCRA liberally in favor of servicemembers, but retain discretion to deny relief in certain cases. The Services are required to provide information to servicemembers explaining their rights under the SCRA.", "Many of the SCRA provisions are especially beneficial for Reservists activated to respond to a national crisis, but many provisions are also useful for career military personnel.", "One measure that affects many who are called to active duty is the cap on interest at an annual rate of 6% on debts incurred prior to a person's entry into active-duty military service. Creditors are required to forgive the excess interest and are prohibited from retaliating against servicemembers who invoke the 6% interest cap by submitting adverse credit reports solely on that basis.", "Other measures protect military families from being evicted from rental or mortgaged property; from cancellation of life insurance and professional liability insurance; from taxation in multiple jurisdictions; from losing domicile for voting and other purposes due to being stationed elsewhere; from losing child custody due to deployment or the possibility of deployment; from foreclosure of property to pay taxes that are due; and from losing certain rights to public land.", "The SCRA makes it unlawful for lienholders or lessors to foreclose or seize property owned or used by servicemembers without a court order. It also permits servicemembers to prematurely terminate leases and other term contracts without incurring any early termination penalties.", "Statutes of limitations that might otherwise prevent servicemembers from pursuing remedies in court or before any governmental agency, including state and local entities, are tolled for the duration of the servicemember's military service. Servicemembers may initiate an action in court for relief prior to defaulting on any pre-service obligation or liability, in order to obtain restructuring of loan repayments or other equitable relief without incurring any penalty.", "Servicemembers may bring an action in court to enforce their rights under the SCRA, or the Attorney General may bring a civil action in U.S. district court for violations of the SCRA by a person who (1) engages in a pattern or practice of violating the act; or (2) engages in a violation that raises an issue of significant public importance." ], "parent_pair_index": [ -1, -1, 1, 2, 2, -1, -1, 1, -1, -1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "DOD Has Established 10 Cross-Functional Teams That Are in Various Stages of Implementation", "DOD Is in the Early Stages of Establishing a Cross-Functional Team to Manage the Transfer of Background Investigations to DOD", "DOD Has Established 9 Cross-Functional Teams to Improve DOD’s Business Operations", "DOD Has Not Issued Its Organizational Strategy That Outlines Steps for Advancing a Collaborative Culture", "DOD Has Not Implemented Training or Issued Guidance for Its Cross- Functional Teams or Provided Training to Presidential Appointees", "DOD Has Not Implemented Training or Issued Guidance for Its Cross-Functional Teams", "Over Two-Thirds of Presidential Appointees in the Office of the Secretary of Defense Have Been Appointed, but None Have Received Required Training or Waivers", "Agency Comments", "Appendix I: Prior GAO Reports on the Department of Defense’s Implementation of Section 911 of the National Defense Authorization Act for Fiscal Year 2017", "Appendix II: Summary of Requirements in Section 911 of the National Defense Authorization Act for Fiscal Year 2017", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "DOD has established 10 cross-functional teams that OCMO officials consider responsive to section 911, and these teams are in various stages of implementation. The Secretary of Defense established a cross- functional team to manage the transfer of background investigations for DOD personnel security clearances from the Office of Personnel Management to DOD. This team is required to report directly to the Secretary. In addition, the Deputy Secretary of Defense established 9 additional cross-functional teams to implement reform initiatives for improving DOD’s business operations. These teams report to the CMO.", "In August 2017, the Secretary of Defense issued a memorandum authorizing its first cross-functional team in response to section 911 to address challenges with personnel vetting and background investigation programs. The memorandum notes that a backlog of background investigations affects DOD’s mission readiness, critical programs, and operations. According to the memorandum, this cross-functional team will conduct a full review of current personnel vetting processes to identify a redesigned process for DOD’s security, suitability and fitness, and credential vetting. The cross-functional team’s objectives are to develop options and recommendations to mitigate shortcomings, ensure necessary resourcing, and transform the personnel vetting enterprise. The Office of the Under Secretary of Defense for Intelligence and the Defense Security Service are leading the efforts to establish the team.\nSince we last reported on DOD’s efforts to establish the team, DOD has taken some steps, such as assigning some team members, but has not completed other key steps to staff and establish a direction for the team. In February 2018, we reported that DOD had selected an interim leader for the team. As of May 2018, this person, a non-Senior Executive Service individual from the Defense Security Service, was still serving as the interim leader. Section 911 requires DOD to assign a senior qualified and experienced individual as the leader of the team. According to Office of the Under Secretary of Defense for Intelligence officials, the department plans to seek nominations from DOD components for a permanent leader from the Senior Executive Service, but does not have a specific timeframe for doing so. DOD also assigned seven full-time personnel to the team, who are now co-located, in accordance with requirements under section 911. These personnel are from the Army, Defense Civilian Personnel Advisory Service, DOD Consolidated Adjudications Facility, OCMO, Office of the Under Secretary of Defense for Intelligence, and MITRE Corporation. Office of the Under Secretary of Defense for Intelligence officials estimated that the team may have 20 members when it is fully staffed, but they did not have an estimate of when DOD will assign the remaining team members.\nIn addition, the Office of the Under Secretary of Defense for Intelligence has established priorities for the cross-functional team. For example, the team is required to prepare a project plan incorporating all key components for a DOD enterprise vetting mission—including key milestones, specific objectives, performance metrics, a resourcing plan, and an action plan for tracking key initiatives—which are key steps for establishing the team’s direction. According to Office of the Under Secretary of Defense for Intelligence officials, as of May 2018, the interim leader was outlining a project plan. Filling key leadership and staff positions will be important for ensuring that the team has the knowledge and expertise from components across the department to effectively develop and implement the plan.", "The Deputy Secretary of Defense has established 9 additional cross- functional teams since October 2017 to implement reform initiatives intended to improve the quality and productivity of the department’s business operations, including moving toward more use of enterprise services. According to the memoranda appointing the team leaders, these teams support the Secretary of Defense’s focus on creating a more lethal and effective force by allowing the department to reallocate resources from business operations to readiness and to recapitalization of the combat force. OCMO officials stated that they consider these teams to be responsive to section 911 of the NDAA for Fiscal Year 2017.\nSection 911 requires DOD to assign senior qualified and experienced individuals to lead the teams, and the Deputy Secretary of Defense generally appointed senior DOD officials as leaders. Seven leaders were appointed in October 2017, one in November 2017, and one in January 2018. According to OCMO officials, these leaders report to the CMO. As of May 2018, the size of the teams ranged from 5 to 12 members; OCMO officials stated that the size of the teams can vary based on the knowledge and expertise the team needs to implement its initiatives. The teams include representatives from the military departments, functional organizations relevant to the reform topic, and external experts. According to OCMO officials, the team leaders chose their team members from candidates proposed by the military departments and functional organizations. In addition, the members may be assigned on a full-time or part-time basis, and all of the teams have co-located space. Figure 1 provides additional details on the structure of these 9 teams.\nOCMO officials stated that these 9 teams are in various stages of implementing their initiatives. For example, the Human Resources team was the most recent team to be established, and OCMO officials stated the team is in the process of finalizing the identification and beginning the implementation of its reform initiatives. Other teams, such as the Financial Management and Information Technology and Business Systems teams, have identified and are in the process of implementing initiatives related to their reform areas.\nDOD established the Reform Management Group to identify opportunities for reform and provide support to these 9 cross-functional teams. Chaired by the Deputy Secretary of Defense and facilitated by the CMO and Director of Cost Assessment and Program Evaluation, the Reform Management Group provides oversight and guidance, makes decisions on team recommendations, and monitors the teams’ progress, according to OCMO officials. These officials also told us that the Reform Management Group holds weekly meetings to discuss the status of the reform teams’ efforts and provides monthly comprehensive reports on these efforts to the Secretary of Defense.", "OCMO has drafted an organizational strategy, but DOD has not issued the strategy, which section 911 required to be completed by September 1, 2017. OCMO officials told us that they have not completed the strategy because they want to align it with the National Defense Strategy, which was issued in January 2018, and the National Defense Business Operations Plan, which was issued in May 2018. OCMO officials told us that, once the organizational strategy is reviewed internally to align with the National Defense Strategy and the National Defense Business Operations Plan, the CMO plans to coordinate the review and approval of the strategy across components within the department. We previously recommended, and DOD concurred, that the CMO should obtain input on the development of the strategy from key stakeholders, such as the military departments and defense agencies. The officials estimated that DOD components would have about 2 to 3 weeks to provide input on the strategy and that the strategy could be issued as early as July 2018.\nWe found that, consistent with our recent recommendations, a revised version of the draft organizational strategy addresses the requirements in section 911, including outlining steps for advancing a collaborative culture within the department. In February 2018, we found that the August 2017 version of the draft organizational strategy that we reviewed addressed the two required elements under section 911, but did not outline how it would achieve several future outcomes that advance a collaborative culture within the department, as required by the NDAA. We recommended, and DOD concurred, that the CMO should revise the organizational strategy to outline how it would achieve these outcomes and, in doing so, should consider our nine leading practices on mergers and organizational transformations.\nBased on our review of a February 2018 version of the draft organizational strategy, we found that OCMO officials have taken steps to address our recommendation, including identifying potential action steps for the department that align with each of the nine leading practices. For example, consistent with the leading practice for establishing a coherent mission and integrated strategic goals to guide the transformation, OCMO officials revised the draft strategy to propose that the CMO, in coordination with stakeholders, could develop an implementation plan with detailed initiatives for increasing collaboration and information sharing across the department. According to the draft strategy, this plan could include goals and milestones for these initiatives, and the CMO could report periodically on the achievement of the goals. Further, consistent with the leading practice to involve employees to obtain their ideas and gain their ownership for the transformation, OCMO officials proposed that a representative from OCMO could chair an action officer- level governance body to plan and share performance information related to this effort. According to the draft strategy, this governance body would solicit feedback about the related changes, propose changes to new policies and procedures based on the feedback, and manage the implementation and tracking of the established goals. Issuing the organizational strategy—in accordance with section 911 and our prior recommendation—will better position DOD to advance a collaborative culture.", "DOD has not fulfilled three related requirements of section 911 to guide the implementation of its cross-functional teams, namely to (1) provide training to cross-functional team members and their supervisors, (2) issue guidance on cross-functional teams, and (3) provide training to presidential appointees. OCMO officials stated that they plan to send the guidance and training curricula to the Secretary of Defense for review and approval after the organizational strategy is issued. Table 1 shows the three requirements of section 911, the due dates, and the status of DOD actions, if any, as of May 2018.", "As of May 2018, OCMO had developed a draft training curriculum for cross-functional team members and their supervisors, but had not provided the required training. In February 2018, we reported that the draft training curriculum addressed all requirements in section 911. OCMO officials stated that after the Secretary of Defense reviews and approves the training curriculum, which will occur after the organizational strategy is issued, they will provide training to the members of the cross- functional team on personnel vetting for background investigations and to the 9 teams implementing reform initiatives.\nOCMO has also drafted guidance on cross-functional teams, but DOD has not issued the guidance and did not meet the statutorily-required date of September 30, 2017. Section 911 requires the guidance to address areas such as the decision-making authority of the teams and key practices that senior leaders should follow with regard to leadership, organizational practice, collaboration, and the functioning of cross- functional teams. In February 2018, we reported that OCMO had developed draft guidance for cross-functional teams that addressed six of seven statutorily-required elements and incorporated five of eight leading practices for effective cross-functional teams that we identified in prior work. We recommended, and DOD concurred, that the CMO should fully address all requirements in section 911 and incorporate these leading practices into the guidance. DOD has taken steps to address our recommendation. For example, consistent with the practice for open and regular communication, OCMO revised the guidance to state that the cross-functional team leaders and OCMO will encourage and facilitate continuous communication and information sharing. According to the revised guidance, the team leaders and OCMO will accomplish this through co-location of team members, management practices by cross- functional team leaders that promote a unified team culture and trust, and use of collaborative information technology tools maintained by OCMO. However, as of May 2018, DOD had not issued the guidance. As we reported in February 2018, without initial guidance that fully addresses the required statutory elements in section 911 and incorporates our leading practices, DOD’s cross-functional teams may not be able to consistently and effectively pursue the Secretary of Defense’s strategic objectives or further promote a collaborative culture within the department.", "OCMO has developed a draft training curriculum for individuals filling presidentially-appointed, Senate-confirmed positions in the Office of the Secretary of Defense. However, as of May 2018, DOD had filled 26 of 36 such positions, and none had received the training or been granted a training waiver. Further, section 911 requires these individuals to complete the training within 3 months of their appointment, but 22 have been in their positions longer than 3 months, as shown in figure 2.\nIn February 2018, we reported that the draft curriculum addressed only one of the four required elements in section 911. Specifically, we found that the draft curriculum addressed the required statutory element for training on the operation of cross-functional teams, but did not incorporate the required statutory elements for leadership, modern organizational practice, or collaboration. We recommended, and DOD concurred, that the CMO should either (1) provide training that includes all of the required elements in section 911 or (2) develop criteria for obtaining a waiver and have the Secretary of Defense request such a waiver from the President for these required elements if the individual possesses—through training and experience—the skill and knowledge otherwise to be provided through a course of instruction. Once the training curriculum is reviewed and approved by the Secretary of Defense, which will occur after the organizational strategy is issued, OCMO officials plan to provide the training on the operation of cross-functional teams to the presidential appointees. These officials stated that DOD plans to develop criteria for presidential appointees who are eligible for a waiver from the training on leadership, modern organizational practice, and collaboration, and to recommend that the Secretary of Defense approve these waivers. Until DOD finalizes actions on this recommendation, the department may have difficulty advancing a collaborative culture, as top leadership commitment is a key practice for a successful organizational transformation.", "We are not making recommendations in this report. We provided a draft of this report to DOD for review and comment. DOD concurred with our report. In addition, DOD provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, and DOD’s Chief Management Officer. In addition, the report is available at no charge on our website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-2775 or [email protected]. 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.", "Section 911 of the National Defense Authorization Act (NDAA) for Fiscal Year 2017 included a provision for us—every 6 months after the date of enactment on December 23, 2016, through December 31, 2019—to submit to the defense committees a report setting forth a comprehensive assessment of the actions that DOD has taken pursuant to section 911 during each 6-month period and cumulatively since the NDAA’s enactment. We issued our first report in June 2017, and did not make recommendations. We issued our second report in February 2018, and made four recommendations to improve DOD’s implementation of section 911. Table 2 identifies the two prior GAO reports on DOD’s implementation of section 911 and the status of the four recommendations from our February 2018 report.", "Section 911 of the National Defense Authorization Act for Fiscal Year 2017 requires the Secretary of Defense to take several actions. Table 3 summarizes some of these requirements, the due date, and the date completed, if applicable, as of May 2018.", "", "", "In addition to the contact named above, Margaret Best (Assistant Director), Tracy Barnes, Arkelga Braxton, William Carpluk, Adelle Dantzler, Michael Holland, William Lamping, Amie Lesser, Ned Malone, Judy McCloskey, Sheila Miller, Richard Powelson, Terry Richardson, Ron Schwenn, Jared Sippel, Sarah Veale, and Tina Won Sherman made key contributions to this report." ], "depth": [ 1, 2, 2, 1, 1, 2, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full h2_full", "h0_full", "h0_full h2_full", "h1_full", "h3_full h1_full", "", "", "", "h3_full", "", "", "", "" ] }

{ "question": [ "How does DOD plan to address the backlog of clearance investigations?", "What do DOD's cross-functional teams address?", "What is the personnel makeup of these teams?", "In what ways has DOD failed to fulfill statutory requirements?", "How have DOD officials responded to this failure?", "What will be the benefits of DOD's implementation of GAO's recommendations?", "What organizational challenges does DOD face?", "How has DOD addressed these concerns?", "What role will cross-functional teams play in this reform?", "How did the NDAA support GAO's assessment of DOD?", "What does GAO assess with regards to DOD's efforts?" ], "summary": [ "Specifically, DOD is in the early stages of establishing one cross-functional team to address the backlog of the department's personnel security clearance background investigations and has assigned an interim leader and seven members to this team.", "In addition, DOD established 9 cross-functional teams to implement reform initiatives intended to improve the efficiency of the department's business operations.", "DOD generally appointed senior department officials to lead these teams, and the size of the teams, as of May 2018, ranged from 5 to 12 members.", "DOD also has not fulfilled three statutory requirements related to guidance and training for cross-functional teams and civilian leaders in the Office of the Secretary of Defense. Specifically, DOD has not (1) provided training to cross-functional team members, (2) issued guidance on cross-functional teams, or (3) provided training to presidential appointees in the Office of the Secretary of Defense.", "DOD officials stated that they plan to send the guidance and training curricula to the Secretary of Defense for review and approval after DOD issues the organizational strategy.", "Fully implementing these requirements and GAO's prior recommendations related to the organizational strategy, guidance, and training, will better position DOD to effectively implement its cross-functional teams and advance a collaborative culture as required by the NDAA.", "DOD continues to confront organizational challenges that hinder collaboration.", "To address these challenges, section 911 of the NDAA for FY 2017 directed the Secretary of Defense to issue an organizational strategy that identifies critical objectives that span multiple functional boundaries and would benefit from the use of cross-functional teams.", "Additionally, DOD is to establish cross-functional teams to support this strategy, issue guidance on these teams, and provide training to team members and civilian leaders in the Office of the Secretary of Defense.", "The NDAA also included a provision for GAO to periodically assess DOD's actions in response to section 911. This is GAO's third report on the implementation of section 911.", "It assesses the status of DOD's efforts to (1) establish cross-functional teams, (2) issue an organizational strategy, and (3) issue guidance on cross-functional teams and provide training to team members and Office of the Secretary of Defense leaders." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, -1, 0, 1, -1, -1 ], "summary_paragraph_index": [ 5, 5, 5, 7, 7, 7, 0, 0, 0, 1, 1 ] }

{ "title": [ "", "Introduction", "Background", "Market Conditions", "Prices", "Consumption", "Supply", "Market Trends", "Seasonality", "Increasing Gas-for-Power Use", "Industrial Gas Use Rebound", "Global LNG Trade", "Infrastructure Progress", "Forecasts", "Uncertainties", "Weather", "Oil Prices", "Economy", "Recent Developments", "Conclusion", "Appendix." ], "paragraphs": [ "", "Natural gas markets in North America remained relatively stable compared to oil markets in 2007. The situation has tightened and prices have regained some upward momentum in 2008.\nThis report examines current conditions and trends in the U.S. natural gas markets. Key market elements examined include prices, consumption, production, imports, and infrastructure. Expectations about the future, as reflected in recent official forecasts, are also incorporated here.\nNatural gas remains an important and environmentally attractive energy source for the United States. Its share of the power generation market has grown. Domestic supply has remained stable and even increased in recent months. New developments in Alaska increase the likelihood that a pipeline from the North Slope will proceed. The natural gas industry continues to attract capital for new pipeline and storage infrastructure. Liquefied natural gas (LNG) imports hit a record level in 2007, even as import facilities continue to have low utilization rates. Weather and the economy remain important factors in natural gas prices, as well.\nGiven the generally adequate functioning of natural gas markets, congressional interest in the near term is likely to focus on unexpected price volatility or importation (or other supply) issues. In the longer term, industry pressure for increased access to public lands for exploration and production is expected to continue receiving congressional attention.\nThis report reviews key factors likely to affect market outcomes. These factors include weather, the economy, oil prices, and infrastructure development. Tables A1 to A4 (in the Appendix) present selected highlight statistics that illustrate current market status.\nBriefly, important developments in natural gas markets include the following:\nThe growth in natural gas for power generation has contributed to increased consumption and reduced seasonal variation in use because gas-for-power peaks in summer, versus the total natural gas use winter peak. In 2007, for the first time, the power generation sector used more natural gas than any other sector. The first quarter 2008 average spot price at Henry Hub increased 20% from the first quarter 2007 to $8.92 per thousand cubic feet (mcf), versus a 6% year-to-year increase from 2006 to 2007. During the 2007-2008 heating season (October to March), average wellhead prices increased more than 30%, according to EIA estimates. Storage levels towards the end of the heating season dropped below five year averages. In the first storage report after the 2007-2008 heating season, working gas storage was at 1,234 billion cubic feet—the lowest level since April 30, 2004. This may indicate that slack in the supply side is decreasing. The United States had record LNG imports in 2007, and increased LNG imports appear likely. Natural gas infrastructure development continued to advance, with many pipeline and storage projects successfully completed in 2007 and more underway in 2008 (including LNG import facilities). Industrial natural gas use had a small rebound in 2007.", "Unlike the global oil market, natural gas markets remain generally regional, with global trade in LNG growing. For the most part, North America has a continent-wide market that is integrated through a pipeline network that connects the lower-48 states, the most populous provinces of Canada, and parts of Mexico. Prices throughout this integrated market are influenced by demand (which may be influenced by weather, economic conditions, alternative fuel prices, and other factors), supply, and the capacity available to link supply sources and demand loads (transmission and distribution systems).\nThe U.S. natural gas market is the major component of the North American natural gas market. It accounts for about 81% of North American consumption and about 69% of North American supply.\nThe key price point in North America is Henry Hub. Henry Hub is a major pipeline hub in Erath, Louisiana, that is used as the designated pricing and delivery point for the New York Mercantile Exchange (NYMEX) gas futures contract and other transactions. The price difference between other locations and Henry Hub is called the \"basis differential.\" When there is spare capacity available to move natural gas from Henry Hub, or the Gulf of Mexico region in general, to the relevant price point area, the basis differential tends to be low, approximating the costs of fuel used to move the gas to the location. When capacity availability is tight, basis differentials can grow because the driving force can become the value of the natural gas at the delivery point, rather than the cost of getting the natural gas to that point.\nNatural gas prices also incorporate costs for distributing the gas from the wholesale marketplace to retail customers. These rates are generally determined by state regulators and involve both (1) the approval of costs and rates of return and (2) the allocation of costs among customer classes (e.g., residential, commercial, industrial).\nAlthough the North American natural gas market remains a distinct regional market, it is increasingly connecting to a global gas marketplace through international LNG trade. Oil prices still affect U.S. natural gas prices and this relationship is changing.", "The key elements of the market are prices, consumption, and supply. This section provides highlights from recent market developments relating to these factors.", "Prices remained fairly stable between 2006 and 2007. Early 2008 prices have increased at a faster pace than in 2007. According to EIA figures, average spot prices at Henry Hub increased about 6% between 2006 and 2007. (See Table 1 for price data.)\nThe U.S. Energy Information Administration (EIA) reports producer price data for its wellhead price series. This price remained stable from 2006 to 2007, decreasing by $0.01 to $6.39 per mcf in 2007 (average). During the 2007-2008 heating season (October to March), EIA estimates the average wellhead price increased more than 30%, to $8.29 per mcf.\nThe EIA citygate price series reflects the unit prices delivered to consuming areas. The U.S. average citygate price decreased $0.49 to $8.11 per mcf from 2006 to 2007.\nComplete import price data for 2007 are not yet available from EIA. From 2005 to 2006, LNG import prices decreased 11.6% to $7.14 per mcf.\nAt the retail level, average U.S. residential natural gas prices were $13.01 per mcf in 2007, with a high of $16.65 in July. This average was a 5.4% decrease from 2006. The average commercial price was $11.31 per mcf, a decrease of 5.7% from 2006. Industrial prices decreased 4.6% on average to $7.58 per mcf. Natural gas sold for electric power use increased prices 2.8% to average $7.30 per mcf. See Table 2 for these data.", "Power sector use of natural gas increased most rapidly in 2007, followed by the weather-sensitive residential and commercial sectors. Total U.S. consumption of natural gas grew 6.5% from 2006 to 2007, according to EIA. Gas-for-power led the sectoral growth, increasing 10.5%. Residential consumption increased about 8.2%, primarily due to colder weather than 2006. The commercial and industrial (without lease and plant use) sectors also had modest increases in consumption, reversing drops in use in these sectors for 2005 to 2006. The power sector led end-use consumption for the first time in 2007.\nTable 3 shows these consumption data.", "U.S. natural gas supply comes from domestic production, pipeline imports, imported LNG, and net withdrawals from storage. Both domestic and imported supplies increased between 2006 and 2007.\nDry gas production increased by 4.3% from 2006 to 2007, to 19,278 billion cubic feet (Bcf). This reflects the increase in drilling activity in response to price increases, as indicated in the natural gas rig count. The U.S. natural gas rig count has trended upward since 2002. In 2002, the average monthly rig count was about 600. Recent data show the count at approximately 1,500.\nThe U.S. natural gas reserve base increased recently. EIA reserves and production data indicate the latest reserves-to-production ratio (2006) is 11.4, an increase from the prior year's ratio of 11.1 and 2000's ratio of 9.2.\nIn 2007, U.S. consumers received most of their supply, 84%, from domestic production. The domestic supply has shifted from shallow Gulf of Mexico to deep Gulf of Mexico and unconventional sources, in the Rocky Mountains and elsewhere. As these new resources grow in importance, industry pressure for increased gas leasing of on- and offshore federal lands is likely to be a continuing issue.\nNet imports (pipeline and LNG) increased almost 10%, to 3,793 Bcf. Imports via pipeline from Canada increased 5%. LNG imports increased more than 32%, growing from 584 Bcf in 2006 to 771 Bcf in 2007.\nTable 4 show these data.\nIn 2007, the available spot LNG supplies were sometimes bid away to European terminals for higher prices. Nevertheless, new U.S. LNG infrastructure went into service in early 2008 and still more received approvals from the Federal Energy Regulatory Commission (FERC). To compete effectively for supply in the global LNG market, natural gas prices at the delivery points may have to increase further to attract LNG deliveries. Location of import facilities is an important factor in the value of landed LNG.\nEIA forecasts U.S. imports of 1,080 Bcf LNG for 2008, including regasified LNG from Mexico's Costa Azul terminal in Baja California. In addition, an LNG import facility in eastern Canada largely focused on exporting to the United States is expected to enter service in 2008.", "There are several trends under way in natural gas markets of interest to policy makers. They include:\na decrease in seasonal demand swings a growth in gas-for-power use a small rebound in industrial use of natural gas a growing international trade in LNG continuing progress in natural gas infrastructure development.", "Consumption of natural gas in the United States remains highly seasonal for three important sectors. Reflecting the importance of space heating, residential and commercial use of natural gas peaks in winter. Reflecting the importance of air conditioning load and the role of natural gas as the marginal fuel source for power generation, electric power use of natural gas peaks in summer.\nFigure 1 illustrates that the combination of these seasonal patterns has led to a decrease in the overall seasonal swing and the development of a secondary peak in the summer due to gas-for-power use. Interestingly, while some continue to call for more storage because of the growing consumption of natural gas, the decrease in the seasonal swing (through a decrease in the high month volume and an increase in the low month volume) means that less storage may be able to serve the annual cycling needs of the U.S. markets. Those trading natural gas may want additional storage for arbitrage uses, but the fundamental needs related to system reliability may decrease somewhat with a decrease in the difference between the minimum and maximum consumption rates.\nAnother noteworthy seasonal feature observed in 2007 by EIA found that natural gas price volatility is \"considerably higher\" in colder months than in other times.", "The natural gas consumption sector with the greatest increase from 2006 to 2007 was electric power. Deliveries to electric power customers increased by 615 Bcf, more than 45% of the consumption growth for the year. For the first time, electric power use of natural gas became the largest end-use sector for natural gas.\nPerhaps even more striking is the relative increase in electric generator use of natural gas during winter. In 2007, FERC's Division of Energy Market Oversight noted that November-March volumes increased 14% between winter 2005/06 and winter 2006/07.", "Industrial natural gas use in 2006 was approximately 13% lower than the 7,507 Bcf consumed in 2002. In 2007, industrial use increased by 2% over the 2006 level. The decrease in price to industrial users may have played a role in this effect.", "In 2007, LNG monthly imports varied from a high of 98.7 Bcf in April to a low of 20.8 Bcf in December. Because little of the LNG is imported under long term contracts, U.S. importers compete on the global LNG spot market for deliveries.\nIn December 2007, European natural gas prices were in the $10.20-$10.66 per million Btu range. U.S. prices varied above and below this. New England citygates were at $12.16 per million Btu and Henry Hub was at $7.15 (the Algonquin citygate figure represents several citygates in New England). Thus, some import points could compete successfully in the global spot market for LNG and others could not. There is excess physical capacity at existing LNG import facilities to handle more than three times the record imports of 2007.", "During 2007, the North American natural gas industry continued its progress in adding new infrastructure to the system. According to EIA and the FERC, the following facilities went into service in the United States in 2007. These facilities appear responsive to serving fundamental market needs, such as new capacity from the growing Rocky Mountains production area. Although no new LNG facilities became operational in 2007, facilities are expected to achieve commercial operation in 2008.", "There are a few noteworthy elements of recent EIA forecasts for the natural gas markets.\nIn its Short Term Energy Outlook, EIA forecasts a 1% increase in natural gas use for 2008, relative to 2007. Weather changes and economic conditions are the reasons EIA mentioned for the slowed growth. Prices are also likely to reinforce a short term slowdown in use. EIA forecasts record U.S. consumption of 23.4 trillion cf in 2009. EIA forecasts increased U.S. production in 2008 of almost 3%, primarily from growth in deepwater Gulf of Mexico and unconventional gas production. LNG imports are expected to decline about 14% from 2007. EIA forecasts supply area natural gas prices (Henry Hub) to increase almost 20% in 2008 to $8.34 per million Btu.\nIn EIA's long term forecast (through 2030), the reference case forecasts natural gas prices at the wellhead gradually decreasing to $5.27 per mcf during the 2015 to 2020 period before gradually increasing to $6.42 per mcf (2006 dollars) in 2030. EIA forecasts natural gas consumption growth to 24.4 trillion cubic feet (tcf) in 2015, declining to 23.4 tcf by 2030. Most of this increased use and the drop come from growth, then decline, in natural gas for power generation. EIA forecasts the arrival of Alaska Natural Gas to the lower-48 via pipeline in 2020, with deliveries reaching 2.4 tcf per year by 2030. This is a two year delay from EIA's 2007 forecast.", "EIA's forecast of gradual reductions in natural gas prices depends on certain assumptions embedded in the forecast. These factors have uncertainty associated with them, as discussed next.", "Weather affects natural gas consumption through both the significant space heating loads in the residential and commercial sectors and the cooling load served by gas-fired power generation. EIA incorporates National Oceanic Atmospheric Administration (NOAA) weather forecasts in its short and long term forecasts. To the extent that actual heating degree days exceed the temperature scenario from NOAA, that will tend to increase demand for natural gas in the relevant heating seasons and increase prices for natural gas during those periods. Similarly, if the actual cooling degree day requirements exceed those incorporated in the EIA scenario, then this will increase natural gas use in the cooling season via increased gas-fired power for air conditioning and increase the price for natural gas in the relevant cooling season.", "Natural gas prices and oil prices have long had a correlation. As the extent of oil/gas fuel switching has declined, this linkage has changed. During 2007, as crude oil and petroleum product prices increased, relative prices for natural gas became lower than the historical pattern. In the recent past, natural gas and oil product price competition tended to exhibit itself most clearly around the New York metropolitan area, where there remained a fair amount of fuel switching capability. This fuel switching capability tended to keep natural gas prices at the New York citygate in a range bounded on the high side by distillate fuel oil prices and on the low side by low sulfur residual fuel oil prices. In 2007, the relevant natural gas prices tended to be below this range (see Figure 2 ).\nThe shift to outside this fuel price range suggests that the consumers had done all the fuel switching to natural gas that remained feasible. Then, as oil prices moved above the relevant range, gas-on-gas competition could have become the market force determining the natural gas prices.", "Economic growth affects consumers' demand for natural gas and their ability to purchase it. EIA appears to have incorporated an economic outlook for 2008 that expects less growth than in its recent forecasts. Given the relative stability in the residential and commercial sector demand, any change in economic outlook would most likely affect industrial natural gas use most directly, but it could also affect commodity prices and world oil prices.", "Since the end of 2007, several noteworthy developments have occurred in the natural gas markets:\nEIA reports natural gas price increases in 2008. For the 2007-2008 heating season (November-March), the average spot price at the wellhead increased more than 30% from the beginning to the end of heating season, to $8.06 per million Btu. Storage levels towards the end of the heating season dropped below five year averages. In the first storage report after the 2007-2008 heating season, working gas storage was at 1,234 billion cubic feet, the lowest level since April 30, 2004. This may indicate that slack in the supply side is decreasing. The opening of the Rockies Express natural gas pipeline out of the Rocky Mountain production region appears to have relieved transmission congestion there. This improved the net back price within the production area. The wellhead price in the Rockies area increased from $4.82 per million Btu in November 2007 to $8.41 in March 2008. This improves the incentives for producers to find and develop new supplies in this area. The natural gas pipeline from the North Slope of Alaska has made progress. In January 2008, the Governor of Alaska announced that one of the pipeline project applications under the state Alaska Gasline Inducement Act (AGIA) was judged complete. In April 2008, two of the North Slope gas producers, BP and ConocoPhillips, announced that they had joined together to start a potentially competing effort, the Denali Alaska Gas Pipeline, which has an open season target date (date when capacity will be offered to potential shippers) of 2010 and an in-service target of 2018 (stated by the producers as a 10-year target). In early April, the Independence Trail pipeline that serves the Independence Hub platform in the Gulf of Mexico was taken out of service for pipeline repairs that could take until mid-year to complete. Independence Hub produces almost 1 billion cubic feet per day, roughly 10% of U.S. Gulf of Mexico production. In May, the North American Electric Reliability Corporation concluded the natural gas supply outlook for the summer of 2008 is \"healthy.\"\nGenerally, these developments indicate that the nation's natural gas market is functioning in tune with fundamental supply and demand conditions.", "Despite the problems arising in some parts of the energy system, natural gas fuel markets in North America have operated relatively well. The smooth natural gas market situation of 2007 appears to have evolved into different, tighter circumstances for 2008. If gas-on-gas competition declines and natural gas prices shift back into a competitive range with petroleum products, this will intensify the adverse effects of high oil prices.\nThe decline in seasonal consumption swings, primarily due to the increased use of gas-for-power, can improve the efficiency with which the nation's natural gas pipeline and storage infrastructure is used. Construction of new pipeline and storage infrastructure has continued to progress in a way apparently consistent with supply and demand fundamentals.\nFinally, LNG infrastructure development also continues. The low current capacity factors at the capital-intensive existing LNG import facilities may indicate that the U.S. LNG purchasing power is not proving as competitive in the international LNG market as project developers or those reviewing the projects had anticipated. The location of LNG facilities has an important effect on this potential competitiveness, and this factor may require greater consideration for future projects.\nHow weather and the economy perform will play an important role in whether prices continue to increase or downward pressure develops for natural gas as a commodity.", "" ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 1, 1, 2, 2, 2, 1, 1, 2 ], "alignment": [ "h0_title h1_title", "h0_full", "", "h0_title h1_title", "h0_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_full", "" ] }

{ "question": [ "Why has the average wellhead price risen during the 2007-2008 heating season?", "Why was this upward price movement in the natural gas market unexpected?", "What will most likely influence prices in the foreseeable future?", "What became the largest sector for natural gas consumption in 2007?", "What was a major factor in the increase in residential use of natural gas?", "How did industrial and commercial growth contribute to the increase in natural gas use?" ], "summary": [ "A tighter demand/supply balance for 2008, however, has generated more upward spot price movement in this latest period. From the beginning to the end of the 2007-2008 heating season, the average wellhead price rose more than 30%, according to Energy Information Administration estimates.", "The functioning of the natural gas market in 2007 appeared relatively stable and infrastructure development continued at an appropriate pace.", "In the foreseeable future, weather and economic performance appear most likely to influence prices.", "Natural gas use for electric power generation increased in 2007 by 10.5% and for the first time became the largest sector for natural gas consumption in the period covered by EIA records.", "Residential use increased 8.2%, with weather as a major factor.", "Commercial and industrial consumption also increased, by 6% and 2%, respectively. The industrial growth reversed a decline of 1.5% from 2005 to 2006." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 5, 5, 5 ] }

{ "title": [ "Background", "GI Bill Overview", "VA OJT and Apprenticeship Programs", "OJT and Apprenticeship Post- 9/11 GI Bill Benefits", "Program Requirements and Approval Process", "OJT and Apprenticeship Resources through DOL", "DOL OJT Services", "DOL Apprenticeship Programs", "DOL-Funded Staff to Support Veterans’ Employment", "Veterans in Our Review Said the Post-9/11 OJT and Apprenticeship Programs Helped Them Transition to Civilian Life, but Relatively Few Veterans Have Participated", "Veterans in Our Review Said the Program’s Supplemental Income Helped Them Cover Living Expenses while They Trained", "Since 2011, About 27,000 Veterans Have Participated in the Post- 9/11 GI Bill OJT and Apprenticeship Programs to Train in a Variety of Occupations", "VA and States Provide Varying Levels of Information and Outreach to Veterans and Employers", "VA Provides Some Program Information That Generally Highlights School-Based Options and Lacks Sufficient Detail On OJT and Apprenticeships", "Transition Assistance Program (TAP)", "Agency Websites", "VA’s Education and Vocational Counseling", "State Officials We Surveyed Reported Providing Outreach to Veterans and Employers, Which Varied By State", "VA and DOL Have Coordinated to Build Awareness of the Post- 9/11 GI Bill Apprenticeship Programs", "Lack of Program Awareness and Administrative Burdens Have Challenged Veterans and Employers, According to State Officials and Program Participants", "Veterans and Employers Often Lack Awareness of OJT and Apprenticeships as Options under the Post- 9/11 GI Bill, According to State Officials and Program Participants", "State Officials and Employers We Surveyed Reported VA’s Paper- Based Payment System, which VA Plans to Replace by 2017, Is Burdensome, and Payments Are Sometimes Delayed", "Little Is Known about the Performance of VA’s OJT and Apprenticeship Programs", "VA Does Not Measure Outcomes for Participants in the Post-9/11 GI Bill OJT and Apprenticeship Programs", "Data on DOL Programs Indicate Potential for Positive Employment Outcomes for OJT and Apprenticeship Models", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Analysis of VA Administrative Data", "Analysis of DOL Administrative Data", "Participating Veteran Survey", "Non-participating Veteran Survey", "Employer and Apprenticeship Sponsor Survey", "State Approving Agency (SAA) Survey", "Review of Relevant Laws, Regulations, and Other Documents", "Analysis of VA and DOL Outreach Materials", "Interviews with Officials and Stakeholders", "Site Visits", "Appendix II: Comments from the Department of Veterans Affairs", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "The Department of Veterans Affairs (VA) has been providing veterans GI Bill benefits since 1944. Among several GI Bill programs, the Post-9/11 GI Bill program has become the largest. The Post-9/11 GI Bill—which took effect in August 2009—provides benefits to veterans and servicemembers serving on active duty after September 10, 2001.\nDepending on what education or training program they select, participants may be eligible for benefit payments for up to 36 months to cover tuition and fees, housing, and books and supplies. From 2009 to 2011, the program provided benefits only to participants attending a degree- granting institution of higher learning. However, in 2011 the Post 9/11 Veterans Educational Assistance Improvements Act of 2010 expanded approved programs of education to include on-the-job training and apprenticeship, as well as other types of non-degree programs, such as vocational or technical school.", "", "Eligible veterans can use their benefits through the VA’s Post-9/11 GI Bill to participate in an approved OJT or apprenticeship program. Veterans can receive benefits for an OJT program lasting from 6 months to 2 years, or for an apprenticeship as long as 36 months until their Post-9/11 GI Bill benefits are exhausted. When veterans opt to apply their Post-9/11 GI Bill benefits to an eligible OJT or apprenticeship program, in addition to the wages they earn from their employer as a trainee or apprentice, they receive a tax free monthly housing payment from VA to help cover living expenses. The amount of the benefit is based on the basic allowance for housing (BAH) paid to servicemembers. Veterans receive scheduled wage increases from their employer during the training period. Every 6 months, the monthly benefit received from VA decreases. Furthermore, because OJT programs can be supplemented with classroom components, and apprenticeship programs must include related instruction, participants may receive up to $83 per month to help cover the cost of books and supplies. (See table 2.)", "Program requirements and the approval process are set out by VA and the State Approving Agencies (SAAs) in their training manual for state officials. To be approved, employers sponsoring OJT programs must complete an application indicating that they meet a number of criteria, including creating and adhering to a training plan, designating a certifying official, having “reasonable certainty” that a position will be available when the veteran completes training, and paying wages that meet program requirements. To be approved for the GI Bill, apprenticeship programs must meet the same regulatory criteria they would need to be registered with DOL or a State Apprenticeship Agency.\nSpecifically, GI Bill-approved OJT programs are intended to be for a job that is learned in a practical way through a structured, systematic program of supervised on-the-job training; however, there is generally no requirement for classroom training. The training period must be full-time, compensated employment that is a minimum of 6 months and a maximum of 2 years in length. Full-time training is generally considered to be not less than 30 hours per week.\nSimilarly, the training manual provides that a GI Bill-approved apprenticeship program must be a structured, organized, written program combining on-the-job training and related instruction in which workers learn the practical and theoretical aspects of a skilled occupation. Employers must provide incremental wage increases to participants throughout the apprenticeship. The length of an apprenticeship is generally not less than 2,000 hours of full-time work experience that is consistent with training requirements as established by industry practices and a recommended minimum of 144 hours of related instruction per year. Full-time training is generally considered to be not less than 30 hours per week or 120 hours per month. According to DOL, individuals participating in an apprenticeship program are expected to advance from a low or no skill, entry-level position to full occupational proficiency at the end of training.\nGI Bill-approved OJT and apprenticeship programs for non-federal employers or apprenticeship sponsors must generally be approved by an SAA, while VA approves OJT and apprenticeship programs sponsored by federal agencies.\nSAAs are state agencies designated by the state’s governor that evaluate, approve, and monitor education and training programs for the GI Bill (see fig. 1). SAAs generally contract with VA to approve both educational institutions and OJT and apprenticeship programs. In addition to approving programs, SAA staff is responsible for providing technical assistance, oversight, and program outreach.", "", "DOL offers OJT services that are separate from the VA Post-9/11 GI Bill OJT program and follow a similar model, but there are several key structural differences between these programs and services. DOL’s OJT services were authorized under the Workforce Investment Act of 1998 (WIA) and now operate under the Workforce Innovation and Opportunity Act (WIOA) enacted in 2014. Under WIOA, eligible individuals, including veterans, can receive employment training assistance and referrals from local workforce offices known as American Job Centers (formerly called One-Stop centers). Consistent with WIOA, American Job Centers provide different levels of services, depending on an individual’s needs:\nCareer Services, which include assistance with job searches and job placement, career counseling, and developing an individual employment plan; and\nTraining Services, including OJT programs and other occupational training opportunities.\nAmerican Job Center staff help match DOL OJT participants to participating employers for employment and training opportunities. Upon establishing a contract for the provision of occupational training, participating employers receive a subsidy of up to 75 percent of the trainee’s wages to compensate for training costs. In order to maintain their eligibility, employers must be able to demonstrate a pattern of providing program participants with long-term employment and wages, benefits, and working conditions commensurate with unsubsidized employees of similar work experience.\nThere are several key differences between the OJT services available to veterans through DOL and the OJT programs that are part of the Post- 9/11 GI Bill (see table 3). Whereas veterans receive a regular benefit equivalent to their monthly housing allowance as part of the Post-9/11 GI Bill, the employers receive wage subsidies as part of DOL OJT services. To be eligible for DOL OJT services, a veteran must have been determined by American Job Center staff to require training in order to gain or retain employment. In contrast, Post-9/11 GI Bill OJT participants must only meet the length of military service requirements in order to be eligible for an OJT program. Unlike the VA, which officials indicated is not required to track outcome measures for OJT participants, states are required to collect and report data to DOL, using Unemployment Insurance wage records, on post-program performance measures, including employment retention rates and earnings gains.", "Distinct from Post-9/11 GI Bill apprenticeship programs, veterans can also participate in DOL’s Registered Apprenticeship program. In concert with recognized state apprenticeship agencies, DOL’s Office of Apprenticeship determines which programs meet the standards to be registered with DOL. For the Post-9/11 GI Bill, an apprenticeship program does not need to be registered with DOL to be approved, but if a program is registered, its training plan is deemed approved for purposes of the VA program.\nRegistered Apprenticeship occupations are offered in such fields as electrical work, carpentry, plumbing, and roofing. In addition to monitoring compliance with program requirements, the Office of Apprenticeship partners with employers, workforce agencies, colleges, the military, and other organizations to promote Registered Apprenticeships and provide technical assistance. As with OJT programs, DOL requires Registered Apprenticeship agencies to monitor performance using completion rates, among other indicators, and enables these agencies to access participants’ wage records through the Wage Record Interchange System (WRIS) to report on performance measures such as employment retention and earnings gains. VA is not required by law to track outcomes for Post-9/11 GI Bill apprenticeship participants, according to VA officials. (See table 4.)", "In addition to American Job Center staff who serve all jobseekers, including veterans, DOL’s Veterans’ Employment and Training Service funds two staff positions that focus on promoting veterans’ employment. Specifically, DOL funds Local Veterans’ Employment Representatives (LVER) to promote veteran employment opportunities and coordinate training services for veterans by building relationships with employers and working with staff at American Job Centers. Additionally, Disabled Veterans’ Outreach Program (DVOP) specialists provide case- management to veterans with significant barriers to employment, such as homelessness or disabilities.", "", "The majority of veteran participants who replied to our survey (125 of 156) cited more than one benefit to the program. Many specifically noted that receiving supplemental income to help them cover living expenses during their transition to civilian life was a primary benefit (112 of 156). In 2015, this supplemental income ranged from $896 to $3,923 per month for the first 6 months, depending on the location of the employer or apprenticeship sponsor. Many veterans we interviewed (21 of 28) said that this supplemental income helped them offset the loss of income they experienced after leaving the military. For example, slightly more than half the veterans we interviewed (16 of 28) said that the supplemental income helped them pay critical living expenses, such as a mortgage or car payment, or support their families. (See text box.) A few veterans (4 of 28) told us that without the Post-9/11 GI Bill benefits they would have needed a second job, which would have made it difficult to focus on learning their new occupation.\nIn addition to providing supplemental income, about half of the OJT and apprenticeship participants who responded to our survey (80 of 156) reported that the programs allowed them to use their GI Bill benefits, to which they are entitled, when college was not a good fit for them. Several veterans we interviewed (4 of 28) said they had not expected to be able to use their GI Bill benefits because they knew they wanted to enter a specific trade or occupation that did not require a college degree, such as pipefitter or police officer. These veterans said they were pleased to be able to use the benefits they had earned while starting their chosen careers. Others (6 of 28) said that due to family obligations they needed to work full time and would not have been able to afford college. Further, some OJT and apprenticeship participants who responded to our survey—including both those who had and had not used Post-9/11 GI Bill benefits to attend college—reported one of the main benefits of the program was that it helped them learn a new occupation (86 of 156) and further develop skills they had obtained in the military (60 of 156).\nVA officials told us that employers and apprenticeship sponsors do not receive any federal funds for participating in these programs, though the employers and apprenticeship sponsors who responded to our survey cited a number of benefits for participating, particularly recruitment and retention. Specifically, just over half of the employers and apprenticeship sponsors who responded to our survey (87 of 153) reported the program helped them recruit veterans to be employees. Almost all of the employers and apprenticeship sponsors we interviewed (12 of 15) praised the discipline, work ethic, or customer service skills of participating veterans, or said they made valuable employees or apprentices. In addition to recruitment benefits, half of the employers and apprenticeship sponsor respondents (76 of 153) indicated that the programs had helped them retain veterans as employees. Some employers and apprenticeship sponsors who responded (47 of 153) also indicated that the program enhanced their standing in the community. (See text box.)", "Of the approximately 1.2 million veterans who used their Post-9/11 GI Bill benefits since October 2011, about 27,000—or about 2 percent— participated in the OJT or apprenticeship programs, according to VA program data. Approximately half of these veterans participated in OJT opportunities, while the other half pursued apprenticeships. The average age of participants was 33, and most were male (94 percent). Over half of all participants had served either in the Army (28 percent) or the National Guard or Reserves (27 percent). (See table 5.) The number of participating veterans varied considerably by state, for example, from a low of 14 participants in Wyoming to a high of 799 in Texas during fiscal year 2014.\nDuring fiscal year 2014, there were approximately 2,700 employers and apprenticeship sponsors approved to train Post-9/11 GI Bill veterans. According to VA and state officials, not all of these approved OJT and apprenticeship sponsors actually had veterans receiving benefits under the program during this timeframe.\nParticipating veterans have used the OJT and apprenticeship programs to train in a variety of occupations. While VA officials told us the agency does not collect standardized occupational data, our analysis of VA’s administrative data on approved programs indicates that the following occupations are among those most frequently pursued by participants:\nPolice and sheriff officer\nCorrectional officer and jailor\nTruck driver\nElectrician\nFirefighter\nAir traffic controller\nVeterans service representative\nCarpenter\nPlumber, pipefitter, and steamfitter In addition, veterans we interviewed reported being trained for a variety of other positions, including maintenance and repair workers, special agents, and cable installation and maintenance technicians.", "", "While VA provides some information on Post-9/11 GI Bill OJT and apprenticeship programs, the focus of most outreach information is on higher education benefits. OJT and apprenticeship information lacks sufficient detail to inform veterans these benefits are available or how they might be used. There are a few different resources available to servicemembers—and to some extent, employers—that provide information on Post-9/11 GI Bill benefits, including information shared at mandatory pre-separation briefings as part of the Transition Assistance Program (TAP), on agency websites, and as part of VA’s education and career counseling.", "In general, mandatory briefings provided by VA for separating servicemembers as part of TAP cover Post-9/11 GI Bill benefits, but almost all of this information is focused on using these benefits for higher education. The purpose of TAP is to prepare servicemembers leaving the military for their transition back into civilian life. TAP includes both mandatory and optional components. For example, all servicemembers participating in TAP must take VA’s Veterans Benefits I and II courses, which discuss available benefits and services, including education benefits. Federal, state, and veterans service organization officials we interviewed identified TAP as one of the primary ways that veterans can learn about the Post-9/11 OJT and apprenticeship programs. However, out of 77 total pages in the TAP facilitator guide and briefing slides for the VA Benefits I and II courses, there is one reference to the OJT and apprenticeship programs as part of a description of the books and supplies stipend portion of the Post-9/11 GI Bill. In discussing Post-9/11 GI Bill benefits, the briefing slides generally refer to “education,” “tuition,” “school,” and “student,” and do not refer to employers, OJT, or apprenticeship opportunities, although these options are also available. Presenting this information in Veterans Benefits I and II courses would align with VA’s stated goal that these briefings be comprehensive and cover the entire spectrum of VA benefits for servicemembers and their families.\nSimilarly, the Veterans Benefits I and II briefing slides do not include any specific examples of veterans who have used their benefits for OJT or apprenticeship opportunities or how these benefits work. Information on the OJT and apprenticeship program of Post-9/11 GI Bill benefits is included in an optional portion of TAP, called the Career Technical Training Track. But here as well there is relatively little information provided to servicemembers on how they can use their Post-9/11 benefits to pursue OJT and apprenticeship opportunities. Several slides in this track provide information on what OJT and apprenticeship programs are, however, it is not clear that veterans can use their Post-9/11 GI Bill benefits for these programs.\nAs discussed later in this report, 39 of 44 SAAs reported that lack of awareness of the Post-9/11 GI Bill OJT and apprenticeship programs was one of two top challenges in facilitating veteran participation. This finding was also supported by the results of our other survey efforts. Specifically, about half the veterans who responded to our survey reported that TAP briefings do not include enough information on OJT and apprenticeship programs under Post-9/11 GI Bill benefits. Of the 156 veterans who responded to our survey and have used their Post-9/11 GI Bill benefits for OJT and apprenticeship, 81 reported that they did not think TAP adequately informs veterans about these options. Similarly, 63 of the 127 responding veterans who have used their Post-9/11 GI Bill benefits for a non-college degree, such as a trade school program, had the same response. While 5 of the 7 veterans service organization leaders we interviewed indicated that TAP should not be the only source of information for veterans, some of whom find it difficult to process the volume of information presented during TAP, additional information about the Post-9/11 GI Bill OJT and apprenticeship programs could be beneficial in informing servicemembers of their options.\nVA officials told us they have not considered expanding the curriculum of the mandatory courses to include more information about the OJT and apprenticeship programs. They stated they only have a limited amount of time to cover a wide range of benefits during the TAP briefings and have prioritized content. VA officials told us that they revisit their TAP curriculum on an annual basis. During this annual process, officials update benefits information and accommodate new material. They also stated that they encourage veterans to attend the optional Career Technical Training Track, which includes information on these programs. However, without additional information about the OJT and apprenticeship program options under the Post-9/11 GI Bill, veterans may continue to lack awareness of these benefits, as discussed later in the report.", "Focus on Higher Education Benefits Another source of information about Post-9/11 GI Bill benefits are agency websites, and while VA’s and DOL’s websites provide some information on these benefits, VA’s website is more focused on higher education benefits. According to the Plain Writing Act of 2010, information supplied to the public regarding any federal benefit (including in paper and electronic publications, forms, notices or instructions) must be clear, concise, well-organized, and appropriate for the intended audience. The President’s guidance for implementing this act states that “agencies should communicate with the public in a way that is clear, simple, meaningful, and jargon-free,” and notes that “a lack of clarity may prevent people from becoming sufficiently aware of programs or services” for which they are eligible. VA’s website has resources for individuals to learn about GI Bill benefits, including a web page for the GI Bill, a web page dedicated to the Post-9/11 GI Bill, and a GI Bill Comparison Tool. While there is also a web page for the OJT and apprenticeship programs, the language used on the other GI Bill-focused web pages, and resources generally, refers to higher education and does not reference OJT or apprenticeships. For example, the main heading of the GI Bill web page is “Education and Training.” However, the rest of the page uses language and visual cues that reference higher education, such as “choose a school” and “verify school attendance.” Moreover, the logo for the Post- 9/11 GI Bill—a graduation cap with dog tag tassels—further emphasizes higher education to the exclusion of other types of GI Bill benefits.\nVA’s GI Bill Comparison Tool also uses language that emphasizes higher education, even though the tool can be used to access information on employers. The main heading, for example, is “Choosing a School,” and the options below are “About Your School” and “Compare This School” even when an employer is chosen—it may not be apparent to veterans that they can use this tool to explore OJT and apprenticeship benefits.\nLack of Sufficient Detail on OJT and Apprenticeship Programs In addition, the information provided on VA’s Post-9/11 GI Bill web page and on its OJT and apprenticeship web page lacks enough detail for users to reasonably understand how to use their GI Bill benefits for the OJT and apprenticeship programs. For example, the page content does not articulate how OJT programs are different from apprenticeship programs—a difference that could have meaningful career implications for veterans. Participants in an apprentice program, for example, earn a license or national industry certification and generally train longer, while OJT participants generally receive a certificate of completion and train for a shorter period of time. In addition, the web page lists three occupations that might be available through OJT or apprenticeship, union plumber, hotel manager, and firefighter, but does not provide additional details, such as descriptions of what OJT or apprenticeship programs associated with these occupations might involve, or testimonials on how actual veterans used and benefited from these programs. In addition to the requirements for clear and meaningful communication described in the Plain Writing Act of 2010, Standards for Internal Control in the Federal Government state that management should ensure there are adequate means of communicating with external stakeholders in which there could be a significant impact on the agency achieving its goals. Further, VA’s strategic goals include empowering veterans to improve their well-being and managing and improving VA operations to deliver seamless and integrated support. Without providing sufficient detail regarding the OJT and apprenticeship programs, VA may not provide veterans complete information to understand these benefits, and may not fully meet its goals of serving this population.\nWhile VA’s OJT and apprenticeship web page links to a fact sheet on these Post-9/11 GI Bill programs, this fact sheet also lacks sufficient detail to help veterans and employers reasonably understand how they can participate. For example, the fact sheet describes the amount of Post-9/11 GI Bill benefit payments, but does not describe the difference between OJT and apprenticeship programs, or provide examples of how veterans used benefits from these programs.\nIn contrast, DOL has a comprehensive web page for its Registered Apprenticeship program that specifically targets veterans. It also includes information about potential benefits of participating in an apprenticeship, and profiles several veterans who participated in the program while receiving GI Bill benefits. These profiles provide concrete examples of how veterans have used the GI Bill benefits during apprenticeships in a variety of fields and how their apprenticeships helped them after leaving the military. VA does not link to this page from its OJT and apprenticeship web page, missing an opportunity to leverage this resource and potentially making it more difficult for veterans to learn about these benefits through its website.\nVA’s GI Bill web pages also provide little information for employers who may be interested in participating. The OJT and apprenticeship web page includes two sentences directed to employers stating that they can participate in the program and directing them to their SAA office. It does not, however, provide information about requirements for employers or why employers might want to participate, which could help attract employers or apprenticeship sponsors to help VA achieve its goal of improving veterans’ well-being.", "Finally, VA’s education and vocational counseling includes some information on GI Bill benefits, but according to VA, counselors rely on the GI Bill website for information regarding the OJT and apprenticeship programs. In addition to TAP and agency websites, servicemembers may participate in VA’s education and vocational counseling to learn more about their benefits. VA officials told us that benefits advisors are permanently staffed at almost 300 military installations and other sites worldwide and provide transition and outreach briefings, as well as individual assistance, guidance, and counseling on all VA benefits and services. According to VA officials, the counselors who deliver these benefits are trained and have knowledge of OJT or apprenticeship programs. When asked to provide training materials related to the OJT and apprenticeship programs, VA officials told us that counselors find information about OJT and apprenticeships on the GI Bill website.", "Most state officials we surveyed reported that they reach out to veterans using direct methods, such as attending job fairs and providing briefings and presentations to veterans’ groups (see table 6). Fewer state officials reported using broader outreach methods, such as radio or television advertisements or social media, to raise awareness of the programs. Some state officials said that they devote considerable staff time and resources to outreach efforts. For example, an SAA director in one state told us his agency created various informational materials to raise awareness of these programs, including a video titled “OJT: It’s not Just for College” to distribute to stakeholders, a monthly newsletter on veterans’ employment issues, and program fact sheets and brochures to be displayed in American Job Centers and higher education veterans’ offices. An SAA official in another state told us his agency arranged for OJT and apprenticeship program information to be printed on the back of state unemployment insurance (UI) benefit checks and works with DOL workforce staff to leverage employer contacts. However, our survey results also indicate that the level of outreach conducted varies by state. Specifically, officials in 5 states we surveyed indicated that due to resource constraints, they were unable to engage in more intensive outreach efforts for veterans or employers.\nWithout adequate program outreach, veterans who could benefit may remain unaware of these programs and miss opportunities to improve their long-term employment prospects, consistent with agency goals.", "VA has coordinated some aspects of its Post-9/11 GI Bill apprenticeship program with DOL’s Registered Apprenticeship program to help make apprenticeship sponsors and veterans aware of the GI Bill program. By statute, the same regulatory requirements apply to apprenticeship sponsors seeking GI Bill approval for their program as those seeking approval through DOL’s Registered Apprenticeship program. Prior to 2014, this process was not streamlined, and SAAs independently assessed whether a Registered Apprenticeship program sponsor seeking approval for GI Bill eligibility met these regulatory requirements. In September 2014, the Secretaries of Veterans Affairs and Labor announced that any DOL or State Apprenticeship Agency-approved Registered Apprenticeship program was qualified to be approved under the Post-9/11 GI Bill. The joint letter making this announcement was sent to approximately 10,000 Registered Apprenticeship programs to alert program officials that participating veterans could be eligible to receive benefits under the Post-9/11 GI Bill, according to VA officials. The letter included detailed information on how Registered Apprenticeship programs could obtain GI Bill approval and also contained two outreach flyers. One flyer was designed for veterans. The other, for Registered Apprenticeship sponsors, provided detailed information on the GI Bill program and its benefits.\nDOL also conducted two additional outreach efforts, one targeted at apprenticeship sponsors and the other at veterans, to raise awareness that veterans can receive GI Bill benefits while participating in a DOL Registered Apprenticeship program. Regarding the first effort, DOL officials told us they created a pop-up window that appears when apprenticeship sponsors enter information into the Registered Apprenticeship database about a new apprentice. The pop-up window reminds sponsors that their apprenticeship program is qualified to be approved under the GI Bill, and that veteran apprentices may be entitled to receive GI Bill benefits while participating in the program. The pop-up window also links to several different resources created by both DOL and VA that apprenticeship sponsors can use to learn more about VA’s program. Regarding the second outreach effort to veterans, DOL created a Registered Apprenticeship website targeted specifically to veterans that highlights the availability of GI Bill benefits for apprenticeships. VA requires SAA officials to meet biannually with DOL’s Local Veterans Employment Representatives (LVER). According to VA’s contract with SAA staff, the purpose of these meetings is to ensure that students who graduate in the SAA’s state are made aware of employment resources and opportunities. SAA directors we interviewed in 10 of 13 states told us these meetings were generally helpful, noting that they increased program awareness or helped SAA staff connect with employers. One official said LVERs are “wonderful ambassadors” for the Post-9/11 GI Bill program. In contrast, SAA directors we interviewed in 3 of the 13 states indicated that while their staff meet with LVER staff as required, these interactions rarely result in increased program awareness about the GI Bill OJT or apprenticeship programs.\nVA and DOL have more coordination for apprenticeship programs than for OJT, possibly due to structural differences in how OJT services are provided. For example, the administration of OJT services funded by DOL, which occurs at the local level, is more decentralized than for Registered Apprenticeship programs, which are overseen at either the federal or state level.", "", "Veterans and employers generally lack awareness of OJT and apprenticeship options, and they most often heard of these programs from word-of-mouth sources, according to state officials and program participants we surveyed. Specifically, most state officials we surveyed cited lack of awareness as a top challenge in facilitating veteran (39 of 44) and employer (39 of 43) use of the Post-9/11 GI Bill OJT and apprenticeship programs (see table 7). In addition, most state officials (39 of 44) cited a lack of understanding among veterans as to how they can use these benefits to pursue career goals as a top challenge. Similarly, the most common challenge experienced by responding state officials trying to facilitate employer participation in OJT and apprenticeship programs is a lack of knowledge of this option among employers (39 of 43).\nState officials we surveyed also cited some of the same challenges that we identified in our review of VA’s information resources, and some confusion about the OJT and apprenticeship programs that may contribute to a lack of knowledge about these programs (see table 7). Specifically, 36 of 44 responding state officials pointed to the emphasis on Post-9/11 GI Bill materials on education rather than OJT or apprenticeship as a challenge in facilitating veteran participation. Additionally, 30 of 44 responding state officials indicated that veterans have difficulty distinguishing between benefit options and programs available to them. Twenty-eight of 43 responding state officials said that employers lacked knowledge of the SAA and its functions and responsibilities. In addition, 25 of 43 responding state officials indicated that employers have difficulty distinguishing OJT and apprenticeship GI Bill programs from other government efforts to promote veterans’ employment. “This is a hidden program that should be more prominent in availability. I would not have known I could use the OJT program if not for word-of-mouth from another employee.”\nSimilarly, participating employers and apprenticeship sponsors who responded to our survey most frequently said they heard about the program from a veteran employee (63 of 153) or an SAA official (42 of 153).\nOf veterans we surveyed who used GI Bill benefits for a non-college degree, such as at a vocational school, about half of those who responded (65 of 127) said they did not know about the OJT and apprenticeship program options when deciding how to use their benefits. About half of the responding veterans (37 of 65) who had not heard about the programs reported they would have considered using their benefits to pursue OJT or apprenticeships rather than an education program had they known this was an option. Further, about half (63 of 127) of the responding veterans who used GI Bill benefits for a non-college degree, such as at a vocational school, stated that TAP did not adequately inform them that they can use their GI Bill benefits for these programs.\nTo build awareness of these programs, VA officials said they send multiple letters to servicemembers prior to their separation to let them know they may be entitled to education benefits. Two of these letters include a statement that says Post-9/11 GI Bill benefits are available for trade schools, apprenticeships, and OJT in addition to colleges and universities. In addition, in 2011 and 2013 VA completed two targeted outreach campaigns. VA officials told us these outreach campaigns were online and targeted the five states that had the highest rates of veteran unemployment in 2011, and the five states with the next-highest rates of veteran unemployment in 2013. According to VA, the first campaign resulted in nearly 354,000 unique individuals visiting the web page that explained the expansion of the GI Bill to OJT and apprenticeship, among other new options. The second campaign resulted in an additional 76,000 visits to this web page. VA officials told us they have since consolidated their web pages and in doing so eliminated this GI Bill expansion web page. They said no additional VA outreach campaigns have been completed or are planned, absent additional funding, among other reasons. While word-of-mouth discussion of the Post-9/11 GI Bill OJT and apprenticeship program benefits can increase program awareness, this is not a systematic method of outreach, and VA officials acknowledged there is room for improvement in their outreach approach.", "“There is no way to verify and track paperwork that has been submitted via fax or mail and it is ‘lost’ 1 out of 3 submissions.” “The biggest time drain is ‘faxing’ in the monthly hour logs. This is an antiquated way of doing this and the option for scanning and emailing should be incorporated.” “The GI/Bill OJT program is beneficial to me, but only when I received my benefits. In the past year, only 3 to 4 months have been ‘on time.’ I’m currently waiting on 4 months’ worth of benefits. I personally am struggling with bills and I know many others are too… That is the biggest concern… that our paperwork gets ‘lost’ for months on end.” “It takes too long for the VA to process the paperwork, and there really is no easy way to correct mistakes if they happen. This delays payment and causes bills to pile up.” “There is no communication between the VA and us. If there is a problem with the application, the VA does not let us know if there are any problems, and the veteran has to wait for his or her application to be processed.” “It was extremely difficult to get everything to and from everybody that needed paperwork. It took over a year after I started the program to get all of the things needed to the right people…. It was a very frustrating process, if I was not persistent, I could have given up.”\nVA officials told us delays sometimes occur because a veteran’s benefit application is received before the employer has been approved or because not all required paperwork has been submitted. VA officials also told us that they are in the process of developing a new data system called Veterans Approval, Certification, Enrollment, Reporting and Tracking System (VA-CERTS), which will combine and replace the program certification for educational institutions, and monthly certification and claims processing functions currently housed in two separate systems. Officials indicated that VA-CERTS will include the program certification and monthly hours certification, as well as claim processing for the OJT and apprenticeship programs. According to officials, VA- CERTS is in the early stage of development. Specifically, the business requirements document to build the new system was completed in July 2015 and delivered to VA’s Office of Information and Technology. It includes the requirements for the OJT and apprenticeship elements mentioned above. Officials told us that funding to develop VA-CERTS has been identified, though final implementation of the new system may not occur until at least 2017. In the interim, absent efforts to ease the administrative challenges associated with submitting monthly paperwork, some employers and veterans are likely to continue to experience difficulties and delays. Such efforts to ease the administrative challenges could include allowing employers and apprenticeship sponsors to submit monthly certification forms by email, or providing confirmation that monthly forms have been received.", "", "VA has not established outcome measures to report on the performance of Post-9/11 GI Bill OJT and apprenticeship participants. Specifically, VA does not measure such outcomes as whether participants retained employment or experienced earnings gains after completing the program. As previously mentioned, VA officials indicated that there is no requirement for VA to measure OJT and apprenticeship performance. However, standards for internal control call for establishing and reviewing performance measures to allow an agency to evaluate relevant data and take appropriate actions. Moreover, a recent review by the Vice President concluded that an integral element of successful job training programs is measuring outcomes for all participants and informing participants and employers of the results. The Vice President’s report noted the importance of tracking outcomes such as employment retention and earnings gains so participants can choose training options wisely— and so programs can improve performance. Additionally, VA officials told us that having access to data on participant outcomes could help them promote the programs to employers and veterans.\nAccording to VA officials, the agency lacks a data mechanism and resources for measuring employment outcomes once veterans have exhausted their Post-9/11 GI Bill benefits. States’ Unemployment Insurance wage records, which DOL uses to measure outcomes for its OJT and apprenticeship programs, are one possible data source VA could explore to measure outcomes for participating veterans. According to DOL officials, VA could consult with DOL to determine if it could access this data source through the Wage Records Interchange System 2 (WRIS 2). VA officials told us they had not previously considered participating in WRIS 2 to access wage records, and consequently have not considered if they need to seek legislative authority to do so. In addition to this shared resource, other mechanisms for measuring outcomes could potentially be developed, such as collecting outcome data directly from employers and apprenticeship sponsors.\nAlthough VA does not measure outcomes for OJT and apprenticeship programs, it does collect and report data for some outcome measures for the higher education portions of the Post-9/11 GI Bill. Specifically, VA collects and publicly reports data for GI Bill participants on such measures as graduation rates and loan default rates. VA officials also indicated that they plan to report on transfer rates and employment retention rates, among other measures, for graduates of higher education programs. This effort was a product of a 2012 Executive Order that called for the Secretaries of Defense, Veterans Affairs, and Education to develop such outcome measures to help veterans make informed decisions about how to use their GI Bill benefits. VA officials told us that even though they currently have no plans to develop or report on similar post-program performance measures for OJT and apprenticeship participants, they recognize the importance of such an effort.\nState officials we surveyed and employers and apprenticeship sponsors who have participated in the OJT and apprenticeship programs and responded to our nongeneralizable survey generally said the programs promote employment retention and effectively serve veterans. Of the 44 SAAs we surveyed, officials from 38 said they believed the programs were generally either very or somewhat effective in improving veterans’ employment prospects (see table 8). Additionally, of the 153 participating employers and apprenticeship sponsors who responded to our survey, 128 said that, in their experience, veteran participants typically continued to work in the same area for which they received training while in the programs. Nevertheless, without establishing and reporting data on outcome measures for these programs, VA will not be able to verify whether these perceptions are accurate and know how well these programs are performing.", "DOL collects performance data for its OJT services and Registered Apprenticeship program, and these data suggest that OJT and apprenticeship training models can be associated with positive outcomes for measures such as employment retention and earnings gains. According to 2013 DOL program data, 85 percent of Post-9/11-era veterans who received OJT services entered employment within 3 months of completing their training, and 86 percent of these veterans retained employment over the subsequent 6 months. Additionally, Post- 9/11-era veterans who used OJT services earned 25 percent more in the second and third quarters after finishing their OJT services than they had earned prior to receiving services.\nWhile these data indicate the potential for positive employment outcomes for an OJT approach to training, they do not necessarily reflect outcomes for veterans in VA’s programs. As previously mentioned, DOL’s OJT services and the Post-9/11 GI Bill OJT program differ in several key ways. First, while all veterans who served for at least 90 days after Sept. 11, 2001, are entitled to Post-9/11 GI Bill benefits, American Job Center staff must determine that DOL OJT participants—civilians and veterans alike— need additional services to obtain employment. Second, whereas veterans receive Post-9/11 GI Bill benefits in the form of a monthly benefit payment, DOL OJT benefits are paid to employers in the form of a wage subsidy. The subsidy covers the costs of training services needed to help participants gain or retain employment. Third, the Post-9/11 GI Bill OJT programs are limited in duration to 6 to 24 months, while the duration of subsidized DOL OJT services varies according to the needs of the position and the availability of local workforce funds.\nOutcome data and available research on DOL’s Registered Apprenticeship program also point to the potential for employment benefits of an apprenticeship training model. DOL reports outcome measures for all Registered Apprenticeship participants, without distinguishing participants by veteran status. Nevertheless, 2014 program data show that 91 percent of participants who completed the DOL program found employment within 3 months compared to 76 percent of those who exited the program without completing it. Of those individuals who completed the program and found employment within 3 months, 91 percent retained their employment over the subsequent 6 months. DOL data also indicate that the average wages of apprentices who completed the program increased about 65 percent from $13.78 per hour to $22.69 per hour during the course of the program. Moreover, a study commissioned by DOL estimated that those individuals who completed a Registered Apprenticeship earned substantially more over a career than similar individuals who did not complete a Registered Apprenticeship. It is important to note that some of these earnings gains are likely due to unobserved differences between those individuals who completed a Registered Apprenticeship and those individuals who did not.\nAs with OJT services, outcomes associated with DOL’s Registered Apprenticeship do not necessarily reflect the outcomes for veterans in Post-9/11 GI Bill apprenticeship programs. First, DOL does not differentiate veterans from nonveterans in its Registered Apprenticeship outcomes; the reported data refer to the entire population of those who either complete or exit a Registered Apprenticeship. It is therefore not possible to use these data to determine how effectively Registered Apprenticeships are serving Post-9/11-era veterans. Second, these data reflect outcomes in the 25 states in which DOL’s Office of Apprenticeship administers the Registered Apprenticeship program. Therefore, Registered Apprenticeship outcome data from DOL do not represent nationwide participant outcomes. Absent measures for VA’s OJT and apprenticeship programs, the performance of these programs will remain unknown.", "While many veterans benefit from higher education after their military service ends, for some veterans it may not be the ideal career path to successfully attain civilian jobs. Given the wide range of education and training options available under the Post-9/11 GI Bill, it is important that veterans be fully aware of their options so they can make an informed decision about how to use their benefits to effectively transition to civilian life. Most Post-9/11 GI Bill outreach materials emphasize higher education programs, and most state officials we surveyed told us that awareness of OJT and apprenticeship opportunities is low. While VA provides some information about OJT and apprenticeship programs, many veterans and employers learn about the program through word-of- mouth rather than through systematic outreach efforts. Without improved program outreach, veterans who could benefit from these programs may remain unaware of them and could miss opportunities to improve their long-term employment prospects, consistent with agency goals.\nOverall, veterans, employers, and state officials we contacted were generally positive about VA’s OJT and apprenticeship programs. However, many suggested that VA’s current, paper-based system for paying monthly benefits is inefficient, leading to administrative burdens for employers and delayed benefit payments for veterans—adding economic stress for veterans who are counting on this assistance. VA has taken a first step towards easing these administrative challenges by deciding to incorporate the OJT and apprenticeship programs into its development of the new VA-CERTS data system to process program approvals and benefit payments. However, this system may not be implemented until at least 2017, and increasing numbers of veterans will become eligible for Post-9/11 OJT and apprenticeship benefits as the military continues to draw down its forces. In the interim, and in the absence of efforts to ease administrative challenges for employers who experience difficulty in submitting monthly certifications and for veterans who experience delayed payments, some veterans will likely continue to experience delayed payments. Such delays can undermine one of the primary benefits of the program cited by participants: helping veterans cover living expenses while transitioning to the civilian workforce.\nWith regard to performance, outcome data collected by DOL on the OJT and apprenticeship programs it administers indicate the potential for positive employment outcomes for these training models. However, VA is limited in its ability to assess the impact of its Post-9/11 GI Bill OJT and apprenticeship programs on veterans because VA does not measure performance outcomes for participants. While VA has undertaken efforts to better measure and report outcomes in its higher education programs, the agency currently has no plans to do so for its OJT and apprenticeship programs. Without measuring and reporting on outcomes for these programs, VA will not be able to assess their effectiveness, and veterans may not be well-positioned to determine which programs are most suitable for them when choosing how to use their benefits.", "We are making the following three recommendations: 1. To help ensure that veterans are aware of the Post-9/11 OJT and apprenticeship programs so they can make informed decisions about how they use their benefits, the Secretary of VA should identify and implement appropriate, cost-effective actions to increase awareness of OJT and apprenticeship benefits under the Post-9/11 GI Bill. 2. To help address challenges veterans and employers reported facing in using the OJT and apprenticeship programs, the Secretary of VA should identify and implement cost-effective steps to ease administrative challenges in submitting paperwork or receiving payments as the new automated VA-CERTS system to process program approvals and benefit payments is being developed and implemented. 3. To increase accountability for program performance, the Secretary of VA should establish measures to report on program outcomes for Post-9/11 GI Bill OJT and apprenticeship programs, including considering relevant data sources and seeking legislative authority to gain access to data, if necessary.", "We provided a draft of this report to VA, DOL, and DOD for comment. VA provided written comments that are reproduced in appendix II. Neither DOD nor DOL provided a formal response. In addition, VA and DOL provided technical comments that we incorporated as appropriate.\nVA agreed with each of our three recommendations. In response to our recommendation to increase awareness of OJT and apprenticeship benefits under the Post-9/11 GI Bill, VA said it will develop a guide for employers and apprenticeship sponsors about Post-9/11 GI Bill OJT and apprenticeship benefits. VA also said it will publicize this guide and make it available on VA’s GI Bill website. Further, VA said it will send veterans and stakeholders information on OJT and apprenticeship benefits via an email blast and by posting information to the Employment Center section of VA’s eBenefits website. In response to our recommendation to ease administrative challenges in submitting paperwork or receiving payments while the new automated VA-CERTS system is being developed and implemented, VA said it will explore the feasibility of cost-effective options and will develop a plan to ease challenges. Finally, in response to our recommendation to establish measures to report on program outcomes, VA agreed that program performance metrics should be developed to report on program outcomes. VA said it will develop a plan to determine the feasibility of collecting and publishing program outcome data for the OJT and apprenticeship programs. VA set a target completion date of June 2016 for all actions set forth in its response to our recommendations.\nWe are sending copies of this report to the appropriate congressional committees and the Secretaries of Veterans Affairs, Labor, and Defense. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff has any questions about this report please contact me at (202) 512-7215 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in Appendix III.", "In conducting our review of the Department of Veterans Affairs (VA) Post- 9/11 GI Bill on-the-job training (OJT) and apprenticeship programs, our objectives were to examine (1) how selected veterans and employers used the programs and how widely they have been used, (2) to what extent VA and states have taken steps to inform veterans and employers about these programs, (3) what challenges, if any, veterans and employers have faced in using them, and (4) to what extent VA has assessed the performance and effectiveness of its programs. This appendix provides a detailed account of the data sources used to answer these questions, the analyses we conducted, and any limitations we encountered.\nWe conducted this performance audit from August 2014 to November 2015 in accordance with generally accepted government auditing standards. These 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.", "To describe how widely the OJT and apprenticeship programs have been used, we requested and analyzed program data from VA. VA provided information from two different databases—the Long Term Solution (LTS) database and the Web Enabled Approval Management System (WEAMS). We assessed the reliability of these data by reviewing existing information about the data and the systems that produced them and by interviewing agency officials knowledgeable about the data. We determined that the data were sufficiently reliable for the purposes of this report. The summary statistics that VA provided from its LTS data included the number of veterans who have participated in the OJT and apprenticeship programs since these benefits first became available on Oct. 1, 2011, and the number of veterans participating in other Post-9/11 GI Bill programs through March 23, 2015—the most recent data available at the time VA analyzed them. In addition, VA provided summary information from the WEAMS dataset as of March 23, 2015 on the number of facilities (employers or apprenticeship sponsors) that have been approved to provide OJT or apprenticeship training opportunities under the Post-9/11 GI Bill. VA also provided selected participant-level information from the LTS dataset that we analyzed to describe key demographic characteristics of the participant population, including average age and the percentage of participants by program type, gender, and branch of service. We also used this data source to identify occupations for which veterans frequently train while participating in the Post-9/11 OJT and apprenticeship programs.", "To provide information on what is known about the effectiveness of OJT services and Registered Apprenticeship programs in serving Post-9/11- era veterans, we reviewed available data sources from DOL, as VA does not have performance data on GI Bill OJT and apprenticeship programs. First, we examined a publicly-available performance data guide for the Workforce Investment Act Standardized Record Data (WIASRD) from program year 2012 to determine what data elements we would request for Post-9/11-era veteran participants in DOL’s OJT services. We then requested and analyzed DOL aggregate outcome data from the fourth quarter of program year 2013, which included program exiters from prior quarters of that year, on: 1) the rate at which participants enter employment during the first quarter after their OJT services; 2) the rate at which participants retain employment during the second and third quarters after their OJT services; 3) average quarterly earnings for participants during the quarter(s) before their OJT services; and 4) average quarterly earnings for participants across the second and third quarters after their OJT services. Per our request, these data were presented by veteran status and included outcomes for Post-9/11-era veterans specifically. In order to verify the reliability of the data, we interviewed data specialists at DOL and requested and evaluated supporting documentation regarding the data source. We determined that the data were sufficiently reliable for the purposes of this report.\nWe also reviewed available DOL data on the Registered Apprenticeship program in order to provide some information on the effectiveness of apprenticeships in serving Post-9/11-era veterans. Specifically, we examined the Registered Apprenticeship Partners Information Management Data System (RAPIDS), which contains Registered Apprenticeship participant information from states whose programs are administered by DOL’s Office of Apprenticeship within the Employment and Training Administration (ETA), as well as individual states that have agreed to report data nationally.\nThrough a data sharing agreement with participating states, DOL’s Office of Apprenticeship assesses outcome measures quarterly, according to DOL officials, using states’ Unemployment Insurance wage records. We analyzed the same aggregate performance data from RAPIDS as we requested data for OJT services from 2014, the most recent year from which DOL could provide data. However, DOL officials noted that Registered Apprenticeship outcomes data are not categorized by veteran status and do not include pre-program earnings. We also interviewed officials from the Office of Apprenticeship to verify data reliability and requested and evaluated supporting documentation regarding the data source. We determined that the data were sufficiently reliable for the purposes of this report.", "To learn about how selected veterans have used the Post-9/11 GI Bill OJT or apprenticeship programs and what challenges they may have faced, we conducted a web-based survey of veterans who have participated in these programs. We limited our in-scope population to those veterans for which VA was able to provide email addresses. Specifically, while VA provided detailed participant level information on 26,375 unique participating veterans, we drew our sample from the 12,011 veterans for which email addresses were provided. As a result, the results of this survey are not generalizable to the population of participating veterans. To generate the original sample, participants were selected in a probability sample stratified by gender. The sample size was calculated to allow us to produce generalizable estimates having 95 percent confidence intervals no larger than plus or minus 10 percent for the overall sample size of 200, assuming a response rate of 50 percent. Of this original sample of 200 participants, 20 participants were women and 180 were male or no gender identified. Due to lower than expected response rates, we decided to select an additional sample so that we could receive more responses, even though the results of the survey would not be generalizable. Specifically, the survey was sent to an additional sample of 5,000 participating veterans, 500 of whom were women and 4,500 of whom were male or no gender identified. Consequently, the survey’s final sample size was 5,200 participating veterans. Prior to fielding the survey, we conducted 4 pretests to ensure that the questions were clear, comprehensive, did not introduce bias, and were not burdensome to complete. We made minor revisions to the survey instrument based upon these pretests. We launched the web- based survey on June 11, 2015, and sent two follow-up emails to sampled veterans on June 17 and June 24, 2015. We made the web- based sample available to the additional 5,000 sampled veterans on July 9, 2015 and sent a follow-up email to all nonrespondents on July 15, 2015. We closed the survey on July 31, 2015. Overall, GAO received responses from 156 participating veterans—a 3 percent response rate.", "To learn to what extent selected veterans who have used Post-9/11 GI Bill benefits to pursue a non-college degree program, such as vocational school, but who have not participated in the apprenticeship or OJT programs, were aware of these programs, we conducted a web-based survey of such veterans. We limited our in-scope population to those veterans for which VA was able to provide email addresses. Specifically, while VA provided detailed participant level information on 145,525 unique veterans who had used their Post-9/11 GI Bill benefits for a non- college degree program, we drew our sample from the 70,695 veterans for whom email addresses were provided. To generate the original sample, 150 veterans who did not participate in OJT or apprenticeship were drawn from the population of veterans who had used their Post-9/11 GI Bill benefits for a non-college degree program and for which email addresses were available. We assumed a 20 percent response rate for this population. Due to lower than expected response rates, we decided to select an additional sample so that we could receive more responses, even though the results of the survey would not be generalizable. Specifically, the survey was sent to an additional sample of 5,000 non- participating veterans. Consequently, the survey’s final sample size was 5,150 veterans. Prior to fielding the survey, we conducted 2 pretests to ensure that the questions were clear, comprehensive, did not introduce bias, and were not burdensome to complete. We made minor revisions to the survey instrument based upon these pretests. We launched the web- based survey on June 10, 2015 and sent follow-up emails to sampled veterans on June 17 and June 24, 2015. We made the web-based sample available to the additional 5,000 sampled veterans on July 8, 2015 and sent a follow-up email to all non-respondents on July 16, 2015. We closed the survey on Aug. 3, 2015. Overall, we received responses from 127 non-participating veterans—a 2.5 percent response rate. Given the low response rate, the findings of this survey are not generalizable.", "To learn about how selected employers and apprenticeship sponsors have used the Post-9/11 GI Bill OJT or apprenticeship programs and what challenges they may have faced, we conducted a web-based survey of employers and apprenticeship sponsors who have participated in these programs. We limited our in scope population to those employers and apprenticeship sponsors for which VA was able to provide email addresses. Specifically, while VA provided detailed information on 5,099 unique participating employers and apprenticeship sponsors, we drew our sample from the 2,691 employers and apprenticeship sponsors for which email addresses were provided. To generate the original sample, 600 employers and apprenticeship sponsors were selected in a simple random sample. The sample size was calculated assuming a response rate of 5 percent, and included 7 employers and apprenticeship sponsors who had completed questionnaires during our site visit to North Carolina. Prior to fielding the survey, we conducted 3 pretests to ensure that the questions were clear, comprehensive, did not introduce bias, and were not burdensome to complete. We made minor revisions to the survey instrument based upon these pretests. We launched the web-based survey on June 11, 2015 and sent follow-up emails to sampled employers and apprenticeship sponsors on June 17 and July 9, 2015. GAO closed the survey on July 24, 2015. Overall, GAO received responses from 153 participating employers and apprenticeship sponsors—a 25 percent response rate. The findings of this survey are not generalizable.", "To learn about what states are doing to help veterans and employers use the Post-9/11 OJT and apprenticeship programs, as well as gain insight on veterans’ and employers’ use of these programs and challenges states faced, we emailed a MS Word questionnaire to SAA officials in the 44 states in which these officials oversee implementation of these programs. After developing our questionnaire, we conducted two pretests with state officials to ensure that the questions were clear, comprehensive, did not introduce bias, and were not burdensome to complete. We made minor revisions to the survey instrument based upon these pretests.\nThe survey included questions about methods of outreach to veterans and employers, assistance to employers, challenges to veteran and employer outreach and participation, and challenges with SAA implementation of the program. It also included questions about the value or interest in key improvements, such as automating the payment system.\nWe sent the survey by email in March and April 2015 using email addresses from the National Association of State Approving Agencies website. We followed-up with unresponsive states via email until we reached 100 percent participation in July 2015. Survey responses were collected using a Microsoft Word form and imported into Microsoft Excel for summary and analysis. In some cases a state official sent their response in another type of file, and we transposed responses into the Microsoft Word form and verified that the responses matched the state’s supplied answers. While we had survey responses for all 44 states, in several instances a state did not supply an answer for a single question. For summary and analysis performed on those questions we excluded those states from the denominator. All analyses of responses were reviewed and verified to be accurate.", "To learn about VA’s implementation of the OJT and apprenticeship programs under the Post-9/11 GI Bill, we reviewed relevant provisions of the Post-9/11 GI Bill and related regulations. We also reviewed the Plain Writing Act of 2010, a law related to the public dissemination of information on benefits. In addition, we reviewed VA’s Strategic Plan for 2014 to 2020 to understand greater agency objectives, and other federal best practice documents such as the Job Driven Checklist in the Vice President’s Ready to Work: Job-Driven Training and American Opportunity report, and Standards for Internal Control in the Federal Government.", "To understand VA and DOL outreach to veterans and employers, we analyzed key sources of information that are readily available regarding Post-9/11 OJT and apprenticeship programs. Specifically, we analyzed curriculum documents for VA’s mandatory Transition Assistance Program (TAP), as well as information publically available to veterans and employers on VA and DOL websites. To understand information presented in VA’s TAP program, we reviewed the facilitator’s and participant’s guides for the mandatory TAP courses called Veterans Benefits I and II, as well as a relevant optional training course called the Career Technical Training Track, and compared it to VA’s goals for TAP after the VOW to Hire Heroes Act of 2011 was implemented. We tallied the number of pages in the facilitator’s guides that mentioned OJT and apprenticeship as options under the Post-9/11 GI Bill. Similarly, we reviewed the online version of the Veterans Benefits I and II training to see if additional information about OJT and apprenticeship options was presented. We also reviewed relevant pages of VA and DOL websites. We reviewed and documented Post-9/11 GI Bill and related web pages using screen shots of each relevant page, and noted key portions of content. We assessed the information available from these sources to determine if a veteran or employer could reasonably understand these programs, as described in the Plain Writing Act of 2010 and Standards for Internal Control in the Federal Government. In both the TAP and website analyses, we reviewed included examples and exercises, visual symbols such as the Post-9/11 GI Bill logo, and the language used to describe Post-9/11 GI Bill benefits to determine how, if at all, OJT and apprenticeship options were included. For the website analyses we also looked to see how, if at all, the agencies created links to each other’s content and resources. The calculations and content analysis of the TAP and the website analyses were independently reviewed and verified by another GAO team member.", "To gain perspectives on how Post-9/11 GI Bill OJT and apprenticeship programs are serving veterans, we conducted interviews with a variety of federal and state officials. We spoke with officials at the VA and DOL concerning program administration, outreach efforts, performance measurement, and coordination of their respective OJT and apprenticeship programs. We also interviewed officials at DOD to better understand transition services that are available for service members upon exiting the military. For perspectives on Post-9/11 GI Bill program usage and outreach, we also interviewed State Approving Agency (SAA) officials from 13 states. We chose these 13 states in order to get a range in the number of active OJT and apprenticeship programs and geographic location. We also chose these states based on the institutional location of the SAAs, so as to gain greater perspective on program use and what, if any, challenges SAAs observe in administering the Post-9/11 GI Bill.\nWe also interviewed stakeholders and experts to learn how OJT and apprenticeship programs are used and, from these stakeholders’ perspective, how effectively they serve veterans. Specifically, we interviewed representatives from a variety of veteran service organizations (VSOs) that serve Post-9/11 veterans and were recommended by internal and external experts on veterans issues. Additionally, we spoke with workforce experts with job training expertise to understand what, if any, academic literature could shed light on the question of OJT and apprenticeship program effectiveness, though their views do not represent the entire research field. Subsequently, we reviewed a 2012 Mathematica Policy Research study, commissioned by DOL, which was cited by experts we interviewed. This study conducted a cost-benefit analysis that included an assessment of the net effects of the Registered Apprenticeship program on participant outcomes. As noted, we found the study to be generally reliable with some methodological limitations.", "Among our 13 case illustration states, we selected two—Missouri and North Carolina—for site visits because they have high numbers of Post- 9/11 GI Bill-approved OJT and apprenticeship programs, and different institutional settings for their SAAs. During these site visits, we interviewed SAA officials, OJT and apprenticeship employers and sponsors, veteran participants, and local workforce officials so that we could get a wide range of stakeholder perspectives of Post-9/11 GI Bill OJT and apprenticeship programs, though these perspectives do not necessarily reflect those of states more generally. We also observed training programs on site in such professions as communications technology maintenance and police work. For additional context, we also conducted interviews at two local site visits in the Washington, D.C. area that involved federal programs that were registered through the Post-9/11 GI Bill—the Department of State’s Bureau of Diplomatic Security OJT program and the Department of Defense’s Defense Logistics Agency Energy OJT program.", "", "", "", "In addition to the contact named above, individuals making key contributions to this report were Laura Heald, Assistant Director, Amy Buck, Devin Braun, Matthew Lowney, Rachel Pittenger, and Michelle Loutoo Wilson. In addition, key support was provided by James Bennett, Rachel Beers, Mindy Bowman, David Chrisinger, Michael Hoffman, Kathy Leslie, Sheila McCoy, Jean McSween, Sara Pelton, Almeta Spencer, Sonya Vartivarian, and Craig Winslow." ], "depth": [ 1, 2, 2, 3, 2, 2, 3, 2, 2, 1, 2, 2, 1, 2, 3, 3, 3, 2, 2, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "", "", "", "h0_title", "h0_full", "h0_full", "h1_title", "h1_full", "", "", "", "h1_full", "", "h0_title h2_title h4_title", "h0_full h4_full h2_full", "h2_full", "h3_title", "h3_full", "", "h3_full h1_full", "", "", "h4_full h2_title h0_title", "h4_full", "", "h0_full", "", "h2_full", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "To what extent have OJT and apprenticeship programs benefited veterans?", "How have the programs helped veterans offset the reduction in income they experienced leaving the military?", "To what extent has the program made GI Bill benefits more readily available?", "What is a contributing factor to the low rate of participation among veterans in the OJT and apprenticeship programs?", "How does the VA communicate information abbout the OJT and apprenticeship programs?", "Why are the VA's outreach efforts not beneficial for most veterans?", "In what ways do state officials conduct outreach for the OJT and apprenticeship programs?", "What are some challenges faced by veterans and employers using these programs?", "What is the main challenge preventing state officials from facilitating participation in the programs?", "How is the VA's paper-based payment processing system detrimental to the programs?", "Why might it take some time before these problems are resolved?", "Why is the effectiveness of VA's OJT and apprenticeship programs unclear?", "Despite this lack of information, how did GAO evaluate the efficacy of the training models?", "What measures are crucial for the VA to be able to assess its programs?", "Why are these measures crucial?", "What questions does this report attempt to answer?", "How did GAO collect data for this report?" ], "summary": [ "Veterans surveyed and interviewed by GAO said the on-the-job training (OJT) and apprenticeship programs offered under the Post-9/11 GI Bill—the largest education benefit program overseen by the Department of Veterans Affairs (VA)—have helped them transition to civilian life, though program data show relatively few veterans have participated.", "Many veterans GAO interviewed (21 of 28) said that the supplemental income the programs provided helped them offset income losses they experienced when leaving the military.", "About half of the veterans responding to GAO's survey (80 of 156) reported that the program allowed them to use their GI Bill benefits even though college was not a good fit for them.", "Post-9/11 GI Bill benefits were initially available only for higher education, but in 2011 provisions were enacted that expanded benefits to cover OJT and apprenticeship.", "VA primarily provides information about the OJT and apprenticeship programs through mandatory briefings for transitioning servicemembers and on its website.", "While VA's outreach efforts include some information on these programs, VA's mandatory briefings and web resources generally emphasize higher education and lack sufficient detail for veterans to reasonably understand how to use their GI Bill benefits for OJT and apprenticeships.", "State officials GAO surveyed reported conducting outreach in a variety of ways, such as attending job fairs and speaking to veterans groups.", "Key challenges faced by veterans and employers using these programs include lack of awareness and administrative burdens, according to state officials, veterans, and employers GAO surveyed.", "Most state officials surveyed (39 of 44) reported that lack of awareness about the programs is a primary challenge they face in facilitating veteran and employer participation.", "Further, over half of state officials surveyed (24 of 42) cited challenges related to VA's current paper-based payment processing system, which requires employers to fax or mail monthly forms to VA in order for a veteran to receive benefits. In addition, 11 of the 15 employers and apprenticeship sponsors GAO interviewed said the process is burdensome or inefficient, and 6 of the 28 veterans GAO interviewed said their benefits have sometimes been delayed.", "VA is developing a new data system, but it may not be implemented until 2017 at the earliest, according to VA officials, and administrative challenges in the interim could hinder program participation.", "Little is known about the performance of VA's Post-9/11 GI Bill OJT and apprenticeship programs because VA does not measure program outcomes, such as whether participants retain employment after completing the program.", "Absent such information, GAO examined Department of Labor (DOL) outcome data for its related OJT and apprenticeship programs, which indicate the potential for positive outcomes for these training models.", "Standards for internal control call for establishing and reviewing performance measures to allow an agency to evaluate relevant data and take appropriate actions.", "Without such measures, VA is limited in its ability to assess its programs.", "This report examines (1) how selected veterans and employers used the programs and how widely they have been used; (2) to what extent VA and states have taken steps to inform veterans and employers about these programs; (3) what challenges, if any, veterans and employers have faced in using them; and (4) to what extent VA has assessed the performance of its programs.", "GAO analyzed VA program data as of March 2015 and DOL program data from 2013 and 2014, and assessed outreach materials. GAO also surveyed officials in all 44 states overseeing VA's programs; conducted nongeneralizable surveys of randomly selected veterans and employers; and interviewed veterans and employers in two states selected for variation in veteran population and type of state agency." ], "parent_pair_index": [ -1, 0, 0, -1, -1, -1, -1, -1, 0, -1, 2, -1, 0, -1, 2, -1, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 5, 5, 5, 5, 1, 1 ] }

{ "title": [ "Background", "Assessments of National Data Largely Show Positive Effect of CHIP on Coverage and Access, and Identify Areas for Improvement", "Mandated Evaluation Highlights Reduction in the Rate of Uninsured Children and Improved Access to Health Care", "HHS Has Ongoing Efforts to Enhance State Reporting of Quality Measures and Identify Areas for Improvement to Care Provided in CHIP", "Cost, Coverage, and Access to Care Are Key Considerations in Determining the Reauthorization of CHIP Funding", "Agency Comments", "Appendix I: Uninsured Rates, State Children’s Health Insurance Program (CHIP) Characteristics, and Coverage Approaches", "Percentage of uninsured children in 2013", "Percentage of uninsured children in 2013", "State Texas", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "Federal law provides states with flexibility in how they operate their CHIP programs and how states implement more recent coverage options under PPACA. For example, states may operate CHIP as a separate program, include CHIP-eligible children in their Medicaid programs, or use a combination of the two approaches. States with separate CHIP programs may modify certain aspects of their programs, such as coverage and cost-sharing requirements.regulations require states’ separate CHIP programs to include coverage However, federal laws and for routine check-ups, immunizations, inpatient and outpatient hospital services, and dental services defined as “necessary to prevent disease and promote oral health, restore oral structures to health and function, and treat emergency conditions.” In addition, CHIP premiums and cost- sharing may not exceed maximum amounts as defined by law. Similarly, PPACA provides states with flexibility in how they opt to implement certain coverage options included in the law. For example, PPACA allows states to expand eligibility for Medicaid to most non-elderly, non-pregnant adults who are not eligible for Medicare and whose income is at or below 133 percent of the FPL. As of January 2015, 29 states have implemented this expansion. PPACA required the establishment of health insurance exchanges by January 1, 2014, to allow consumers to compare individual health insurance options available in each state and enroll in coverage. In states electing not to operate their own exchange, PPACA required the federal government to establish and operate an exchange in the state, referred to as a federally facilitated exchange. States with federally facilitated exchanges may enter into a partnership with HHS to assist with the operation of certain exchange functions. As such, a state could establish the exchange (referred to as a state-based exchange), cede the responsibility entirely to HHS (referred to as a federally facilitated exchange), or enter into a partnership with HHS (referred to as a partnership exchange). As of January 2015, 17 states established state-based exchanges, 27 states were using the federally facilitated exchange, and 7 states established partnership exchanges.See fig. 1 for information on the variation in children’s uninsured rates, CHIP characteristics, and coverage approaches under PPACA by state; and see appendix I for the information in tabular form.\nThe Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) included provisions aimed at improving the information available from states on the quality of health care furnished to children in both CHIP and Medicaid. Specifically, CHIPRA required the Secretary of HHS to conduct an independent evaluation of CHIP and to submit the results to Congress. The mandated evaluation, for which the final report was issued in August 2014, documents what is known about CHIP; explores the program’s evolution since inception; and examines the role CHIP has played in covering low-income children. In addition, CHIPRA required HHS to identify quality measures, known as the Child Core Set measures, to serve as a tool for states to use to monitor and improve the quality of health care provided to children enrolled in CHIP and Medicaid. CHIPRA also required HHS to develop a standardized format for states to voluntarily report these measures. These measures assess the quality of care provided through CHIP and Medicaid, and include a range of health conditions, such as asthma, obesity, attention deficit hyperactivity disorder, and perinatal care. (See table 1.)\nIn 2013, as required by CHIPRA, HHS began annually publishing recommended changes to the Child Core Set measures in an effort to improve upon the measures and align them with national quality measurement activities, which can result in changes to the number of measures. With the use of state reported data on the Child Core Set, HHS conducts an annual assessment and publishes its findings in its annual quality report, as required under CHIPRA. States report CHIP service utilization and other measures through systems developed by HHS; specifically, the CHIP Annual Reporting Template System (CARTS), a web-based data submission tool, and through the Form CMS-416, an annual report submitted by states on the Medicaid Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit provided for enrolled children. States that use managed care plans to deliver CHIP benefits are also required to report outcomes and performance measures from External Quality Review Organizations and performance improvement projects.\nIn February 2010, CMS awarded 10 grants—which funded 18 states to implement projects that include using quality measures to improve child health. CMS also provided funding to AHRQ to lead a national evaluation of these demonstrations, to be completed by September 30, 2015. electronic health records, and (5) assessing the utility of other innovative approaches to enhance quality.", "Available assessments of national data we reviewed identify positive effects of CHIP, including a reduction in the rate of uninsured children and children’s improved access to care, and these findings are often consistent with our prior work. HHS also has ongoing efforts to enhance state reporting of the Child Core Set measures and publishes data from these quality measures to identify areas for improving the care provided in CHIP.", "HHS’s mandated evaluation identified several positive effects of CHIP across states, particularly with regard to children who are uninsured. For example, based on an analysis of data from the Current Population Survey Annual Social and Economic Supplement (CPS-ASEC), the evaluation reported that Medicaid and CHIP contributed to the decline in the national rate of uninsured children between 1997 and 2012, with coverage rates improving for all ethnic and income groups.notably, coverage rates for Hispanic children increased dramatically, rising from 42 percent to 65 percent during this time. Changes to state CHIP programs also contributed to the decline in the national uninsured rates among children. For example, many states expanded CHIP coverage by raising upper income eligibility limits and covering newly eligible groups, such as immigrant children who have resided legally in the United States for less than 5 years, which was newly permitted under Most federal law. In addition, state outreach and enrollment activities also reduced the number of children eligible for—but not enrolled in—Medicaid or CHIP by about 1.2 million from 2008 to 2012.\nTo determine whether factors other than insurance coverage may affect differences in responses about obtaining care or utilization of health care services, the mandated evaluation controlled for age, sex, race/ethnicity and language groups, more than three children in the household, highest education of any parent, parents’ employment status, parent citizenship, and local area or county.\nCHIP enrollees were an estimated 38 percentage points more likely to have a usual source of dental care, and were an estimated 39 percentage points more likely to have had a dental check-up in the past year;\nCHIP enrollees were an estimated 25 percentage points more likely to have an annual well-child checkup visit, and were more likely to receive a range of health services, including mental health visits, specialty care, and prescription drugs;\nCHIP enrollees were more likely to receive most preventive care measures, including flu vaccinations, vision screenings, and height and weight measurements; and parents of CHIP enrollees were less likely to report having trouble paying their child’s medical bills, and were substantially more confident in their ability to get needed health care for their child.\nBased on our assessment of HHS’s Medical Expenditure Panel Survey from 2007 through 2010, we also found that children enrolled in CHIP have better access to care and service use than children who are uninsured. In particular, when compared with uninsured children, we found that CHIP enrollees fared better, and the differences we identified were statistically significant in most cases. For example, a higher proportion of CHIP respondents reported having a usual source of care; ease in getting a person the care, tests, or treatment that the parent or a doctor believed necessary; and ease in seeing a specialist; and using certain health care services, including office-based provider visits, outpatient department provider visits, and dental care visits.\nWhen the mandated evaluation compared CHIP enrollees with the privately-insured group, it also found that CHIP enrollees experienced comparable access and service use for many, but not all, measures, and that parents of children enrolled in CHIP experienced less financial burden in paying their children’s medical bills.\nCHIP enrollees used a similar level of preventive care and other health care services; however, CHIP enrollees had higher usage of prescription medication and lower levels of emergency department visits and hospital stays.\nCHIP enrollees had similar rates of health and development screenings, but were 9 percentage points less likely to receive a flu vaccination.\nCHIP enrollees had higher rates of dental access and utilization of certain services. For example, 92 percent of CHIP enrollees reported having access to dental coverage in 2012, compared with 77 percent of privately insured children. In terms of utilization, 84 percent of CHIP enrollees reported having a dental checkup or cleaning in the previous 12 months compared with 79 percent of privately insured children.\nParents of CHIP enrollees reported substantially less trouble paying their children’s medical bills and had much lower out-of-pocket spending levels.\nFor our assessment of the Medical Expenditure Panel Survey, we also compared CHIP enrollees’ access and service use with children who were privately-insured, and our findings were consistent with some of the findings in the mandated evaluation.\nWhen asked about access to care, we found that respondents with children enrolled in CHIP reported experiences that were generally comparable with privately insured children for 5 of the 6 measures reviewed, including having a usual source of care; ability to make needed appointments; and ease in seeing a specialist.\nRespondents’ reported ease in getting needed care was the only measure for which we identified a statistically significant difference.\nCHIP families faced a lower financial burden than families with private insurance because of the federal requirement that states’ CHIP programs may not impose premiums and cost-sharing that, in the aggregate, exceed 5 percent of a family’s total income for the length of the child’s eligibility period.\nHowever, with regard to the utilization of certain services, our prior work is less consistent with the findings of HHS’s mandated evaluation. For example, when asked about their use of certain medical and dental services, we found that access to care for CHIP enrollees was lower than that of the privately-insured for several services, and these differences were often statistically significant. Specifically, we previously reported that a lower proportion of CHIP enrollees reported visiting dentists (42.4 percent compared with 50.9 percent) and orthodontists (4.9 percent compared with 11.2 percent) within the past 12 months than did those who were privately insured; and a higher proportion of CHIP enrollees reported having an emergency room visit (14.1 percent compared with 10.4 percent).\nDifferences between our findings and those included in the national evaluation may be related to the timeframes of the data and the measures used. For example, some of the data used in our analyses predate the CHIPRA requirement that CHIP programs offer comprehensive dental benefits coverage beginning in 2009. The timeframes for both bodies of work also predate the implementation of the PPACA requirement that most individual and small group market health plans provide pediatric dental coverage.\nFinally, while the mandated evaluation noted that, overall, CHIP programs were meeting the health care needs of most enrollees, it identified areas for program improvement. Specifically, many CHIP enrollees did not receive recommended preventive care or reported an unmet health care need. For example, slightly less than half of CHIP enrollees received a flu vaccination, and only about one-third received a developmental screening for children under age 6. In addition, one in four CHIP enrollees had an unmet health care need, with the highest unmet need being for dental care.", "HHS publishes data that states report on the Child Core Set measures in its annual quality report. While reporting on the Child Core Set measures is voluntary for states, the number of states reporting these quality measures and the median number of measures each state reports has increased steadily since reporting of the measures began in 2010. For example, beginning in fiscal year 2012, all 51 states have reported at least two or more measures, a notable increase from the 43 states that reported at least one measure for fiscal year 2010. Similarly, the median number of Child Core Set measures that states report has increased from about 7 measures in fiscal year 2010 to 16 measures in fiscal year 2013. HHS attributed the rise in state reporting to increased familiarity with the Child Core Set measures and the department’s efforts to streamline state reporting and provide technical assistance and guidance to states. For example, CMS established a Quality Measures Technical Assistance and Analytic Support Program in May 2011, which works with states to support their efforts in collecting, reporting, and using quality measures for their CHIP and Medicaid programs.\nHowever, states varied considerably in the number of measures they reported in fiscal year 2013, ranging from 2 measures in Nebraska and Wisconsin to 25 measures in North Carolina and South Carolina. (See fig. 2.)\nSeveral factors can affect a state’s ability to report the Child Core Set measures. Officials from the states we reviewed provided the following examples of challenges they face reporting the Child Core Set measures.\nMississippi and Pennsylvania officials cited difficulty reporting certain measures, such as the extent of follow-up care for children prescribed medication for attention-deficit/hyperactivity disorder, due, in part, to their not having access to the data required to report the measure.\nArizona, New Hampshire, Nevada, and Wisconsin officials cited the difficulty and cost of reporting certain measures, in particular those measures that require medical record reviews as opposed to the reporting of measures that use only encounter data. For example, HHS suggests that medical record reviews be used to calculate a perinatal measure related to the performance of caesarean sections and none of these states reported this measure in fiscal year 2013.\nRhode Island officials noted that it can be difficult to collect data for measures that are not nationally endorsed—and as a result, they may not report them. For example, in fiscal year 2013, Rhode Island did not report the Child Core Set measure of a developmental screening in the first 3 years of a child’s life, which had not been endorsed by the National Committee for Quality Assurance, but developed by a university in Oregon.\nNoting that the state does not have a department dedicated to measuring quality, Alaska cited a lack of internal expertise needed to collect and report reliable data for the measures. As such, an official cited the need to leverage resources and work with other agencies within the state that have the expertise to analyze measures and set targets for quality improvement.\nIn light of difficulties cited by states in reporting on the Child Core Set measures, HHS reported ongoing efforts to assist states with reporting the measures. For example, to streamline state reporting, HHS began calculating three Child Core Set measures on behalf of states in fiscal year 2012. Specifically, HHS began calculating the preventive dental and dental treatment measures from the Form CMS-416. At this time, HHS also began using data available from the Centers for Disease Control and Prevention to calculate the neonatal central-line associated blood stream infection measure. In addition, HHS assists states by allowing states to report Child Core Set measures for the Medicaid population, CHIP population, or combined Medicaid and CHIP populations.\nAdditionally, HHS reported efforts to assist states in improving their reporting of the Child Core Set measures through the Quality Demonstration Grant Program. Through this program, HHS awarded 10 grants providing funding to 18 states to implement various projects to improve the information available on the quality of care provided to children enrolled in CHIP, including undertaking efforts to improve their reporting of the Child Core Set measures. For example, in one such project, Pennsylvania is testing the use of financial rewards to encourage certain health systems—which include hospitals, primary care practice sites, and other facilities—to use the Child Core Set measures to drive Pennsylvania also reported that it is quality improvement projects.recruiting health systems to determine the extent to which electronic health records can provide data for the Child Core Set measures for children.\nFrom the measures submitted by states, HHS reports states’ performance to assess the quality of care for children enrolled in CHIP and Medicaid, and the results of this assessment are mixed. HHS calculates mean rates for most of the Child Core Set measures—which it calls performance rates—including primary and preventive care, perinatal health, management of acute and chronic conditions, and dental services, among the states reporting those measures. Based on this assessment, HHS determined that states had high performance rates for some measures, such as young children’s access to primary care. For example, a mean of 96 percent of children aged 12 to 24 months enrolled in CHIP or Medicaid had at least one primary care physician visit during fiscal year 2013. In contrast, states had lower performance rates for other measures. For example, a mean of 46 percent of children received at least one preventive dental service, and a mean of 25 percent of children (See table 2.) received at least one dental treatment in fiscal year 2013.As such, HHS specified that children’s access to oral health care continues to be a primary focus of improvement efforts in CHIP and Medicaid.\nIn addition to HHS’s review of states’ reporting on the Child Core Set measures, the department’s annual quality report includes the results of its review of external quality review reports and performance improvement projects from states that contract with managed care plans to deliver services for CHIP and Medicaid enrollees. States are required to annually review their managed care plans to evaluate the quality, timeliness, and access to services that the plans provide to enrollees, and HHS must include this information in its annual quality report. For the most recent annual quality report, 40 of the 42 states that contract with managed care plans to deliver services to CHIP and Medicaid enrollees Based on its review of these submitted external quality review reports.reports, HHS found that the most frequently reported performance measures from states’ external quality reports—which included well-child care, primary care access, childhood immunization rates, and prenatal/postpartum care—mirrored states’ most frequently reported Child Core Set measures in fiscal year 2013. In terms of HHS’s review of states’ performance improvement projects, 38 of the 40 states that submitted external quality review reports included at least one project targeted to improve the quality of care for children and pregnant women enrolled in managed care; for example, by implementing projects related to behavioral health and improving childhood immunization rates for children, and prenatal and postpartum care for pregnant women.", "Our prior work has identified important considerations related to cost, coverage, and access when determining the ongoing need for CHIP, many of which were echoed by officials from the 10 states we reviewed. With regard to cost, our prior work comparing CHIP plans to states’ benchmark plans, which were the models for health plans available under health insurance exchanges established under PPACA, found that costs—defined as deductibles, copayments, coinsurance, and premiums—were almost always less for CHIP plans.\nCHIP plans we reviewed typically did not require the payment of deductibles, while all five states’ benchmark plans did.\nThe cost difference in copayments between CHIP plans and benchmark plans was considerable for physician visits, prescription drugs, and outpatient therapies. For example, an office visit to a specialist in Colorado would cost a CHIP enrollee $2 to $10 per visit, depending on their income, compared to $50 per visit for benchmark plan enrollees.\nFamilies could face higher dental costs in states where dental coverage through the exchange is optional and offered as a stand- alone dental plan (SADP) as opposed to CHIP plans where dental benefits are included.\nOfficials from five selected states also expressed concerns about the higher costs of QHP coverage and the implications this would have for families.\nSee GAO-14-40. The five states evaluated in our prior work were Colorado, Illinois, Kansas, New York, and Utah. These findings were subsequently discussed in a hearing before the Subcommittee on Health, Committee on Energy and Commerce, House of Representatives on December 3, 2014. See GAO, Children’s Health Insurance: Cost, Coverage, and Access Considerations for Extending Federal Funding. GAO-15-268T (Washington, D.C.: Dec. 3, 2014); We are currently examining how CHIP coverage and consumer costs compare to selected QHPs that were available on the exchanges in these five states in 2014.\nBased on a review of QHPs available on the state’s exchange in 2014, Nevada officials estimated that the average annual premium for a child in a family with an income of 168 percent of the FPL was more than two and a half times higher than the $200 premium for coverage in a CHIP plan. This price difference does not account for differences in co-pays, which the state does not charge under CHIP. The extent to which QHPs in the state apply co-pays to covered services could increase this price differential further. As such, Nevada officials were concerned that absent CHIP, families would not purchase QHP plans due to their higher cost.\nDue to the additional premiums and cost-sharing associated with SADPs, New Hampshire officials expressed concern that families will forego dental care if they must purchase a SADP. The officials noted that cost-sharing particularly affects families with incomes from 185 to 250 percent of the FPL, which is 75 percent of the state’s CHIP population.\nWe also previously reported that coverage is a relevant consideration, and that separate CHIP and benchmark plans were generally similar in terms of their coverage of selected services and the services on which they imposed limits, with some variation. For example, the plans we reviewed were similar in that they typically did not impose any limits on ambulatory patient services, emergency care, preventive care, or prescription drugs; but commonly imposed limits on outpatient therapies, and pediatric dental, vision, and hearing services. Officials from several selected states pointed out that CHIP coverage was more comprehensive than QHPs for certain services, particularly for services needed by children with special health care needs.\nAlaska and Pennsylvania officials noted that coverage of services— including orthodontics, vision, audiology, outpatient therapies, language disorders, and durable medical equipment—was more comprehensive in CHIP when compared with QHPs in their states.\nRhode Island officials highlighted the state’s coverage of comprehensive pediatric dental services and any medically necessary services deemed warranted as a result of the EPSDT benefit to which all CHIP-eligible children in the state are entitled. According to the state officials, these same services are either unavailable or unaffordable through QHPs in the state.\nArizona officials specified that coverage of certain enabling services, such as non-emergency medical transportation, family support services, and behavioral health services are included in the state’s CHIP plan, but may not be offered in QHPs.\nWith regard to access, our work found that CHIP enrollees generally reported positive responses in their ability to obtain care that was generally comparable to those with private insurance, with some exceptions, including lower utilization of dental and orthodontia services. Some of the states we reviewed also raised concerns related to access to care if CHIP funding is not reauthorized. For example, Nevada officials raised concerns about the ability of certain populations—specifically, children of undocumented parents—to access care if CHIP is no longer available. Nevada officials stated that these children could lose CHIP coverage since a significant portion of them have parents who may not file federal income tax returns that would expose them to tax penalties for failing to enroll their children in alternative health coverage. In addition, an Alaska official noted the need for further work on the comparability of benefits between QHPs and CHIP to ensure that the former could be an adequate substitute, and that children moving to QHPs would not experience decreased access to health care. The official noted that comparability across benefit packages is particularly important for children in households whose income changes would result in movement between CHIP and QHPs.", "We provided a draft of this report to HHS for comment. The department provided technical comments, which we incorporated as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from its date. At that time, we will send copies to the Secretary of Health and Human Services. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact me at (202) 512-7114 or [email protected]. 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.", "", "Act (PPACA)", "Act (PPACA)", "Act (PPACA)\nAs of February 2015, 42 states operated separate CHIP programs (2 states had a separate CHIP program only, and 40 states covered CHIP children through both a separate program and an expansion of their Medicaid program). The other 9 states covered CHIP children through an expansion of their Medicaid program, which we refer to as a “CHIP Medicaid expansion.” Minnesota and New Mexico have CHIP income eligibility levels that vary by age group; therefore, we reported the highest income eligibility level reported for these states—which are ages 0 to 1 year in Minnesota and ages 0 to 5 years in New Mexico. These state-based marketplaces use the federally facilitated marketplace’s information technology platform for applicants to apply and enroll in their respective states.", "", "", "In addition to the contact named above, Susan T. Anthony, Assistant Director; Sandra George; Seta Hovagimian; Drew Long; JoAnn Martinez-Shriver; Vikki Porter; Lisa Rogers; Eden Savino; Laurie F. Thurber; and Kate Tussey made key contributions to this report.", "Health Care Transparency: Actions Needed to Improve Cost and Quality. GAO-15-11. Washington, D.C.: October 20, 2014.\nChildren’s Health Insurance: Cost, Coverage, and Access Considerations for Extending Federal Funding. GAO-15-268T. Washington, D.C.: December 3, 2014.\nChildren’s Health Insurance: Information on Coverage of Services, Costs to Consumers, and Access to Care in CHIP and Other Sources of Insurance. GAO-14-40. Washington, D.C.: November 21, 2013.\nChildren’s Health Insurance: Opportunities Exist for Improved Access to Affordable Insurance. GAO-12-648. Washington, D.C.: June 22, 2012.\nMedicaid and CHIP: Most Physicians Serve Covered Children but Have Difficulty Referring Them for Specialty Care. GAO-11-624. Washington, D.C.: June 30, 2011.\nMedicaid and CHIP: Given the Association between Parent and Child Insurance Status, New Expansions May Benefit Families. GAO-11-264. Washington, D.C.: February 4, 2011.\nState Children’s Health Insurance Program: CMS Should Improve Efforts to Assess whether SCHIP Is Substituting for Private Insurance. GAO-09-252. Washington, D.C.: February 20, 2009.\nHealth Insurance For Children: Private Insurance Coverage Continues to Deteriorate. GAO/HEHS-96-129. Washington, D.C.: June 17, 1996." ], "depth": [ 1, 1, 2, 2, 1, 1, 1, 2, 2, 2, 1, 2, 2, 1 ], "alignment": [ "h1_full", "h0_title h2_full h1_title", "h0_full", "h1_full", "h2_full", "h2_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What are some advantages that CHIP enrollees have over uninsured and privately insured children?", "How are the findings of the mandated evaluation of CHIP supported by previous studies?", "How did the findings of the mandated evaluation differ from prior GAO work?", "What could have caused this difference?", "How do the Child Core Set measures reported by states show mixed results regarding service utilization among CHIP and Medicaid enrollees?", "What does the HHS use these data for?", "How did the utilization of dental services by children compare to that of primary care services in the fiscal year 2013?", "How did GAO assess the effect of CHIP?", "How did GAO identify key issues that the Congress may wish to consider?", "How were the states in which to interview CHIP officials selected?" ], "summary": [ "A mandated evaluation of CHIP published in 2014 noted that CHIP enrollees (1) had substantially better access to care, service use, and preventive care when compared with uninsured children; and (2) experienced comparable access and service use when compared with privately insured children.", "These findings are generally consistent with prior GAO work, which used national survey data to compare CHIP enrollees' access and service use with children who were uninsured or privately insured.", "When comparing CHIP enrollees with privately insured children, the mandated evaluation and prior GAO work differed regarding the utilization of certain services, such as emergency room use and dental services, which may be due to differences in when the data were collected and the particular measures that were used.", "When comparing CHIP enrollees with privately insured children, the mandated evaluation and prior GAO work differed regarding the utilization of certain services, such as emergency room use and dental services, which may be due to differences in when the data were collected and the particular measures that were used.", "These Child Core Set measures show mixed results regarding service utilization among CHIP and Medicaid enrollees. For example, states reported that nearly all children aged 12 to 24 months enrolled in CHIP or Medicaid had at least one primary care physician visit during fiscal year 2013. However, states reported that far fewer children obtained dental prevention or treatment services, with a mean of 46 percent of children receiving a preventive dental service, and a mean of 25 percent receiving dental treatment services.", "HHS officials said that they use these data to help identify areas for improvement in the care provided in CHIP and Medicaid.", "For example, states reported that nearly all children aged 12 to 24 months enrolled in CHIP or Medicaid had at least one primary care physician visit during fiscal year 2013. However, states reported that far fewer children obtained dental prevention or treatment services, with a mean of 46 percent of children receiving a preventive dental service, and a mean of 25 percent receiving dental treatment services.", "For the assessments of CHIP's effect, GAO reviewed reports on CHIP, including a mandated evaluation and annual HHS reports on quality, which publish data that states report on Child Core Set measures, which are quality measures identified by HHS that states can use to monitor health care provided to children in CHIP and Medicaid.", "To identify key issues that the Congress may wish to consider, GAO reviewed its own relevant reports and testimony; reviewed letters from state governors regarding CHIP; and interviewed CHIP officials in 10 states, which were selected based on variation in location, program size, and design.", "To identify key issues that the Congress may wish to consider, GAO reviewed its own relevant reports and testimony; reviewed letters from state governors regarding CHIP; and interviewed CHIP officials in 10 states, which were selected based on variation in location, program size, and design." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, -1, -1, -1, 1 ], "summary_paragraph_index": [ 5, 5, 5, 5, 6, 6, 6, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "The Current Process: Criminal Contempt and Civil Enforcement of Subpoenas", "Criminal Contempt of Congress", "Civil Enforcement of Subpoenas", "The Current Process in Use", "The Burford Contempt", "The Miers and Bolten Contempts", "The Holder Contempt", "The Lerner Contempt", "Implications of Recent Practice", "The Historical Process: Inherent Contempt", "Subpoena-Enforcement Frameworks and Their Attendant Constitutional Concerns", "Potentially Applicable Separation-of-Powers Principles", "Congressional Exercise of Executive or Judicial Powers", "Executive Privilege", "Bicameralism and Presentment", "Current Framework", "Alternative Subpoenas Enforcement Frameworks", "Establish Expedited Civil Enforcement in the Courts", "Return to the Inherent Contempt Power", "Inherent Contempt and Executive Privilege", "Inherent Contempt and the Power to Fine: An Alternative to Detention", "Provide for the Appointment of an Independent Official to Enforce Violations of the Criminal Contempt of Congress Statute", "Contingent Contempt Legislation", "Conclusion" ], "paragraphs": [ "", "Through its investigative powers, Congress gathers information it considers necessary to oversee the implementation of existing laws or to evaluate whether new laws are necessary. This \"power of inquiry\" is essential to the legislative function and derives directly, though implicitly, from the Constitution's vesting of legislative power in the Congress.\nThe information that Congress seeks, whether to inform itself for lawmaking purposes or to conduct oversight, often lies in the executive branch's possession. And while executive branch officials comply with most congressional requests for information, \"experience has taught that mere requests\" can sometimes be \"unavailing,\" and that \"information which is volunteered is not always accurate or complete . . . .\" The Supreme Court has therefore determined that \"some means of compulsion [is] essential\" for Congress \"to obtain what is needed.\" When Congress finds an inquiry blocked by the withholding of information, or where the traditional process of negotiation and accommodation is considered inappropriate or unavailing, a subpoena—either for testimony or documents—may be used to compel compliance with congressional demands. An individual—whether a member of the public or an executive branch official—has a legal obligation to comply with a duly issued and valid congressional subpoena, unless a valid and overriding privilege or other legal justification permits non-compliance. The subpoena, however, is only as effective as the means by which it is potentially enforced. Without a process by which Congress can coerce compliance or deter non-compliance, the subpoena would be reduced to a formalized request rather than a constitutionally based demand for information.\nCongress currently employs an ad hoc combination of methods to combat non-compliance with subpoenas. The two predominant methods rely on the authority and participation of another branch of government. First, the criminal contempt statute permits a single house of Congress to certify a contempt citation to the executive branch for the criminal prosecution of an individual who has willfully refused to comply with a committee subpoena. Once the contempt citation is received, any later prosecution lies within the control of the executive branch. Second, Congress may try to enforce a subpoena by seeking a civil judgment declaring that the recipient is legally obligated to comply. This process of civil enforcement relies on the help of the courts to enforce congressional demands.\nCongress has only rarely resorted to either criminal contempt or civil enforcement to combat non-compliance with subpoenas. In most circumstances involving the executive branch, committees can obtain the information they seek through voluntary requests or after issuing (but not yet seeking enforcement of) a subpoena. Even where the executive branch is initially reluctant to provide information, Congress can use the application of various forms of legislative leverage, along with an informal political process of negotiation and accommodation, to obtain what it needs. Congress exercises substantial power over the executive branch by controlling agency authority, funding, and, in the case of the Senate, confirmation of executive officers. The use or threatened use of these powers in a way that would impose burdens on an agency can encourage compliance with subpoenas (or make it more likely that requested information will be provided without need to issue a subpoena) and solidify Congress's position when trying to negotiate a compromise during an investigative dispute with the executive branch.\nBut legislative leverage and the subpoena enforcement mechanisms do not always ensure congressional access to requested information, particularly from the executive branch. Recent controversies could be interpreted to suggest that the existing mechanisms are at times inadequate—at least in the relatively rare instance that enforcement is necessary to respond to a current or former executive branch official who has refused to comply with a subpoena.\nFour times since 2008, the House of Representatives has held an executive branch official (or former official) in criminal contempt of Congress for denying a committee information subpoenaed during an ongoing investigation. In each instance the executive branch determined not to bring the matter before a grand jury. In three of the four instances, the House also looked to the federal courts for civil enforcement of the outstanding subpoena. The committees involved eventually obtained much of the information sought through those lawsuits, but only after prolonged litigation, and, in one of the cases, only after a judicial decision that could be viewed as potentially hindering Congress's access to executive branch information in the future.\nThe House's decision to resort to criminal contempt of Congress and civil enforcement in these cases was not without controversy, as in each instance the executive official asserted that a constitutional privilege limited Congress's right to the information sought. This report will not address whether the officials in each case invoked a valid privilege or whether the privilege asserted was adequate to justify withholding information from Congress. Nor will this report address whether, under the circumstances, it was appropriate for Congress to exercise its contempt power. Rather, this report will examine the legal enforcement of congressional subpoenas in a contemporary and historical context and discuss legal issues associated with alternative subpoena-enforcement frameworks that Congress may consider to obtain information from the executive branch.", "Besides leveraging its general legislative powers, Congress currently relies on two formal legal mechanisms to enforce subpoenas: criminal contempt of Congress and civil enforcement of subpoenas in the federal courts.", "The criminal contempt of Congress statute, enacted in 1857 and only slightly modified since, makes the failure to comply with a duly issued congressional subpoena a criminal offense. The statute, now codified under 2 U.S.C. § 192, provides that any person who \"willfully\" fails to comply with a properly issued committee subpoena for testimony or documents is guilty of a misdemeanor, punishable by a substantial fine and imprisonment for up to one year.\nThe criminal contempt statute outlines the process by which the House or Senate may refer the non-compliant witness to the Department of Justice (DOJ) for criminal prosecution. Under 2 U.S.C. § 194, once a committee reports the failure to comply with a subpoena to its parent body, the President of the Senate or the Speaker of the House is directed to \"certify[] the statement of facts . . . to the appropriate United States attorney, whose duty it shall be to bring the matter before the grand jury for its action.\" The statute does not expressly require approval of the contempt citation by the committee's parent body, but both congressional practice and judicial decisions suggest that approval may be necessary. Although approval of a criminal contempt citation under § 194 appears to impose a mandatory duty on the U.S. Attorney to submit the violation to a grand jury, the executive branch has repeatedly asserted that it retains the discretion to determine whether to do so.\nA successful contempt prosecution may lead to criminal punishment of the witness in the form of incarceration, a fine, or both. Because the criminal contempt statute is punitive, its use is mainly as a deterrent. In other words, while the threat of criminal contempt can be used as leverage to encourage compliance with a specific request, a conviction does not necessarily lead to release of the information to Congress.", "Congress may also choose to enforce a subpoena through a civil suit in the federal courts by a process known as civil enforcement. Under this process, either house of Congress may unilaterally authorize one of its committees or another legislative entity to file a suit in federal district court seeking a court order declaring that the subpoena recipient is legally required to comply with the demand for information. In the past, this authorization has been provided through a simple House or Senate resolution.\nFederal law provides the jurisdictional basis for the Senate's exercise of its civil enforcement power. Under 28 U.S.C. § 1365, the U.S. District Court for the District of Columbia (D.C. District Court) has jurisdiction \"over any civil action brought by the Senate or committee or subcommittee of the Senate to enforce . . . any subpoena.\" The law, however, makes clear that the grant of jurisdiction \"shall not apply\" to an action to enforce a subpoena issued to an executive branch official acting in his or her official capacity who has asserted a \"governmental privilege.\" Yet at least one district court has suggested that the limitation found within § 1365 does not necessarily bar the courts from exercising jurisdiction over Senate claims to enforce a subpoena against an executive official under other jurisdictional provisions.\nThe House has no corresponding statutory framework for beginning a civil enforcement lawsuit, but still retains the authority to seek assistance from the courts. Recent practice, approved by the D.C. District Court, suggests that the House may authorize a committee or other entity to file a civil claim in federal court to enforce a subpoena on behalf of the body. This process has been used on various occasions to bring civil enforcement lawsuits against an executive branch official.\nAs opposed to criminal contempt, a successful civil enforcement suit generally has the benefit of securing compliance with the congressional subpoena—meaning the committee may obtain the information it seeks. If the court orders compliance with the subpoena and disclosure of the information, generally after finding both that the subpoena is valid and that the individual has not invoked an adequate privilege justifying non-compliance, continued defiance may lead to contempt of court as opposed to contempt of Congress.", "Modern congressional disputes with the executive branch over access to information provide insight into the functioning of both the criminal contempt of Congress and civil enforcement processes.", "In 1982, a pair of House committees issued subpoenas to Environmental Protection Agency (EPA) Administrator Anne Burford for litigation documents relating to EPA's enforcement of the federal \"Superfund\" law. At the direction of President Ronald Reagan, Administrator Burford refused to disclose the files on the ground that they were protected by executive privilege. In response, the House approved a criminal contempt citation under 2 U.S.C. § 192 and § 194 for Burford's failure to comply with the committee subpoenas.\nShortly after passage of the contempt resolution, and before the Speaker delivered the citation to the U.S. Attorney, the DOJ filed a lawsuit asking a federal court to declare that Administrator Burford had acted appropriately in withholding the litigation documents. The lawsuit was ultimately dismissed, with the court determining that judicial intervention in such executive-legislative disputes \"should be delayed until all possibilities for settlement have been exhausted.\" That point, the court reasoned, would not occur until Administrator Burford was prosecuted for criminal contempt of Congress. The U.S. Attorney subsequently refused to present the criminal contempt to a grand jury, asserting that despite the apparently mandatory language of 2 U.S.C. § 194, the statute left him with discretion to withhold the citation. Two separate compromises were ultimately reached in which both congressional committees were provided access to the subpoenaed documents, at least partly in exchange for proposing a resolution effectively withdrawing the contempt citation.\nShortly thereafter, the DOJ Office of Legal Counsel (OLC), which acts as a legal adviser to the President and the executive branch, released an opinion articulating the legal reasoning underlying the Administration's decision not to pursue a contempt prosecution against Administrator Burford. Based on both statutory interpretation and the constitutional separation of powers, the OLC concluded that (1) Congress \"may not direct the Executive to prosecute a particular individual without leaving any discretion to the Executive to determine whether a violation of the law has occurred,\" and (2) \"the contempt of Congress statute was not intended to apply and could not constitutionally be applied to an Executive Branch official who asserts the President's claim of executive privilege . . . .\" Specifically, the opinion asserted that interpreting 2 U.S.C. § 194 as requiring the executive branch to bring a criminal contempt prosecution under these circumstances would \"burden\" and \"nullif[y]\" the President's exercise of executive privilege, and impermissibly interfere with the \"prosecutorial discretion of the Executive by directing the executive branch to prosecute particular individuals.\"", "In 2007, former White House Counsel Harriet Miers and White House Chief of Staff Joshua Bolten failed to comply with subpoenas issued by the House Judiciary Committee for testimony and documents relating to the dismissal of various United States Attorneys during the George W. Bush Administration. The President asserted executive privilege in each case, asserting that the subpoenaed testimony and documents involved protected White House communications. Both Miers and Bolten relied on the President's determination as justification for non-compliance with the committee subpoenas. After failed negotiations, the House held both individuals in criminal contempt of Congress and—presumably in response to the position taken by the DOJ in the Burford contempt—simultaneously approved a separate resolution authorizing the Judiciary Committee to initiate a civil lawsuit in federal court to enforce the subpoenas. After receiving the criminal contempt citation, the Attorney General informed the Speaker that the DOJ would exercise its discretion and not take any action to prosecute Mr. Bolten or Ms. Miers for criminal contempt of Congress. The DOJ's position, as in the Burford contempt, was that requiring such a prosecution would inhibit the President's ability to assert executive privilege and infringe on the DOJ's prosecutorial discretion. Shortly thereafter, the House Judiciary Committee filed suit, asking the federal court to direct compliance with the subpoenas.\nIn Committee on the Judiciary v Miers , the D.C. District Court rejected the Administration's main argument that a senior presidential adviser asserting executive privilege at the direction of the President is immune from being compelled to testify before Congress. The court described the asserted immunity as \"entirely unsupported by existing case law\" and instead held that Ms. Miers had to appear, but was free to assert executive privilege \"in response to any specific questions posed by the Committee. \" Thus, Ms. Miers could still assert the protections of executive privilege during her testimony depending on the substance of any individual question asked by a Member of the Committee. As for Mr. Bolten, the court directed that the executive branch produce a \"detailed list and description of the nature and scope of the documents it seeks to withhold on the basis of executive privilege\" to allow the court to resolve those claims. The district court decision was appealed. Almost two years after the first subpoena was issued, with the appeal pending before the U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit) and a newly elected Congress and President in office, the parties reached a settlement and the case was dismissed. Under that settlement, most of the requested documents were provided to the Committee and Ms. Miers would testify, under oath, in a closed but transcribed hearing.", "In 2012, Attorney General Eric Holder failed to comply with a House Oversight and Government Reform Committee subpoena seeking documents relating to misleading communications made by the DOJ in response to the committee's ongoing investigation into operation Fast and Furious—a Bureau of Alcohol, Tobacco, Firearms, and Explosives operation in which firearms were permitted to be \"walked,\" or trafficked, to gunrunners and other criminals in Mexico. Like the previous controversies, the President asserted executive privilege over the pertinent documents and directed the Attorney General not to comply with the subpoena. Procedurally, the Holder controversy mirrored that of Miers and Bolten. The House held the Attorney General in criminal contempt of Congress and simultaneously passed a resolution authorizing the committee to enforce the subpoena in federal court. The DOJ shortly thereafter informed the Speaker that it would not take any action on the criminal contempt citation, again citing congressional encroachments on executive privilege and prosecutorial discretion. The committee responded by filing a lawsuit, authorized by House resolution, seeking judicial enforcement of the subpoena.\nThe D.C. District Court held that it had jurisdiction to hear the dispute in 2013 and denied the committee's motion for summary judgment in 2014. But it was not until 2016—in a new Congress and after Attorney General Holder had left his position—that the D.C. District Court issued an opinion in Committee on Oversight and Government Reform v. Lynch instructing the new Attorney General to comply with the subpoena. The court rejected the DOJ's argument that the deliberative process privilege—a prong of executive privilege that protects pre-decisional and deliberative agency communications—justified withholding the subpoenaed documents in the case. In \"balancing the competing interests\" at stake, the court held that the asserted privilege must yield to Congress's \"legitimate need\" for the documents.\nDespite the committee's victory, two aspects of the court's reasoning may affect Congress's ability to obtain similar documents from the executive branch. First, in denying the committee's earlier motion for summary judgment, the court rejected the argument that the deliberative process privilege can never justify withholding documents in the face of a congressional subpoena. While a previous D.C. Circuit decision had suggested that the deliberative process privilege is a \"common law\" privilege, typically subject to override by legislative action, the district court determined that \"there is an important constitutional dimension to the deliberative process aspect of the executive privilege.\" Although the scope of the deliberative process privilege remains unsettled, by explicitly concluding that it has some degree of constitutional foundation the court's decision might have strengthened the privilege in certain contexts, especially for its use in response to a congressional subpoena.\nSecond, in ordering disclosure of the subpoenaed material, the court emphasized that the substance of the DOJ's internal deliberations had been publicly disclosed as part of a DOJ Inspector General investigation and report. Thus, in considering the DOJ's interests, the court noted that the agency would suffer only \"incremental harm\" from disclosing the documents to the committee. This suggests that in a scenario where deliberative process privilege documents have not been disclosed, a court may give more weight than the Lynch court to the agency's interest in protecting the confidentiality of its communications.\nAlthough the committee won the case, it still appealed the decision to the D.C. Circuit out of concern for the reasoning applied. As with Miers , the litigation has spanned different Congresses and different presidential Administrations. The case is being held in abeyance pending a potential settlement between the committee and the Trump Administration. Although the parties reportedly reached a negotiated settlement in March 2018, that settlement was contingent upon the vacation of two specific orders issued by the district court earlier in the case. In October 2018, the district court declined to vacate those decisions, leaving the fate of the negotiated settlement uncertain.", "Finally, in 2013, former Internal Revenue Service (IRS) official Lois Lerner appeared before the House Oversight and Government Reform Committee for a hearing on allegations that the IRS had given increased scrutiny to conservative political groups applying for tax-exempt status. After Ms. Lerner provided an opening statement denying any wrongdoing, she invoked her Fifth Amendment privilege against self-incrimination, and refused to respond to questions from committee members. After further deliberation, the committee ruled that she had waived her Fifth Amendment privilege by making an opening statement proclaiming her innocence. About 10 months later, the committee recalled her to provide testimony and she again asserted her Fifth Amendment privilege. Ultimately, the House adopted a resolution citing Ms. Lerner for criminal contempt of Congress, but did not choose to approve a resolution authorizing the committee to pursue civil enforcement of the subpoena in federal court, as had been done in 2008 with Ms. Miers and 2012 with Attorney General Holder. The U.S. Attorney for the District of Columbia later informed the Speaker that Ms. Lerner's actions did not warrant a prosecution for criminal contempt, as he had determined that she had not waived her Fifth Amendment rights. This decision was notable in that unlike the Burford, Miers, Bolten, and Holder scenarios, Ms. Lerner was relying on a personal privilege rather than the President's assertion of executive privilege as justification for her non-compliance.", "A pair of observations may be gleaned from the above events. First, efforts to punish an executive branch official for non-compliance with a committee subpoena through the criminal contempt of Congress statute will likely prove unavailing in certain circumstances. For example, when the President directs or endorses the non-compliance of the official, such as when the official refuses to disclose information pursuant to the President's decision that the information is protected by executive privilege, past practice suggests that the DOJ is unlikely to pursue a prosecution for criminal contempt. As a result, it would appear arguable that there is not currently a credible threat of prosecution for violating 2 U.S.C. § 192 when an executive branch official refuses to comply with a congressional subpoena at the direction of the President.\nEven when the official is not acting at the clear direction of the President, as in the Lerner controversy, the executive branch has contended that it retains the authority to make an independent assessment of whether the official (or former official) has in fact violated the criminal contempt statute. If the executive branch determines either that the statute has not been violated or that a defense is available that would bar the prosecution, then it may—in an exercise of discretion—leave a congressional citation unenforced. The criminal contempt statute, therefore, may have limited utility as a deterrent to non-compliance with congressional subpoenas by executive branch officials faced with similar circumstances.\nSecond, seeking enforcement of congressional subpoenas in the courts, even when successful, may lead to significant delays in Congress obtaining the sought-after information. This shortcoming was apparent in Miers and the Fast and Furious litigation. Miers , which never reached a decision on the merits by the D.C. Circuit, was dismissed at the request of the parties after about 19 months. Similarly, the Fast and Furious litigation, which remains pending on appeal before the D.C. Circuit, was filed more than six years ago. The passage of time, together with the intervening congressional and presidential elections in each case, could be said to have diminished both the value of the disclosure and the committee's ability to engage in effective, timely oversight.\nRelying on civil enforcement also involves the risk to Congress that the court will reach a decision that will make it harder for committees to obtain information in the future. For example, while the Miers decision rejected absolute immunity for senior presidential advisers and may have removed a barrier to Congress's access to such testimony in the future, the district court opinions in the Fast and Furious litigation may have more limiting effect on congressional efforts to access testimony by certain executive branch officials, because the court recognized that the deliberative process privilege has constitutional roots and must be balanced against Congress's need for the information.", "Historically, the House and Senate relied on their own institutional power to not only enforce congressional subpoenas, but also to respond to other actions that either house viewed as obstructing their legislative processes or prerogatives. Indeed, the criminal contempt statute was not enacted until 1857, and the courts do not appear to have entertained a civil action to enforce a congressional subpoena against an executive official until the Watergate era. For much of American history the House and Senate instead used what is known as the inherent contempt power to enforce their investigative powers.\nThe inherent contempt power is a constitutionally based authority given to each house to unilaterally arrest and detain an individual found to be \"obstruct[ing] the performance of the duties of the legislature.\" The power is therefore broader in scope than the criminal contempt statute in that it may be used not only to combat subpoena non-compliance, but also in response to other actions that could be viewed as \"obstructing\" or threatening either house's exercise of its legislative powers.\nIn practice, the inherent contempt power has been exercised using a multi-step process. Upon adopting a House or Senate resolution authorizing the execution of an arrest warrant by that chamber's Sergeant-at-Arms, the individual alleged to have engaged in contemptuous conduct is taken into custody and brought before the House or Senate. A hearing or \"trial\" follows in which allegations are heard and defenses raised. Although generally occurring before the full body, it would appear likely that the contempt hearing could also permissibly take place before a congressional committee who reports its findings to the whole House or Senate. If judged guilty, the House or Senate may then direct that the witness be detained or imprisoned until the obstruction to the exercise of legislative power is removed. Although the purpose of the detention may vary, for subpoena non-compliance the use of the power has generally not been punitive. Rather, the goal is to detain the witness until he or she discloses the information sought, but not beyond the end of the Congress.\nDespite its title, \"inherent\" contempt is more accurately characterized as an implied constitutional power. The Supreme Court has repeatedly held that although the contempt power is not specifically granted by the Constitution, it is still \"an essential and appropriate auxiliary to the legislative function,\" and thus implied from the general vesting of legislative powers in Congress. The Court has viewed the power as one rooted in self-preservation, concluding that the \"power to legislate\" includes an \"implied right of Congress to preserve itself\" by dealing \"with direct obstructions to its legislative duties\" through contempt.\nThe Court has also suggested that Congress may effectuate this implied power through the Necessary and Proper Clause, which authorizes Congress to \"make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers . . . .\" The 1857 criminal contempt provision, for example, has been viewed as \"an act necessary and proper for carrying into execution the powers vested in . . . each House.\" To that end, it seems understood that the criminal contempt statute was intended to supplement each house's inherent contempt power, rather than to replace it. The Supreme Court has specifically articulated this view and, in fact, gone further to suggest that \"Congress could not divest itself, or either of its Houses, of the essential and inherent power to punish for contempt.\" Historical practice also supports this conclusion, as Congress continued to use the inherent contempt power after enactment of the criminal contempt statute.\nAs applied to subpoena enforcement, the Supreme Court has affirmed the existence of each house's constitutionally based authority to arrest and detain individuals for refusing to comply with congressional demands for information. The 1927 case of McGrain v. Daugherty may be viewed as the high-water mark of the judiciary's recognition of this power. McGrain arose from a Senate investigation into the alleged failure of the Attorney General to prosecute federal antitrust violations associated with the Teapot Dome Scandal. As part of that investigation, a subpoena was issued to Mallie Daugherty, the brother of the Attorney General and president of an Ohio bank, for relevant testimony. When Daugherty refused to comply, the Senate exercised its inherent contempt power and ordered its Sergeant-at-Arms to take Mr. Daugherty into custody. Once arrested, Daugherty filed a writ of habeas corpus with the local district court, which, upon review, held the House's action unlawful and directed that Daugherty be discharged from the Sergeant-at-Arm's custody. The Supreme Court reversed and upheld the House's authority to arrest and detain a witness in order to obtain information for legislative purposes—noting that \"[t]he power of inquiry—with process to enforce it—is an essential and appropriate auxiliary to the legislative function.\" In an oft-quoted passage, the Court declared:\nA legislative body cannot legislate wisely or effectively in the absence of information respecting the conditions which the legislation is intended to affect or change; and where the legislative body does not itself possess the requisite information—which not infrequently is true—recourse must be had to others who do possess it. Experience has taught that mere requests for such information often are unavailing, and also that information which is volunteered is not always accurate or complete; so some means of compulsion are essential to obtain what is needed.\nAlthough broadly conceived, the Court has policed the outer confines of the inherent contempt power. In Jurney v MacCracken , the Court clarified that no act is punishable for contempt \"unless it is of a nature to obstruct the performance of the duties of the legislature.\" The Court identified two scenarios to which the power to punish would not extend: (1) where Congress lacks a \"legislative duty to be performed\" or (2) where \"the act complained of is deemed not to be of a character to obstruct the legislative process.\"\nThe first scenario is reflected in Kilbourn v. Thompson, a case in which the Court held that no person may be made subject to the contempt power unless the subject matter of the investigation giving rise to the contempt was within the body's authority. In Kilbourn , the Court ordered the release of a witness held under the contempt power after determining that the House had exceeded its authority when it authorized an investigation into a bankrupt private real-estate pool, of which the United States was a creditor pursuing payment in the bankruptcy court. The Court viewed the investigation—and therefore the contempt—as exceeding the House's constitutional authority because Congress had \"no general power of making inquiry into the private affairs of the citizen.\" Instead, the Court concluded that by interfering in an issue properly resolved in the bankruptcy courts, the House had \"assumed power . . . [that was] in its nature clearly judicial.\"\nThe second scenario set forth in MacCracken is reflected in Marshall v. Gordon . There it was held that a \"manifestly ill-tempered\" letter written to a committee chair was not related enough to obstructing the powers of the House to constitute a contempt. The Marshall opinion began by establishing that the exercise of the contempt power is appropriate only as \"necessary to preserve and carry out the legislative authority given\" to Congress. The power could, for example, be used to remedy\nphysical obstruction of the legislative body in the discharge of its duties, or physical assault upon its members for action taken or words spoken in the body, or obstruction of its officers in the performance of their official duties, or the prevention of members from attending so that their duties might be performed, or finally with contumacy in refusing to obey orders to produce documents or give testimony which there was a right to compel.\nThe Court concluded that because the Marshall contempt was approved in response to the writing of an \"irritating\" letter, and \"not because of any obstruction to the performance of legislative duty,\" it was \"not intrinsic to the right of the House to preserve the means of discharging its legislative duties\" and thus invalid.\nDespite its potential reach, the inherent contempt power has been described by some observers as cumbersome, inefficient, and \"unseemly.\" Presumably for these reasons, it does not appear that either house has exercised its inherent contempt power to enforce subpoenas or to remove any other obstruction to the exercise of the legislative power since the 1930s. Even so, the mere threat of arrest and detention by the Sergeant-at-Arms can be used to encourage compliance with congressional demands. For example, Senator Sam Ervin, when serving as chairman of the Senate Select Committee on Presidential Campaign Activities, invoked the inherent contempt power several times to encourage compliance with the committee's requests for information during its investigation of the Nixon Administration. Although the power has long lain dormant, it remains a tool that Congress may use to enforce subpoenas.", "Given the difficulties associated with Congress's current approach to subpoena enforcement, the House or Senate may find it desirable to consider potential alternative frameworks. Before turning to specific alternatives, it is necessary briefly to establish certain foundational separation-of-powers principles that are generally implicated in any discussion of Congress's authority to compel compliance with subpoenas issued to the executive branch.", "Although the text of the Constitution distributes the legislative, executive, and judicial powers among the three branches of government, the Supreme Court generally has not endorsed an absolute separation. The allocation of powers was never intended, in the words of Justice Oliver Wendell Holmes, to cause the branches to be \"hermetically sealed,\" or divided into \"fields of black and white.\" Instead, observed Justice Robert Jackson, the separation of powers \"enjoins upon [the] branches separateness but interdependence, autonomy but reciprocity.\" It is a doctrine often characterized by ambiguity and overlap rather than bright-line rules.\nIn the subpoena-enforcement context, potential separation-of-powers concerns may arise in three principle areas: congressional exercise of executive or judicial powers; congressional infringement upon executive privilege; and procedural compliance with the constitutional requirements of bicameralism and presentment.", "The separation of powers could be implicated either when Congress attempts to enforce a subpoena on its own; seeks to limit or control the executive's discretion in conducting that enforcement; or reserves for itself the ultimate right to adjudicate inter-branch disputes. These actions, at least on the surface, might implicate enforcement and adjudication powers generally granted to the executive and judicial branches, respectively.\nWhile the Constitution provides Congress with \"[a]ll legislative Powers herein granted,\" it is the executive branch, and the President specifically, that is directed to \"take Care that the Laws be faithfully executed.\" In enforcing these constitutionally articulated roles, the Court has carefully proscribed attempts by Congress to preserve for itself the authority to engage in executive functions, such as the execution or implementation of law. Congress, the Court has held, may neither execute the law itself, nor appoint or control those engaged in the execution. In Bowsher v. Synar , for example, the Court struck down a provision of law that had delegated executive power to the Comptroller General, a legislative branch officer. Under the law, the Comptroller General was to use his own \"independent judgment\" to identify spending reductions to be implemented by the President that were necessary to reduce the deficit to an established target. In rejecting this arrangement, the Court held that the functions delegated to the Comptroller General were executive in nature, as he was required to \"exercise judgment concerning facts that affect the application\" and \"interpretation\" of the law, and had \"ultimate authority to determine the budget cuts to be made.\" Because \"[t]he structure of the Constitution does not permit Congress to execute the laws,\" Congress could not constitutionally delegate that authority to a legislative officer under its control.\nThe Court has also clearly stated that Congress is not \"a law enforcement or trial agency.\" \"Legislative power,\" the Court has established, \"is the authority to make laws, but not to enforce them .\" Thus, \"in order to forestall the danger of encroachment 'beyond the legislative sphere,'\" Congress may not \"invest itself or its Members with . . . executive power.\" These general principles have specific application in the context of congressional investigations and contempt, in which the Court has held that \"the power to investigate must not be confused with any of the powers of law enforcement; those powers are assigned under our Constitution to the Executive and the Judiciary.\"\nA corollary to the principle that the Constitution has assigned the law enforcement power principally to the executive branch is the notion that when engaging in that enforcement, the executive branch generally retains some degree of \"prosecutorial discretion.\" This doctrine, which derives from a mixture of constitutional principles including the separation of powers, the Take Care Clause, and the duties of a prosecutor as an appointee of the President, forms the foundation of the Court's statement in United States v. Nixon that \"the Executive Branch has exclusive authority and absolute discretion to decide whether to prosecute a case . . . .\" As noted previously, the executive branch has relied partially on prosecutorial discretion in declining to pursue some violations of criminal contempt of Congress. The scope of this discretion is not well established, especially regarding the extent that Congress can require or curtail its exercise. In any event, any attempt by Congress to mandate that the executive branch initiate a specific prosecution, including a prosecution for criminal contempt of Congress, has been opposed by the executive branch and may raise constitutional questions.\nJust as Congress is not a law enforcer, it is similarly not a court, and may not bestow upon itself the judicial power. The Supreme Court has made clear that \"no judicial power is vested in Congress\" and has generally rebuked congressional attempts to \"try\" an individual for \"any crime or wrongdoing.\" The Constitution does not authorize Congress to exercise even \"commingled\" legislative and judicial powers. In fact, the Court has declared that such an arrangement \"would be absolutely destructive of the distinction between legislative, executive, and judicial authority which is interwoven in the very fabric of the Constitution.\" Relatedly, the Bill of Attainder Clause prohibits Congress from adjudicating specific legal disputes by taking action \"that legislatively determines guilt and inflicts punishment upon an identifiable individual without provision of the protections of a judicial trial.\"\nOne might assert that these general prohibitions on Congress's exercise of executive or judicial powers would cast doubt upon Congress's historical exercise of its inherent contempt power. It could be argued that when exercising that power, Congress, both as an institution and through officials such as the Sergeant-at-Arms, is exercising executive and judicial power by acting as an arresting officer, prosecutor, and judge. But in affirming the constitutionality of the inherent contempt power, the Court has viewed the power (including the attendant arrest, hearing, and detention of the witness) as an exercise of implied legislative power and thus not in contravention of general separation-of-powers principles. Thus, in considering separation-of-powers questions that arise from the various methods by which Congress can enforce its subpoenas, it is essential to distinguish between Congress exercising its own legislative powers pursuant to the inherent contempt power, and Congress attempting to enforce and judge general statutory prohibitions such as statutory criminal contempt violations under 2 U.S.C. § 192. In short, the former is a permissible exercise of legislative power to remedy an offense against Congress, while the latter may be an impermissible exercise of executive and judicial power to remedy a criminal offense against the United States.", "The use of some contempt procedures against an executive branch official invoking executive privilege at the direction of the President could be viewed as frustrating the President's ability to protect the confidentiality of his communications—a protection rooted in the separation of powers. In general, executive privilege is an implied legal doctrine that permits the executive branch to \"to resist disclosure of information the confidentiality of which [is] crucial to fulfillment of the unique role and responsibilities of the executive branch of our government.\" Because past subpoena enforcement disputes between Congress and the executive branch have involved such assertions, it is necessary to outline briefly executive privilege's general contours.\nThe Supreme Court has only rarely addressed executive privilege, but its most significant explanation of the doctrine came in the unanimous opinion of United States v. Nixon . Nixon involved the President's assertion of executive privilege in refusing to comply with a criminal trial subpoena—issued upon the request of a special prosecutor—for electronic recordings of conversations he had in the Oval Office with White House advisers. The Court's opinion recognized an implied constitutional privilege protecting presidential communications, holding that the \"privilege of confidentiality of presidential communications\" is \"fundamental to the operation of Government and inextricably rooted in the separation of powers.\" The justification underlying the privilege related to the integrity of presidential decisionmaking, with the Court reasoning that the importance of protecting a President's communications with his advisers was \"too plain to require further discussion,\" as \"[h]uman experience teaches that those who expect public dissemination of their remarks may well temper candor with a concern for appearances and for their own interests to the detriment of the decisionmaking process.\"\nEven so, the Court determined that when the President asserts only a \"generalized interest\" in the confidentiality of his communications, that interest must be weighed against the need for disclosure in the given case. In conducting that balancing, the Court held that the President's \"generalized\" assertion of privilege \"cannot prevail over the fundamental demands of due process of law in the fair administration of criminal justice,\" and therefore \"must yield to the demonstrated, specific need for evidence in a pending criminal trial.\"\nThe Nixon opinion established three key characteristics of executive privilege, at least as it relates to presidential communications. First, the Court expressly rejected the assertion that the privilege was absolute. Instead, the Court found the privilege to be qualified, requiring that it be assessed in a way that balances \"competing interests\" and \"preserves the essential functions of each branch.\" Second, to protect the \"public interest in candid, objective, and even blunt or harsh opinions in presidential decisionmaking,\" the Court viewed confidential presidential communications as \"presumptively privileged.\" As a result, the Court appeared to suggest that some degree of deference is due to a President's initial determination that certain information is protected by the privilege. Moreover, the burden would appear to be on the party seeking the information to overcome that \"presumption\" through a strong showing of need for the information. Third, the Court viewed the privilege as limited to communications made \"'in performance of [a President's] responsibilities,' 'of his office,' and made 'in the process of shaping policies and making decisions. . . .'\" Thus, the privilege does not appear to apply to all presidential communications.\nAlthough presidential claims of a right to protect executive branch confidentiality interests have occurred with relative frequency, the Supreme Court has not addressed executive privilege in any substantial way since the Nixon era, and, in fact, has never addressed the application of executive privilege in the context of a congressional investigation. Indeed, in Nixon , the Court explicitly disclaimed any attempt to assess the application of executive privilege in a congressional investigation, noting that \"we are not here concerned with the balance between the President's generalized interest in confidentiality . . . and congressional demands for information.\" The lower federal courts have generally sought to avoid adjudicating disputes between the executive and legislative branches over executive privilege, instead encouraging the branches to settle their differences through political resolution. Consistent with that approach, lower federal courts have suggested that judicial intervention in such disputes \"should be delayed until all possibilities for settlement have been exhausted,\" and warned that the branches should not take an \"adversarial\" approach to executive privilege disagreements, but should instead \"take cognizance of an implicit constitutional mandate to seek optimal accommodation through a realistic evaluation of the needs of the conflicting branches in the particular fact situation.\"\nThe most significant judicial analysis of executive privilege in the context of a congressional investigation is the D.C. Circuit's decision in Senate Select Committee on Presidential Campaign Activities v. Nixon . Senate Select Committee involved an attempt by the Senate Select Committee on Presidential Campaign Activities to obtain the Nixon White House tapes and other materials as part of the committee's investigation into \"illegal, improper, or unethical\" actions during the 1972 presidential election. The D.C. Circuit decision was issued shortly before the Supreme Court decision in United States v . Nixon , and contemporaneously to an impeachment investigation conducted by the House Judiciary Committee. Although ultimately siding with the President, the D.C. Circuit's opinion affirmed the qualified nature of the privilege by making clear that a President's assertion of the privilege could be overcome by a \"strong showing of need by another institution of government. . . .\" The court elaborated that Congress, in the exercise of its investigative powers, may overcome the President's presumptive privilege when it can show that \"the subpoenaed evidence is demonstrably critical to the responsible fulfillment of the Committee's function.\" Notably, the court suggested that the \"nature of the presidential conduct that the subpoenaed material might reveal,\" including President Nixon's alleged criminal misconduct, is not a significant factor in assessing whether the privilege is overcome. Instead, that analysis depends \"solely\" on the \"nature and appropriateness\" of the function the committee is carrying out.\nThe D.C. Circuit in Senate Select Committee concluded that the Select Committee on Presidential Campaign Activities had failed to make the requisite showing of need. That determination, however, appears to have been based on a pair of unique facts: first, that copies of the tapes had been provided to the House Judiciary Committee under that committee's impeachment investigation; and second, that the President had publicly released partial transcripts of the tapes. Significantly, the Select Committee sought to make the required showing by arguing it had a \"critical\" need for the tapes to carry out two separate and distinct functions. First, pursuant to its oversight function , the committee argued that the tapes were necessary to \"oversee the operations of the executive branch, to investigate instances of possible corruption and malfeasance in office, and to expose the results of its investigations to public view.\" Second, pursuant to its legislative function , the committee argued that \"resolution, on the basis of the subpoenaed tapes, of the conflicts in the testimony before it 'would aid in a determination whether legislative involvement in political campaigns is necessary' and 'could help engender the public support needed for basic reforms in our electoral system.'\" As for the oversight function, the Court held that the Select Committee failed to show the requisite need—mainly because the House Judiciary Committee had already obtained the tapes. Any further investigative need by the Select Committee was therefore \"merely cumulative,\" as the tapes were already in the possession of one committee of Congress. With regard to the Select Committee's legislative functions, the court held that the particular content of the conversations was not essential to future legislation, as \"legislative judgments normally depend more on the predicted consequences of proposed legislative actions . . . than on precise reconstruction of past events.\" Any \"specific legislative decisions\" faced by the Select Committee, the court concluded, could \"responsibly be made\" based on the released transcripts.\nGiven both Nixon and Senate Select Committee , it appears that executive privilege does not establish an absolute bar to Congress obtaining protected information, especially when the assertion of the privilege is based on a \"generalized interest\" in confidentiality rather than one connected to \"military, diplomatic, or sensitive national security secrets.\" Instead, the appropriate inquiry appears to be fact-specific, focusing \"solely\" on whether the investigating committee can show that the information sought is \"demonstrably critical\" to a legitimate legislative function such as oversight or the consideration of legislation.\nWithout more detailed judicial pronouncements the political branches have adopted somewhat divergent views on the scope of executive privilege. This interpretive divide has likely contributed to the frequency and intensity of inter-branch disputes over executive privilege. The executive branch has historically viewed the privilege broadly, providing protections to several different categories of documents and communications that relate to executive branch confidentiality interests. Under the executive branch's interpretation, the privilege covers, among other possible areas, presidential communications; deliberative communications within the executive branch; military, diplomatic, and national security information; and law enforcement files. Congress, however, has generally interpreted the privilege more narrowly, limiting its application to the types of core Article II duties and presidential communications referenced by the Supreme Court in Nixon , while also emphasizing that whatever the privilege's scope, it can be overcome by an adequate showing of need.\nIt appears likely that the executive branch will continue to raise constitutional objections if Congress attempts to use the contempt power to either force the disclosure of information the President considers privileged or to punish an executive branch official for asserting executive privilege. Yet judicial decisions and historical practice have set few clear legal standards for application in such disputes—except to establish that neither side's power is absolute and that Congress and the President have an obligation to attempt to accommodate each other's needs. Thus, any conflict between the power of inquiry and executive privilege, either under the current system or as applied to the alternative approaches discussed in this report, would likely be governed not by bright-line rules, but by a balancing of the specific interests at play in the given dispute, and only after it had become apparent that the legislative and executive branches could not reach an acceptable settlement. How that balancing is implemented, and what legal standard is applied to evaluate an executive privilege claim made in response to a congressional subpoena, will likely depend on the type of information the privilege is asserted to protect. The courts appear to have adopted a hierarchical approach to various privileges within the executive privilege taxonomy. For example, the courts \"have traditionally shown the utmost deference\" to the executive's need to protect \"military or diplomatic secrets.\" Courts have not \"extended this high degree of deference to a President's generalized interest in confidentiality\" of his communications. Other asserted aspects of executive privilege, for example the deliberative process privilege, have been given still less weight, and must be assessed differently in the face of an exercise of Congress's investigative powers.\nUltimately, the framework through which Congress chooses to enforce a subpoena for information the President considers protected by executive privilege will impact the process by which executive branch assertions of the privilege are resolved. Under the criminal contempt framework, the Executive becomes the final arbiter of the appropriate scope of executive privilege by deciding whether to go forward with a criminal contempt prosecution of an official relying on the privilege. A decision not to move forward with a prosecution would generally not be subject to judicial review. Under the civil enforcement framework, the initial determination on the application of the privilege is made by the Executive, subject to judicial review if the House or Senate chooses to challenge that determination in federal court. Under inherent contempt, the initial determination on the application of the privilege is made by Congress, subject to review in the courts if the subject of the contempt proceeding challenges his detention.", "Finally, because the power to seek enforcement of a congressional subpoena is independently vested in each house, rather than in Congress as a whole, constitutional questions may be raised over whether a single house, through approval of a contempt resolution, can trigger legal consequences or impose requirements upon the executive branch without compliance with bicameralism and presentment.\nThe Supreme Court has made clear that Congress must exercise its legislative power in compliance with the \"finely wrought and exhaustively considered[] procedure\" set forth in Article I, Section 7 of the Constitution, which provides that \"every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States.\" This provision establishes the bedrock constitutional principle that before legislation is given the force and effect of statutory law, it must first satisfy the requirements of bicameralism (approval by both houses of Congress) and presentment (submission to the President for his signature or veto).\nIn the seminal case INS v. Chadha , the Court relied on the bicameralism and presentment requirements to invalidate provisions of the Immigration and Nationality Act that authorized either house of Congress, by a one-house resolution, to \"veto\" an exercise of statutory authority delegated to an executive branch officer. In invalidating this \"legislative veto,\" the Court interpreted Article I, Section 7 of the Constitution as establishing that not only all bills, but all \"legislative acts\" are subject to the procedural requirements of bicameralism and presentment. The Court defined a \"legislative act\" as any action \"properly [] regarded as legislative in its character and effect\" or taken with \"the purpose and effect of altering the legal rights, duties and relations of persons. . . outside the legislative branch.\" In other words, congressional actions that have the \"force of law\" generally must comply with the Constitution's \"single, finely wrought\" process—that of passage by both houses and presentment to the President.\nThe Chadha opinion identified specific exceptions to the bicameralism and presentment requirements, noting that \"[c]learly, when the [Constitution's] Draftsmen sought to confer special powers on one House, independent of the other House, or of the President, they did so in explicit, unambiguous terms.\" The Constitution's impeachment provisions and those relating to Senate advice and consent to treaty ratification and the appointment of judges, ambassadors, and public officials are examples of such provisions. The Court also noted that \"[e]ach House has the power to act alone in determining specified internal matters.\" That authority, the Court added, \"only empowers Congress to bind itself and is noteworthy only insofar as it further indicates the Framers' intent that Congress not act in any legally binding manner outside a closely circumscribed legislative arena, except in specific and enumerated instances.\"\nThe contempt power does not fit neatly into the Chadha mold. Indeed, the Court may have neglected the inherent contempt power in articulating its list of exceptions to Chadha 's bicameralism and presentment requirements. Despite Chadha 's language, it does not appear that the Constitution always speaks \"explicit[ly]\" or \"unambiguous[ly]\" when conferring power to each house individually. There is no explicit constitutional language conferring the contempt power or the power of inquiry to each individual house. Rather, as discussed, these powers are implied as essential to the legislative power. Notably, no court has suggested that the exercise of the inherent contempt power by a single house of Congress, which could alter the legal rights or obligations of a detained witness, is inconsistent with the requirements of bicameralism or presentment.\nAs for the criminal contempt statute, the DOJ has asserted that interpreting that statute to require that a contempt citation be brought before the grand jury would be inconsistent with Chadha by allowing one house to place a legal requirement on a U.S. Attorney. To date, no court has had opportunity to consider the validity of the DOJ's position. But it is possible that Chadha -like concerns could be raised by alterations to the contempt framework that would allow the approval of a contempt citation by a single house to create new legal rights or restrictions or otherwise alter the legal authority that may be exercised by executive branch officials.\nWith these general separation-of-powers principles established as background, this report now considers possible subpoena-enforcement frameworks and the key legal issues they raise.", "As noted previously, most congressional requests for information from the executive branch are complied with, and in those cases when there is a dispute, negotiations between the committee and the executive agency generally lead to a resolution acceptable to both parties. In the instances that Congress has resorted to its subpoena-enforcement mechanisms, the committee involved has generally been able to obtain eventually much of the information it sought. Thus, an argument can be made that the current system acts as an adequate and effective way to obtain information and deter non-compliance with congressional subpoenas in most cases.\nHowever, in the rare case that actual prosecution is necessary to compel an executive branch official to comply with a subpoena, criminal contempt (as described above) would not appear to be a wholly reliable means of enforcement. Congress would instead presumably be forced to rely on the traditional process of negotiation, accommodation, and compromise to encourage compliance, or wield its other constitutional powers, such as the power of the purse, the confirmation power, impeachment, and its general legislative control over agency authority to encourage compliance by executive branch officials.\nWhen necessary, each house retains the authority to utilize the courts for assistance in enforcing subpoenas. Civil enforcement in the courts, especially when an executive branch official is asserting executive privilege at the direction of the President, conforms to general pronouncements from both the judicial and executive branches. It accords with the judiciary's determination that its established authority to \"say what the law is\" includes the power to \"construe and delineate\" the scope of executive privilege and the executive branch's previous statements that civil enforcement is a permissible way to resolve the competing interests of Congress and the Executive in information access disputes.\nBut reliance on civil enforcement may have certain drawbacks. As discussed above, judicial resolution of oversight disputes can be lengthy and possibly lead to opinions that weaken Congress's oversight authority. Moreover, although a series of district court opinions have recently held civil enforcement cases arising from oversight disputes between the legislative and executive branches to be justiciable, the last appellate opinion to reach the merits of such a dispute was Senate Select Committee v. Nixon in 1977. The executive branch continues to assert the position that inter-branch oversight disputes are non-justiciable. Although such arguments have been rejected by the D.C. District Court, if an appellate court were to adopt the executive's position, that decision could leave both the existing criminal and civil enforcement avenues with only limited effect for use against an executive branch official.", "There would appear to be several ways in which Congress could alter its approach to enforcing committee subpoenas issued to executive branch officials. But because of the separation-of-powers issues highlighted above, many of these options have potential legal concerns. The extensive ambiguity in this area results from a combination of a lack of applicable judicial precedent; the vast differences in how the executive and legislative branches interpret their own institutional powers; and the importance of practical implementation issues.", "Congress could try to expedite the civil enforcement process by either statutorily establishing timetables for review or urging speedy judicial consideration of civil subpoena-enforcement cases filed in the federal judiciary by the House or Senate. For example, H.R. 4010 , introduced in the 115th Congress, would have amended 28 U.S.C. § 1365a to provide that \"it shall be the duty\" of the federal courts to \"advance on the docket and to expedite to the greatest possible extent the disposition\" of any civil enforcement lawsuit. The bill would have also provided the House and Senate with the option of having the claim heard by a three-judge panel with a direct appeal to the Supreme Court.\nSuch an approach would appear to be well within Congress's power. Congress has broad authority over the rules of procedure for federal courts, including setting general timetables for judicial consideration of \"cases and controversies.\" Various examples of expedited judicial review procedures exist elsewhere in federal law. Some provisions combine expedited review with the ability to file the lawsuit directly with a federal appellate court rather than a federal district court.\nFederal law had provided for expedited judicial review of lawsuits filed by the Senate to enforce subpoenas. Under 28 U.S.C. § 1364(c), Senate subpoena-enforcement actions were to be set for hearing at the \"earliest practicable date\" and \"in every way to be expedited.\" Those provisions were repealed in 1984.\nEstablishing expedited judicial review of congressional subpoena-enforcement actions may mitigate some drawbacks of the current civil enforcement process. Yet even if expedited procedures lead to swifter judicial decisions, the risk remains to Congress that a reviewing court could issue a decision adverse to the legislative branch's investigative and oversight interests. Moreover, some commentators have suggested that any attempt to seek assistance from the courts to enforce Congress's own constitutional powers effectively weakens the legislative branch.", "The House or Senate may also seek to utilize the inherent contempt power to enforce compliance with congressional subpoenas issued to executive branch officials. As noted, the Supreme Court has confirmed the existence of each house's independent and unilateral authority to arrest and detain individuals in order to compel compliance with a subpoena. If either the House or Senate was to revive the inherent contempt power, the chamber may consider establishing specific procedures to be followed in its exercise. Such procedures could govern consideration of an inherent contempt resolution and actions of the Sergeant-at-Arms, as well as the process by which the House or Senate would conduct the \"trial.\" These procedures could be established by a one-house resolution or—if both the House and Senate seek to use uniform procedures—by concurrent resolution or by statute.\nAlthough rare, the inherent contempt power has been used to detain executive branch officials, including for non-compliance with a congressional subpoena. During an 1879 investigation into allegations of maladministration by George F. Seward while a consul general in Shanghai, a House committee issued a subpoena to Seward for relevant documents and testimony. When Seward—then an ambassador to China—refused to comply, the House passed a resolution holding him in contempt and directing the Sergeant-at-Arms to take him into custody and bring him before the House. Seward was taken into custody and brought before the House, where he was ultimately released while the House considered impeachment articles.\nIn another example which gave rise to Marshall v. Gordon , the House adopted a contempt resolution directing the Sergeant-at-Arms to arrest U.S. Attorney Snowden Marshall for an insulting letter sent to a committee chair. The arrest was then made and quickly challenged in federal court, where ultimately the Supreme Court ordered Marshall released. In doing so, the Court reaffirmed the contempt power generally, but concluded that in Marshall's case the contempt was invalid as \"not intrinsic to the right of the House to preserve the means of discharging its legislative duties.\" Notably, the Court was silent on whether Marshall's status as an executive branch official had any impact on the House's exercise of the power.\nGiven these examples, and the Supreme Court's general statements on the reach of the inherent contempt power, it would appear to be within Congress's power to use inherent contempt to compel executive branch compliance with congressional subpoenas, at least in certain circumstances. But neither the Seward nor Marshall example involved an assertion of executive privilege, meaning that the Court did not need to consider what, if any, constraints that privilege may impose upon Congress's exercise of its inherent contempt authority.\nMoreover, an attempt by Congress to arrest or detain an executive official may carry other risks. There would appear to be a possibility that, if the Sergeant-at-Arms attempted to arrest an executive official, a standoff might occur with executive branch law enforcement tasked with protecting that official. This concern is also applicable in the event that a judicial marshal enforces a judicial order of contempt against an executive official, and perhaps will always be \"attendant in high-stakes separation-of-powers controversies.\"", "Although any subpoena-enforcement mechanism used to override the President's assertion of executive privilege may raise constitutional considerations, use of the inherent contempt power to detain an executive official to obtain documents or testimony the President has found to be privileged would likely raise unique concerns.\nAs discussed, the 1984 OLC opinion issued in the wake of the Burford contempt concluded that the criminal contempt of Congress provision could not constitutionally be applied to an executive official asserting a President's claim of executive privilege. The alternative, the OLC argued, \"would immeasurably burden the President's ability to assert the privilege and to carry out his constitutional functions\" by requiring that subordinates risk a criminal trial and possible conviction to \"vindicate\" the privilege. In a footnote, the opinion extended that same conclusion to Congress's use of inherent contempt to \"arrest\" and \"punish\" an executive branch official invoking a President's claim of executive privilege. The OLC asserted that because the \"reach\" of the criminal contempt statute was \"intended to be coextensive with Congress's inherent civil contempt powers,\" the \"same reasoning that suggests that the criminal contempt statute could not constitutionally be applied against a Presidential assertion of privilege applies to Congress' inherent contempt powers as well.\" This argument has never been tested in court, but was alluded to in Miers . There, the district court stated that the executive branch position was not \"dispositive\" and that the court \"need not decide the issue.\" Nevertheless, the court acknowledged that \"there are strong reasons to doubt the viability of Congress's inherent contempt authority vis-a-vis senior executive officials.\"\nAn argument can be made that the OLC position is based on a conception of inherent contempt not entirely consistent with the power's historical use. For example, the criminal contempt statute does not appear to have been intended to be \"coextensive\" with inherent contempt. While 2 U.S.C. § 192 and its predecessors apply only to non-compliance with congressional subpoenas, the inherent contempt power applies to a much wider range of actions that threaten Congress's ability to discharge the legislative function. The Supreme Court also appears to have viewed the two powers as distinct, noting that they are \"separately exercised\" and \" diverso intuito .\" As opposed to prosecution under the criminal contempt statute, inherent contempt is not necessarily imposed to \"punish\" the contemnor. In the context of subpoena enforcement, inherent contempt has in fact generally been remedial rather than punitive, in that any detention has generally been lifted once the subpoena is complied with. The Supreme Court, for example, noted in 1917 that it could not identify a \"single instance where in the exertion of the power to compel testimony restraint was ever made to extend beyond the time when the witness should signify his willingness to testify . . . .\" Even so, the Court also appears to have recognized that Congress retains the authority to use the inherent contempt power \"solely\" for purposes of punishment.\nConflicts between the President's constitutionally implied privilege to protect confidential executive branch communications and Congress's constitutionally implied power to conduct investigative oversight prerogatives are not novel. Indeed, they have consistently arisen throughout American history, beginning as early as the first Congress when President Washington asserted that although the executive branch had a general obligation to comply with congressional requests for information, it still \"ought to refuse those [papers], the disclosure of which would injure the public.\" A full analysis of this long-standing debate is beyond the scope of this report. It is enough to suggest that historical practice and the limited case law both suggest that neither the President's executive privilege nor Congress's inherent contempt power is absolute. In the case of a conflict, judicial decisions relating to both executive privilege and Congress's oversight and contempt powers would suggest that a resolution would most appropriately come through good-faith negotiations between the political branches in which each seeks to accommodate the needs of the other. If those negotiations fail, and Congress chooses to invoke the inherent contempt power against an executive branch official claiming executive privilege, a court would likely be called upon to resolve the dispute, presumably in the posture of a habeas proceeding or a civil suit for wrongful detention. Although the scope of this review is somewhat unclear, it would seem likely that a reviewing court would engage in a fact-based balancing of interests—weighing Congress's legislative or oversight need for the information against the Executive's need to maintain confidentiality in the specific instance.", "The use of the inherent contempt power to arrest and detain an executive branch official asserting executive privilege at the direction of the President would likely also raise practical concerns relating to historical comity between the branches. The district court in Miers articulated this view, warning that the use of the inherent contempt power to imprison current or even former executive branch officials would \"exacerbate the acrimony between the two branches and would present a grave risk of precipitating a constitutional crisis.\" The court suggested that a \"stand-off\" between the Sergeant-at-Arms and an executive branch official would be an \"unseemly\" and \"provocative clash\" that should be avoided.\nIf Congress agrees with the sentiments expressed in the Miers opinion about the \"unseemly\" nature of directing the Sergeant-at-Arms to arrest and detain an executive branch official, it may consider imposing less onerous penalties on an official deemed guilty of contempt through the inherent contempt process. For example, the imposition of a fine or other monetary penalty, rather than detention and imprisonment, could mitigate some concerns associated with a physical arrest. Neither the House nor the Senate has ever imposed a monetary penalty through the exercise of inherent contempt, yet there may be an argument supporting the existence of that power.\nSuch an argument would likely rely both on dicta from the Supreme Court's opinion in Kilbourn v. Thomps on and an analogy to the judiciary's contempt power . In Kilbourn , the Court made a passing reference to fines during a discussion of the scope of the House's power to \"punish.\" After establishing that the House clearly had authority to punish its own Members for \"disorderly behavior,\" and perhaps the power to punish others as part of either an inquiry into a contested election or an impeachment investigation, the Court then noted that \"[w]hether the power of punishment in either House by fine or imprisonment goes beyond this or not, we are sure that no person can be punished for contumacy as a witness before either House, unless his testimony is required in a matter into which that House has jurisdiction to inquire.\" This may be interpreted to suggest that so long as punishment is appropriate, the form of punishment that may be imposed could include a fine.\nIn Anderson v. Dunn , the Court drew analogies between Congress's power and the judiciary's power to punish for contempt. The courts, the opinion noted, had been delegated authority by statute to punish contemptuous conduct with a fine, imprisonment, or both. The Court suggested, however, that the courts could have exercised the \"power to fine and imprison for contempts . . . without the aid of the statute\" pursuant to a constitutional contempt authority \"incidental to a grant of judicial power.\" The purpose of the judicial contempt statute, the Court reasoned, was to make a \"legislative declaration, that the power of punishing for contempt shall not extend beyond its known and acknowledged limits of fine and imprisonment.\" This statement could be read to suggest that the court viewed the imposition of a fine as a \"known and acknowledged\" form of punishment for inherent contempt, at least in the courts. If such a power inheres to the courts, it might also inhere to Congress as a coordinate branch of government.\nYet additional language from Anderson suggests that the power to punish for inherent contempt in the congressional context may be limited to imprisonment. After discussing the judicial contempt power, the Anderson opinion appears to have directly considered the scope of Congress's authority, noting that the \"extent of [Congress's] punishing power\" is\n\"the least possible power adequate to the end proposed;\" which is the power of imprisonment. It may, at first view, and from the history of the practice of our legislative bodies, be thought to extend to other inflictions. But every other will be found to be mere commutation for confinement; since commitment alone is the alternative where the individual proves contumacious.\nDespite the Court's statement that \"imprisonment\" was the \"least possible power adequate\" to remedy contemptuous conduct, monetary penalties have generally been viewed as less severe than imprisonment. The Supreme Court, for example, has viewed the imposition of a fine as a \"lesser punishment\" than the \"punishment of imprisonment.\" Still, the Court later reaffirmed the notion that imprisonment was the appropriate penalty for contempt in Marshall by stating that Anderson imposed two limitations on the contempt power: \"the power . . . is limited to imprisonment and such imprisonment may not be extended beyond the session of the body in which the contempt occurred.\"\nIt would appear, therefore, that whether Congress has the authority to impose a fine or other monetary penalty on a witness found to be in contempt by either house is an open question. However, in the case of a legal challenge to a fine, the lack of any precedent for such an assertion of power may inform a court's judgment on the appropriate reach of Congress's power. Moreover, even if Congress retains this authority, it is unclear how such a fine would be implemented and, in the case that the contemnor refuses to remit the sum, collected.", "Another proposed alternative for subpoena enforcement has been to establish statutorily a procedure for the appointment of an independent official responsible for prosecuting criminal contempt of Congress citations against executive branch officials. Such a law would seek to create an independent prosecutor authorized to make litigation and enforcement decisions, including the decision to initiate and pursue a criminal contempt prosecution pursuant to 2 U.S.C. § 192 and § 194 under reduced influence from the President and the DOJ. The independent prosecutor would retain prosecutorial discretion in enforcement decisions, but would arguably not be subject to the same \"subtle and direct\" political pressure and controls that a traditional U.S. Attorney may face. This office would likely be loosely modeled on the expired Office of Independent Counsel (Independent Counsel) established in the Independent Counsel Act of 1978 (Independent Counsel Act or ICA) and upheld by the Supreme Court in Morrison v Olson .\nThe ICA created a statutory framework by which an Independent Counsel could be appointed to investigate and prosecute high-ranking government officials for a variety of violations of federal law, including criminal contempt of Congress. The actual appointment took place under a three-step process. First, the law required that the Attorney General conduct a preliminary investigation upon receiving \"information sufficient to constitute grounds to investigate whether\" a covered federal criminal violation has occurred. Second, if the Attorney General determined that there were \"reasonable grounds to believe that further investigation is warranted,\" the Attorney General had to \"apply\" to a three-judge panel of the D.C. Circuit for the appointment of an Independent Counsel. Third, upon receipt of an application from the Attorney General, the three-judge panel had to \"appoint an appropriate independent counsel . . . .\" Thus, although the actual appointment was made by the judiciary, the Attorney General's preliminary investigation determined whether the court's appointment authority was triggered. Under the law, Congress could request an appointment of an Independent Counsel, but it could not mandate that the Attorney General initiate the appointment process. Nor was a decision by the Attorney General not to seek appointment of an Independent Counsel subject to judicial review.\nOnce appointed, the Independent Counsel had \"full power and independent authority to exercise all investigative and prosecutorial functions and powers of the Department of Justice, the Attorney General, and any other officer or employee of the Department of Justice.\" Moreover, he would exercise those powers with a substantial degree of independence established through removal protections and other provisions ensuring the Independent Counsel's authority to make investigatory and prosecutorial decisions without direction from the Attorney General. With regard to removal, the law provided that the Independent Counsel \"may be removed from office . . . only by the personal action of the Attorney General and only for good cause, physical or mental disability . . . or any other condition that substantially impairs the performance of such independent counsel's duties.\"\nThe ICA was upheld against constitutional challenge in the 1988 case of Morrison v. Olson . In a 7-1 decision, the Court held that the law was consistent with both the Appointments Clause and the general separation of powers. With regard to the Appointments Clause, the Court determined that the Independent Counsel was an inferior officer, and was thus not required to be appointed by the President with the advice and consent of the Senate, but could permissibly be appointed by the \"courts of law.\" As for the general separation of powers, the Court held that Congress could provide the Independent Counsel with substantial autonomy and protection from removal despite his law enforcement powers. The majority opinion reasoned that although the Independent Counsel was \"to some degree 'independent' and free from executive supervision to a greater extent than other federal prosecutors,\" the ICA still provided the Attorney General with several adequate means of \"supervising or controlling\" the Independent Counsel's prosecutorial powers, preserving in the executive branch \"sufficient control over the Independent counsel to ensure that the President is able to perform his constitutionally assigned duties.\"\nAlthough subject to some external criticism in the decades since its issuance, the Morrison opinion has neither been overturned nor even directly criticized by a majority opinion of the Supreme Court. That said, the composition of the Court has changed, and its more recent decisions have arguably been more protective of executive power, specifically with regard to the President's authority to supervise and control executive branch officials. In any event, if Congress were to seek to establish an independent office for the prosecution of criminal contempt of Congress, it would seem prudent to mirror the Independent Counsel framework approved in Morrison , subject to some potential adjustments.\nPerhaps the chief criticism of the independent counsel statute, and arguably the reason the statute was permitted to expire, was the breadth of the Independent Counsel's jurisdiction. The ICA authorized the appointment of an independent counsel to investigate and prosecute a wide array of crimes, while also providing the option for the expansion of an appointed counsel's initial jurisdiction with the approval of the three-judge panel. Strictly limiting a new Independent Counsel's jurisdiction to only the investigation and prosecution of the specific criminal contempt of Congress citation approved by either the House or the Senate, with no option for jurisdictional expansion, might sufficiently restrict the authority of the Independent Counsel to alleviate some of those concerns.\nCongress may also seek to alter the triggering mechanism for the appointment of an independent counsel, for example, by removing the requirement for a preliminary investigation and instead simply requiring appointment by the court upon the approval of a contempt citation by either house of Congress. This alteration would prevent the Attorney General from effectively blocking an appointment at that preliminary stage by concluding that the official's non-compliance with the subpoena had legal merit. It would appear, however, that such a change could raise additional constitutional concerns to an already debated framework. Providing the Attorney General with discretion in triggering the appointment was important to the Court's ultimate approval of independent counsel provisions in Morrison . The Court noted the Attorney General's control in both discussing whether the law authorized an unconstitutional \"usurpation\" of \"executive functions\" and whether the law otherwise undermines \"the powers of the executive branch.\" Specifically, the Court noted that the special division could not appoint an independent counsel \"sua sponte,\" and that because the Attorney General retained authority over the appointment, the law gave \"the executive a degree of control over the power to initiate an investigation by the independent counsel.\" Given these statements, removal of the discretionary authority provided to the Attorney General in triggering the appointment would likely create additional avenues of legal challenge to the law.", "Congress might also seek to establish a contingent contempt framework in which either house's approval of a contempt citation against an executive branch official automatically results in some other consequence to either the individual official who is the subject of the contempt citation or the official's agency. Like the criminal contempt of Congress provisions, such a statute would arguably be enacted as \"necessary and proper\" to Congress's enforcement of its investigative subpoena power. Any number of consequences may be built into this type of contingent framework, but perhaps the most effective approach would be to utilize Congress's power of the purse to establish some form of conditional limitation or reduction on an agency's funding that is triggered by the approval of a contempt citation against the agency's official. For example, a law might seek to establish that the approval of a contempt resolution against an executive branch official would lead to the temporary withholding of a certain percentage of the official's agency's appropriated funds until the outstanding subpoena is complied with. A law could, for example, place an obligation on the Office of Management and Budget (OMB) to restrict the release of a percentage of the applicable agency's funds at the next quarterly apportionment. Such an arrangement would use Congress's control over agency funding to encourage and incentivize agency cooperation with committee subpoenas.\nContingent (or conditional) legislation—typically defined as legislation in which a provision is triggered, activated, or given legal effect only upon the occurrence of some future event or decision—has generally been approved by the courts. That said, the triggering event built into previously approved contingent legislation has generally been an action, finding, or decision of an executive branch official. The Supreme Court has explained the purpose of this type of legislation, writing that due to the uncertainty of \"future conditions,\" Congress \"may feel itself unable conveniently to determine exactly when its exercise of the legislative power should become effective,\" and instead \"may leave the determination of such time to the decision of an Executive.\" A statute that would instead effectively leave that determination to a single house of Congress—through the approval of a contempt resolution—would appear to be a unique and potentially problematic arrangement. Such a statutory arrangement could arguably be viewed as an impermissible exercise of either legislative or executive power by a single house of Congress.\nThe argument that tying a reduction in agency funding to the approval of a contempt resolution may represent an invalid exercise of legislative power by a single house of Congress would be based on the principles of Chadha . As noted, Chadha limited Congress's authority to wield legislative power—which the Court defined as any action with \"the purpose and effect\" of \"altering the legal rights\" of those outside the legislative branch—without complying with the Constitution's \"finely wrought\" process of bicameralism and presentment. Once Congress makes a legislative choice it generally must abide by that choice until \"legislatively altered or revoked.\" Thus, Congress cannot, even by statute, provide one house with the power to override or alter authority delegated to the executive branch. A contingent contempt framework that would allow one house effectively to amend an agency's legal authority to obligate funds by adopting a contempt resolution could be viewed as in tension with this principle. The executive branch, for example, has objected to legislative proposals that would create a \"permanent [contempt] mechanism to be triggered by the vote of one house,\" at least when that mechanism would \"impose. . . an affirmative legal duty\" on the executive branch. Such an arrangement, the executive has argued, would be \"contrary to the clear language and rationale of Chadha .\"\nThe limits that the Chadha decision imposes on contingent contempt legislation are difficult to assess. It is clear, for example, that in the typical legislative scenario a one-house resolution cannot constitutionally have the legal effect of altering statutorily authorized appropriations. If Congress wants to amend an appropriations provision, it generally must do so by enacting a new law. Even so, it would appear that an argument could be made that the restrictions of Chadha are either inapplicable or apply with less force in the investigative and oversight context, perhaps because it is an area in which the Constitution has implicitly authorized a single house to act with legal authority. There are a variety of existing investigative authorities that appear to allow a single house, or a single committee, to alter the legal rights and obligations of those outside the legislative branch. These include issuing a subpoena, which triggers a legal obligation to comply; the inherent contempt power, which allows one house to arrest and detain those outside the legislative branch; the criminal contempt statute, which by its terms and as interpreted by some courts appears to impose an obligation on the U.S. Attorney that flows from the approval of a contempt resolution; and the federal immunity statute, which allows a single committee or single house to obtain a court order granting a witness immunity and requiring their testimony following an assertion of the Fifth Amendment privilege against self-incrimination. Decisions of at least two federal appellate courts have explicitly recognized each house's authority to act unilaterally in the investigatory context, holding that \"[t]here is no doubt that Congress constitutionally can act, without recourse to the full legislative procedure of bicameral passage and presentment, to investigate the conduct of executive officials and others outside the legislative branch.\" Because the \"process to enforce\" investigative demands has been viewed as part of the \"power of inquiry,\" an argument could be made that laws incidental to enforcing congressional subpoenas (like contingent contempt legislation) should not be subject to bicameralism and presentment limitations.\nThe argument that tying a reduction in agency funding to the approval of a contempt resolution may represent an impermissible exercise of executive power by a single house of Congress would likely be based on the principles of Bowsher v. Synar . As discussed, in Bowsher , the Court relied on the separation of powers to invalidate a federal law that had empowered the Comptroller General, a legislative branch officer, to identify and mandate executive branch spending reductions. The Court concluded that by vesting the \"ultimate authority\" to interpret and implement the law in one of its officers, Congress had in effect \"retained control over the execution of the Act\" and unconstitutionally \"intruded into the executive function.\" Congress, the Court concluded, may \"control the execution of its enactment only indirectly . . . by passing new legislation.\"\nAs in Bowsher , it could be argued that the House and Senate would retain impermissible control over the execution of any law that ties budgetary reductions to the approval of a contempt resolution. Arguably, however, the Comptroller General's authority at issue in Bowsher could be distinguished from that exercised by the House or Senate in a contingent contempt framework. In determining that the Comptroller General was exercising executive authority, the Bowsher Court focused on the fact that the Comptroller General used his own \"interpretation\" and \"judgment\" to \"determine precisely what budgetary calculations are required\" and the \"budget cuts to be made.\" Under a contingent contempt framework that established a set percentage funding reduction the House and Senate would exercise no such \"interpretation\" or \"judgment\" in determining the cuts to be made. To the contrary, a house would have discretion in determining whether an official was in contempt (a legislative act) but would exercise no discretion in the resulting execution or implementation (an executive act) of the budget restrictions, which would be implemented in an arguably ministerial manner by the executive branch.\nA contingent funding restriction in this context may also run into some of the same implementation obstacles as enforcement of subpoenas through criminal contempt of Congress, especially if executive privilege is being asserted. This is because the withholding of already appropriated funds would likely require the assistance of the executive branch—either through OMB withholding or through DOJ enforcement of a violation of the Anti-Deficiency Act. The executive branch has objected to congressional attempts to use the spending power to encourage compliance with investigative demands in a way that \"infringe[s] on the President's constitutional authority.\" For example, in 1960 the Attorney General directed that appropriated funds \"continue to be available\" to the State Department despite the agency withholding information from Congress that triggered a conditional provision terminating certain funds if congressional requests for documents were not complied with. Thus, in a contempt dispute involving executive privilege, if the President views the contingent contempt funding restriction as a \"burden\" on his ability to assert executive privilege, he might direct the OMB not to withhold applicable funding.\nThe uncertainty associated with tying automatic funding reduction to the approval of a contempt resolution in mind, Congress may consider creating a contingent contempt framework that uses the power of the purse to reward agencies for compliance with congressional subpoenas rather than to punish them. This approach may provide the executive branch with a clear budgetary incentive to disclose subpoenaed information to a committee. For example, future appropriations bills could contain provisions that would make additional funding available (at some later point in the fiscal year) to an agency that has not had an official held in contempt of Congress. This carrot, rather than stick, approach has been used to encourage agency compliance with congressional wishes. Even though arguments may still be put forward that this arrangement raises Chadha or Bowsher concerns by giving a single house control over an agency's funding level, it may not be in the Executive's interest to challenge such a provision given that invalidation of the provision would remove agency access to the increased funds.\nRather than trying to establish an automatic alteration to agency funds, Congress could avoid any potential constitutional concerns by instead allowing for the introduction of a joint resolution that would provide for the withholding of the agency's funding upon the approval of a contempt citation by either house. That resolution could be given \"fast track procedures\" to encourage speedy consideration by both the House and Senate. Upon passage by the House and Senate, the joint resolution would be presented to the President. This arrangement would satisfy the requirements of bicameralism and presentment and entail no execution of the law by the legislative branch or its competent parts. The joint resolution would, however, be subject to presidential veto.\nIn the alternative, the House or Senate may establish parliamentary procedural consequences that flow from the approval of a contempt citation under each body's constitutional authority to \"determine the Rules of its Proceedings.\" For example, either the House or Senate could limit consideration of any legislative measure that would fully fund either the salary of the official held in contempt or the office in which the official works. Like other rules, such a provision would be enforceable by a point of order, and subject to waiver under the usual processes.", "Congress's ability to issue and enforce its own subpoenas is essential to the legislative function and an \"indispensable ingredient of lawmaking.\" That said, the prevailing enforcement mechanisms of criminal contempt of Congress and civil enforcement, both of which rely on the assistance and participation of the other branches of government, have certain drawbacks that arguably limit their effectiveness in ensuring timely compliance with congressional subpoenas by executive branch officials. As discussed, alternatives to the current framework are available, but both the constitutional separation of powers and the practical limitations arising from the political nature of congressional executive information access disputes would likely need to be considered in any potential effort at reform." ], "depth": [ 0, 1, 1, 2, 2, 2, 3, 3, 3, 3, 3, 1, 1, 2, 3, 3, 3, 2, 2, 3, 3, 4, 4, 3, 3, 1 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "", "", "", "", "", "", "", "", "", "", "h1_title", "", "", "", "", "h1_full", "h1_full", "", "h1_full", "", "", "", "h1_full", "" ] }

{ "question": [ "How can compliance with congressional demands be compelled when information is withheld by the executive branch?", "What is the recipient of a valid congressional subpoena required to do?", "Why is it important to have a process by which to enforce congressional subpoenas?", "When can the existing mechanisms for enforcing committee subpoenas be inadequate?", "What are some ways in which Congress could alter its approach to enforcing committee subpoenas issued to executive branch officials?", "What is another way the House or Senate could enforce subpoenas issued to executive branch officials?", "Why would some of these proposals raise constitutional concerns?" ], "summary": [ "When Congress finds an inquiry blocked by the withholding of information by the executive branch, or where the traditional process of negotiation and accommodation is inappropriate or unavailing, a subpoena—either for testimony or documents—may be used to compel compliance with congressional demands.", "The recipient of a duly issued and valid congressional subpoena has a legal obligation to comply, absent a valid and overriding privilege or other legal justification.", "But the subpoena is only as effective as the means by which it may be enforced. Without a process by which Congress can coerce compliance or deter non-compliance, the subpoena would be reduced to a formalized request rather than a constitutionally based demand for information.", "Recent controversies could be interpreted to suggest that the existing mechanisms are at times inadequate—particularly in the instance that enforcement is necessary to respond to a current or former executive branch official who has refused to comply with a subpoena.", "There would appear to be several ways in which Congress could alter its approach to enforcing committee subpoenas issued to executive branch officials. These alternatives include the enactment of laws that would expedite judicial consideration of subpoena-enforcement lawsuits filed by either house of Congress; the establishment of an independent office charged with enforcing the criminal contempt of Congress statute; or the creation of an automatic consequence, such as a withholding of appropriated funds, triggered by the approval of a contempt citation.", "In addition, either the House or Senate could consider acting on internal rules of procedure to revive the long-dormant inherent contempt power as a way to enforce subpoenas issued to executive branch officials.", "Yet, because of the institutional prerogatives that are often implicated in inter-branch oversight disputes, some of these proposals may raise constitutional concerns." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Our Prior Reports and Recommendations", "Cost Estimating", "Test Events", "Legislative Cost Cap of Ford-Class Ships", "Persistent Issues with Lead Ship Construction Continue to Drive Cost Uncertainty", "Challenges with Technology Development, Design, and Construction, Coupled with an Optimistic Budget, Drove Lead Ship Cost Growth", "Recent Shipboard Testing Problems Create Cost and Schedule Uncertainty", "CVN 79 Cost Estimate Is Not Reliable, with Construction Costs Likely to Exceed Cost Cap", "Cost Estimate Is Not Accurate Because of Overly Optimistic Labor Hour Projections and Untimely Cost Data", "Labor Hour Estimate Is Based on Unprecedented Reductions Compared to Prior Carrier Class Construction", "The Navy Did Not Demonstrate the Estimate Has Been Updated with Current Data", "CVN 79 Cost Estimate Is Not Credible Because It Does Not Include Sufficient Risk for Program Uncertainties", "Sensitivity Analysis Indicates CVN 79 Cost Estimate Does Not Accurately Reflect Program Uncertainties", "Risk Analysis Indicates CVN 79 Budget Will Not Cover Most Likely Costs and Has No Reserve for Cost Growth", "Basis for Program Cost Estimate Is Poorly Documented", "Current CVN 79 Construction Performance Suggests Cost Estimate May Not Be Achieved", "Ford Class Oversight Mechanisms Provide Limited Insight into Ship Costs", "Significant Funding Decisions Are Made Prior to Attaining Independent Cost Estimates", "Program Selected Acquisition Reports Obscure Individual Ship Cost Growth", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Assessment of CVN 79 Cost Estimate", "Summary of the GAO Methodology Used to Perform Cost Estimating Analysis", "GAO High-Level Analysis", "Appendix III: Comments from the Department of Defense", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "The Ford-Class nuclear-powered aircraft carriers are the successors to the Nimitz-Class carriers designed in the 1960s. The Navy set ambitious goals for the Ford-Class program, designing the carrier with an array of cutting-edge technologies, including an aircraft launch system that would use electromagnetics—versus steam—to propel aircraft off of the ship (EMALS), an advanced arresting gear (AAG) with an electric motor to recover aircraft, and a dual band radar (DBR) that would use two planar (stationary) radars to provide air traffic control, ship self-defense, and other capabilities. These technologies, along with new design features like a new propulsion system, an enlarged flight deck, and an aft- positioned island, would improve combat capability, while simultaneously reducing acquisition and life-cycle costs. Newport News Shipbuilding, in Newport News, Virginia, began construction of CVN 78 in September 2008 with delivery originally expected in September 2015. Delivery was delayed, however; and CVN 78 was delivered in May 2017. Construction of CVN 79 began in June 2015, with an expected initial delivery in 2022.\nDue to their vast size and complexity, aircraft carriers require funding for design, long-lead materials, and construction over many years. To accomplish these activities on the Ford Class, the Navy has awarded contracts for two phases of construction—(1) construction preparation and (2) detail design and construction—which are preceded by the start of advance procurement funding. The CVN 78 detail design and construction contract was a cost-plus incentive fee contract, which means that the shipbuilder is reimbursed for its allowable costs plus a fee which is adjusted according to a formula and is capped by a negotiated maximum fee. In contrast, the CVN 79 detail design and construction contract is a fixed-price incentive fee contract, meaning the government’s liability is capped at a negotiated ceiling price. However, because the Navy budgeted the ship at the target cost, any cost increases above the target would require the Navy to adjust its budget planning and request additional funding from Congress. DOD and the Navy have conducted program reviews for each Ford-Class ship prior to major phases in the program, such as prior to awarding advanced procurement and detail design and construction contracts.", "We have reported extensively on issues with the cost and execution of the Ford-Class program and made a number of recommendations. DOD has addressed some but not all of our recommendations: In 2007, we reported that delays in Ford-Class technology development and overly optimistic cost estimates would likely result in higher lead ship costs than what the Navy planned in its budget. Among other things, we recommended actions to improve the realism of the CVN 78 budget estimate and the Navy’s cost surveillance capability. We also recommended that the Navy develop carrier- specific tests of DBR to ensure that it could meet carrier-specific requirements. While DOD agreed with these recommendations and eventually acted on some of them, including improving the Navy’s cost surveillance capability, the Navy’s updates to CVN 78’s cost estimate did not reflect its most likely costs.\nIn 2013, we reported that the Navy faced technical, design, and construction challenges to completing CVN 78 that had led to significant cost increases and reduced the likelihood that a fully functional ship would be delivered on time. The Navy’s strategy for providing timely demonstration of CVN 78 capabilities was hampered by post-delivery test plan deficiencies, Joint Strike Fighter aircraft delivery delays (this is one of the primary aircraft slated to operate from the carrier), and reliability shortfalls affecting key ship systems. We recommended that DOD: conduct a cost-benefit analysis on required CVN 78 capabilities— namely, reduced manning and the increased rate of aircraft launches (known as the sortie generation rate)—in light of known and projected reliability shortfalls for critical systems; update the Ford-Class program’s test and evaluation master plan and adjust the planned post-delivery test schedule; defer the CVN 79 detail design and construction contract award until land-based testing for critical systems was complete; and update the CVN 79 cost estimate on the basis of actual costs and labor hours needed to construct CVN 78.\nWhile DOD agreed to update the test plan and delayed the CVN 79 detail design and construction contract award, it partially concurred with and has taken only modest action to address our other recommendations.\nIn 2014, we reported that the extent to which CVN 78 would be delivered on time and within the Navy’s $12.9 billion estimate was dependent on the Navy’s plan to defer work and costs to the post- delivery period. We found that CVN 78 would deploy without demonstrating full operational capabilities because it could not achieve certain key requirements—such as increasing launch and recovery rates—according to its test schedule. We also found that the Navy was implementing steps to achieve the congressional cost cap for CVN 79, but that they were largely based on ambitious efficiency gains and reducing a significant amount of construction, installation, and testing—work traditionally completed prior to ship delivery. We made no new recommendations in this report but noted that our 2013 recommendations remained valid. However, we suggested that Congress consider revising the cost cap legislation to ensure that all work included in the initial ship cost estimate that is deferred to post- delivery is counted against the cost cap; if warranted, we noted, the Navy could seek statutory authority to increase the cap. To date, Congress has not taken action to change the cost cap legislation; however, the National Defense Authorization Act for Fiscal Year 2016 lowered the cost cap for all follow-on ships, to include CVN 79, from $11.5 billion to $11.4 billion.", "A reliable cost estimate is critical to the success of any program. Such an estimate provides the basis for informed investment decision making, realistic budget formulation and program funding, meaningful progress measurement, proactive course correction when warranted, and accountability for results. The GAO Cost Estimating and Assessment Guide states that reliable cost estimates reflect 4 characteristics, which encompass 20 best practices. The characteristics are (1) comprehensive, (2) accurate, (3) credible, and (4) well-documented, as shown in table 1 below.\nFor Navy shipbuilding programs, including the Ford Class, several different entities are involved in cost estimating:\nThe Naval Sea Systems Command (NAVSEA) Cost Engineering and Industrial Analysis Group (05C) is responsible for developing the program life-cycle cost estimate, which is an estimate accounting for the total cost to the government of acquisition and ownership of a system over its full life.\nThe Naval Center for Cost Analysis (NCCA) is responsible for developing an independent cost assessment for certain Navy programs at program milestone events in the defense acquisition system. This assessment is not a separate estimate, but rather a review of the NAVSEA 05C program life-cycle cost estimate. NCCA and NAVSEA 05C, with support from the program office, collaborate to develop the Navy Service Cost Position, based on the program life- cycle cost estimate and the independent cost assessment. NCCA first assessed the Ford-Class program in 2015.\nThe Office of the Secretary of Defense’s Office of Cost Assessment and Program Evaluation (CAPE) develops an independent cost estimate. According to DOD’s Cost Analysis Guidance and Procedures, independent cost reviews are required for major defense acquisition programs at milestone events. The Navy Service Cost Position and the CAPE independent cost estimate are compared and presented to the Under Secretary of Defense for Acquisition, Technology, and Logistics (the Milestone Decision Authority for the Ford-Class program) to establish the program acquisition baseline. DOD policy states that a major defense acquisition program should budget to the independent cost estimate unless an alternative estimate is approved by the Milestone Decision Authority.\nThe program office uses cost and risk information from the program life-cycle cost estimate to inform all resource and programming decisions. The program office is responsible for developing and annually updating the Cost Analysis Requirements Description, which includes the program acquisition approach, system characteristics, and preliminary schedules. This document is used as the basis for all program cost estimates.\nThe most recent CAPE and NCCA independent cost estimate and assessment for the Ford Class were completed in May 2015 and April 2015, respectively, to support an April 2015 Defense Acquisition Board Review prior to the Navy’s June 2015 award of the CVN 79 detail design and construction contract. The Under Secretary of Defense for Acquisition, Technology, and Logistics accepted the Navy Service Cost Position as the program estimate.\nThe Ford-Class program held a Milestone B review in 2004 to approve the program development decision, coinciding with the award of the construction preparation contract, as shown in figure 1 below. Milestone C was aligned with the end of operational testing, scheduled for fiscal year 2020. In 2014 the Under Secretary of Defense for Acquisition, Technology, and Logistics decided to shift this milestone review to April 2015 to take place during the planned Defense Acquisition Board Review. In 2015 the Under Secretary canceled the milestone review, and rescheduled it for fiscal year 2018.", "During the acquisition process, major defense programs, including shipbuilding programs, execute several types of testing, while the ship progresses toward operational milestones including the point when the fleet initially receives the ship.\nDevelopmental testing is intended to assist in the maturation of products, product elements, or manufacturing or support processes. For ship technologies, developmental testing typically includes land-based testing activities prior to introducing a new technology in a maritime environment and commencing with shipboard testing. Shipboard testing— which occurs during both developmental and integration testing—is meant to ensure correct installation and operation of the equipment and systems in a maritime environment. Testing in this phase is a complex and iterative process, as problems inherent with the start-up and initial operation of a system must be identified, corrected, and retested to ensure that the issues have been resolved.\nIntegration testing is intended to assess, verify, and validate the performance of multiple systems operating together to achieve required ship capabilities.\nOperational testing occurs after delivery and assesses the ship’s capability in a realistic environment when maintained and operated by sailors, subjected to routine wear-and-tear, and employed in combat conditions against simulated enemies. During this test phase, the ship is exposed to as many actual operational scenarios as possible to reveal the weapon system’s capability under stress.", "To ensure the Navy adheres to its cost estimates, Congress established a procurement cost cap for the Ford Class. In the National Defense Authorization Act for Fiscal Year 2007, Congress set the cap at $10.5 billion for the lead ship and $8.1 billion for each subsequent carrier. This legislation also established six provisions, including economic inflation and insertion of new technologies, which allow the Navy to make adjustments to the cost cap without seeking statutory authority. Following the 2007 legislation, Congress has twice increased the cap, which now stands at $12.9 billion for the lead ship and $11.4 billion for follow-on ships. The National Defense Authorization Act for Fiscal Year 2014 further expanded the list of allowable adjustments, solely for CVN 78, to include cost changes due to urgent and unforeseen requirements identified during shipboard testing.", "Since August 2007, we have reported on key risks to the CVN 78 program that would impair the Navy’s ability to deliver the ship at cost, on time, and with its planned capabilities. These risks have been realized, with nearly $2.4 billion in cost growth and over a 1-year delay in delivery. While construction of CVN 78 is complete, recent technical deficiencies— discovered as the Navy continues to test the systems installed on the ship and the shipbuilder completes the latter stage of construction activities— suggest that additional costs are likely. Program officials stated they have not fully estimated these remaining costs. As a result, the current cost cap of $12.9 billion does not represent the required budget necessary to deliver the ship.", "Our work has shown that the key drivers of CVN 78’s procurement cost growth were an ambitious technology development plan for incorporating critical technologies on the ship and the ship’s incomplete design at the start of construction. These factors, along with engineering and construction challenges, contributed to inefficiencies in ship construction and have led to $2.4 billion in cost increases as of 2016. We highlight the cost drivers to date in table 2.\nCVN 78’s critical technologies drove approximately 40 percent of the ship’s procurement cost growth. This cost growth was largely attributable to EMALS, DBR, and AAG, as seen in table 3.\nIn addition to cost increases to buy these systems, costs to develop these systems also increased above initial estimates. For example, EMALS experienced a $549 million increase in its development costs. Development costs for AAG and DBR are not reflected in the development costs for CVN 78, as the systems are managed through different Navy programs. Development costs for the AAG program (managed by the Naval Air Systems Command) increased by $572 million—an over 300 percent increase above its initial estimate from 2005. The Navy initially planned to retrofit AAG on the Nimitz Class; it opted to install the system only on the Ford Class, in part as a result of cost increases. Similarly, DBR, which is managed by NAVSEA’s Integrated Warfare Systems Program Executive Office, experienced development cost increases. However, since this system was initially developed for the Zumwalt Class destroyer program, its cost increases are not accounted for in the CVN 78 program.\nIn our November 2014 report, we elaborated on ongoing issues with DBR, AAG, and EMALS, which were attributed to unanticipated challenges in development, as highlighted in table 4.\nThe Navy took steps to limit procurement cost growth for EMALS and AAG, which, as noted above, are being developed and produced under contracts separate from the CVN 78 detail design and construction contract. Most notably, in fiscal year 2010, the Navy awarded a firm fixed- price contract for production of these systems for CVN 78, which had the effect of leveling off the systems’ procurement cost growth as shown in figure 2 below. The contractor developing these systems is generally responsible for any cost growth beyond the contract’s firm fixed-price.\nIn August 2007, we found that the Navy’s cost estimate of $10.5 billion used to develop the CVN 78 budget was optimistic. We highlighted a number of concerns:\nThe cost estimate made the unprecedented assumption that CVN 78 would take 2 million fewer labor hours to build than its more mature predecessor—CVN 77. We questioned the Navy’s assumption that the lead ship’s costs would be offset by the use of the computer- assisted product model and other investments in facilities, as these were unproven.\nKey technology costs were likely to increase because the systems were still in development.\nMaterial costs were uncertain. CVN 78 was already beginning to experience slips in the delivery of material in August 2007. According to the shipbuilder, none of the delays to date were expected to disrupt the construction schedule. However, late material delivery led to labor hour increases on both CVN 76 and CVN 77.\nCVN 78’s costs grew, as the budget did not appropriately reflect the actual effort required to construct the ship. As a result, the Secretary of the Navy increased the cost cap in 2010, and Congress approved an additional increase to the cap in 2013. The Navy attributed the cost increases to construction cost overruns and economic inflation. Figure 3 depicts CVN 78’s procurement cost growth and cost cap increases.", "Recent issues discovered during shipboard testing of the systems installed on the ship further delayed CVN 78’s delivery date, creating added uncertainty regarding the program’s ability to maintain costs under the current $12.9 billion cost cap. Since we last reported on the status of CVN 78 in November 2014, EMALS has completed deadload testing—a key aspect of the system’s test program—and the shipbuilder has positioned the ship to begin testing the ship’s propulsion system in preparation for sea trials. However, other systems have experienced the following problems, which have resulted in cost and schedule uncertainty:\nDBR—In August 2016, program officials told us that testing for DBR had been further delayed due to problems with ship integration, specifically related to its interface with the power system. The Navy is working to resolve technical deficiencies with the volume search radar. Program officials stated that they plan to continue DBR testing during sea trials following ship delivery. However, issues with DBR may still affect CVN 78’s schedule. For example, warfare and aircraft operations events scheduled for 6 weeks after ship delivery may be pushed back if DBR issues are not resolved.\nAAG— In May 2017, the Navy reported that shipboard testing of AAG is 85 percent complete, and the remaining testing has been deferred to post-delivery. The Navy is still resolving issues with emergent faults with the AAG system discovered during shipboard testing, while land-based testing with live and simulated aircraft continues. The Navy needs to resolve these issues in order to support aircraft operations during an exercise scheduled to take place 10 weeks after ship delivery.\nPropulsion Plant—According to the Navy, in June 2016, a transformer in one of the main turbine generators in CVN 78’s propulsion plant experienced a catastrophic failure. A shipbuilder and vendor review of this incident found that the failure was likely due to a manufacturing defect in the transformer. However, a follow-on review uncovered additional problems, including issues with the voltage regulator on the main turbine generator; design and performance problems with the protection system; and excessive noise in the plant. Detailed assessments of these issues show that the voltage regulator and protection systems require design modifications. Laboratory testing of the design modifications are complete and shipboard installation is underway, which will be followed by shipboard testing. The generator incident and the time needed to conduct the subsequent reviews have affected propulsion plant testing, but program officials believe that they are able to meet the new delivery date.\nAdvanced Weapons Elevators—In early January 2017, the Navy reported that testing of the Advanced Weapons Elevators was 35 percent complete and that the shipbuilder would complete construction and testing of 2 of the 11 elevators by ship delivery. The Navy is working to resolve a problem with the elevator doors in order to continue with testing. In general, the elevators continue to have issues with reliability, which will affect their ability to support aircraft operations.\nProgram officials stated that they are considering several options to resolve problems uncovered during shipboard testing and have not fully estimated the resulting costs. Because the remaining costs have not been estimated, the current program baseline does not represent the required budget necessary to deliver the ship. Data from contract performance reports—owned and maintained by the shipbuilder—in turn no longer provide an accurate assessment of the costs at completion, as additional undefined work will be required to resolve problems identified in testing. In the likely event that additional funding is needed to complete the ship, the Navy may choose to defer more construction work or installation of mission-related systems until after ship delivery to stay within the cost cap. Finally, the delivery schedule for CVN 78 has continued to slip from its initial plan of September 2015 and was delivered in May 2017. Delays in delivery will result in additional costs, as the government may continue to have to pay for unanticipated construction work and unanticipated overhead costs.", "The $11.4 billion the Navy has budgeted to construct CVN 79 is likely insufficient, in part because the cost estimate that supports the budget is not reliable and does not address lessons learned from the experiences of the lead ship. We compared the program life-cycle cost estimate to best practices criteria as outlined in GAO’s Cost Estimating and Assessment Guide. While the estimate was comprehensive in that it included all life-cycle costs—meaning development, procurement, and sustainment—we found several weaknesses that indicate the $11.4 billion is not a realistic program estimate.\nFirst, we question the accuracy of the CVN 79 estimate because of its optimistic assessment regarding the labor hours needed to construct the ship and because the estimate did not use timely data to ensure that it reflected the costs most likely to be incurred. While Navy officials stated they have updated the cost estimate, the documentation they provided to us was only a high-level briefing chart reflecting final numbers. This documentation is not sufficient for us to gain insights into the sources or timeliness of the data—key aspects of our cost estimating best practices.\nSecond, we question the credibility of the estimate because it does not sufficiently account for program risks. As a result, the cost estimate does not provide a reliable basis for program decision making, such as developing annual budgets, making requirement trade-offs, and gauging shipbuilder progress, among other things.\nThird, we found that the estimate lacked documentation and analysis to support the derived cost savings from CVN 78.\nFor a high-level summary of the CVN 79 cost estimate compared to GAO best practices, see appendix II.\nFinally, the contractor performance reports indicate the shipbuilder has not been consistently achieving the anticipated labor efficiencies needed to meet the $11.4 billion cost cap.", "The CVN 79 cost estimate does not address lessons learned from the experiences of the lead ship, specifically in terms of its optimistic assessment of the labor hours required to complete construction. A cost estimate is considered accurate when it is based on an assessment of the most likely costs—that is, it is neither overly conservative nor overly optimistic—and it is updated regularly to reflect the current status of the program. However, the cost estimate for CVN 79 does not fully meet GAO’s best practice standards for accuracy because: (1) it is based on a projected reduction in construction labor hours that is unprecedented in aircraft carrier construction and relies on untested efficiencies and (2) inadequate documentation existed regarding the timeliness of data to ensure that it reflected the costs most likely to be incurred. Additional information supporting the GAO conclusions in this section may be found in the sensitive version of this report, which is available upon request for official use only to those with the appropriate need-to-know.", "The April 2015 cost estimate calculated that significantly fewer labor hours would be required to construct CVN 79 compared to CVN 78. NAVSEA 05C cost estimators attributed most of this labor hour reduction to the assumption that CVN 79 would not experience the same challenges that led to increased labor hours for CVN 78, including an immature design, and the construction and engineering challenges discussed above. The estimate also assumed reductions would result from changes in the processes to build the ship that would make construction more efficient and thus require fewer labor hours. Specific details of the CVN 79 estimate were redacted because the directorate responsible for NAVSEA contracting deemed the information to be sensitive in the context of CVN 80 contract negotiations.\nAfter developing this cost estimate, the Navy negotiated an 18 percent reduction in the labor hours to construct CVN 79 compared to CVN 78. However, this reduction is twice the labor hour reduction from the Nimitz Class of carriers. Even if the shipbuilder did not experience the same challenges as CVN 78, a nearly 9 million labor hour reduction would be unprecedented in 50 years of aircraft carrier construction since the construction contract for CVN 68 was awarded in 1967. As shown in table 5, in each successive aircraft carrier build, the number of labor hours needed to complete construction has, at most, decreased by 9.3 percent as compared to the previous ship (with CVN 69 compared to CVN 68 accounting for the largest percentage decrease). Specific details of the CVN 79 estimate were redacted because the directorate responsible for NAVSEA contracting deemed the information to be sensitive with regard to CVN 80 contract negotiations.\nThe planned labor hour reduction in the CVN 79 cost estimate includes a reduction as a result of several shipbuilder initiatives intended to increase efficiency. NAVSEA 05C cost estimators derived this reduction based on the shipbuilder’s estimates of its efficiencies, but did not conduct any additional assessments to validate these estimates. The shipbuilder’s planned efficiencies include a new build sequence aimed at completing more work earlier in the construction sequence and in the shops instead of after the ship is in the dock, as well as improvements to some shipyard construction facilities. Work completed earlier in the build process is more efficient and less costly than work done later on the ship when spaces are more difficult to maneuver within. In addition, the shipbuilder’s revised build plan consolidates and increases the size of superlifts—fabricated units and block assemblies that are grouped together and lifted into the dry dock—to form larger sections of the ship. However, the new build sequence and shipyard improvements are untested and there are no historical data available to support whether the planned labor reductions can be achieved. Shipbuilder representatives told us they had not fully estimated the anticipated savings from future efficiencies. Since a complete plan to achieve the required efficiencies has not been developed, the shipbuilder is at risk of not meeting the planned $11.4 billion budget. Specific details of the CVN 79 estimate were redacted because the directorate responsible for NAVSEA contracting deemed the information to be sensitive in the context of CVN 80 contract negotiations.\nIndependent DOD and Navy cost reviews also found NAVSEA 05C’s labor hour estimates to be optimistic. To calculate the labor hour reduction, CAPE accounted for CVN 78 work packages that were adversely impacted by concurrency of design and construction, and material unavailability. NCCA developed two different estimates of the labor hour reduction from Nimitz-Class labor hour data, accounting for the weight of each ship. Specific details of the CAPE and NCCA estimates were redacted because the directorate responsible for NAVSEA contracting deemed the information to be sensitive.\nNCCA officials stated they do not believe that CVN 79 construction will be as efficient as the program office projects. CAPE’s independent cost estimate also assumed fewer construction efficiencies than the program estimate. Additionally, CAPE’s review noted that challenges may arise during construction when parts are assembled at the dock and pier, and estimated that 15 percent of future work will begin late relative to the schedule. CAPE’s independent cost estimate projected that CVN 79 would exceed the program’s cost estimate by several hundred million dollars, with nearly all of that difference for labor costs. Similarly, NCCA noted that the shipbuilder is at risk of not achieving the entire estimated labor hour savings from CVN 78 to CVN 79, and estimated that labor costs could potentially increase by over $100 million. Specific details of the CAPE and NCCA estimates were redacted because the directorate responsible for NAVSEA contracting deemed the information to be sensitive with regard to CVN 80 contract negotiations.\nAlthough the CAPE and NCCA labor estimates are more conservative than the NAVSEA 05C estimate, they are still optimistic compared to historical aircraft carrier construction data. CAPE and NCCA officials told us they had limited time to prepare their reviews, in part due to delayed access to shipbuilder labor hour data. As a result, these reviews may not have captured the full extent of potential cost risks. According to DOD and Navy cost guidance, CAPE and NCCA should have been notified at least 7 or 6 months, respectively, in advance of the program milestone event. NCCA only had 3 months to develop its cost review and officials stated they had to shorten their internal review process. In addition, NCCA officials stated they did not receive shipbuilder labor hour data. CAPE officials stated they received this data only one month prior to the estimate completion date. At the April 2015 Defense Acquisition Board review, the CAPE estimate was still in development, so the optimistic NAVSEA 05C estimate was the only complete estimate available to inform decision makers at that review. The final CAPE estimate was completed in May 2015, prior to issuance of the Acquisition Decision Memorandum in June 2015.", "In its April 2015 estimate, NAVSEA 05C used an estimate of CVN 78’s total labor hours at ship completion as the starting point to determine CVN 79 labor hours. Since CVN 78 had not yet been delivered, NAVSEA 05C used shipbuilder data on the actual labor hours expended and an estimate of the labor hours for the remaining work. However, some of the shipbuilder data used to calculate the distribution of production labor hours were from March 2014, which was already a year out of date at the time of the estimate. GAO’s Cost Estimating and Assessment Guide advises regularly updating cost estimates as technical or program assumptions change and more data become available. The guide also recommends that the cost estimate be continually updated as actual costs begin to replace the original estimates, as shown in figure 4.\nGAO’s Cost Estimating and Assessment Guide emphasizes that cost estimates should be realistic and timely. If an estimate is not regularly updated with actual costs, it is difficult to analyze changes, accurately estimate future costs, and provide decision makers with accurate information for assessing alternatives. Regularly updating cost estimates also allows program officials and estimators to have a track record of the estimate for comparison over time. Without a documented comparison between a current estimate—updated with actual costs—and the previous estimate, cost estimators cannot determine how different the two estimates are, and thus how well they are estimating.\nWhile NAVSEA 05C cost estimators assert they have updated the CVN 79 cost estimate since April 2015, we are unable to validate this claim based on the documentation provided. In June 2016, we were provided with a demonstration of the cost estimating model NAVSEA 05C used to develop the CVN 79 cost estimate. However, the cost estimating model did not incorporate any updates based on new performance data. According to officials from NAVSEA 05C, the cost estimating model was updated in July and September 2016 with actual costs. However, officials were unable to provide documentation sufficient for us to verify the assumptions and sources of the estimate. This level of detail is a key component of the “accurate” characteristic for our cost best practices.", "To determine an estimate’s credibility, cost estimators should test, among other things, the sensitivity of key elements of cost, such as labor hours and labor rates, and conduct uncertainty analyses to quantify risks. Uncertainty analysis provides the basis for adjusting estimates to reflect known facts and circumstances that could affect costs and a level of confidence in the estimate to help inform decision makers about the effects of varying levels of cost. Additionally, an independent cost estimate should be conducted by a group outside the acquiring organization to determine whether other estimating methods produce similar results. While CAPE and NCCA conducted independent cost assessments and NAVSEA 05C conducted sensitivity and risk analyses to test the validity of its estimate, our evaluation of the cost estimate shows that it may not accurately account for the risk of certain technologies and the new shipbuilder efficiencies. As a result, the amount the Navy has budgeted for CVN 79 is likely insufficient to cover program costs. Additional information supporting the GAO conclusions in this section may be found in the sensitive version of this report, which is available upon request for official use only to those with the appropriate need-to-know.\nIn August 2016, the Under Secretary of Defense for Acquisition, Technology, and Logistics expressed concern about CVN 78’s schedule and performance and directed an independent team to review the critical technologies in order to identify and mitigate potential risks for Ford-Class follow-on ships. In December 2016, the independent review found that CVN 79 is at risk of not meeting planned efficiencies. In particular, the review found that the new radar system, which was intended to reduce cost and technical risk, is at risk of not meeting the CVN 79 schedule. The review also found that reverting to legacy systems for follow-on Ford- Class ships is impractical and would impact the ships’ ability to meet key performance parameters.", "While NAVSEA 05C conducted a sensitivity analysis to identify a range of possible costs, we found that the results of this analysis were not realistic. We reviewed some of the top cost drivers identified in the sensitivity analysis developed for NAVSEA 05C’s cost estimate and how each driver impacts the range of potential program costs. Our analysis of the results of the sensitivity analysis found that for some cost drivers, NAVSEA 05C estimated a higher likelihood that these costs would be lower than expectations (or underrun), rather than higher than expectations (or overrun)—which seems unlikely given the program uncertainties.\nThis is particularly evident in NAVSEA 05C’s sensitivity analysis for production labor hours. As previously mentioned, we found the CVN 79 labor hour estimate to be optimistic. This optimism results in an unrealistic range of labor hours in the sensitivity analysis. Compared to historical aircraft carrier data, the minimum value represents a labor reduction which is significantly more than the largest decrease that has been observed in the past 50 years of carrier construction. The sensitivity analysis also indicates that the range for labor hour underruns is larger than the range for overruns, which is not realistic given that construction for CVN 76 and CVN 77 have required more labor hours than originally estimated. Specific details of the CVN 79 sensitivity analysis were redacted because the directorate responsible for NAVSEA contracting deemed the information to be sensitive with regard to CVN 80 contract negotiations.\nIn addition, the sensitivity analysis for EMALS and AAG may not accurately reflect program uncertainty. Specifically, the analysis for AAG conducted by NAVSEA 05C indicates that a cost underrun is more likely than a cost overrun. Given the significant technical issues on AAG that are still being resolved for the lead ship, this risk analysis may not accurately reflect the cost risk associated with AAG performance issues. Specific details of the CVN 79 sensitivity analysis were redacted because the directorate responsible for NAVSEA contracting deemed the information to be sensitive.\nFurther, NAVSEA 05C’s estimate did not sufficiently account for potential changes during CVN 79 construction. NAVSEA 05C estimators only included a factor of 3 percent of the total construction cost for changes. However, 3 percent is not realistic compared to historical data from the Nimitz-Class ships. The actual change order costs for all but one carrier were greater than 3 percent, with an average cost of 5 percent. Additionally, the estimate is on the low side of cost guidance from NAVSEA for programs to budget between 3 and 5 percent of total construction costs for potential changes on its follow-on ships. Due to the uncertainty of the new technologies and build strategies, CVN 79 will likely have above average change orders that will exceed the 3 percent budget.\nFinally, none of the cost reviews validated the program office’s anticipated savings of $188 million from replacing the DBR with a new radar solution, known as the Enterprise Air Surveillance Radar. The NCCA independent cost assessment stated that analysts could not develop a cost estimate for the radar since the program office did not provide sufficient technical details. At the time of NCCA’s estimate, the Navy had not yet begun development of the Enterprise Air Surveillance Radar. In addition, NCCA pointed out that the radar program was not fully funded to the cost estimate. As a result, the Navy may need to request additional funding. The Navy awarded a contract for the radar development in August 2016. While the new radar may result in procurement cost savings, as the independent review team identified, there is risk for additional costs going forward to integrate the radar on the ship.", "Based on our analysis, the CVN 79’s program estimate will likely be insufficient to complete ship construction. NAVSEA 05C analysts conducted a risk analysis to identify and quantify program risks, and determined the effects of changing key cost driver assumptions and factors—important steps in creating a high quality estimate. However, NAVSEA 05C’s risk analysis indicates that the point estimate of $11.5 billion represented less than a 50 percent confidence level—the probability that costs for the program will be at or below that level. For example, a 50 percent confidence level indicates that there is an equal chance that program costs will be above or below that cost level. An estimate’s confidence level is used to inform a program budget, and as additional budget is allocated to a program, there is a higher confidence that program costs will fall under the budgeted amount. Navy cost guidance recommends using the “risk adjusted mean” as the best estimate for unknown cost for the program, which usually lies between 50 and 60 percent. Additionally, GAO’s Cost Estimating and Assessment Guide states that program cost estimates should be budgeted to at least the 50 confidence level. Even then, there is still a chance that the program will need additional funding because programs tend to overrun more than underrun. Thus, budgeting to the mean of the distribution or higher, which is between the 55 percent to 65 percent confidence level, is considered a best practice to guard against potential risks. Specific details of the CVN 79 risk analysis were redacted because the directorate responsible for NAVSEA contracting deemed the information to be sensitive in the context of CVN 80 contract negotiations.\nHowever, NAVSEA 05C’s risk analysis indicates that the current budget does not provide margin for cost risk. We compared NAVSEA 05C’s risk analysis of CVN 79’s potential cost outcomes and the associated probability that such an outcome will be realized, with the typical risk- adjusted funding levels based on Navy cost guidance and GAO best practices. Specific details of the CVN 79 risk analysis were redacted because the directorate responsible for NAVSEA contracting deemed the information to be sensitive.\nThe National Defense Authorization Act for Fiscal Year 2016 reduced CVN 79’s cost cap to $11.4 billion and the program budget was further reduced, resulting in a confidence level well below typical risk-adjusted funding levels based on GAO’s best practices and Navy guidance. As a result, the current budget for CVN 79 construction is unlikely to cover the program costs even if there are no issues or schedule delays, and therefore leaves no margin for program risk or uncertainty. The program office plans to meet the cost cap in part from anticipated savings through a two-phase delivery for CVN 79. Under this strategy, labor hours would shift to a second phase, where installation of some electronic systems (in particular the Enterprise Air Surveillance Radar) and compartments will be completed after the ship is delivered and competed among different vendors, which the Navy hopes will lower costs. The NAVSEA 05C estimate did not include any savings from the two-phased delivery approach beyond the savings identified for radar replacement, assuming that the shipbuilder would remain responsible for completing all remaining installation work. However, the NCCA independent cost assessment reviewed the two-phase approach and could not substantiate the assumption that the shift in labor hours to the second phase would decrease overall costs. As a result, it is unclear whether the two-phase approach will result in cost savings to meet the CVN 79 cost cap. Specific details of the CVN 79 risk analysis were redacted because the directorate responsible for NAVSEA contracting deemed the information to be sensitive.\nFurther, we found that since the cost estimate does not sufficiently account for program risks, it is likely that its confidence levels are optimistic and this ship is at an even higher risk of exceeding the budget. Based on an insufficient reflection of risk in the program office estimate and recent budget reductions, the Navy will likely need additional funding beyond the cost cap to complete CVN 79 construction. Typically, a high confidence level means that there is a high probability that funding is available to cover costs, even if multiple risks are realized. In the case of CVN 79, this means that a high confidence level should cover the shipbuilder not meeting planned labor efficiencies, as well as any critical technologies requiring unplanned changes. We found the estimate does not realistically reflect the full potential of CVN 79 cost growth, compared to CVN 76 and CVN 77, the last two ships in the Nimitz Class, which had 6 and 17 percent cost growth respectively. Considering the cost risks associated with potential changes to CVN 79’s baseline and the cost growth observed on previous carriers, it is unlikely that the confidence levels reflects the potential for CVN 79 cost growth. Since NAVSEA 05C applied a narrow risk range to the cost estimate, the confidence levels are particularly sensitive to change. However, since CVN 79 is not a low risk program, it is likely that the cost estimate does not capture all potential risks or costs.", "A reliable cost estimate is supported by detailed documentation that describes how it was derived and how the expected funding will be spent in order to achieve an objective. It is important that outside parties can replicate the cost estimate and understand the logic behind the estimate. The cost estimate documentation we reviewed did not describe the estimating methodologies used and estimators had to provide us with additional explanations to support the methodologies. Although production man hours are identified as the top risk variable, there is limited documentation to support the inputs behind the labor hour risk analysis. For example, the estimate for planned construction efficiencies was based on a shipbuilder estimate and had insufficient documentation and no historical data to support it. To be considered fully documented in accordance with best practices, we would expect to see data sources, methodologies, and assumptions behind the estimate. For example, for Milestone B in 2004, a 58-page document with 13 separate appendixes was produced for the Ford-Class program life-cycle cost estimate. In contrast, the primary documentation for the April 2015 program life-cycle cost estimate was a 14-page memorandum which did not include the same level of detail. Specific details of the CVN 79 cost analysis were redacted because the directorate responsible for NAVSEA contracting deemed the information to be sensitive with regard to CVN 80 contract negotiations.\nPoorly documented cost estimates can cause a program’s credibility to suffer because the documentation cannot explain the rationale of the methodology or the calculations underlying the cost elements. Therefore, estimates that lack sufficient documentation are not useful for updates or information sharing and can hinder understanding and proper use. Furthermore, without adequate documentation, analysts unfamiliar with the program will not be able to replicate the estimate because they will not understand the logic behind it. Documentation is essential for validating and defending a cost estimate. That is, without a well- documented cost estimate, one cannot present a convincing argument of an estimate’s validity, or answer decision makers’ and oversight groups’ probing questions.", "Shipbuilder representatives told us that they are still working to define some of the future efficiencies that will help them meet the planned reduction in labor hours. As of January 2016, the shipbuilder had primarily made progress on structural and component fabrication assembly work, which represents only 15 percent of total labor. The largest labor category, ship assembly, which is 45 percent of total labor, was only 5 percent complete, so it is uncertain whether shipbuilder performance will continue to progress similarly as more ship assembly work is completed. CAPE noted in its May 2015 independent cost estimate that although the CVN 79 construction preparation contract was performing well at the time, ship assembly is a key cost driver for the remainder of the construction contract. Since efficiencies will be implemented for specific phases of work, achieving efficiencies to date does not ensure that the shipbuilder can achieve future efficiencies.\nOur analysis of contract performance reports shows the shipbuilder is not achieving the estimated labor efficiencies and cost performance—as illustrated by the cost performance index, which indicates a steady decline in performance. The cost performance index measures the ratio of work performed to actual costs for work performed.\nA cost performance index of less than 1 is unfavorable, because work is being performed less efficiently than planned; a value greater than 1 is favorable, implying that work is being performed more efficiently than planned. Cost performance can be expressed in dollars: 0.9 means that for every dollar spent, the program has received 90 cents worth of completed work. Calculating the cost performance of the prior 6 months provides an average measure of recent shipbuilder performance. Our analysis found recent drops from the established baseline in both monthly cost performance and the cost performance of the prior 6 months. The first shipbuilder performance report for the new construction contract was provided in October 2015, so a 6-month cost performance average could not be calculated until March 2016. Additional information supporting the GAO conclusions in this section may be found in the sensitive version of this report, which is available upon request for official use only to those with the appropriate need-to-know.\nShipbuilder contract performance reports identify several labor categories, such as sheet metal, insulation, and piping, where completed work has cost more than planned. In some of these categories, the shipbuilder may not realistically be able to improve labor efficiencies and complete certain work within the budget. Independent analysis from the Navy’s Supervisor of Shipbuilding also found that overall construction labor cost performance has been slowly degrading. The shipbuilder must complete future work more efficiently and below budget in order to compensate for recent performance issues. If current shipbuilder performance trends continue, CVN 79 is at risk of not being completed within the $11.4 billion cost cap.", "Current reporting mechanisms, such as budget requests and the SAR, provide limited insight into the overall Ford-Class program and individual ship costs. Because the Navy has designated the entire Ford-Class program as a single major defense acquisition program, independent cost reviews have been infrequent and are not conducted for each ship before the Navy must request funding for ship construction. As a result, individual ships have received a significant portion of funding with limited information on program costs. Additionally, annual acquisition reports to Congress provide only aggregate program cost for all three ships currently in the class, a practice that diminishes transparency into individual ship costs. As a result of unreliable cost estimates and limited acquisition reporting, Congress has limited ability to oversee one of the most expensive programs in the defense portfolio.", "Because the entire Ford-Class program is considered a single major defense acquisition program, the Navy requested and received a significant portion of funding for each of the first three Ford-Class ships without an independent cost estimate to confirm the credibility of program estimates. An independent cost estimate is important because it provides an unbiased assessment of whether a program’s estimate is reasonable. DOD acquisition policy and federal statute state that independent cost estimates for major defense acquisition programs are conducted at milestone events. In the case of the Ford-Class program, although each individual ship exceeds the $2.79 billion procurement cost threshold to be designated a major defense acquisition program, DOD considers the entire Ford-Class program—rather than each individual ship—as a major defense acquisition program. Therefore, independent cost estimates are not required for each individual ship and CAPE only developed independent cost estimates to support milestone events in 2004 and 2015 for the Ford-Class program as a whole.\nFigure 5 shows that the independent cost estimates have trailed behind the Navy’s funding requests and Congress’s authorization of advance procurement and construction funding.\nCAPE developed its first independent cost estimate for CVN 78 in 2004 in support of the program’s Milestone B decision. However, at this point the program had already received $1.7 billion in advance procurement funding. For CVN 79, an independent cost estimate was not developed until May 2015 to support the Ford-Class program’s originally planned Milestone C. This occurred after the CVN 79 construction preparation contract was awarded and $6.0 billion of procurement funding had been received. As a result, no independent cost estimates were conducted during the 11-year period between these milestones. Program officials stated that CAPE reviewed NAVSEA 05C’s estimate in 2007 and 2010; however, CAPE did not develop an independent cost estimate during those reviews to provide decision makers with an alternative estimate. During that time, the program received $15.1 billion in procurement funding. In particular, there was no current independent cost estimate to inform the Department of Navy’s President’s budget request for construction of CVN 78 in 2007, and no independent cost estimate prior to the budget request for construction of CVN 79 in 2012. Additionally, there was no independent cost review of CVN 79 before Congress raised the program cost cap from $8.1 billion to $11.5 billion in 2013.\nNo independent cost estimate to date has included CVN 80, and before an independent cost estimate for CVN 80 is developed, the Navy will have received nearly $2.2 billion in advance procurement funding. According to guidance, CAPE will be required to develop an independent cost estimate, to include costs for CVN 80, for the Ford-Class program Milestone C now scheduled for fiscal year 2018. The Joint Explanatory Statement accompanying the National Defense Authorization Act for Fiscal Year 2016 required the Navy to assess the merits associated with using economic order quantity procurement with CVN 80 and CVN 81 and the Navy has estimated savings of $1.3 billion by pursuing this strategy. However, since there will be no future milestone events for the program after the Milestone C scheduled for fiscal year 2018, CAPE will not be required to develop independent cost estimates for any follow-on ships in the class after CVN 80—including CVN 81, which may soon be added to the acquisition program baseline.\nIf each individual carrier were designated a separate major defense acquisition program, each ship would have its own milestone events. The Navy could align these milestones to correspond with major funding decisions—for example, prior to budget requests for advanced procurement funding, or prior to requesting funding to begin ship construction—and CAPE would develop independent cost estimates prior to these major milestones. Similarly, NCCA would also develop more frequent independent cost assessments that focus on each individual carrier. NCCA officials stated they have only conducted one review of the Ford-Class program since it began in 2000. In comparison, Air Force instruction requires the Air Force Cost Analysis Agency to conduct annual independent cost assessments of all major defense acquisition programs.\nIn February 2005, we recommended, and DOD concurred, that an independent review should occur with every acquisition of every aircraft carrier. But DOD has not implemented this recommendation, as demonstrated by the fact that no independent estimate was conducted prior to the start of CVN 79 construction and the request for construction funding. Given the fact that CVN 78’s costs have increased $2.4 billion and CVN 79 faces cost increases as well, more realism in the budget requests would help inform Congress about expected costs to the taxpayer for the Ford Class.", "The Navy totals Ford-Class performance measures for all three Ford- Class ships in the SAR, a practice that diminishes transparency and encumbers oversight efforts. The SAR is a statutorily-mandated, comprehensive acquisition summary required for major defense acquisition programs. DOD submits SARs to Congress for program oversight purposes. The SAR for the Ford Class is prepared in accordance with the current Ford-Class acquisition program baseline— which is approved for three ships (CVN 78 to CVN 80). As a result, the Navy reports combined average unit costs for the three ships annually, rather than preparing separate reports for individual ships. The program office noted that costs for non-recurring engineering and EMALS apply to the entire Ford-Class program and cannot be easily allocated to individual ships. While this is true, most costs are for ship procurement, which is budgeted specifically for each ship. Reporting combined average unit costs obscures individual ship cost growth and does not provide insight into cost performance against the specific cost caps Congress has mandated for each ship.\nFurther, this practice is in contrast to Nimitz-Class ships, which were reported by individual hull in the SAR, with the exception of CVN 72 and CVN 73, and CVN 74 and CVN 75, which were procured under single contracts. Navy officials could not provide an explanation for why SAR reporting changed.\nThe effect of the current practice of reporting combined average unit costs for the three Ford-Class ships is clear when considering the Navy’s reported procurement costs for the class. The 2015 SAR reported a decline in the base year program and average procurement unit costs for the class, when actual costs for CVN 78 have increased. This reported decline is driven by a decrease in the estimated costs for CVN 80. However, since an independent cost estimate for CVN 80 has not yet been developed, it is possible that the anticipated ship savings have not been accurately estimated and will not compensate for cost growth in CVN 78 and CVN 79.\nPrinciple 15 in Standards for Internal Control in the Federal Government states that management should externally communicate the necessary quality information to achieve the entity’s objectives. As a result of the combined Ford-Class reporting, program managers are not externally communicating the necessary quality information to achieve their program’s objective. Reporting the program cost by hull for the Ford- Class program would allow for enhanced oversight—which is necessary given the magnitude of the investment required for each ship. It would also allow Congress more visibility into the cost performance of each ship against the legislated cost caps.\nAdditionally, cost and funding summaries for individual ships would allow more transparency into the cost trade-offs of each ship. Federal standards for internal control note that the information program managers communicate to overseers, namely Congress, should include significant matters relating to risks, changes, or issues that affect the program’s internal control system. Internal control standards further note that managers should select appropriate methods of communication for external parties. Further, while the statute governing the SAR does not require reporting on individual aircraft carriers, it requires that the SAR provide information that the congressional defense committees need to perform their oversight functions. Reporting cost and funding information by individual hull would provide more transparency on cost tradeoffs and cost drivers, which would improve the committees’ ability to perform oversight. Reporting ship costs individually in the SAR would also allow program managers to separately baseline, track, and manage each ship’s cost. Without this more granular level of reporting, Congress and DOD cannot determine the amount and cause of cost growth for each ship.", "The experiences of the Ford-Class program are well known. We have reported for many years on the program’s challenges that contributed to nearly $2.4 billion in cost growth for the lead ship. Even as construction of CVN 78 was just getting underway in 2007, we noted key risks in the Ford-Class carrier program and pointed out the optimism in the cost estimate. CVN 79’s cost estimate appears to suffer from similar optimism, indicating that lessons were not learned from the lead ship in this regard. NAVSEA 05C’s CVN 79 estimate is not realistic, as it does not accurately capture actual program risks. As a result, CVN 79 is likely to experience cost growth beyond the congressionally mandated cost cap and will require additional program funding. Congress designed the cost cap in order to encourage the program to adhere to its cost estimate. However, the cost cap for CVN 79 was established without the input from a program cost estimate. Consequently, instead of the program cost estimate informing the cost cap, the cost cap informed the program cost estimate. Developing a new CVN 79 cost estimate would allow the program to have a more realistic budget that accurately reflects current shipbuilder performance.\nFurther, the infrequent independent cost estimates result in Congress being asked to commit billions of dollars to the program before key information is available. As a result, individual ships receive billions of dollars in funding before a realistic cost is determined, at which point there are fewer opportunities to identify cost efficiencies or potential tradeoffs. More frequent independent cost reviews would identify risks for program cost growth sooner, allowing actions to be taken.\nFinally, although each individual ship far exceeds the threshold for being a major defense acquisition program, the entire Ford Class, rather than each ship, is considered a major defense acquisition program, and thus there is less oversight over individual ships as a result of infrequent independent cost reviews and consolidated SAR reporting. Reporting cost and funding summaries in the SAR individually for each ship would allow Congress insight into individual ship cost growth and any tradeoffs that are made to stay within cost caps. Additional information on ship costs would allow for the Navy and Congress to develop a realistic acquisition strategy and budget for the Ford-Class program.", "We recommend the Secretary of Defense direct the Secretary of the Navy to take the following three actions:\nTo ensure the Milestone Decision Authority has an accurate and credible cost estimate for the Milestone C program review, NAVSEA 05C should update the cost estimate for CVN 79 as part of the Ford- Class program life-cycle cost estimate. This estimate should be prepared in accordance with cost estimating best practices and include current shipbuilder performance data.\nNCCA should review the new CVN 79 cost estimate as part of the planned independent cost assessment.\nFurther, the Secretary of Defense should direct the CAPE to include the new CVN 79 cost estimate as part of the planned independent cost estimate, which should form the basis of the program budget request. If the independent cost estimate for CVN 79 should exceed the cost cap, the Navy should submit to Congress a request to revise the cost cap.\nStarting with CVN 80, NAVSEA 05C should develop program life- cycle cost estimates for each individual ship in the Ford-Class program baseline.\nDevelopment of these estimates should be provided at milestone reviews that should be aligned with major aircraft carrier funding events. In particular, for CVN 80, a program life-cycle cost estimate should be developed prior to the request for ship construction funding.\nFor all ships in the class after CVN 80, a program life-cycle cost estimate should be aligned with milestone reviews that correspond with the receipt of any advance procurement funding and the first year of the request for ship construction funding. These estimates should be prepared in accordance with best practices and updated regularly with actual cost data.\nThe Secretary of Defense should further direct the CAPE to develop independent cost estimates for these ships prior to the listed events.\nThe Secretary of the Navy should direct NCCA to conduct independent cost assessments for these ships prior to the listed events.\nTo improve insight into cost changes for individual ships in the Ford Class, the program office should prepare cost summary and funding summary sections for each individual ship in the class as part of the SAR for the overall Ford-Class program.", "We provided a draft of this report to DOD for comment. In its written comments, which are reprinted in appendix III, DOD concurred with much of the report. DOD agreed that an accurate cost estimate for CVN 79 is essential to support the Milestone C review for the program, but did not concur with revising the cost cap should the CVN 79 cost estimate exceed the current cost cap, stating that it will use the cost estimate to determine whether the current cost cap is at risk and if additional cost mitigation strategies are needed. While we understand that the program would want to evaluate and balance the cost risks, we continue to believe that the cost cap is meant to reflect the program’s baseline. If the department chooses not to request that Congress update the cost cap, then the cost cap is driving the cost estimate and not vice versa, increasing the likelihood that the cost estimate will not reflect realistic assumptions, such as regarding the number of labor hours needed to construct the ships. We will review the updated CVN 79 cost estimate to determine whether it accurately reflects likely program costs.\nDOD agreed to develop program life-cycle cost estimates for each individual ship according to our recommended timelines. However, DOD stated that it will not be able to meet the timeline for CVN 80 since the request for ship construction funding has already been submitted and the first program life-cycle cost estimate is still being prepared to support the program review in fiscal year 2018. DOD stated it will follow our recommendation for all subsequent ships.\nIn response to agency comments, we revised one of our draft recommendations, specifically regarding reporting in the SAR. DOD informed us that submitting a separate SAR report for each individual ship would result in duplicative information. We subsequently revised the recommendation to focus on cost and funding data for each ship within the overall Ford Class SAR. We believe this change will improve the transparency of individual ship costs without imposing burdensome or duplicative reporting requirements. DOD noted that the department currently provides progress reports to Congress on costs for CVN 78 and CVN 79. While true, the SAR is the primary statutorily required means for DOD to report on program status. And as our report notes, at present the SAR does not include any cost information on individual ships. Grouping costs of all Ford-Class ships together does not provide Congress with an adequate level of insight to monitor this approximately $40 billion program. Further, the current progress reports do not include CVN 80. Our recommendation would ensure that Congress receives insight into the costs of each existing and planned Ford Class ship.\nIn addition, DOD provided technical comments that were incorporated as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Defense and the Secretary of the Navy. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-4841 or [email protected]. GAO staff who made key contributions to this report are listed in appendix IV.", "This report assesses cost drivers for the lead ship in the Ford Class, the quality of the Navy’s Ford-Class cost estimates, and the cost insights provided by Ford-Class reports. The scope of our work primarily focused on the Gerald R. Ford (CVN 78) and the John F. Kennedy (CVN 79), as a complete cost estimate has not yet been established for the Enterprise (CVN 80). Specifically, we assessed (1) the drivers of CVN 78 cost growth; (2) the extent to which the CVN 79 cost estimate is reliable and addresses known cost risks from the performance of the lead ship; and (3) the extent to which oversight mechanisms—including annual budget requests and selected acquisition reports—provide insight into total ship costs and budget execution.\nTo identify the drivers of CVN 78 cost growth and what, if any, challenges remained for the lead ship as it approached delivery, we reviewed an Office of the Under Secretary of Defense memorandum to the Secretary of the Navy, Navy memorandums to members of Congress, and program office briefings to Congress. In addition, we analyzed Navy budget submissions. We also relied on our prior work evaluating the Ford-Class program to supplement the above analyses. To further corroborate documentary evidence and gather additional information in support of our review, we conducted interviews with relevant Navy officials from the Program Executive Office, Aircraft Carriers.\nTo assess the reliability of CVN 79’s cost estimate, we determined the extent to which the estimate was consistent with best practices as identified in GAO’s Cost Estimating and Assessment Guide. We examined documents supporting the cost estimate, such as the CVN 79 estimate brief, memorandum, and other documents that contain cost, schedule, and risk information, as well as relevant Department of Defense (DOD) and Navy policies. We met with Navy personnel responsible for developing the cost estimate to understand the processes used by the cost estimators, to clarify information, and to allow the program to provide additional documentation to support the estimate. Because we did not have direct access to the CVN 79 cost model, we observed portions of the model during a presentation and discussion with Navy cost estimators. Finally, we examined Navy cost estimating guidance to determine whether the Navy complied with the guidance in developing the CVN 79 estimate. In addition, to inform our analysis of how well the CVN 79 cost estimate addresses known cost risks from the performance of CVN 78, we relied on our prior work evaluating the Ford-Class program. To further corroborate documentary evidence and gather additional information in support of our review, we conducted interviews with relevant DOD and Navy officials responsible for developing and updating the Ford-Class cost estimates, such as the Office of Cost Assessment and Program Evaluation; Naval Center for Cost Analysis; Naval Sea Systems Command’s Cost Engineering and Industrial Analysis Group; Program Executive Office, Aircraft Carriers; CVN 78 and 79 program offices; Aircraft Launch and Recovery program office; and the Program Executive Office, Integrated Warfare Systems.\nTo determine how oversight mechanisms provide insight into Ford-Class ship costs and budget execution, we examined Navy budget requests and Selected Acquisition Reports (SAR), to assess the transparency of cost information. We reviewed the budget requests and the SARs to identify cost information. To further corroborate documentary evidence and gather additional information in support of our review, we conducted interviews with relevant Navy and contractor officials responsible for managing the technology development and construction of CVN 78, such as the Program Executive Office, Aircraft Carriers; CVN 78 and CVN 79 program offices; and the Naval Sea Systems Command’s Cost Engineering and Industrial Analysis Group. We also held discussions with officials from the Office of the Assistant Secretary of the Navy Financial Management and Comptroller and the Congressional Budget Office.\nWe conducted this performance audit from December 2015 to March 2017 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 GAO Cost Estimating and Assessment Guide (GAO-09-3SP) was used as criteria in this analysis. For this guide, GAO cost experts assessed measures consistently applied by cost-estimating organizations throughout the federal government and industry and considered best practices for the development of reliable cost estimates. We analyzed the cost estimating practices used by the Navy against these best practices. For our reporting needs, we collapsed these best practices into four general characteristics for sound cost estimating, which include: well- documented, comprehensive, accurate, and credible. The cost estimating analysis was also based on interviews with Navy officials and the Navy’s written responses regarding their implementation of the 12-step cost- estimating process.", "After reviewing documentation the Navy submitted for its cost estimate, conducting numerous interviews, and reviewing relevant sources, we determined that the CVN 79 cost estimate substantially met one and partially met three of the four characteristics of a reliable cost estimate, shown in table 6. We determined the overall assessment rating by assigning each individual rating a number: Not Met = 1, Minimally Met = 2, Partially Met = 3, Substantially Met = 4, and Met = 5. Then, we took the average of the individual assessment ratings to determine the overall rating for each of the four characteristics. The resulting average becomes the Overall Assessment as follows: Not Met = 1.0 to 1.4, Minimally Met = 1.5 to 2.4, Partially Met = 2.5 to 3.4, Substantially Met = 3.5 to 4.4, and Met = 4.5 to 5.0. A cost estimate is considered reliable if the overall assessment ratings for each of the four characteristics are substantially or fully met. If any of the characteristics are not met, minimally met, or partially met, then the cost estimate does not fully reflect the characteristics of a high-quality estimate and cannot be considered reliable.\nSee table 6 for a high level summary of each best practice and the reasons for the overall scoring.", "", "", "", "In addition to the contact named above, key contributors to this report were Diana Moldafsky, Assistant Director; Jessica E. Karnis; Juana S. Collymore; Burns C. Eckert; Marcia Fernandez; Laura Greifner; Kristine Hassinger; Karen Richey; and Roxanna Sun.", "Defense Acquisitions: Assessments of Selected Weapon Programs. GAO-17-333SP. Washington, D.C.: March 30, 2017.\nDefense Acquisitions: Assessments of Selected Weapon Programs. GAO-16-329SP. Washington, D.C.: March 31, 2016.\nFord Class Aircraft Carrier: Poor Outcomes Are the Predictable Consequences of the Prevalent Acquisition Culture. GAO-16-84T. Washington, D.C.: October 1, 2015.\nDefense Acquisitions: Assessments of Selected Weapon Programs. GAO-15-342SP. Washington, D.C.: March 12, 2015 [Reissued on April 9, 2015].\nFord-Class Aircraft Carrier: Congress Should Consider Revising Cost Cap Legislation to Include All Construction Costs. GAO-15-22. Washington, D.C.: November 20, 2014.\nFord-Class Carriers: Lead Ship Testing and Reliability Shortfalls Will Limit Initial Fleet Capabilities. GAO-13-396. Washington, D.C.: September 5, 2013.\nDefense Acquisitions: Navy Faces Challenges Constructing the Aircraft Carrier Gerald R. Ford within Budget. GAO-07-866. Washington, D.C. August 23, 2007." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 1, 2, 3, 3, 2, 3, 3, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 2, 3, 1, 1, 2, 2, 1 ], "alignment": [ "h5_title h3_full h4_title", "h5_full h3_full", "", "", "h3_full h4_full", "h0_title", "h0_full", "", "h0_full h1_title", "h0_title h1_title", "h0_full h1_full", "", "h1_title", "", "h1_full", "", "", "h2_full", "h2_full", "", "h0_full h2_full", "h5_full", "h5_full", "h3_full h4_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "Why does the cost estimate for CVN 79 not demonstrate that the program can meet its cost cap?", "What challenges lead to cost growth for the lead ship?", "What assumptions in the Navy's estimate for CVN 79 make the estimate unrealistic?", "How did the program estimate influence the amount of labor hours negotiated by the Navy?", "Why is CVN 79's estimate optimistic?", "What does Navy analysis show about the CVN 79 cost estimate?", "Why is insight into the Ford Class program and individual ship costs limited?", "How do budget requests contribute to this lack of transparency?", "How do the program's Selected Acquisition Reports contribute to this lack of transparency?", "How does this affect Congress?", "What was the Navy's intention for the Ford Class aircraft carrier?", "How has the Navy failed to meet their goal?", "What are the cost estimates for the two ships?", "What prompted GAO to review Ford-class cost estimates?", "What does this report cover?", "How did GAO perform its assessments?", "How should the Navy improve its processes to avoid the pitfalls of the lead ship?", "How did the navy respond to this suggestion?", "How did GAO revise the recommendation?" ], "summary": [ "The cost estimate for the second Ford-Class aircraft carrier, CVN 79, is not reliable and does not address lessons learned from the performance of the lead ship, CVN 78. As a result, the estimate does not demonstrate that the program can meet its $11.4 billion cost cap.", "Cost growth for the lead ship was driven by challenges with technology development, design, and construction, compounded by an optimistic budget estimate.", "Instead of learning from the mistakes of CVN 78, the Navy developed an estimate for CVN 79 that assumes a reduction in labor hours needed to construct the ship that is unprecedented in the past 50 years of aircraft carrier construction, as shown in the figure below.", "After developing the program estimate, the Navy negotiated 18 percent fewer labor hours for CVN 79 than were required for CVN 78.", "CVN 79's estimate is optimistic compared to the labor hour reductions calculated in independent cost reviews conducted in 2015 by the Naval Center for Cost Analysis and the Office of Cost Assessment and Program Evaluation.", "Navy analysis shows that the CVN 79 cost estimate may not sufficiently account for program risks, with the current budget likely insufficient to complete ship construction.", "The Navy's current reporting mechanisms, such as budget requests and annual acquisition reports to Congress, provide limited insight into the overall Ford Class program and individual ship costs.", "For example, the program requests funding for each ship before that ship obtains an independent cost estimate. During an 11-year period prior to 2015, no independent cost estimate was conducted for any of the Ford class ships; however, the program received over $15 billion in funding.", "In addition, the program's Selected Acquisition Reports (SAR)—annual cost, status, and performance reports to Congress—provide only aggregate program cost for all three ships currently in the class, a practice that limits transparency into individual ship costs.", "As a result, Congress has diminished ability to oversee one of the most expensive programs in the defense portfolio.", "The Navy intended for the Ford Class aircraft carrier to improve combat capability while reducing acquisition and life-cycle costs.", "However, as GAO has reported on extensively since 2007, the lead ship has experienced cost growth of nearly 23 percent, with a reduced capability expected at delivery.", "CVN 78 is estimated to cost $12.9 billion, while the next ship, CVN 79, is estimated to be $11.4 billion.", "The Senate Armed Services Committee Report accompanying the National Defense Authorization Act for Fiscal Year 2016 included a provision that GAO review Ford-class cost estimates, among related issues.", "This report assesses: (1) the extent to which the CVN 79 cost estimate is a reliable basis for meeting the cost cap and addresses known cost risks from the lead ship, and (2) the extent to which oversight mechanisms provide Congress with insight into ship costs.", "To do this work, GAO compared the CVN 79 cost estimate with GAO's Cost Estimating and Assessment Guide, analyzed cost reports, and interviewed relevant officials.", "The Navy should develop a new, reliable cost estimate for CVN 79 validated by cost reviews and obtain an independent cost estimate before requesting funding for future ships.", "The Navy partially concurred with these recommendations, but did not concur with a draft recommendation to prepare a SAR for each Ford class ship.", "In response to comments, GAO revised the recommendation to focus on SAR cost and funding summaries." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 1, -1, 0, 0, 0, -1, 0, -1, -1, -1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1, 6, 6, 6 ] }

{ "title": [ "", "Background", "Policy Issues", "Restrictions on OSTP Engagement with China", "Reporting Structure of the U.S. Chief Technology Officer", "OSTP Role in Ensuring Scientific Integrity", "George W. Bush Administration", "Obama Administration", "Public Access to Published Results of Federally Funded R&D", "STEM Education Reorganization", "113th Congress", "114th Congress", "Activities in the 114th Congress", "H.R. 467", "H.R. 810", "H.R. 1119", "H.R. 1156", "H.R. 1561", "H.R. 1764", "H.R. 1806", "H.R. 1898", "H.R. 2039", "Concluding Observations" ], "paragraphs": [ "The National Science and Technology Policy, Organization, and Priorities Act of 1976 ( P.L. 94-282 ) established the Office of Science and Technology Policy (OSTP), including the position of its Director, within the Executive Office of the President (EOP) to provide scientific and technological analysis and advice to the President. The act also codified a presidential science advice function that previously existed at each President's discretion.\nThis report provides background on EOP science and technology (S&T) advice to the President and discusses selected issues and options for Congress regarding OSTP's Director, OSTP management and operations, the President's Council of Advisors on Science and Technology (PCAST), and the National Science and Technology Council (NSTC). For additional information on OSTP, including historical information regarding funding and provision of scientific advice, see CRS Report R43935, Office of Science and Technology Policy (OSTP): History and Overview , by [author name scrubbed] and [author name scrubbed]", "Congress established the Office of Science and Technology Policy as an office within the EOP to, among other things, \"serve as a source of scientific and technological analysis and judgment for the President with respect to major policies, plans, and programs of the Federal Government.\" Within the context of its organic statute, OSTP currently defines its mission as having three components:\nProvide the President and his senior staff with accurate, relevant, and timely scientific and technical advice on all matters of consequence.\nEnsure that the policies of the Executive Branch are informed by sound science.\nEnsure that the scientific and technical work of the Executive Branch is properly coordinated so as to provide the greatest benefit to society.\nTo this end, OSTP has established the following strategic goals and objectives:\nEnsure that federal investments in science and technology are making the greatest possible contribution to economic prosperity, public health, environmental quality, and national security.\nEnergize and nurture the processes by which government programs in science and technology are resourced, evaluated, and coordinated.\nSustain the core professional and scientific relationships with government officials, academics, and industry representatives that are required to understand the depth and breadth of the Nation's scientific and technical enterprise, evaluate scientific advances, and identify potential policy proposals.\nGenerate a core workforce of world-class expertise capable of providing policy-relevant advice, analysis, and judgment for the President and his senior staff regarding the scientific and technical aspects of the major policies, plans, and programs of the Federal government.\nOSTP also has several roles not articulated in these formal statements. These include serving as a sounding board and conduit of information for agency executives seeking to understand, clarify, and help shape science and technology-related policy objectives and priorities and helping to resolve interagency conflicts over areas of S&T responsibility and leadership.\nOSTP also plays a managerial and executive role with respect to other White House science and technology entities. OSTP manages the NSTC and exercises policy and programmatic oversight of PCAST.", "Congressional oversight of OSTP and influence over its activities are ongoing processes. The 114 th Congress may opt to consider a variety of issues and legislative options related to OSTP. These include:\nthe compliance of OSTP with statutory restrictions on its use of appropriated funds for certain activities involving China; the reporting structure of the Office of the U.S. Chief Technology Officer; the role of OSTP in ensuring scientific integrity in federally funded and supported research, including the communication of scientific and technical information by federal scientists and engineers; efforts by OSTP to effect change in federal policies regarding public access to the results of federally funded research and development (R&D); and efforts by OSTP to consolidate federal science, technology, engineering, and mathematics (STEM) education initiatives and activities.\nThe following sections address each of these issues, along with Obama Administration efforts and policy options for Congress.", "Congress has for several years restricted OSTP from engaging in certain activities with China or any Chinese-owned company by prohibiting the use of appropriated funds for these activities. OSTP may proceed with such activities only if it certifies they pose no risk of transferring technology or information with security implications to China and will not knowingly involve interaction with officials who have been determined by the United States to have direct involvement with violations of human rights. This certification must be submitted to the House and Senate Committees on Appropriations at least 30 days prior to such activities.\nSome Members of Congress have raised concerns regarding interactions between certain U.S. science and technology officials and the government of China. In part based on these concerns, Congress has sought to restrict OSTP from engaging in certain activities by prohibiting the use of appropriated funds for those activities.\nSection 1340(a) of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ) prohibited OSTP from expending funds made available under Division B of the act\nto develop, design, plan, promulgate, implement, or execute a bilateral policy, program, order, or contract of any kind to participate, collaborate, or coordinate bilaterally in any way with China or any Chinese-owned company unless such activities are specifically authorized by a law enacted after the date of enactment of this division.\nThe appropriations acts since FY2011 that funded OSTP all included similar restrictions.\nThe Department of Justice (DOJ) and OSTP have asserted that the President's constitutional authority to conduct foreign diplomacy precludes Congress from proscribing the use of funds for such specific activities. OSTP expended a portion of its FY2011 appropriation to engage in activities with China that Section 1340(a) sought to proscribe. OSTP has asserted that \"certain applications of Section 1340 ... would infringe upon the President's constitutional authority to conduct foreign diplomacy.\" Subsequently, DOJ issued a supporting opinion on the constitutionality of the application of Section 1340 to OSTP's activities, stating, in part,\nSection 1340(a) of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 is unconstitutional as applied to certain activities undertaken pursuant to the President's constitutional authority to conduct the foreign relations of the United States.\nMost, if not all, of the activities of the Office of Science and Technology Policy that we have been asked to consider fall within the President's exclusive power to conduct diplomacy, and OSTP's officers and employees therefore may engage in those activities as agents designated by the President for the conduct of diplomacy, notwithstanding section 1340(a).\nThe plain terms of section 1340(a) do not apply to OSTP's use of funds to perform its functions as a member of the Committee on Foreign Investment in the United States.\nThe Government Accountability Office (GAO)—in response to a request from the Chairman of the Subcommittee on Commerce, Justice, Science, and Related Agencies of the House Committee on Appropriations, Representative Frank Wolf—concluded that OSTP's use of appropriations violated the prohibition in Section 1340. GAO stated that it did not attempt to opine on or adjudicate the constitutionality of a duly enacted statute, but viewed legislation that was passed by Congress and signed by the President as heavily presumed to be constitutional. Citing the GAO conclusion, Chairman Wolf sent a letter to Attorney General Eric Holder stating his expectation that the Attorney General would \"ensure comprehensive enforcement of section 1340\" of P.L. 112-10 and \"hold [OSTP Director] Dr. Holdren to full account for his violation of the Anti-Deficiency Act.\"\nCongress subsequently reduced OSTP's FY2012 appropriations by nearly one-third (32.3%). Further, statutory language in OSTP's FY2012 appropriations act ( P.L. 112-55 ) and language in the accompanying report ( H.Rept. 112-284 ) prohibited OSTP from using appropriated funds to support activities that would carry the risk of transferring sensitive technology to China. In contrast with the FY2011 language, Section 539 of P.L. 112-55 allowed OSTP to proceed with activities that it certified pose no risk of transferring technology, data, or other information with national security or economic security implications to China or a Chinese-owned company.\nP.L. 113-6 , the Consolidated and Further Continuing Appropriations Act, 2013, restored OSTP funding levels and continued the statutory language prohibiting expenditure of OSTP funds. The act retained the prior clarification that this prohibition shall not apply to activities that OSTP certifies have no risk but added a requirement that OSTP certify that such activities\nwill not involve knowing interactions with officials who have been determined by the United States to have direct involvement with violations of human rights.\nOSTP must submit any such certification to Congress at least 30 days prior to the activity. These requirements reportedly reflected an existing agreement between Congress and OSTP. P.L. 113-76 , the Consolidated Appropriations Act, 2014, reaffirmed and extended the above requirements for FY2014. P.L. 113-235 , the Consolidated and Further Continuing Appropriations Act, 2015, continued this restriction through FY2015.", "The position of U.S. chief technology officer (CTO) was created by President Obama. The absence of a statutory foundation for the position has contributed to ambiguity in the CTO's responsibilities, authorities, and reporting structure.\nIn November 2007, Senator Barack Obama announced his intention, if elected President, to appoint a federal chief technology officer CTO. In April 2009, President Obama announced Aneesh Chopra as the first U.S. Chief Technology Officer (CTO), stating that his role would go beyond that performed traditionally by CTOs, to include promoting technological innovation to help the United States create jobs, reducing health care costs, protecting the homeland, and addressing other national goals. In appointing Chopra's successor, Todd Park, the President described his role as helping to \"harness the power of data, technology, and innovation\" across the federal government. OSTP Director Holdren described the role of Park's successor, Megan Smith, as guiding \"the Administration's information-technology policy and initiatives, continuing the work of her predecessors to accelerate attainment of the benefits of advanced information and communications technologies across every sector of the economy and aspect of human well-being.\"\nA current issue facing Congress is ambiguity surrounding the formal reporting structure of the CTO, a position shown on at least some iterations of OSTP organizational charts as being a part of OSTP. This issue arose during congressional efforts to obtain testimony from the then-CTO, Todd Park, on his role in the implementation of the healthcare.gov website.\nAmong the factors contributing to the lack of clarity in reporting responsibilities is the absence of specific statutory authority for the CTO position and the lack of a formal position description laying out the authorities and responsibilities of the CTO. In addition, both the first CTO, Aneesh Chopra, and his successor, Todd Park, held multiple titles. Chopra was appointed to serve as CTO, Assistant to the President, and OSTP associate director for technology; Park was appointed CTO and Assistant to the President. In response to questions for the record submitted by the House Committee on Science, Space, and Technology's Subcommittee on Oversight, Mr. Park asserted that these different roles involved different reporting relationships:\n[As an Assistant to the President,] I took general direction from the White House Office of the Chief of Staff and specific direction from different individuals with whom I would work on each of the technology and innovation initiatives in which I was involved ... As U.S. CTO and part of OSTP's leadership, I focused on technology and innovation policy, consistent with OSTP's mission. As an Assistant to the President, I held the same rank as Dr. Holdren, and therefore operated as his peer and as a partner, though Dr. Holdren holds overall management responsibility for the operations of OSTP.\nCongress may wish to clarify the roles, responsibilities, and reporting structure of the U.S. Chief Technology Officer in statute or through its OSTP oversight authorities. Several attempts have been made to establish the CTO position in statute. H.R. 1261 (112 th Congress) and H.R. 1910 (111 th Congress) sought to establish the Office of the Federal Chief Technology Officer as a separate office in the Executive Office of the President. In addition, an amendment ( H.Amdt. 658 ) was offered to the National Defense Authorization Act for Fiscal Year 2011 ( H.R. 5136 ), which included, among other things, Subtitle B, \"Federal Chief Technology Officer.\"\nIf Congress chooses to establish the CTO position through statute, there are several questions it may wish to consider, including: What mission, duties, and authorities should be given to the CTO? Should one person serve as both CTO and OSTP associate director for technology? Should the CTO be placed in the Executive Office of the President or elsewhere in the executive branch? If in the EOP, should the CTO directly report to the President, or instead be part of another EOP agency? Should the appointment of the CTO be subject to Senate confirmation? Should the CTO be a stand-alone position or should he or she head an office or agency with its own staff? How should the work of the CTO differ from, overlap with, and/or complement the duties and authorities of offices in the Executive Office of the President, and other executive branch agencies? What should be the relationship between the President's CTO and the existing CTOs and CIOs of individual departments and agencies?", "OSTP plays a role in ensuring the scientific integrity of research conducted and supported by the federal government, as well as in the communication of scientific and technical information developed and analyzed by federal scientists and engineers. For example, OSTP, as part of a process managed by the Office of Management and Budget (OMB), reviews executive branch S&T-related testimony to Congress. OMB has taken actions relating to scientific integrity during both the George W. Bush Administration and the Obama Administration.", "During the George W. Bush Administration, advocacy groups charged that the Administration's political agenda adversely affected the integrity of science, especially science related to the environment, public health, and national security. These groups contended that Administration officials restricted the ability of federal scientists and engineers to provide information, instructed them to change their research reports, or modified the congressional testimony of federal scientific and technical agency leadership that did not support the Administration's views. OSTP Director Marburger stated that such allegations were \"sweeping generalizations based on a patchwork of disjointed facts and accusations that reach conclusions that are wrong and misleading.\"\nPolicymakers responded to these concerns in several ways. In the America COMPETES Act ( P.L. 110-69 , Section 1009), Congress directed OSTP to develop an overarching set of principles to ensure the communication and open exchange of data by federal scientists and engineers. On May 28, 2008, in response to this requirement, OSTP sent a memorandum to federal agencies that sponsor research. The memorandum provides guidance and what OSTP termed the \"Core Principle for Communication of the Results of Scientific Research Conducted by Scientists Employed by Federal Civilian Agencies.\" It states:\nRobust and open communication of scientific information is critical not only for advancing science, but also for ensuring that society is informed and provided with objective and factual information to make sound decisions. Accordingly, the Federal government is committed to a culture of scientific openness that fosters and protects the open exchange of ideas, data and information to the scientific community, policymakers, and the public.\nThe memorandum also indicated that the National Aeronautics and Space Administration's (NASA's) science communications policy should be a model for other federal agencies: NASA policy states that, \"In keeping with the desire for a culture of openness, NASA employees may, consistent with this policy, speak to the press and the public about their work,\" with exceptions for privileged and other controlled information.", "Shortly after taking office, President Obama issued a memorandum for the heads of executive departments and agencies on the subject of scientific integrity. In the memorandum, the President articulated his view of the importance of ensuring scientific integrity; identified several overarching principles; charged the OSTP Director with ensuring \"the highest level of scientific integrity in all aspects of the executive branch's involvement with scientific and technological processes\"; required the Director to confer with heads of executive departments and agencies, the OMB, and other offices within the EOP in the development of a plan to achieve the identified principles; and directed the OSTP Director to develop recommendations for presidential action to guarantee scientific integrity throughout the executive branch.\nOSTP Director Holdren subsequently issued a memorandum to the heads of executive departments and agencies providing further guidance on implementing the Administration's policies on scientific integrity. Director Holdren's memorandum provided principles in four broad areas: foundations of scientific integrity, public communications, use of federal advisory committees, and professional development of government scientists and engineers.\nOSTP reviewed the guidelines developed by each agency to ensure consistency with the guidance provided in President Obama's original memorandum. According to OSTP, some departments decided to develop policies that will apply broadly to a number of their component agencies. OSTP has also stated that individual agencies covered by their departments' policies may develop their own policies with additional elements specific to their missions. At least 19 federal agencies have released final policies; four others have released draft policies and are in the process of finalizing them for release. The agencies' policies have met with mixed reviews. An analysis published by the Union of Concerned Scientists, a not-for-profit advocacy group, lauded the policies of some agencies for their active support for \"a culture of scientific integrity,\" while criticizing the policies of other agencies as inadequate.\nThe Obama Administration also acted to address the concerns of some policy advocacy groups that Executive Order 13422 might be used by OMB to conduct political reviews of scientific documents. On January 30, 2009, President Obama issued Executive Order 13487 rescinding orders, rules, regulations, guidelines, and policies implementing or enforcing Executive Order 13422.\nS&T policy advocacy groups also proposed other measures, such as the executive branch changing its scientific communication policy. One proposal called for the issuance of an executive order requiring federal agency leadership to monitor scientific integrity within their agencies and submit an annual report to OSTP with their observations and actions.\nOther proposals included enhancing whistleblower protections, including strengthening the Office of Special Counsel; requiring that scientific studies used to inform regulatory policy be disclosed and docketed prior to the decision-making process; reforming agency communication and media policies; and providing the public with the scientific results or analysis used in policymaking and including a minority report if there are significant dissenting scientific evidence or opinions.\nSome organizations have suggested that the Obama Administration also address the use of science in regulatory policy, including explicitly differentiating between questions that involve scientific judgments and questions that involve judgments about economics, ethics, and other matters of policy; and develop guidelines on when to consult advisory panels on scientific questions, how to appoint them, how they should operate, and how to deal with conflicts of interest.\nThere are some policymakers who have asserted that the Obama Administration has failed to protect scientific integrity. For example, in a letter to the OSTP Director, several Members of Congress alleged scientific misconduct by the Department of the Interior, the Environmental Protection Agency, the Department of Energy, and the Nuclear Regulatory Commission. Concerns raised in the letter related to data quality, integrity of methodologies and collection of information, agency misrepresentation of the weight of what were asserted as scientific facts, misrepresentation of scientific conclusions in federal courts, and failure to rigorously apply the scientific method.\nCongress might opt to influence the direction of the existing executive branch activities, provide oversight of the implementation of these activities, or establish alternative reporting mechanisms for issues related to scientific integrity. Congress might establish guidance regarding how agencies should craft and implement scientific integrity policies. Alternatively, Congress might leave establishing and implementing such policies to agency discretion, and require regular reporting from agencies regarding scientific integrity issues and the effectiveness of policy enforcement. Finally, Congress could further empower agency Inspectors General to address issues of scientific integrity or establish alternative reporting mechanisms, such as a federal ombudsman, to receive complaints regarding scientific integrity issues.", "In \"open access\" or \"public access\" publishing, the entity that holds the copyright to an article grants all users unlimited, free access to the article. In traditional scientific publishing, subscriptions generally fund the costs of journal publication and distribution; in some cases, authors may also pay fees. This contrasts with open access publishers, which typically fund the costs of journal publication and distribution through author fees and give readers free online access to the full text of articles. Some traditional publishers have implemented a hybrid model in which authors may choose to provide their articles free to readers in exchange for increased author fees.\nSince 2008, Congress has authorized the National Institutes of Health (NIH) to require recipients of NIH grants to submit an electronic version of their final, peer-reviewed articles to NIH. The NIH places these articles in a public repository no later than 12 months after publication. This congressionally authorized policy has raised issues regarding protection of intellectual property and government competition with the private publishing industry.\nSupporters of federal open access publishing policies have a variety of motivations, including the rising cost of traditional journal subscriptions; beliefs regarding improved scientific collaboration and free information access; and a desire for the public to have access to the results of taxpayer-funded R&D. Proponents of open access policies urge increased federal support for open access publishing.\nIn contrast, traditional publishers and some scholarly associations object to federal open access policies because they believe it may weaken the publishing industry, erode publishing revenues, and consequently restrict the activities of associations whose main source of income is publishing. Opponents of federal open access publishing policies also cite other potential negative consequences, such as uncertain long-term maintenance of electronic archives; increased publication costs for researchers; and the perceptions of the academic community and the academic reward system, which appear to give more status to articles published in traditional journals.\nThe America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) required the OSTP Director to establish a working group to coordinate agency policies \"related to the dissemination and long-term stewardship of the results of unclassified research, including digital data and peer-reviewed scholarly publications, supported wholly, or in part, by funding from the Federal science agencies\" and report to Congress on these efforts. OSTP issued a public request for information seeking perspectives on various facets of the public access issue. Respondents generally supported increasing public access to such research results.\nIn February 2013, the OSTP Director affirmed the Obama Administration's commitment \"to ensuring that … the direct results of federally funded scientific research are made available to and useful for the public, industry, and the scientific community. Such results include peer-reviewed publications and digital data.\" The Director instructed federal agencies that fund more than $100 million of R&D per year to develop plans to make the published results of federally funded research freely available to the public and provided a guideline of doing so within one year of publication.\nOSTP identified 20 agencies from which it expected draft public access plans. OSTP and OMB have reviewed the plans that were submitted and provided feedback to those agencies. Two agency plans have received final approval. Once a plan is approved, each agency will determine its own release date. The Department of Energy released its final public access plan in July 2014, and NASA released its in November 2014.\nCongress has supported OSTP efforts in this area with select statutory and report language. Section 525 of Division G of P.L. 113-235 , the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2015, directs entities receiving funding through that act to implement public access plans if they had R&D expenditures in excess of $100 million. The statute mandates that these policies shall establish \"free online public access to such final peer-reviewed manuscripts or published versions not later than 12 months after the official date of publication\" and require that \"a machine-readable version of the author's final peer-reviewed manuscripts that have been accepted for publication in peer-reviewed journals describing research supported, in whole or in part, from funding by the Federal Government\" be submitted \"to the agency, agency bureau, or designated entity acting on behalf of the agency.\" This provision is similar in effect to the requirement called for in the OSTP memorandum, but it specifies the period of embargo rather than leaving it to agency discretion.\nThe reports accompanying other FY2015 appropriations acts contain language expressing support for implementing the OSTP efforts at the Department of Homeland Security, Department of Veterans Affairs, Department of State, United States Agency for International Development (USAID), and Environmental Protection Agency. The report accompanying P.L. 113-235 also directed NIH to report to Congress on its activities to meet the requirements of the OSTP memorandum.\nCongress provided similar support in FY2014. Section 527 of Division H of P.L. 113-76 , the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2014, directed entities receiving funding through that act to implement public access plans if they had R&D expenditures in excess of $100 million. Also, the report accompanying P.L. 113-76 , the Consolidated Appropriations Act, 2014, encouraged the EPA to comply with the OSTP memorandum and directed the Department of Agriculture to report to Congress on its activities to meet the requirements of the memorandum. The report accompanying FY2014 appropriations for the Department of Homeland Security contained language expressing support for implementing the OSTP efforts.", "Congress and the Administration attempted in recent years to address governance concerns about federal science, technology, engineering, and mathematics (STEM) education programs. OSTP has been a focus of these efforts due, in part, to the OSTP Director's role as manager of the National Science and Technology Council.\nThe America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) directed OSTP to establish an NSTC committee \"to coordinate Federal programs and activities in support of STEM education.\" The act charged the committee—established by the NSTC as the Committee on Science, Technology, Engineering, and Math Education (CoSTEM)—with, among other things, conducting a review of STEM education activities and programs to identify potential duplication of efforts, developing a five-year STEM education strategic plan, and establishing an inventory of federally sponsored STEM education programs and activities.\nIn addition, P.L. 111-358 assigned the OSTP Director responsibility for ensuring that the strategic plan is developed and executed and that the objectives of the plan are met. The act also required the OSTP Director to submit an annual report to Congress at the time of submission of the President's budget request. This report is to include, among other things, a description of the STEM education programs and activities for the previous and current fiscal years, the levels of funding for each program and activity, and an evaluation of duplication and fragmentation of the programs and activities.\nIn December 2011, CoSTEM published a detailed inventory of federal STEM education \"investments.\" The inventory included a description of federal STEM education programs (e.g., their purposes, objectives, and funding agencies) and a list of federal STEM education investments, by agency, with FY2008 to FY2010 funding levels. In February 2012, CoSTEM published a progress report on its efforts to coordinate federal STEM education investments. In April 2012, CoSTEM published the 2010 Federal STEM Education Inventory Data Set. In March 2014, OSTP published an update on the Administration's efforts to coordinate federal investments in STEM education.", "In March 2013, the explanatory statement for the FY2013 Consolidated and Further Continuing Appropriations Act ( P.L. 113-6 ) required OSTP to produce a federal STEM education strategic plan by May 10, 2013. Shortly thereafter, in its FY2014 budget request (released in April 2013), the Administration proposed a reorganization of the federal STEM education effort. The proposed reorganization would have eliminated or consolidated about half of the federal STEM education effort, while increasing total FY2014 funding for federal STEM education activities by about 6% over FY2012 levels. The Department of Education, National Science Foundation, and Smithsonian Institution would have become lead agencies for K-12, postsecondary, and informal STEM education, respectively. Some other federal STEM education programs, including those at the lead agencies, would have been consolidated under the plan. In May 2013, the NSTC released the federal STEM education strategic plan.\nIn deliberations on the FY2014 Commerce, Justice, Science and Related Agencies appropriations acts, neither the House Committee on Appropriations nor the Senate Committee on Appropriations supported the proposed reorganization. (House Energy and Water Development appropriators, in contrast, accepted some portions of the reorganization within their jurisdiction.) In addition, the House committee identified what it saw as flaws in the subsequent federal STEM strategic plan, including the proposed mechanism for dissemination of federal STEM education research and findings. The House committee report sought to direct OSTP to report within 180 days of passage on the resources and authorities necessary to develop a \"one stop\" style website containing findings from federal research on STEM education. The Senate committee report sought to defer action on such consolidation until OSTP finalizes STEM program assessments and require OSTP to work with non-federal education and outreach communities on any subsequent reorganization proposal.\nThe joint explanatory statement accompanying P.L. 113-76 , the Consolidated Appropriations Act, 2014, was critical of the proposed reorganization, stating:\nWhile the Congress is supportive of attempts to improve efficiency and effectiveness in Federal STEM education programs, the proposed reorganization of these programs contained in the budget request was incomplete and lacked sufficient detail. The proposal contained no clearly defined implementation plan, had no buy-in from the education community and failed to sufficiently recognize or support a number of proven, successful programs. Accordingly, the agreement does not adopt the reorganization; all STEM activities are funded in their existing programmatic structures unless explicitly noted otherwise elsewhere in this statement or through language in either the House or Senate report that is not modified or superseded by this statement.\nThe joint explanatory statement further directed OSTP to reexamine other possible reorganizations of federal STEM programs after engaging in an inclusive development process and taking into consideration evaluations and other evidence of program success.\nThe Obama Administration's FY2015 budget request again proposed a government-wide reorganization of federal STEM education programs. According to the Office of Management and Budget, the reorganization would have consolidated or terminated 31 programs at nine agencies. Funding would have remained at each agency, but would have focused on the priorities outlined in the NSTC's 2013 federal STEM education five-year strategic plan. Congress approved portions of this proposal while prohibiting certain consolidations or terminations in report language. For more information on the FY2015 reorganization effort, see CRS Report IF00013, The President's FY2015 Budget and STEM Education (In Focus) (pdf), by [author name scrubbed].", "President Obama has proposed additional STEM education consolidations and eliminations within agencies in his FY2016 budget.\nPublication of the reorganization proposals has raised concerns among some STEM education stakeholders, including questions regarding the role of program assessment in the reorganization and the potential fragmentation of existing networks that connect educational activities to scientific programs. Additionally, some policymakers questioned the capacity of lead agencies to take on their new roles and have expressed support, instead, for the activities to remain with their existing agencies (e.g., NASA).\nAdvocates for the Administration's reorganization proposals have generally asserted that the wide diversity of small STEM education programs distributed across numerous federal agencies presents a substantial barrier to coordination and efficiency. They assert that re-aligning programs and funding would improve program evaluation, reduce fragmentation, and enhance coordination. Some argue that, as a result, resources could be directed to high-priority programs, increasing effectiveness.", "The 114 th Congress is considering a number of bills that would directly affect the operations or priorities of OSTP or NSTC, and they are described below. A number of these bills contain common or similar provisions.", "The STEM Opportunities Act of 2015 ( H.R. 467 ) would address certain issues related to STEM workforce and education. Among other provisions, it would require the OSTP Director to carry out programs and activities with the purpose of ensuring that federal science agencies and institutions of higher education receiving federal R&D funding are fully engaging their entire talent pool. The bill would require the OSTP Director to require federal science agencies to establish policies regarding primary investigators who also have caregiving responsibilities; collect data on demographics, primary field, award type, budget request, funding outcome, and awarded budget for all applications for merit-reviewed R&D grants; provide guidance as necessary on policies to implement best practices to minimize implicit bias based on gender, race, or ethnicity during review of federal research grants; and develop and implement practices and policies to conduct periodic laboratory-wide culture surveys of research personnel at all levels, and provide educational opportunities for STEM research personnel to learn about current research in implicit bias in recruitment, evaluation, and promotion of research personnel at federal laboratories. The OSTP Director would report to Congress regarding a description and evaluation of such policies and practices.", "The National Aeronautics and Space Administration Authorization Act of 2015 ( H.R. 810 ) would authorize NASA programs and authorize NASA appropriations for FY2015. ( H.R. 2039 , discussed later in this report, contains similar provisions and would authorize NASA programs and authorize NASA appropriations for FY2016 and FY2017.) Among its provisions, the bill would require the OSTP Director to consult with a variety of stakeholders, develop a strategic plan for conducting competitive, peer-reviewed research in physical and life sciences and related technologies on the International Space Station, and transmit the plan to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation. The bill would require the strategic plan to identify various criteria for the proposed research; required instrumentation; necessary capabilities to support direct, real-time communications; and an acquisition strategy for any new support capabilities.\nH.R. 810 would require the OSTP Director and the NASA Administrator to conduct an analysis of the requirements for radioisotope power system material for robotic missions and the risks to those missions due to a lack of adequate material. The bill would specify the contents of the analysis and require it to be submitted to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation.\nH.R. 810 would also require the OSTP Director and the NASA Administrator to provide an initial report with recommendations on carrying out a near-Earth object survey program and an associated budget. The report would contain an analysis of possible options to divert an object on a likely collision course with Earth and efforts to coordinate and cooperate with other countries on the issue.\nIn addition, the bill would require the OSTP Director to provide a report on the status of the orbital debris mitigation strategy required under P.L. 111-267 , the National Aeronautics and Space Administration Authorization Act of 2010. H.R. 810 would also require the OSTP Director to carry out a review and assessment of the issues involved in protecting and preserving historically important Apollo Program lunar landing sites and Apollo program artifacts residing on the lunar surface. The OSTP Director would submit the results of this assessment to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation no later than one year after enactment.", "The Research and Development Efficiency Act ( H.R. 1119 ) would address certain regulatory aspects of the research process. It would require the OSTP Director to establish a working group within the NSTC to review federal regulations affecting research and research universities. The working group would recommend how to harmonize, streamline, and eliminate duplicative federal regulations and reporting requirements; minimize the regulatory burden on U.S. institutions of higher learning while maintaining accountability; and identify and update specific regulations to refocus on performance-based goals. The working group would consider input from non-federal stakeholders and report no later than one year after enactment and annually thereafter for three years to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation.", "The International Science and Technology Cooperation Act of 2015 ( H.R. 1156 ) would address international science and technology cooperation and coordination. It would require the OSTP Director to establish a body within the NSTC responsible for identifying and coordinating international science and technology cooperation. The OSTP Director would transmit a publicly available report, updated every two years, to the House Committee on Science, Space, and Technology; the House Committee on Foreign Affairs; the Senate Committee on Commerce, Science, and Transportation; and the Senate Committee on Foreign Relations. The report would contain a description of federal priorities and policies for aligning federal international science and technology cooperative research and training activities and partnerships with the foreign policy goals of the United States; ongoing and new international partnerships; summary views of stakeholder input and the means by which it was received; and the issues influencing the ability of U.S. scientists and engineers to collaborate with foreign counterparts.", "The Weather Research and Forecasting Innovation Act of 2015 ( H.R. 1561 ) would, among other provisions, require the OSTP Director to establish an Interagency Committee for Advancing Weather Services to improve coordination of relevant weather research and forecast innovation activities across the federal government. The bill would require the National Aeronautics and Space Administration, the Federal Aviation Administration, the National Oceanic and Atmospheric Administration, and the National Science Foundation to participate in the committee. The committee would identify and prioritize weather forecast needs, coordinate those needs against federal agency budgets and programs, and share information across federal agencies. In addition, the OSTP Director would take such steps as necessary to coordinate federal activities with the American weather industry, state governments, emergency managers, and academic researchers.", "The United States Chief Technology Officer Act ( H.R. 1764 ) would create the position of United States CTO as one of the OSTP associate directors. The CTO duties would include, among others, advising the President and the OSTP Director on federal information systems, technology, data, and innovation policies and initiatives; promoting innovative technological approaches across the federal government; promoting transparency and accountability for all federal technological implementation; and providing an annual report to the President, the OSTP Director, and Congress on the current state of information systems of all federal agencies.", "The America COMPETES Reauthorization Act of 2015 ( H.R. 1806 ) would address a range of science and technology policy issues. Among its provisions, it would authorize $4.55 million in appropriations for OSTP for both FY2016 and FY2017. H.R. 1806 would also require the OSTP Director to establish a working group within the NSTC that would review federal regulations affecting research and research universities. The working group would recommend how to harmonize, streamline, and eliminate duplicative federal regulations and reporting requirements; minimize the regulatory burden on U.S. institutions of higher learning while maintaining accountability; and identify and update specific regulations to refocus on performance-based goals. The working group would consider input from non-federal stakeholders and report no later than one year from enactment and annually for the next three years to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation.\nH.R. 1806 would also require the OSTP Director to establish a body within the NSTC responsible for identifying and coordinating international science and technology cooperation. The OSTP Director would transmit a publicly available report, updated every two years, to the House Committee on Science, Space, and Technology; the House Committee on Foreign Affairs; the Senate Committee on Commerce, Science, and Transportation; and the Senate Committee on Foreign Relations. The report would contain a description of federal priorities and policies for aligning federal international science and technology cooperative research and training activities and partnerships with the foreign policy goals of the United States; ongoing and new international partnerships; summary views of stakeholder input and the means by which it was received; and the issues influencing the ability of U.S. scientists and engineers to collaborate with foreign counterparts.\nIn addition, H.R. 1806 would require the OSTP Director to annually submit a report that lists and describes all foreign travel by OSTP staff and detailees to the House Committee on Science, Space, and Technology; the House Committee on Foreign Affairs; the Senate Committee on Commerce, Science, and Transportation; and the Senate Committee on Foreign Relations. Each report would specify the dates and purpose of the trip, OSTP participants on the trip, total OSTP costs associated with the trip, and details of all international meetings, including meeting participants and topics addressed.\nH.R. 1806 would require OSTP to develop an agreement to be signed by judges of prize competitions that includes nondisclosure, conflict of interest, and judging code of conduct requirements. The OSTP would be required to report to Congress regarding the agreement no later than 30 days after its development and to report to Congress as part of its budget submission on the pilot programs identified and conducted.\nH.R. 1806 would also create the position of United States CTO as one of the OSTP associate directors. The CTO duties would include, among others, advising the President and the OSTP Director on federal information systems, technology, data, and innovation policies and initiatives, promoting innovative technological approaches across the federal government, promoting transparency and accountability for all federal technological implementation, and providing an annual report to the President, the OSTP Director, and Congress on the current state of information systems of all federal agencies.", "The America Competes Reauthorization Act of 2015 ( H.R. 1898 ) would address a range of science and technology policy issues. Among its provisions, it would require the OSTP Director to create a working group within the NSTC responsible for reviewing federal regulatory and reporting requirements that affect research in an effort to reduce regulatory burdens and to eliminate and harmonize duplicative requirements. The working group would, among other responsibilities, develop and update at least once every three years a strategic plan for streamlining federal regulations and reporting requirements that affect the conduct of U.S. research. The strategic plan would include a priority list of research-related regulations, reporting requirements, and agency guidance to be harmonized, streamlined, updated, or eliminated; and an implementation plan, including a timeline. The working group would consider input from non-federal stakeholders and report to Congress no later than one year from enactment and annually thereafter.\nH.R. 1898 would require the OSTP Director to establish a body within the NSTC responsible for identifying and coordinating international science and technology cooperation. The OSTP Director would transmit a publically available report, updated every two years, to the House Committee on Science, Space, and Technology; the House Committee on Foreign Affairs; the Senate Committee on Commerce, Science, and Transportation; and the Senate Committee on Foreign Relations. The report would contain a description of federal priorities and policies for aligning federal international science and technology cooperative research and training activities and partnerships with the foreign policy goals of the United States; ongoing and new international partnerships; summary views of stakeholder input and the means by which it was received; and the issues influencing the ability of U.S. scientists and engineers to collaborate with foreign counterparts.\nIn addition, H.R. 1898 would require the OSTP Director to designate an OSTP associate director or other appropriate senior government official as the Coordinator for Environmental, Health, and Safety Research. The Coordinator would be responsible for oversight of the coordination, planning, and budget prioritization of research and other activities related to environmental, health, safety, and other appropriate societal concerns related to nanotechnology. The Coordinator would be responsible for ensuring that a research plan for the environmental, health, and safety research activities related to nanotechnology is developed, updated, and implemented. This research plan would be transmitted to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation within six months after enactment and would be updated at least every three years.\nH.R. 1898 would also require, among other STEM education provisions, the OSTP Director to establish an OSTP associate or another appropriate senior government official as the Coordinator for STEM Education. The Coordinator would work with appropriate senior officials from other agencies represented on the NSTC Committee on STEM Education. The OSTP Director would develop guidance for federal agencies to increase opportunities and training, as appropriate, for federal scientists and engineers to participate in STEM engagement activities through their respective agencies and in their communities.\nH.R. 1898 would require the OSTP Director to carry out programs and activities with the purpose of ensuring that federal science agencies and institutions of higher education receiving federal R&D funding are fully engaging their entire talent pool. The bill would require the OSTP Director to require federal science agencies to establish policies regarding primary investigators who have caregiving responsibilities; collect data on demographics, primary field, award type, budget request, funding outcome, and awarded budget for all applications for merit-reviewed R&D grants; provide guidance as necessary on policies to implement best practices to minimize implicit bias based on gender, race, or ethnicity during review of federal research grants; develop and implement practices and policies to conduct periodic laboratory-wide culture surveys of research personnel at all levels, and provide educational opportunities for STEM research personnel to learn about current research in implicit bias in recruitment, evaluation, and promotion of research personnel at federal laboratories. The OSTP Director would report to Congress regarding a description and evaluation of such policies and practices.", "The National Aeronautics and Space Administration Authorization Act for 2016 and 2017 ( H.R. 2039 ) would authorize NASA programs and authorize NASA appropriations for FY2016 and FY2017. ( H.R. 810 , discussed earlier in this report, contains similar provisions and would authorize NASA programs and authorize NASA appropriations for FY2015.) Among its provisions, it would require the OSTP Director to consult with a variety of stakeholders, develop a strategic plan through 2020 for conducting competitive, peer-reviewed research in physical and life sciences and related technologies on the International Space Station, and transmit it to the House Committee on Science, Space, and Technology, and the Senate Committee on Commerce, Science, and Transportation. H.R. 2039 would require the strategic plan to identify various criteria for the proposed research; required instrumentation; necessary capabilities to support direct, real-time communications; and an acquisition strategy for any new support capabilities.\nH.R. 2039 would also require the OSTP Director and the NASA Administrator to conduct an analysis of the requirements for radioisotope power system material for robotic missions and the risks to those missions due to a lack of adequate material. H.R. 2039 would specify the contents of the analysis and require that it be submitted to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation.\nH.R. 2039 would also require the OSTP Director and the NASA Administrator to provide an initial report with recommendations on carrying out a near-Earth object survey program and associated budget. The initial report would contain an analysis of possible options to divert an object on a likely collision course with Earth and efforts to coordinate and cooperate with other countries on the issue.\nIn addition, H.R. 2039 would require the OSTP Director to provide a report on the status of the orbital debris mitigation strategy required under P.L. 111-267 , the National Aeronautics and Space Administration Authorization Act of 2010. In addition, H.R. 2039 would require the OSTP Director to carry out a review and assessment of the issues involved in protecting and preserving historically important Apollo Program lunar landing sites and Apollo program artifacts residing on the lunar surface. The OSTP Director would submit the results of this assessment to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation, no later than one year from enactment.", "Congress has expressed an abiding interest in the health of the federal science and technology (S&T) enterprise and the roles that it plays in meeting federal mission needs, expanding the frontiers of human knowledge, addressing societal needs, developing the U.S. science and engineering workforce, and promoting U.S. technological leadership, innovation, and competitiveness.\nFor more than half a century, presidential science advisors have played a central role in U.S. S&T policy—informing Presidents on S&T issues, serving as liaisons to the S&T community, and articulating presidential priorities to federal S&T agencies and to the public. In addition, since 1976, presidential science advisors have directed and managed the Office of Science and Technology Policy.\nOSTP plays an important role in coordinating and integrating the activities of federal S&T enterprise, acquiring scientific and technical advice and information from the private sector, and advising the President on related matters. Congress provides oversight of OSTP in the execution of its statutory authorities. In addition to the legislation currently under consideration, the 114 th Congress may explore issues and legislative options related to the structure of OSTP, its authorities, its relationships with the NSTC and PCAST, and the portfolio of policy issues identified in this report." ], "depth": [ 0, 1, 1, 2, 2, 2, 3, 3, 2, 2, 3, 3, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h0_title h2_full h1_title h3_title", "", "h0_full", "", "", "", "h2_full", "h3_full h1_full", "h3_full", "", "h1_title", "", "", "", "", "", "", "h1_full", "", "", "h1_full" ] }

{ "question": [ "How did Congress establish the Office of Science and Technology Policy (OSTP)?", "What does the National Science and Technology Policy, Organization, and Priorities Act of 1976 state?", "What is the primary function of the OSTP Director, according to the act?", "What else is the office responsible for, according to the act?", "How is the OSTP Director appointed?", "What is the duty of the APST?", "What else does the APST do?", "How has the OSTP taken actions to provide greater public access to the results of federally funded research and development?", "What is the status of these policies?", "What investments have been made by the OSTP?", "What was the purpose of the President's FY2015 and FY2014 budget requests?", "What importance do the extent and success of these reorganizations have?" ], "summary": [ "Congress established the Office of Science and Technology Policy (OSTP) through the National Science and Technology Policy, Organization, and Priorities Act of 1976 (P.L. 94-282).", "The act states, \"The primary function of the OSTP Director is to provide, within the Executive Office of the President [EOP], advice on the scientific, engineering, and technological aspects of issues that require attention at the highest level of Government.\" Further, \"The Office shall serve as a source of scientific and technological analysis and judgment for the President with respect to major policies, plans, and programs of the Federal Government.\"", "The act states, \"The primary function of the OSTP Director is to provide, within the Executive Office of the President [EOP], advice on the scientific, engineering, and technological aspects of issues that require attention at the highest level of Government.\"", "Further, \"The Office shall serve as a source of scientific and technological analysis and judgment for the President with respect to major policies, plans, and programs of the Federal Government.\"", "The OSTP Director is appointed by the President, subject to Senate confirmation, and may also be appointed Assistant to the President for Science and Technology (APST).", "The APST manages the National Science and Technology Council, an interagency body established by Executive Order 12881 that coordinates science and technology policy across the federal government.", "The APST also co-chairs the President's Council of Advisors on Science and Technology, a council established by Executive Order 13539 and composed of external advisors who provide advice to the President.", "OSTP has taken actions to provide greater public access to the results of federally funded research and development. In February 2013, OSTP Director Holdren issued a memorandum requiring federal agencies investing at least $100 million per year in research and development to develop policies allowing the general public access to the results of this investment.", "These policies are in the process of being released and implemented and may spur additional congressional oversight.", "Finally, OSTP has inventoried federal science, technology, engineering, and mathematics (STEM) education investments and developed a strategic plan for them.", "In his FY2015 and FY2014 budget requests, the President proposed reorganizations of federal STEM education programs.", "The extent and success of this reorganization may further focus congressional attention on OSTP's role as a coordinator of cross-agency science and technology activities." ], "parent_pair_index": [ -1, -1, 1, 1, -1, -1, 1, -1, 0, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 4, 4, 5, 5, 5 ] }

{ "title": [ "Background", "Interior Uses a Multistep Review Process to Help Ensure That Compacts Comply with IGRA", "Interior’s Process for Reviewing Compacts", "Variety of Provisions Contained in Compacts Approved by Interior", "Reasons Compacts Are Deemed Approved or Disapproved", "State and Tribal Regulation of Indian Gaming", "Compacts and Tribal Gaming Ordinances Establish the Roles of States and Tribes", "States Vary in Their Approaches to Regulating Class III Indian Gaming", "Tribes Are Responsible for the Day-to-Day Regulation of Indian Gaming", "The Commission’s Regulation and Oversight of Indian Gaming and Impacts of Recent Reorganization", "The Commission Is Responsible for Ensuring That Gaming Facilities Comply with IGRA and Applicable Federal and Tribal Regulations", "The Commission’s Recent Initiative Seeks to Resolve Tribal Compliance Issues Voluntarily, When Possible", "The Commission’s Reorganization Appears to Align with Its Emphasis on Compliance Assistance", "GAO Contact and Staff Acknowledgments" ], "paragraphs": [ "Since fiscal year 1995, revenue from Indian gaming has grown from $8.2 billion to $27.9 billion in fiscal year 2012 (see fig. 1). In fiscal year 2012, about 240 of the 566 federally recognized tribes operated more than 420 Indian gaming establishments across 28 states. These establishments included a broad range of operations, from tribal bingo to multimillion dollar casino gaming facilities. Of these establishments, a few large operations account for a major portion of the revenue.\nIGRA is the primary federal statute governing Indian gaming.provides, among other things, a statutory basis for the regulation of Indian gaming to shield it from corrupting influences, assure that gaming is conducted fairly and honestly by both the operators and the players, and ensure that tribes are the primary beneficiaries of gaming operations. The act establishes the following three classes of gaming.\nClass I gaming consists of social gaming solely for nominal prizes or traditional gaming played in connection with tribal ceremonies or celebrations and is regulated solely by tribes and not subject to IGRA.\nClass II gaming includes bingo, pull-tabs, punch boards, and certain and is regulated by the tribes and the Commission.\nClass III gaming includes all other forms of gaming, including casino games and slot machines, and although both Interior and the Commission play a role in overseeing certain aspects of Class III gaming, it is regulated by the tribes and the states pursuant to compacts.\nA tribe may only conduct Class III gaming activities if such activities are conducted in conformance with a compact, among other things. According to the relevant Senate committee report, IGRA was intended to provide a means by which tribal and state governments can realize their unique and individual governmental objectives. The Senate committee report also noted that the terms of each compact may vary extensively and may allocate most or all of the jurisdictional responsibility to the tribe, to the state, or to any variation in between.negotiated agreements that establish the states’ and tribes’ regulatory roles and specify the games that are allowed, among other things. IGRA specifies that compacts may include provisions related to the application of criminal and civil laws and regulations of the tribe and the state that are directly related to and necessary for the licensing and regulation of gaming, the allocation of civil and criminal jurisdiction between the tribe and the state necessary to enforce those laws and regulations, state assessments of gaming activities as necessary to defray costs of regulating gaming, tribal taxation of gaming activities, remedies for breach of contract, standards for gaming activity operations and gaming facility maintenance, and any other subjects directly related to the operation of gaming activities.\nIGRA authorizes the Secretary to approve compacts and only allows the Secretary to disapprove a compact if it violates IGRA, any other federal law that does not relate to jurisdiction over gaming on Indian lands, or the trust obligation of the United States to Indians. Compacts only go into effect when a Notice of Approval from the Secretary has been published in the Federal Register.\nClass II and Class III gaming may only be conducted on Indian lands in states that permit such gaming. Indian lands, as defined in IGRA, are (1) all lands within the limits of an Indian reservation; (2) lands held in trust by the United States for the benefit of an Indian tribe or individual over which the tribe exercises governmental power; and (3) lands held by an Indian tribe or individual that are subject to restriction against alienation and over which the tribe exercises governmental power.", "Interior has a multistep review process that helps to ensure that compacts comply with relevant IGRA provisions and other applicable laws. While compacts approved by Interior share similar provisions, they do vary in some respects, such as the terms of “revenue sharing” arrangements between states and tribes and the extent to which the compact addresses tribal interactions with local governments. Interior cited a variety of reasons for allowing compacts to take effect without Secretarial action (deemed approved) and for disapproving compacts.", "Interior’s Office of Indian Gaming, under the supervision of the Deputy Assistant Secretary of Indian Affairs Policy and Economic Development, is responsible for reviewing compacts. According to Office of Indian Gaming officials, on the day that a compact is received, the Office of Indian Gaming date-stamps the compact and files the original version. The Office of Indian Gaming has 10 days to conduct an initial review of the compact. During this time, they will contact the applicant tribe or state if any additional information is needed. After this initial review, the Office of Indian Gaming sends a copy of the compact to Interior’s Office of the Solicitor to conduct a legal review of the compact. The Office of the Solicitor has 10 days to review the compact. After the Office of the Solicitor’s review is complete, the Office of Indian Gaming provides a copy of the compact and a summary of relevant information to the Assistant Secretary of Indian Affairs, who has 45 days to approve or disapprove the compact. Under IGRA, if a compact is not approved or disapproved within 45 days of its submission, then the compact is considered to have been approved (referred to as “deemed approved”), but only to the extent that it is consistent with IGRA.\nOn June 18, 2014, the Office of Indian Gaming provided us with a list of compacts that were approved, deemed approved, disapproved, or withdrawn each year from 1998 to the present. We are in the process of verifying the accuracy of this list. Based on our preliminary analysis of this list of compacts, the Secretary received a total of 490 compacts during this time period to review. Of these, 78 percent (382) were approved; 12 percent (60) were deemed approved; 6 percent (28) were withdrawn; and 4 percent (18) were disapproved. The number of compacts submitted varied from year to year, from a high of 66 in 1999 to a low of 8 in 2006.", "The compacts approved by Interior share similar provisions but vary in some respects. For example, while IGRA does not authorize states to impose a tax or fee on tribes, apart from the assessment to defray regulatory costs, the Secretary has approved compacts that contain provisions for revenue sharing with states, so long as the states provide the tribe with a comparable benefit in return—a benefit to which the tribe would not otherwise be entitled. The amount of revenue sharing varied widely in the compacts we reviewed. Some compacts do not provide for revenue sharing, such as the 1991 compact between the Fond du Lac Band of the Minnesota Chippewa Tribe and the state of Minnesota, or the 2011 compact between the Flandreau Santee Sioux Tribe and the state of South Dakota. In contrast, some compacts require the tribe to share significant portions of revenue with the state. For example, the 2010 compact between the Seminole Tribe of Florida and the state of Florida establishes percentages of net revenue that the tribe must give to the state—as much as 25 percent—based on how much revenue the tribe makes each year.\nApproved compacts had provisions that varied in other ways, such as the extent to which the compacts require the tribe to enter into agreements with local governments. For example, the 2003 compact between the La Posta Band of Diegueno Mission Indians and the state of California requires the tribe to consult with the county and other relevant local governments to develop agreements to prevent and mitigate effects from any proposed gaming facility. Some compacts make no mention of agreements with local governments.", "Compacts that are not approved or disapproved within 45 days are deemed approved, but only to the extent that they comply with IGRA. According to Federal Register notices or decision letters that accompany the compacts, Interior might not take action on a compact within the statutory deadline for a variety of reasons. Federal Register notices indicate that some compacts take effect without Secretarial action because they only change the expiration date of a previously approved compact and do not require additional review. According to decision letters accompanying other compacts, the compacts were deemed approved because they contained provisions that the Secretary found to be questionable but not outright objectionable. For example, the 2014 compact between the Mashpee Wampanoag Tribe and the state of Massachusetts contained terms that could provide the possibility in the future for the state to regulate certain Class II games, which IGRA does not authorize, and Interior’s letter cautioned the state and tribe against implementing the compact in a way that violated IGRA.\nOf the disapproved compacts we reviewed, the reasons for disapproval varied. For example, compacts were disapproved because lands proposed to be used for gaming were not Indian lands as defined by IGRA or the compact established a management contract that did not meet the requirements of IGRA.", "Compacts establish the responsibilities of both tribes and states for regulating Class III gaming and identify the standards for the gaming operation and maintenance of gaming facilities, as well as the state and tribal laws and regulations that will be used to regulate the gaming, among other things. In addition, tribal gaming ordinances, which apply to Class II and Class III gaming, provide the general framework for tribal regulation of gaming facilities. The ordinances include specific procedures that must be followed by tribes and standards that they must meet, among other things. Based on our preliminary observations of ongoing work, we found that the approaches of the three states we have visited to regulating Indian gaming vary, as seen through differences in their regulatory agencies’ organization, staffing levels, and funding. For the seven tribes we have visited, each has established tribal gaming regulatory agencies that govern the day-to-day operations of their gaming facilities. These agencies perform various regulatory functions to help ensure that their gaming facilities are operated in accordance with tribal laws and regulations and, for Class III operations, the compact.", "The roles of states and tribes in regulating Indian gaming vary and are established in two key documents: (1) compacts for Class III gaming and (2) tribal ordinances for both Class II and Class III gaming. Compacts that govern Class III gaming on Indian lands lay out the responsibilities of both tribes and states for regulating gaming. For example, compacts may include, but are not limited to, provisions allowing the state to conduct inspections, certify employee licenses, and review surveillance records. They may also include tribal responsibilities to notify the state when they hire a new employee or when they make changes to their gaming regulations or rules for gaming.\nIn addition, IGRA requires a tribe’s governing body to adopt, and the Commission Chair to approve, a tribal gaming ordinance before a tribe can conduct Class II or Class III gaming. According to the Commission, the tribal gaming ordinances are a key part of IGRA’s regulation for tribal gaming, providing the general framework for tribal regulation of gaming facilities, and including specific procedures and standards to be met. For the Chair to approve the ordinances, they must provide, among other things, that the tribe will have sole proprietary interest in the gaming activity; gaming revenues will only be used for authorized purposes; annual independent audits of gaming operations will be provided to the construction, maintenance, and operation of the gaming facilities will be conducted in a manner that adequately protects the environment, public health and safety; and the tribe perform background investigations and the licensing of key employees and primary management officials in accordance with certain requirements.\nAlong with the ordinance, a tribe must also submit other documentation to the Commission, including copies of all tribal gaming regulations. The Chair has 90 days after submission of a tribal gaming ordinance to approve or disapprove it; if the Chair does not act within 90 days, the ordinance is considered to have been approved but only to the extent it is consistent with IGRA.", "Based on our preliminary observations, the three states that we have visited—Arizona, California, and Oklahoma—vary in their approaches to regulating Class III gaming. As illustrated in table 1, the three states differ in their organization, funding, and staffing levels. For example, California divides its regulatory responsibilities between two agencies, whereas Arizona and Oklahoma each have one agency. We also observed that state budgets for the regulation of Class III Indian gaming ranged from $1.1 million to $19.8 million and staffing levels ranged from 3 to 136 full-time equivalents.\nWe also observed that the three states engaged in a variety of regulatory activities, including conducting background checks on current and prospective employees, licensing gaming devices, inspecting gaming operations, and reviewing the gaming operator’s surveillance.", "The Commission recognizes that tribal governments are responsible for the day-to-day regulation of gaming conducted on Indian lands. While tribal governments have the authority to engage in gaming, the Commission stresses the importance of tribes establishing a comprehensive regulatory framework for gaming. According to the Commission, comprehensive regulation by tribes is a necessary component to ensure the integrity of the games and to protect the interest of the tribe.\nEach of the seven tribes we visited in Arizona, California, and Oklahoma for our preliminary observations have established tribal gaming regulatory agencies—also called tribal gaming commissions or tribal gaming agencies—that perform various regulatory functions to ensure that their gaming facilities are operated in accordance with tribal laws and regulations and, for Class III operations, the compact. For each of these tribes, the tribal gaming regulatory agency was established by the tribal government for the exclusive purpose of regulating and monitoring gaming on behalf of the tribe. In general, the regulatory functions that can be performed by tribal gaming regulatory agencies include developing licensing procedures for all employees of the gaming conducting background investigations on primary management officials and key employees, obtaining annual independent outside audits and submitting these audits to the Commission, ensuring that net revenues from any gaming activities are used for the limited purposes set forth in the gaming ordinance, promulgating tribal gaming regulations pursuant to tribal law, monitoring gaming activities to ensure compliance with tribal laws and establishing or approving minimum internal control standards or procedures for the gaming operation.\nAs part of our ongoing work, we plan to visit additional tribes to discuss their approaches to regulating Indian gaming, and we will summarize our findings in our final report.", "The Commission plays an important role in regulating Class II gaming and overseeing Class III gaming to ensure compliance with IGRA and applicable federal and tribal regulations. Among other things, the Commission monitors Class II gaming, inspects Class II gaming premises, and takes enforcement actions when necessary. In 2011, the Commission implemented its Assistance, Compliance, and Enforcement (ACE) initiative, which emphasizes providing assistance to tribes to achieve compliance with IGRA. Through this initiative, the Commission has sought to provide technical assistance and training to tribes so that compliance issues may be resolved early and voluntarily without the need for a Notice of Violation, which we refer to as an enforcement action. Also in 2011, as part of a broader organizational realignment, the Commission merged its Enforcement and Audits divisions into one Compliance Division. According to Commission officials, this merger was deemed necessary, in part, to better support the Commission’s emphasis on compliance assistance under its ACE initiative.", "IGRA established the Commission within Interior to provide federal regulation of Class II and oversight of Class III Indian gaming. Among other things, the Commission monitors tribal Class II gaming activity; inspects Class II gaming premises; reviews licenses issued by tribes for key employees and primary management officials; audits and reviews financial records of Class II gaming operations (and Class III operations when tribal gaming ordinances provide for it); provides technical assistance and training to tribal gaming commissions and operations, and; when appropriate, undertakes enforcement actions for violations of IGRA, the Commission’s regulations and approved tribal gaming ordinances.\nThe Commission also monitors tribal compliance with minimum internal control standards, which specify in detail the minimum practices tribes must establish and implement for gaming activities. The Commission adopted these standards for gaming operations on Indian lands in 1999; however, in 2006, a federal circuit court ruled that IGRA did not authorize the Commission to issue regulations establishing minimum internal control standards for Class III gaming. Commission officials explained that the impact of the court’s decision is tempered by compacts requiring tribes to adopt tribal internal control standards for Class III gaming and that, in most cases, these standards are at least as stringent, if not more, than the Commission’s Class III minimum internal control standards. Specifically, as of July 2014, Commission officials said 115 compacts in six states require tribes to adopt tribal internal control standards that are at least as stringent as the Commission’s Class III standards. In addition to these compact provisions, Commission officials said that 15 tribes in California have gaming ordinances that provide for Commission enforcement of the Commission’s Class III minimum internal control standards in lieu of the tribe ensuring compliance with tribal internal control standards and state verification of that compliance. However, Commission officials expressed concern that its minimum internal control standards are out of date since the Commission does not have the authority to amend these standards for Class III gaming. For example, gaming reporting functions have improved since the Class III minimum internal control standards were promulgated in 1999, and now this reporting is in digital format rather than in the analog format that the Class III minimum internal control standards suggest.", "In 2011, the Commission implemented its ACE initiative, which emphasizes, among other things, providing assistance to tribes to achieve compliance with IGRA. Through this initiative, the Commission seeks to provide technical assistance and training to tribes so that compliance issues may be resolved voluntarily without the need for enforcement actions. However, Commission officials told us that enforcement actions will still be taken when necessary.\nAs part of its ACE initiative, the Commission provides guidance, technical assistance, and training to tribes to help build and sustain their capacity to prevent, respond to, and recover from internal control weaknesses and violations of IGRA and Commission regulations. To improve the technical assistance and training that the Commission offers to tribes, the Commission tracks the number of training and technical assistance events it offers, their length in hours, the number of people the training and technical assistance reaches, and satisfaction rates with the training the Commission offers. In fiscal year 2013, the Commission held 194 training and technical assistance events that provided 754 hours of training and technical assistance and reached 2,751 participants who were largely satisfied with the training and technical assistance provided, according to a Commission report (see table 2).\nAs indicated in table 2, the Commission has met or exceeded its goals for training and technical assistance, with the exception of the percentage of tribes attending training in fiscal year 2012.\nTo monitor tribal compliance with IGRA and applicable federal and tribal regulations for both Class II and Class III operations—another component of the Commission’s ACE initiative—the Commission conducts site visits and audits and evaluations of tribal gaming facilities, among other things. The Commission has developed various performance measures related to these compliance activities to help measure progress toward achieving its goals. As shown in table 3, the Commission met its goals for conducting site visits and audits in fiscal years 2011 and 2012, but it did not meet its goals for these activities in fiscal year 2013.\nThe Commission also tracks tribal compliance with what it defines as eight primary obligations under IGRA, which are obtaining a compact approved by Interior prior to conducting Class III submitting investigative reports and suitability determinations on each key employee and primary management official, summarizing the results of the tribal background investigation; submitting fingerprint cards to the Commission for processing; submitting gaming employee applications to the Commission at the commencement of employment; adopting a gaming ordinance for Class II or Class III gaming that has been approved by the Commission; paying a fee assessment to the Commission based on gaming issuing a separate license for each facility where gaming is conducted; and submitting an annual independent audit of each Class II gaming operation to the Commission.\nIn its 2012 report to the Secretary regarding tribal compliance with these obligations, the Commission stated that tribes were in compliance with most of the obligations. However, the report stated that a number of tribes did not meet established deadlines for submission of fee payments and audit reports.\nIn recent years, the Commission has rarely initiated enforcement actions. Our analysis of the last 10 years of publicly available Notices of Violation—documents that describe the circumstances surrounding the violation of the law, Commission regulation or tribal ordinance and measures required to correct the violation—peaked in fiscal years 2008 and 2009 (see table 4) before the implementation of the ACE initiative. Prior to fiscal year 2010, the Commission issued Notices of Violation most frequently to address untimely submissions of annual audit statements or untimely fee statements.\nCommission officials attributed the decline in the Commission’s enforcement actions since fiscal year 2009 to its more proactive, preventative approach taken to help ensure compliance as called for by the ACE initiative. Specifically, the ACE initiative seeks to prevent violations from occurring since Commission officials are working collaboratively with tribal regulators. Under the ACE initiative, Commission officials said that enforcement is generally viewed as a tool of last resort. Also, the Commission modified its regulations in 2012 so that fees or quarterly statements submitted late are now subject to a fine rather than a Notice of Violation. As these were the most common enforcement action initiated prior to fiscal year 2010, some decline in enforcement actions would be expected. We are continuing to collect and analyze data related to the Commission’s regulations and oversight of Indian gaming, and we will present that information in our final report.", "In 2011, as part of a broader organizational realignment, the Commission merged its Enforcement and Audits divisions into one Compliance Division. According to Commission officials, this merger was deemed necessary, in part, to better support the Commission’s emphasis on compliance assistance through its ACE initiative. These officials explained that centralizing compliance, enforcement, and auditing staff into one division improves communication among these staff and allows the Commission to identify compliance issues early. Early identification of compliance issues, in turn, allows the Commission to provide assistance to tribes before an issue becomes more serious. In keeping with the ACE initiative, Commission officials said they would prefer not to let compliance issues reach the enforcement stage. We will continue to collect information on the Commission’s reorganization, and we will present this information in our final report.\nChairman Tester, Vice Chairman Barrasso, and members of the Committee, this completes my prepared statement. I would be happy to respond to any questions that you or other members of the Committee may have.", "If you or your staff members have any questions about this testimony, please contact me at (202)-512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Key contributors to this testimony were Jeff Malcolm (Assistant Director), Amy Bush, Jillian Cohen, John Delicath, Justin Fisher, Paul Kazemersky, Jeanette Soares, and Lisa Turner.\nThis 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." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1 ], "alignment": [ "h3_full", "h0_full", "h0_full", "h0_full", "h0_full", "h0_full h1_title h3_title", "h3_full h1_full", "h1_full", "h1_full", "h2_full", "h2_full", "h2_full", "h2_full", "" ] }

{ "question": [ "How does the Department of the Interior help ensure that compacts comply with the Indian Gaming Regulatory Act?", "What are these compacts?", "How do the provisions of the compacts approved by the Department of the Interior vary?", "What happened to the compacts which were not approved by the Interior?", "How are the roles of states and tribes in regulating Indian gaming established?", "In what ways do Arizona, California, and Oklahoma differ in their approaches to regulating Indian gaming?", "What is the purpose of tribal gaming commissions?", "What role does the National Indian Gaming Commission play?", "How does the Assistance, Compliance, and Enforcement initiative help tribes achieve compliance with IGRA?", "What effect has this initiative had?", "Why did the Commission merge its Enforcement and Audits divisions into one division?", "What significance does Indian gaming have for tribes?", "What was the extent of the Indian gaming industry in 2012?", "How does the IGRA impact Indian gaming?", "What bodies regulate and oversee Indian gaming?" ], "summary": [ "The Department of the Interior (Interior) has a multistep review process designed to help ensure that compacts comply with the Indian Gaming Regulatory Act (IGRA).", "Such compacts are agreements between a tribe and state that governs the conduct of the tribe's Class III (or casino) gaming activities.", "While the provisions in compacts approved by Interior are largely similar, they do vary in some respects, such as the terms of “revenue sharing” arrangements established between states and tribes. For example, some compacts do not provide for revenue sharing with states, while some require tribes to share significant portions of revenue with states.", "The remaining 22 percent (106) of compacts reviewed were either (1) considered approved without action by the Secretary of the Interior, (2) withdrawn, or (3) disapproved by Interior for various reasons, such as when they were not consistent with IGRA.", "The roles of states and tribes in regulating Indian gaming vary and are established in two key documents: (1) compacts for Class III gaming and (2) tribal gaming ordinances, which provide the general framework for day-to-day tribal regulation of Class II (including bingo) and Class III gaming facilities.", "Based on GAO's preliminary observations of ongoing work, GAO found that the three states visited—Arizona, California, and Oklahoma—varied in their approaches to regulating Indian gaming, as seen through differences in their regulatory agencies' organization, staffing levels, and funding.", "For the seven tribes GAO visited, each has established tribal gaming commissions that perform various regulatory functions to help ensure that their gaming facilities are operated in accordance with tribal laws and regulations and, for Class III operations, the compact.", "The National Indian Gaming Commission (Commission), an independent commission created by IGRA within Interior, plays an important role in regulating and overseeing Indian gaming by ensuring that Class II and Class III gaming facilities comply with IGRA and applicable federal regulations and tribal ordinances or resolutions. Among other things, the Commission monitors tribal gaming activities, inspects gaming premises, and takes enforcement actions when necessary.", "In 2011, the Commission implemented its Assistance, Compliance, and Enforcement initiative, which emphasizes providing assistance to tribes to achieve compliance with IGRA. Through this initiative, the Commission has sought to provide technical assistance and training to tribes so that compliance issues may be resolved early and voluntarily without the need for enforcement actions.", "According to Commission officials, in part, as a result of this initiative, the number of enforcement actions has decreased significantly.", "Also in 2011, as part of a broader organizational realignment, the Commission merged its Enforcement and Audits divisions into one Compliance Division. According to Commission officials, this merger was deemed necessary, in part, to better support the Commission's emphasis on compliance assistance under its initiative.", "Over the past 25 years, Indian gaming has become a significant source of revenue for many tribes, reaching $27.9 billion in 2012.", "At that time, about 240 of the 566 federally recognized tribes operated more than 420 gaming establishments ranging from bingo halls to multimillion dollar casinos across 28 states.", "IGRA, the primary federal statute governing Indian gaming, provides, among other things, a statutory basis for the regulation of Indian gaming to assure that it is conducted fairly and honestly.", "Tribes, states, Interior, and the National Indian Gaming Commission have roles in regulating or overseeing Indian gaming." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, -1, -1, -1, 1, -1, -1, -1, -1, -1 ], "summary_paragraph_index": [ 4, 4, 4, 4, 5, 5, 5, 6, 6, 6, 6, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Establishment and Evolution of GAO", "1921 Establishment", "Expansion and Extension of Authority and Jurisdiction", "Additional Responsibilities", "Audit and Accounting Authority", "GPRA", "Reviewing Regulations", "Access to Government Documents and Information", "Legislative Reorganization Act Changes", "Other Duties Assigned to the Comptroller General", "Changes in Authority", "Proposed Changes for GAO in the 110th Congress", "Structure and Organization", "Pay and Benefits", "Deputy Comptroller General's Appointment", "Inspector General", "Reimbursement of Certain Audit Costs", "Access to Government Records and Information", "Auditing of the Intelligence Community", "GAO Resources", "Budget Levels", "Personnel Levels", "Personnel System", "Antecedent Authority", "Additional Authority in 2004", "Followup Study and Ongoing Considerations", "Employee Representation", "Appointment of the Comptroller General and Deputy", "Current Process", "Recent Nominations", "Removal, Retirement, and Resignation", "Removal", "Retirement and Annuity", "Resignation", "Concluding Summary" ], "paragraphs": [ "", "The Government Accountability Office (GAO)—with more than 3,100 staff positions and an annual budget exceeding $507 million in FY2008—is the largest of several support agencies that provide research, review, and analysis for Congress; and it is the only one with a nationwide field structure. GAO, which had been titled the General Accounting Office until 2004, operates under the control and direction of the Comptroller General of the United States (CG). The head is appointed by the President—after receiving recommendations from a special bicameral congressional commission—by and with the advice and consent of the Senate, for a 15-year nonrenewable term. The position, which had been vacant for two years, was filled in late 1998, when David M. Walker was sworn in and became only the seventh Comptroller General in GAO's history, which began more than eight decades ago. The post is now vacant with Mr. Walker's resignation on March 12, 2008.\nGAO was established as an independent auditor of government agencies and activities by the Budget and Accounting Act of 1921 (42 Stat. 23). That enactment also created the Bureau of the Budget, the forerunner to the Office of Management and Budget, and established presidential authority over the budget formulation process. The basic authority for the office and its head is codified at 31 U.S.C. 701 et seq. and 3511 et seq. Numerous other statutory provisions affect the powers and duties of both GAO and the CG.\nThe office was designed to be \"independent of the executive departments,\" which were placed under its audit and review powers (31 U.S.C. 702(a)). Sometimes characterized as \"Congress's watchdog\" and the \"investigative arm of Congress,\" the GAO provides a variety of services to Congress, largely connected to the oversight, investigation, and evaluation of executive operations, activities, and programs.\nThe evolution of the office's authority, functions, and mandates over time, along with new pay and personnel powers for the Comptroller General, prompted him to request a change in its name: from the General Accounting Office to the Government Accountability Office ( P.L. 108-271 ). GAO's current activities and services include:\nauditing and evaluating federal programs and operations; conducting special investigations (through a small office) of alleged violations of federal criminal law, particularly conflict of interest or procurement and contract fraud; providing various legal services to Congress, including advice on legal issues involving government programs and activities; resolving bid protests that challenge government contract awards; prescribing accounting principles and standards for the executive branch, advising federal agencies on fiscal and other policies and procedures, and setting standards for auditing government programs; assisting the professional audit/evaluation community in improving and keeping abreast of ongoing developments in such matters as audit methodology and approaches; and detailing GAO staff to work directly for congressional committees (in these temporary transfers, the assigned staffs represent the committees and not GAO itself). Since 1994, GAO has been the subject of congressional hearings, studies, and proposals for change connected with its mission, roles, capabilities, and personnel system. After a lengthy period of growth—in its powers, duties, and resources—the office experienced reductions in these areas in the mid-1990s. In 1996, for instance, certain of the \"executive powers\" of the Comptroller General were abolished or transferred to executive branch agencies. In addition, GAO's budget was cut by 25% over a two-year period (FY1996 and FY1997), representing the largest reduction in a seven-year downsizing (1992-1999). Since then, however, its budget authority has increased, from a low of $358 million in FY1998 to a high of $507.2 million for FY2008. Since 1995, however, full-time-equivalent employees are fewer than in each previous year, with 3,100 currently compared to 4,324 in FY1995. In fact, in the midst of the cutbacks during the 1990s, GAO experienced an overall staff reduction of 39% from FY1992 to FY1998.", "", "The Budget and Accounting Act of 1921, which created the General Accounting Office, built upon efforts over a considerable period of time to develop a new budget process and involved trade-offs between the legislature and executive. The legislation gave the President substantial responsibilities and authority over the federal budget formulation process. To assist in this endeavor, the statute also created the Bureau of the Budget in the Treasury Department. (The bureau was later moved to the Executive Office of the President and is now known as the Office of Management and Budget.) As a counterweight to these enhancements of executive power in the budget process, Congress established the General Accounting Office in the legislative branch, in large part through the transfer of comptroller and auditor duties from the Treasury Department.\nCongressional work on what was to become the 1921 act began two years earlier with legislative proposals to transfer the duties and responsibilities of the comptrollers and auditors from the Treasury Department to an entity independent of the executive departments and, indeed, located in the legislative branch. This initial legislation was vetoed by President Woodrow Wilson, who objected to a section allowing for the removal of the new Comptroller General by Congress alone, through a concurrent resolution. This provision was later changed to allow for the removal of the Comptroller General by adoption of a joint resolution. The joint resolution, which must be signed by the President, is subject to presidential veto and the possibility of a veto override.\nThe 1921 act abolished the post of Comptroller and Assistant Comptroller of the Treasury, along with the six auditors in the department. Their personnel, records, and resources were transferred to the new General Accounting Office. The establishing authority also vested GAO with the powers and responsibilities of the auditors and Comptroller of the Treasury, some of which dated to the Treasury Act of 1789.\nAlong with this, the originating legislation gave the Comptroller General broad authority to \"investigate, at the seat of government or elsewhere, all matters relating to the receipt, disbursement, and application of public funds\" (42 Stat. 25). To augment this, the Comptroller General was given extensive access to information in \"all departments and establishments ... regarding the powers, duties, activities, organization, financial transactions, and methods of business of their respective office as he may from time to time require\" (42 Stat. 26).\nAdding to the new position, the law authorized the Comptroller General to recommend legislation \"to facilitate the prompt and accurate rendition and settlement of accounts and concerning such other matters relating to the receipt, disbursement, and application of public funds as he may think advisable\" (42 Stat. 25-26). The initial authority, moreover, established new requirements for reporting to Congress and directed the Comptroller General to make special investigations and reports when ordered by either House of Congress or by any committee with jurisdiction over revenue, appropriations, and expenditures.", "Since 1921, the scope of GAO's powers, mandates, and jurisdiction has been expanded by public laws. Its current functions, duties, and extensive jurisdiction (with a few notable exceptions ) have grown out of its powers over finances and expenditures of the federal government, the two major legislative branch reorganizations (in 1946 and 1970), and specific additions to the Comptroller General's responsibilities and authority.", "Additional responsibilities and authority have accrued over time.", "The Government Corporation Control Act of 1945, for instance, granted GAO audit authority over mixed-ownership government corporations (59 Stat. 600-601). And the Budget and Accounting Procedures Act of 1950 directed the Comptroller General to prescribe principles and standards for accounting in executive agencies (64 Stat. 835). Building on this, the Federal Manager's Financial Integrity Act of 1982 required each agency to establish internal accounting and administrative controls in accordance with standards prescribed by the Comptroller General (96 Stat. 814). In addition, the Chief Financial Officers Act of 1990 gave the Comptroller General enhanced audit authority and the power to review financial audits conducted by an inspector general or an external auditor (104 Stat. 2852-2854).", "Along these same lines, GAO has a prominent role in monitoring and reviewing the development and implementation of the Government Performance and Results Act of 1993 (GPRA) (107 Stat. 285). GAO has been involved not only in the training of executive personnel and congressional staff who are to implement and oversee GPRA, but also in the evaluation of pilot programs, strategic plans, annual performance plans and goals, and followup reports from the agencies.", "In the 106 th Congress, GAO was authorized to review federal agency rules and regulations, under the Truth in Regulating Act of 2000. But the program was not implemented because of a lack of funding.", "In order to fulfill its mission, the Government Accountability Office has been given broad powers to gain access to information and materials of government entities, based on its original authority as well as later supplements (31 U.S.C. 712 and 716), with several exceptions. These powers are designed to provide access—fully and directly in most cases—or, barring that, provide an auxiliary means to compel recalcitrant offices to release information. To enforce this, the Comptroller General has power, rarely used, to sue a noncomplying agency for the production of requested records (31 U.S.C. 716). Under this authority, the CG makes a written request to the agency head, who has 20 days to explain why the records are not being made available. At that time, the Comptroller General may file a report with the President, the Director of the Office of Management and Budget, the head of the relevant agency, and Congress. Twenty days after this action, the CG may file suit in the district court for the District of Columbia to require the agency head to produce the requested records.\nAn attempt to use this authority in 2001 resulted in a conflict with the executive. In this case, the Comptroller General was denied access to records of an executive commission—the National Energy Policy Development Group (NEPDG), established by a presidential memorandum and headed by the Vice President. Still denied access after issuing a demand letter, the Comptroller General sued. In 2002, however, the District Court for the District of Columbia held in Walker v. Cheney that GAO lacked standing to sue the Vice President to compel the release of information pertaining to NEPDG. The decision has not been appealed. Legislation ( H.R. 6388 ) has been introduced in the 110 th Congress—by Representative Henry Waxman, chairman of the House Committee on Oversight and Government Reform, for himself and 18 other House chairs—that would, in effect, override Walker v. Cheney , by augmenting the CG's authority to gain access to such records. The bill would also affirm GAO's right to obtain records from three specified agencies (i.e., Centers for Medicare and Medicaid Services, Federal Trade Commission, and Food and Drug Administration). Furthermore, H.R. 6388 would expand GAO's authority to administer oaths and give it express powers to interview federal employees when conducting evaluations and investigations.", "Major legislative reorganization efforts have also augmented GAO's powers and independence. The Legislative Reorganization Act (LRA) of 1946 specifically directed the Comptroller General \"to make an expenditure analysis of each agency in the executive branch of Government (including Government corporations), which, in the opinion of the Comptroller General, will enable Congress to determine whether public funds have been economically and efficiently administered and expended\" (60 Stat. 837). In the 1970 LRA, Congress significantly expanded GAO's assistance to congressional committees and strengthened its program evaluation responsibilities (84 Stat. 1167-1171).", "In addition to the office's assignments and powers, the Comptroller General himself has been given a variety of specific responsibilities in public law, some of which are temporary while others are permanent. Over the years, these have included the power to bring suit to require the release of impounded funds (2 U.S.C. 687); a duty to impose civil penalties under the Energy Policy and Conservation Act of 1975 (42 U.S.C. 6385(a)); the assignments to serve as a member of the Chrysler Corporation Loan Guarantee Board (15 U.S.C. 1862) and of the Board of Directors of the United States Railway Association (45 U.S.C. 711(d)); and the authority to consider bid protests under the Competition in Contracting Act of 1984 (31 U.S.C. 3551-3556).\nThe Comptroller General, along with the Secretary of the Treasury and Director of OMB, serves as a principal on the Federal Accounting Standards Advisory Board. It considers and recommends issuance of accounting standards and principles and provides interpretations of existing ones. Previously, the CG had co-chaired the Cost Accounting Standards Review Panel, consisting of public officials and defense industry representatives. It had examined operations and activities of the Cost Accounting Standards Board (CASB), an executive agency in OMB (41 U.S.C. 422).\nIn the aftermath of the devastating Gulf Coast hurricanes of 2005, the Comptroller General joined inspectors general from appropriate agencies in a new Hurricane Katrina Contract Audit Task Force. It serves as a means of coordinating the efforts of federal organizations auditing the Gulf Coast Recovery Program. Besides GAO, these include offices of inspector general in the Departments of Defense, Homeland Security, Housing and Urban Development, Health and Human Services, and Transportation, as well as the Environmental Protection Agency and General Services Administration.\nThe Comptroller General also chaired the Commercial Activities Panel (CAP), a now-defunct interagency group consisting of representatives from executive departments (i.e., the Office of Personnel Management and Department of Defense), as well as from private organizations and public sector unions. The congressionally mandated panel, which completed its mission in 2002, studied and made recommendations for improving the policies and procedures governing the transfer of commercial activities from the government to contractor personnel.", "Several different types of changes in the authority of GAO and the CG have occurred since the mid-1980s.\nIn 1985, a constitutional conflict arose over powers delegated to the Comptroller General, when Congress gave him specific budget-reduction authority under the Balanced Budget and Deficit Control Act. The CG was to review recommendations about such reductions and report his findings to the President, who, in turn, was to issue a sequestration order mandating spending reductions specified by the CG. Additional legislative mechanisms (or \"fallback\" provisions) to cut spending were also included in the statute. The Supreme Court held, however, that the delegation of authority to the CG was unconstitutional, concluding that \"the powers vested in the Comptroller General under section 251 violate the command of the Constitution that the Congress play no direct role in the execution of the laws.\"\nIn contrast to GAO's long-term expansion over decades, the mid-1990s witnessed a cutback in its authority and, perhaps more importantly, its resources (discussed below). The 1996 General Accounting Office Act abolished or transferred—to the Director of the Office of Management and Budget or the head of an executive department or agency—certain specific \"executive\" powers of the Comptroller General (110 Stat. 3826 and 3838-3840). These related to his authority to make certain determinations about executive assistance and services, resolve disputes over certain purchases made by executive agencies, conduct identified audits of executive accounts, or prescribe regulations for specified executive operations.", "A number of proposals in the 110 th Congress would affect GAO's organization, structure, and authority.", "In July 2007, the Comptroller General called for changes in a number of areas, changes that have been included, as requested or modified, in legislative proposals in the 110 th Congress. The initial version of the Government Accountability Office Act, H.R. 3268 , was introduced at the request of the CG; and an amended version, H.R. 5683 , has passed the House and Senate and has been sent to the White House. The various transformations would affect GAO's pay and personnel system, retirement pay, voluntary separation incentive payments, the CG's annuity level, reimbursement of audit costs, administering oaths, appointment of the deputy, and the office of inspector general.", "If signed into law, H.R. 5683 would modify the CG's authority over pay rates for GAO officers and employees. One provision, for instance, would allow them to rise to level III of the Executive Schedule (EX), instead of the current GS-15 ceiling, while another would grant more discretion to the Comptroller General in determining pay for several high-ranking positions now paid by reference to the EX Schedule; these posts are the Comptroller General, deputy, general counsel, and up to 20 experts and consultants. The legislation would also set new requirements for future annual pay adjustments and respond to past pay discrepancies. With regard to the latter, a proposal would grant pay adjustments for certain employees and officers, including a lump-sum payment for officers and employees who failed to receive certain pay increases in 2006 and 2007. Another modification, in H.R. 3268 but not H.R. 5638 , would set the Comptroller General's annuity at EX level II. (Discussed further below.)", "The appointment process for the Deputy Comptroller General would be transformed—under H.R. 3268 but not H.R. 5683 —allowing the Comptroller General to appoint the deputy, after consultation with a special congressional commission. The new process would end the current arrangement in which the deputy, whose post has been vacant for nearly 30 years, is a presidential nominee subject to Senate confirmation.", "The establishment of a statutory inspector general (IG), also contained in H.R. 5683 , would replace the current administrative construct. The new office would mirror but not duplicate its counterparts in \"designated federal entities\"—usually the smaller agencies, boards, commissions, foundations, and government corporations, where the IG is appointed by and can be removed by the agency head—now operating under the Inspector General Act of 1978, as amended. The new statutory inspector general at GAO, to be selected without regard to political affiliation, would be appointed by and removable by the Comptroller General, who could not, however, prevent the IG from carrying out his or her duties. The inspector general would be responsible for combating waste, fraud, and abuse in GAO and keeping the Comptroller General and Congress currently and fully informed concerning such matters, by way of semi-annual reports and otherwise. Statutory offices of inspector general, incidently, have previously been established in four other legislative branch entities: the Architect of the Capitol Office, Government Printing Office, Library of Congress, and U.S. Capitol Police, all of which allow for the agency head (or a board) to appoint and remove the inspector general.", "Another provision in H.R. 5683 calls for the reimbursement of certain audit costs by executive agencies (or components thereof), beginning in FY2009. They would have to reimburse GAO for its costs associated with auditing their annual financial statements or related schedules prepared under 31 U.S.C. 3515—which covers all accounts and associated activities—under certain conditions. The revenue from the reimbursements would be deposited in a special account in the Treasury, to be made available to GAO as specified in its annual appropriations acts.", "A conflict with the executive arose in 2001 over GAO's independent access to certain executive branch records, in this case, those of the National Energy Policy Development Group, headed by the Vice President. In 2002, as noted above, a federal district court in Cheney v. Walker held that GAO lacked access to the records. In response, Representative Henry Waxman, for himself and 18 other chairs, introduced the Government Accountability Act of 2008 ( H.R. 6388 ) that would augment the CG's power to gain access to such records as well as those from three specified agencies (Centers for Medicare and Medicaid Services, Food and Drug Administration, and Federal Trade Commission). The legislation, which has been approved by the House, would also expand GAO's authority to administer oaths and give it express powers to interview federal employees when conducting evaluations and investigations. Another provision in the bill creates a reporting mechanism, so that Congress would be informed when federal agencies fail to cooperate with the office.", "As noted above, the Government Accountability Office possess nearly unfettered jurisdiction to audit and investigate the federal government. GAO's access, however, may be precluded in certain situations: by the President, if it involves sensitive or classified records, such as foreign intelligence and counterintelligence activities; in instances where the records are statutorily exempted from disclosure (31 U.S.C. 716(d)); or in cases where an executive agency holds competing powers which prevent GAO access.\nThe last of these proscriptions has led to conflicts between the Government Accountability Office and the Intelligence Community (IC), particularly the Central Intelligence Agency (CIA). Legislation has been introduced in the 110 th Congress to clarify GAO's auditing the IC, with hearings held in 2008.\nThe CIA views its own statutory authority as keeping it off-limits to independent GAO audits and investigations. Under its interpretation, the CIA has declined to participate in GAO reviews (as well as in some congressional oversight hearings held by panels other than the Select Committees on Intelligence). Other IC components, however, have not asserted the same proscription to GAO audits. In contrast to the CIA's stand, for instance, the Department of Defense has issued the following instructions:\nIt is DoD policy that the Department of Defense cooperate fully with the GAO and respond constructively to, and take appropriate corrective action on the basis of, GAO reports .... [But DoD is also to] be alert to identify errors of fact or erroneous interpretation in GAO reports, and to articulate the DoD position in such matters, as appropriate.\nGAO has taken exception to the CIA's position, emphasizing that the Office has authority to audit the Agency independently but lacks enforcement power. If enacted, the Intelligence Community Audit Act would change this situation. These and similar proposals, which were first raised in the mid-1970s, are designed to \"reaffirm the authority of the Comptroller General to audit and evaluate the programs, activities, and financial transactions of the intelligence community.\"", "GAO's budget and staffing levels have varied since the mid-1990s, experiencing both downs and ups, with a current leveling off as continuing resolutions have tended to stabilize both figures.\nThe Government Accountability Office, like the other congressional support agencies, operates under a permanent authorization and an annual appropriation. A proposal in 1994, based on the recommendations of the Joint Committee on the Organization of Congress, would have mandated an eight-year authorization period for all congressional support agencies to replace their permanent authorizations. No action, however, was taken on the recommendation.\nTable 1 provides statistics on total new budget authority (gross) and on full-time equivalent employees (FTEs) for GAO from FY1995 through FY2009 (requested).", "GAO's budget authority and personnel levels have fluctuated since the mid-1990s. At that time, the office experienced a substantial cut in its funding, with a combined 25% reduction in total new budget authority for fiscal years 1996 and 1997, by comparison to its FY1995 total. This continued a downward trend that had begun in FY1992 and ebbed in FY1998. Since then, GAO's budget level has risen each year. And over the past decade, it has increased nearly 30%, from $358 million in FY1998 to $507.2 million in FY2008 and $545.5 million requested for FY2009.", "In the mid-1990s, GAO also experienced a significant reduction in its personnel levels, as a result of the budget cuts. Because employee compensation constitutes about 80% of GAO's budget, its cost-saving actions resulted in a sizable staff downsizing at the time. According to 1997 testimony by the Acting Comptroller General, the cutbacks \"have necessitated a loss of people. Today, as a result of those reductions, GAO staffing is at its lowest level since before World War II.\"\nIn 1999, Comptroller General David Walker elaborated on the effects of the seven-year downsizing of GAO (from FY1992 through FY1998). One result was a 39% reduction in its workforce during that span, from 5,325 in FY1992 to 3,245 in FY1998. In 1999 testimony, the CG recounted that the office also\ninstituted a reduction-in-force; closed regional offices; imposed a 5-year hiring freeze; eliminated performance rewards; curtailed technology investments; and reduced travel, training, supplies, and other support costs to achieve the overall mandated reduction in spending. GAO is now facing a number of critical human capital, information technology, and work process challenges that it needs to address.\nGAO's budget and personnel requests dealt with some of these areas since then. But the office has not seen its staff size exceed the 3,275 FTEs in FY1999 and FY2000; and it witnessed smaller numbers in the two following years (with 3,110 in FY2001 and 3,210 in FY2002). By comparison to these low figures, however, personnel levels rose to 3,269 FTEs in FY2003. Nonetheless, recent final FTE statistics show a continuing downsizing each year since FY2003—from 3,269 in that year to 3,100 in FY2008, the lowest total of the past 13 years (see Table 1 ). If approved, the requested number of positions for FY2009—3,251—would reverse this trend.", "Legislation enacted in 2004 granted the Comptroller General certain personnel flexibilities over the GAO workforce. This augmented authority from 1980, 1988, and 2000, which provided the basis for the personnel system at GAO.", "The General Accounting Office Personnel Act of 1980 was designed to construct an \"independent personnel system\" ( P.L. 96-191 , 94 Stat. 27). The new structure replaced GAO's reliance on requirements from several executive branch entities, especially the Office of Personnel Management (OPM) and the Merit System Protection Board. According to the Senate Committee on Governmental Affairs, which reported the proposal favorably, \"this independence from regulation by executive branch entities is the principal objective of the legislation.\" The change, requested by the Comptroller General, was seen as necessary to remove even the appearance of a conflict of interest, as GAO had increased oversight of these agencies and the federal personnel system. This first installment gave the CG authority to \"appoint, pay, assign, and direct such personnel as the Comptroller General determines necessary to discharge the duties and functions of the General Accounting Office\" (94 Stat. 27). Accompanying this general grant were requirements to meet specified provisions of Title 5 of the U.S. Code , which set merit system principles and prohibit certain personnel practices, among other matters (94 Stat. 27).\nAmendments to the personnel act were approved in 1988 ( P.L. 100-426 , 102 Stat. 1598-1602). These revised provisions concerned GAO's personnel appeals board membership and judicial review of its decisions. The amendments also changed the retirement qualifications for the Comptroller General and Deputy, allowing them to remain in office past the otherwise mandatory retirement age of 70; and the statutory changes brought the CG's survivor benefits into conformity with those available to federal judges.\nIn 2000, the CG's powers over personnel were enhanced through a three-year pilot program allowing for specific personnel flexibilities ( P.L. 106-303 , 114 Stat. 1063-1070). This legislation gave qualified authority to the Comptroller General to offer certain voluntary separation incentives, along with early retirements, and to implement a reduction in force.", "The GAO Human Capital Reform Act of 2004 ( P.L. 108-271 ) granted the Comptroller General additional authority over pay and personnel. The enactment allows the Comptroller General to offer early retirement and buy-out incentives; establish an exchange program with the private sector; and make employee relocation benefits more flexible. Another far-reaching provision permits him to set annual pay raises tied more closely with performance appraisal ratings (as opposed to granting automatic yearly increases). In so doing, the CG could also use factors other than the Consumer Price Index, Employment Cost Index, and locality pay surveys to determine the amounts. Other sections, emerging after congressional committee deliberations, are designed to meet several objectives: protect the merit principle of \"equal pay for work of equal value,\" keep the pay rates of employees who have been demoted because of workforce restructuring or job reclassification at their current levels, and set qualifications on exchanges with the private sector.\nAs described by the Comptroller General, the overall transformation is intended to \"further GAO's ability to enhance our performance, assure our accountability, and ensure that we can attract, retain, motivate, and reward a quality and high-performing workforce currently and in future years.\" Changes in this realm and their source—coming from Congress's largest support agency and its chief examiner of executive personnel systems—attracted widespread attention and considerations of a number of matters connected with it, both favorable and not.", "A followup report—issued in mid-2005 under the auspices of the IBM Center for the Business of Government—provides initial responses to these questions, based on an examination of the changes under GAO's new personnel system.\nThe report concluded that GAO successfully used human capital management, broadly defined, to drive its organizational transformation. The authors extended this notion, recommending that \"other agencies would do well to heed the lessons of the federal government's chief accountability office as they go about the critical work of reinventing their own personnel systems.... In particular, GAO has five basic lessons to teach the rest of the federal government.\" These are the need to move cautiously when pushing major change; the need for strong workforce planning; the need to emphasize more targeted recruitment, hiring, and retention policies; the need to beef up investments in systems for the selection and training of managers; and the need for a fair, unbiased, and transparent system for employee appeals.\nDespite this endorsement, the IBM study recognized that some executive agencies—the majority of whose personnel have moved out from under the traditional civil service—may be reluctant or limited in adopting the GAO model, in light of the important differences between GAO (a legislative branch support agency) and executive agencies that carry out public policy directly and immediately. By comparison to GAO, these policy-implementing organizations are usually much larger; experience different levels of autonomy for entities within the agency or department; are more organizationally varied; and exhibit more functional diversity and mission multiplicity, resulting in cross-cutting and shared jurisdictions with other executive entities.\nThe GAO pay-for-performance implementation, along with similar efforts in executive agencies, have raised concerns over several matters in congressional hearings in the 110 th Congress and other forums, and have led to legislative proposals to modify the Comptroller General's powers in this regard (discussed above). The issues include: whether the changes are implemented fairly and impartially across the board, whether the plan's criteria and standards are clear and appropriate, whether the measurements used to compare personnel in GAO and elsewhere lead to valid and reliable conclusions, whether the changes produce the desired results, whether they have an adverse effect on employee morale, and whether they prompt (or endorse) requests for similar authority in other government entities. Earlier, the office's pay-ban determinations had been challenged by 308 employees, resulting in a favorable settlement for 12.", "As an outgrowth of the pay-for-performance dispute and other matters, eligible GAO analysts voted on September 19, 2007, to establish a local affiliate of the International Federation of Professional and Technical Employees (IFPTE), which will represent all bargaining unit employees on all matters that are subject to collective bargaining. The new unit, supported by a two-to-one margin of the voting employees (among the 1,813 eligible), marks the first such employee organization in GAO history.", "Since its inception in 1921 as the General Accounting Office, the Government Accountability Office has been headed by only seven Comptrollers General. Table 2 lists them in chronological order.\nWhen the Comptroller General post is vacant, GAO has been headed by an acting Comptroller General, as it is now. The longest absence of a confirmed Comptroller General was three years, 1936-1939. The second longest was the two-year vacancy from September 30, 1996, when Charles Bowsher ended his term, until November 9, 1998, when David Walker began his.", "Under GAO's current statutory charter, the Comptroller General and Deputy Comptroller General are nominated by the President, following recommendations from a special congressional commission, and are confirmed by the Senate.\nWhen a vacancy occurs in the office of the Comptroller General or the Deputy, a special congressional commission, consisting of members of both chambers and both parties, is established to recommend individuals to the President for appointment. Added by the General Accounting Office Act of 1980 (94 Stat. 314-315), this process became operational the following year. Under the arrangement, the recommending commission consists of the Speaker of the House, the President pro tempore of the Senate, the majority and minority leaders of the House and Senate, the chairmen and ranking minority members of the Senate Committee on Homeland Security and Governmental Affairs and the House Committee on Oversight and Government Reform, and, when the Deputy's post is vacant, the Comptroller General. The commission determines the criteria and standards for its nominees.\nThe current process includes examination of the backgrounds and future plans of potential nominees, including, of course, their credentials, accomplishments, and relevant work experience in the private sector and public office. These examinations are conducted by the commission members and staff through interviews and meetings with the candidates, as well as with interested and knowledgeable parties, and a review of relevant materials and documents. Later examinations are held by the Senate Committee on Homeland Security and Governmental Affairs, which reports the nomination to the full Senate.\nThe commission must recommend at least three individuals but the President may ask for additional names for consideration (or nominate someone else). The original bill called for five names to be submitted. However, the number was reduced, according to the report of the Senate Committee on Governmental Affairs, because \"three names is a more realistic figure. Considering the high qualifications for the Office of Comptroller and Deputy Comptroller General, a requirement to generate five names might be extremely difficult to satisfy.\"\nThe reporting panel also recognized that the President could still nominate an individual not recommended by the commission, in light of \"the President's authority under the Appointments Clause .... However, it is expected that the President would give great weight to the Commission's recommendations.\" This expectation has been met. On the two occasions since the 1980 enactment when a vacancy in the office of Comptroller General arose, Presidents Reagan in 1981 and Clinton in 1998 each selected a nominee from the initial congressional list.\nThe provision for a bicameral commission gives both chambers of Congress a formal and direct role in selecting the head of this legislative branch agency. The Senate Committee on Governmental Affairs endorsed the new arrangement:\nIn view of the relationship between the Comptroller General and the Congress, the Committee believes it is appropriate that both Houses be given a role in the selection process.... [The new provision] reflects the special interests of both Houses in the choice of an individual whose primary function is to provide assistance to Congress.\nThe current unique nomination process has not been used for the post of Deputy Comptroller General, which has remained vacant since the 1980 enactment. Instead of a confirmed Deputy, the Comptroller General has relied upon his own appointee(s) in one or two posts over the past several decades. Early in this period, a single special assistant to the Comptroller General served as second in command. Currently, two officials—the chief operating officer and the chief mission support officer—carry out the appropriate duties and functions.", "The new nomination process went into effect in 1981, resulting in the appointment of Charles A. Bowsher, whose 15-year term expired in September, 1996.\nA second congressional commission met afterwards, to recommend a successor. On January 22, 1998, the commission sent the names of three individuals who \"had received majority support from the members of the Commission\" to President Clinton for his consideration, as provided in the 1980 statute. Independently, six days later, Democratic members of the commission submitted four additional names. On October 5, 1998, President Clinton nominated David M. Walker, one of the three original recommendations of the commission majority. He was confirmed by the Senate on October 21, following hearings by the Governmental Affairs Committee on October 7, and its favorable report on October 9. Walker began his term of office on November 9, 1998.\nThe two-year interregnum marked the second longest period without a confirmed Comptroller General. And the nearly 10 months before the President submitted a nomination based on the congressional commission's recommendation prompted interest in making the Comptroller General position exclusively a legislative branch officer. But this was not acted on. By so doing, Congress would have made the appointment itself, as it does, for instance, with the Director of the Congressional Budget Office. (By comparison, other legislative branch offices—the Librarian of Congress, Architect of the Capitol, and Public Printer, who heads the Government Printing Office—are filled by presidential nominees who are confirmed by the Senate.)", "The Comptroller General is limited to a single 15-year term, a statutory provision designed to protect the officer's independence, professional integrity, and objectivity. Of the seven Comptrollers General, three served the full term. (See Table 2 .) The four with shorter tenures include David Walker, who will have served for nine years and four months when his resignation takes effect (November 9, 1998, to March 12, 2008). The remaining three who left early, coincidentally in succession, were Brown, one year, resignation; Warren, 14 years, retirement; and Campbell, 10½ years, retirement. All three cited ill health as the reason for leaving.", "The Comptroller General or Deputy may be removed by impeachment or by adoption of a joint resolution of Congress. Removal by joint resolution can occur only after notice and an opportunity for a hearing and only for certain specified reasons: permanent disability, inefficiency, neglect of duty, malfeasance, felony conviction, or conduct involving moral turpitude. No Comptroller General or Deputy has been subject to either impeachment or removal by a joint resolution.", "The current requirement creates an unequaled retirement system for the Comptroller General, by comparison with other government officials and employees. It provides that a CG who retires after at least 10 years in office \"is entitled to receive an annuity for life equal to the pay the Comptroller General is receiving on completion of the term or at the time of retirement\" (31 U.S.C. 772(a)). In addition to this benefit, an annuity for a retired CG \"shall be increased at the same time that, and by the same percent as the percentage by which, annuities are increased under section 8340(b) of Title 5\" (31 U.S.C. 777(a)). As a qualification, this annuity \"may not be more than the basic pay of the Comptroller General\" (31 U.S.C. 777(b)).\nThis special retirement system was added in 1953. In considering the legislation, the Senate Committee on Government Operations received the views of both the Civil Service Commission (CSC) and the Comptroller General. The Committee stated that the new retirement system for the Comptroller General was\ndesigned to conform to the particular nature of the office, which witnesses testified was similar in character, tenure and independence to the office of a Federal judge, and that its provisions are designed to conform to retirement benefits provided for Federal judges.\nThe post was regarded as \"unique,\" in a statement on behalf of the Chairman of the Civil Service Commission, who favored the retirement provision for several reasons.\nThe Comptroller General is unique in that he is (a) independent of Executive control, (b) cannot be removed except by the Congress, and (c) is not eligible for reappointment after serving a 15-year term.\nA letter to the Committee from the CSC elaborated on these and other rationales. It noted that the Comptroller General's duties were \"important and complex,\" demanding \"the appointment of a mature man,\" who would not necessarily have had previous government experience and might not after leaving the post. The resulting condition is that \"upon completion of his term, the Comptroller General will normally be of such advanced age as to deter, if not prohibit, his acceptance of employment in other pursuits.\"\nLindsay Warren, the Comptroller General at the time, echoed these sentiments. The fixed 15-year term, without the possibility of reappointment,\nis too long for such an officer to retain other ties, and too short to provide lifetime security or sufficient longevity to buy an annuity under the Civil Service Retirement System.... Important and complex duties of the position dictate the appointment of a mature man, who, upon completion of his term, would normally be beyond the age when he might seek new fields of activity.... the Office is a part of the legislative branch of the Government, and is of a semijudicial nature.\nAn attempt to transform the CG's retirement system was advanced by the House Appropriations Committee in the 110 th Congress. The panel included a proviso\nthat repeals the unique Comptroller General Retirement system for any individual appointed Comptroller General after the enactment of this Act. Future appointments to this position will be covered under the standard Federal Employees Retirement System (FERS).\nOf the seven Comptrollers General, two—Lindsay Warren and Joseph Campbell—retired after going beyond the 10-year threshold (which was made available in 1954).", "Throughout GAO's history, only two of the seven Comptrollers General have resigned from office. Fred Herbert Brown served a little over one year (April 11, 1939, to June 19, 1940), leaving office after suffering a stroke. David M. Walker resigned in order to head a newly established public interest foundation. He had served as Comptroller General for nine years and four months (November 9, 1998, to March 12, 2008), thus, falling short of the 10-year threshold to be eligible for the CG's retirement annuity.", "Created in 1921, the General Accounting Office, now the Government Accountability Office, is Congress's largest support agency, with a budget of more than $507 million and an authorized staff of 3,100 for FY2008. The office has been headed by only seven comptrollers general over its eight-decade history; with a vacancy currently, it operates under an acting CG. GAO has been granted broad jurisdiction over the executive and substantial independence from it as well as extensive authority to gain access to its records and to investigate, audit, and evaluate its operations. These attributes support a wide variety of services and activities, most connected with legislative oversight of the executive, that GAO can initiative on its own or, more usually, at the request of Congress, its Members, and panels.\nOver the past decade, questions have arisen over several matters affecting GAO's structure, organization, and powers: the process (and resulting delay) for selecting the Comptroller General; the absence of a confirmed Deputy for more than twenty-five years; the unsuccessful attempt to gain access to information from a presidentially established panel, headed by the Vice President; problems in securing independent access to the records of certain agencies; and limitations on GAO auditing of all components of the intelligence community. As a result, bills have been introduced in the 110 th Congress which would enhance GAO access to executive branch information, clarify the office's jurisdiction over the intelligence community, provide reimbursement for certain audit costs, and establish a statutory inspector general in GAO.\nIn the mid-1990s, GAO underwent a substantial downsizing—in funding and staffing—in part because of congressional criticism of its perceived orientation towards the previous two administrations and concerns about its missions and roles. In the meantime, the office has experienced a paradox between its budget and personnel levels. Its annual budget has increased regularly over the past 10 years—reaching its highest level in FY2008—while its staff has been downsized, falling to its smallest level at the same time.\nIn 2004, the Comptroller General garnered new authority over pay and personnel in the newly-designated Government Accountability Office. A followup study a year later, under the auspices of the IBM Center for the Business of Government, found benefits in GAO's use of human capital management to drive its organizational transformation. The authors recommended that executive agencies—notwithstanding their differences with a legislative branch support agency—\"heed the lessons of the government's chief accountability office as they go about the critical work of reinventing their own personnel systems.\" Despite this endorsement, the changes in GAO (as well as parallel ones in executive agencies) prompted concerns over the implementation and impact of the new personnel flexibilities authority and pay. These developments contributed, in 2007, to the establishment of an employee union with collective bargaining rights; in 2008, to a new contract for eligible employees; and in the same year, to legislative proposals to modify the CG's powers over such personnel matters and provide reimbursements for certain staff who did not receive pay increases in 2006 and 2007.\nIn sum, the Government Accountability Office appears to be going through a transition period. Changes—in progress or proposed—have been prompted by a vacancy in the office of the Comptroller General; the nearly 30-year absence of an official Deputy CG; conflicts over a new personnel system and its implementation; the perceived need for certain new arrangements and organizations within GAO, such as a statutory inspector general; and restrictions on its independent access to executive branch information and its auditing of the intelligence community." ], "depth": [ 0, 1, 1, 2, 2, 3, 4, 4, 4, 4, 3, 3, 2, 1, 2, 3, 3, 3, 3, 2, 2, 1, 2, 2, 2, 3, 3, 3, 3, 1, 2, 2, 1, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full h1_full", "h3_title", "", "", "", "", "", "", "", "", "", "h3_full", "h2_full", "h2_title", "h2_full", "", "", "", "", "h2_full", "h2_title h3_title", "h3_full", "h3_full", "h2_full", "", "", "", "h2_full", "h1_title", "h1_full", "", "h1_full", "", "", "", "" ] }

{ "question": [ "What are the original and current names of GAO?", "Why was the GAO renamed?", "What is the Government Accountability Office?", "How does GAO operate?", "How is the GAO instantiated?", "What is the current status of the Comptroller General post?", "Why was GAO established in 1921?", "What was the intention for GAO?", "What services does GAO provide today?", "How have proposals in the 110th Congress augmented GAO's capabilities?", "What controversies surround the GAO?", "How has the GAO changed in response to these controversies?", "In what areas has the GAO experienced growth?", "How did the GAO change in the 1990s?", "How did the GAO change after addressing its criticisms?", "How has this affected the GAO's funding and staff size?" ], "summary": [ "On July 7, 2004, an old congressional support agency was given a new name, while keeping the same initials (GAO): at that time, the General Accounting Office, established in 1921, was re-designated the Government Accountability Office (P.L. 108-271).", "The renaming, which came at the request of its head, the Comptroller General (CG) of the United States, was designed to reflect the agency's evolution and additional duties since its creation more than eight decades before.", "The Government Accountability Office is the largest of three agencies that provide staff support, research, review, and analysis for Congress.", "GAO operates under the control and direction of the Comptroller General, who is appointed by the President, with the advice and consent of the Senate, for a 15-year nonrenewable term.", "A unique arrangement begins the process with a special bicameral commission of legislators from both parties making recommendations to the President.", "The CG post is currently vacant, with the resignation of David Walker on March 12, 2008.", "GAO was established in 1921 as an independent auditor of government agencies and activities by the Budget and Accounting Act.", "The office was intended to be \"independent of the executive departments,\" the entities it would audit and review.", "Sometimes called \"Congress's watchdog\" and its \"investigative arm,\" GAO now provides a variety of services to Congress that extend beyond its original functions and duties, including oversight, investigation, review, and evaluation of executive programs, operations, and activities.", "Several proposals in the 110th Congress are seen as augmenting GAO's capabilities. These include clarifying its audit authority over the Intelligence Community (H.R. 978 and S. 82) and enhancing its powers to gain access to executive documents (H.R. 6388).", "In a separate matter, personnel flexibilities powers granted to the Comptroller General in 2004 have generated some controversy in Congress and among GAO employees.", "As an outgrowth of this and other considerations, GAO staff have set up a new bargaining unit, the first union in the office's history. Legislation has also been proposed that would, among other things, amend GAO's basic authority over personnel and pay matters for employees, provide pay adjustments and reimbursements for certain employees who had not received pay increases in 2006 and 2007, and establish an office of inspector general (H.R. 5683, which has passed the House and Senate and been sent to the President).", "Throughout much of its history, the office has experienced growth in its powers, duties, and resources.", "In the mid-1990s, however, it was the subject of congressional hearings, studies, and proposals for change, connected with its mission, roles, and capabilities; these reviews were generated in part by criticisms of its perceived orientation.", "As a result, GAO's budget and personnel levels were reduced and certain of the \"executive powers\" of the Comptroller General.", "In comparison to these earlier budget reductions, however, the office's funding has since risen, from $358 million in FY1998 to $507.2 million in FY2008. Nonetheless, GAO's staff size (at 3,100 in FY2008) has remained lower than in earlier years." ], "parent_pair_index": [ -1, -1, -1, 0, 0, -1, -1, 0, -1, -1, -1, 4, -1, -1, -1, 2 ], "summary_paragraph_index": [ 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Overview", "Regional Organizations", "The Pacific Islands and U.S. Interests", "U.S. Policies in the South Pacific", "Foreign Assistance", "South Pacific Tuna Treaty", "Compacts of Free Association", "Background", "Palau: Compact of Free Association Review Agreement", "Marshall Islands Nuclear Test Damages Claims", "U.S. Nuclear Test Compensation", "Marshall Islands Legal Actions", "China's Growing Influence", "China's Foreign Assistance and Trade", "Australia, New Zealand, and Other External Actors", "France", "Other External Actors", "Climate Change and Other Environmental Issues", "The Paris Agreement and the Pacific", "Ocean Acidification", "Fisheries", "Referenda on Self-Determination", "New Caledonia", "Bougainville", "Appendix. Social and Economic Indicators" ], "paragraphs": [ "", "The Pacific Islands region, also known as the South Pacific or Southwest Pacific, presents Congress with a diverse array of policy issues. It is a strategically important region that encompasses U.S. Pacific territories. U.S. relations with Australia and New Zealand include pursuing common interests in the Southwest Pacific, which also has attracted Chinese diplomatic attention and economic engagement. Congress plays key roles in approving and overseeing the administration of the Compacts of Free Association that govern U.S. relations with the Marshall Islands, Micronesia, and Palau (also referred to as the Freely Associated States or FAS). The United States has economic interests in the region, particularly fishing. The United States provides foreign assistance to Pacific Island countries, which are among those most affected by climate change, particularly in the areas of climate change adaptation and mitigation.\nThe Southwest Pacific covers 20 million square miles of ocean and 117,000 square miles of land area (roughly the size of Cuba). The region includes 14 sovereign states with approximately 9 million people, including three countries in \"free association\" with the United States—the Marshall Islands, Micronesia, and Palau. Papua New Guinea (PNG), the largest country in the Southwest Pacific, constitutes 80% of region's land area and 75% of its population. (See Table 1 .) The region's gross domestic product (GDP) totals around $32 billion (about the size of Albania's GDP). Per capita incomes range from lower middle income (Solomon Islands at $2,000 per capita GDP) to upper middle income (Nauru and Palau at $14,200).\nAccording to many analysts, since gaining independence during the post-World War II era, many Pacific Island countries have experienced greater political than economic success. Despite weak political institutions and occasional civil unrest, human rights generally are respected and international observers largely have regarded governmental elections as free and fair. Of 12 Pacific Island states ranked by Freedom House for political rights and civil liberties, eight are given \"free\" status, while Fiji, Papua New Guinea, and the Solomon Islands—the three largest countries in the region—are ranked as \"partly free.\"\nMost Pacific Island countries, with some exceptions such as Fiji, Papua New Guinea, and the Solomon Islands, have limited natural and human resources upon which to launch sustained development. Many small atoll countries in the region are hindered by lack of resources, skilled labor, and economies of scale; inadequate infrastructure; poor government services; and remoteness from international markets. In addition, some areas also are threatened by frequent weather-related natural disasters and rising sea levels related to climate change.", "The Pacific Islands Forum (PIF), which was known as the South Pacific Forum until 1999, seeks to foster cooperation between member states. It is comprised of 18 states and territories. The PIF's 16 states are Australia, Cook Islands, the Federated States of Micronesia, Fiji, Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, the Republic of the Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu. Its two territories are French Polynesia and New Caledonia. The PIF Secretariat is located in Suva, Fiji. Key issues addressed by the PIF include climate change, regional security, and fisheries. American Samoa, Guam, and the Northern Marianas have observer status with the PIF.\nThe Melanesian Spearhead Group (MSG), founded in 1986, includes the following Melanesian countries and organizations: Fiji, the Kanak Socialist Liberation Front (FLNKS) of New Caledonia, Papua New Guinea, the Solomon Islands, and Vanuatu. The MSG seeks to have \"common positions and solidarity in spearheading regional issues of common interest, including the FLNKS cause for political independence in New Caledonia.\" In 2015, the MSG granted the United Liberation Movement for West Papua observer status and Indonesia associate member status.", "On the whole, the United States enjoys friendly relations with Pacific Island countries and has benefitted from their support in the United Nations. This is especially true of the Freely Associated States, particularly Palau, which in 2014 reportedly voted with the United States 90% of the time. (See \" Compacts of Free Association \" below.) The United States has worked with Australia, the preeminent power in the Southwest Pacific, to help advance shared strategic interests, maintain regional stability, and promote economic development, particularly since the end of the Cold War in the early 1990s. New Zealand also has cooperated with U.S. initiatives in the region, been a major provider of foreign aid, and helped lead peacekeeping efforts. France and Japan also maintain significant interests in the region. China has become a diplomatic force, major source of foreign aid, and leading trade partner in the Southwest Pacific. In addition, more recently, other nations, including Russia, India, and Indonesia, have made efforts to expand their engagement in the region.\nThe Pacific Islands generally can be divided according to four spheres of influence, those of the United States, Australia, New Zealand, and France. The American sphere extends through parts of the Micronesian and Polynesian subregions. (See Figure 1 .) In the Micronesian region lie the U.S. territories Guam and the Northern Mariana Islands as well as the Freely Associated States. In the Polynesian region lie Hawaii and American Samoa. U.S. security interests in the Micronesian subregion, including military bases on Guam and Kwajalein Atoll in the Marshall Islands, constitute what some experts call a defensive line or \"second island chain\" in the Pacific. The first island chain includes southern Japan, Taiwan, and the Philippines. Some analysts in China have viewed the island chains as serving to contain China and the Chinese navy. The region also was a key strategic battleground during World War II, where the United States and its allies fought against Japan.\nAustralia's interests focus on the islands south of the equator, particularly the relatively large Melanesian nations of Papua New Guinea, which Australia administered until PNG gained its independence in 1975, the Solomon Islands, and Vanuatu. New Zealand has long-standing ties with its territory of Tokelau, former colony of Samoa (also known as Western Samoa), and the Cook Islands and Niue, two self-governing states in \"free association\" with New Zealand. Australia and New Zealand often cooperate on regional security matters such as peacekeeping. France continues to administer French Polynesia, New Caledonia, and Wallis and Futuna.\nU.S. policymakers have emphasized the importance of the Pacific Islands region for U.S. strategic and security interests. In testimony before the Subcommittee on Asia and the Pacific of the House Committee on Foreign Affairs, former Deputy Assistant Secretary of State Matthew Matthews emphasized the changing strategic context of the Pacific Islands region:\nThe Pacific Island region has been free of great power conflict since the end of World War II, we have enjoyed friendly relations with all of the Pacific island countries. This state of affairs, however, is not guaranteed.... Our relations with our Pacific partners are unfolding against the backdrop of shifting strategic environment, where emerging powers in Asia and elsewhere seek to exert a greater influence in the Pacific region, through development and economic aid, people-to-people contacts and security cooperation. There is continued uncertainty in the region about the United States' ... willingness and ability to sustain a robust forward presence.\nDuring the hearing, then-Chairman of the Subcommittee on Asia and the Pacific former Representative Matt Salmon stated that the countries of the region deserve U.S. attention \"for the important roles that they play in regional security, as participants in international organizations, and as the neighbors to our own U.S. territories of American Samoa, Guam and the Commonwealth of the Northern Mariana Islands.\"\nSome analysts have expressed concerns about the long-term strategic implications of China's growing engagement in the region. Other experts have argued that China's diplomatic outreach and economic influence have not translated into significantly greater political sway over South Pacific countries, and that Australia, a U.S. ally, remains the dominant power and provider of development assistance in the region. Some observers also have contended that Chinese military assistance and cooperation in the region remain modest compared to that of Australia, and that China has not actively sought to project \"hard power.\"", "Broad U.S. objectives and policies in the region have included promoting sustainable economic development and good governance, addressing the effects of climate change, administering the Compacts of Free Association, supporting regional organizations, projecting a presence in the region, and cooperating with Australia and regional aid donors. Other areas of concern and cooperation include combating illegal fishing, supporting peacekeeping operations, and responding to natural disasters.\nAreas of particular concern to Congress include overseeing U.S. policies in the Southwest Pacific and the administration of the Compacts of Free Association; regional foreign aid programs and appropriations; approving the U.S.-Palau agreement to provide U.S. economic assistance through 2024; and supporting the U.S. tuna fleet. The Obama Administration asserted that as part of its \"rebalancing\" to the Asia-Pacific region, it had increased its level of engagement in the Southwest Pacific, including expanding staffing and programming and increasing the frequency of high-level meetings with Pacific leaders. Other observers contended that the rebalancing policy had not included a corresponding change in the level of attention paid to the Pacific Islands region.\nU.S. diplomatic outreach to the region includes the following:\nIn 2011, then-President Obama met with Pacific Island leaders on the margins of the Asia Pacific Economic Cooperation (APEC) Leaders Meeting. In 2012, Hillary Clinton attended the Pacific Islands Forum annual summit, the first Secretary of State to do so, in the Cook Islands, where she noted U.S. assistance to the region and highlighted three U.S. objectives: trade, investment in energy, and sustainable growth; peace and security; and women's empowerment. In 2013, then-Secretary of State John Kerry met with Pacific Island leaders at the United Nations and pledged to work with the region to address climate change. In 2014, then-Secretary Kerry visited the Solomon Islands following devastating floods there. In 2015, then-President Obama met with leaders of Kiribati, the Marshall Islands, and Papua New Guinea at the Paris Climate Conference. In September 2016, then-Assistant Secretary of State for East Asian and Pacific Affairs Daniel Russel led a U.S. delegation to the 28 th Pacific Islands Forum in Pohnpei, Micronesia. Main topics of discussion included climate change, management and conservation of fisheries and other marine resources, sustainable development, regional economic integration, and human rights in West Papua.", "The region depends heavily upon foreign aid. In terms of official development assistance (ODA) as defined by the Organization for Economic Cooperation and Development (OECD), which focuses on grant-based assistance, OECD members Australia, New Zealand, the United States, France, and Japan are the principal aid donors in the Southwest Pacific. Major multilateral sources of ODA include the World Bank's International Development Association and the Asian Development Bank. According to the OECD, in 2014, the most recent year for which full data are available, the leading aid donors committed ODA to the region as follows: Australia, $850 million; New Zealand, $374 million; the United States, $277 million; France, $126 million; and Japan, $107 million. Although the United States remains one of the largest providers of ODA to the region by some measures, U.S. assistance remains concentrated among the Freely Associated States. China has become a major source of foreign assistance, but Chinese aid differs from traditional ODA due to its heavy emphasis on concessional loans and infrastructure projects (see \" China's Foreign Assistance and Trade \" below).\nThe U.S. government administers foreign assistance to Pacific Island countries through the U.S. Agency for International Development (USAID) Office for the Pacific Islands (based in the Philippines) and Pacific Islands Satellite Office (based in Papua New Guinea). U.S. foreign assistance activities include regional environmental programs; military training; disaster assistance and preparedness; fisheries management; HIV/AIDS prevention, care, and treatment programs in Papua New Guinea; and strengthening democratic institutions in Papua New Guinea, Fiji, and elsewhere. U.S. assistance also aims to help strengthen Pacific Islands regional fora.\nUSAID has partnered with Pacific Islands regional organizations to carry out a five-year program to coordinate responses to the adverse impacts of climate change. Through the Coastal Community Adaptation Program, USAID supports local-level climate change interventions in nine Pacific Island countries. The United States supports natural disaster mitigation and response capabilities and weather and climate change adaptation programs in the Marshall Islands and Micronesia, two low-lying atoll nations, and elsewhere in the Pacific Islands region. USAID's Regional Development Mission-Asia (RDM/A) carries out several environmental programs in the region, particularly in Papua New Guinea.\nThe United States conducts International Military Education and Training (IMET) programs related to peacekeeping operations, strengthening national security, responding to natural and man-made crises, developing democratic civil-military relationships, and building military and police professionalism in Fiji, Papua New Guinea, Samoa, and Tonga. The Obama Administration requested $1 million in Foreign Military Financing (FMF) for FY2016 for a regional program to promote peacekeeping activities, English language capabilities, and professionalism in the military. (See Table 2 .) For FY2017, U.S. assistance aims to expand engagement with the PIF and other regional bodies to improve democratic development and governance in the region.", "Funding provided pursuant to the South Pacific Tuna Treaty (SPTT) constitutes a major source of U.S. assistance to some Pacific Island countries. Under the SPTT, in force since 1988, Pacific Island parties to the treaty provide access for U.S. tuna fishing vessels to fishing zones in the Southwest Pacific, which supplies one-third of the world's tuna. In exchange, the American Tunaboat Association pays licensing fees to Pacific Island parties to the treaty. In addition, as part of the agreement, the United States provides economic assistance to the Pacific Island parties totaling $21 million per year. In January 2016, the United States temporarily withdrew from the agreement, arguing that the terms were \"no longer viable\" for the U.S. tuna fleet. The U.S. fleet argued that it could no longer pay quarterly fees due to sharply declining prices for tuna and competition from other countries, some of which was illegal. U.S. boats resumed fishing in the region in March 2016 but with fewer fishing days allotted than in 2015. Talks to renegotiate the SPTT resulted in an agreement in principle in June 2016 that aims to \"establish more flexible procedures for commercial cooperation between Pacific Island Parties and US industry.\"", "Congress plays roles in approving and overseeing the administration of the Compacts of Free Association that govern U.S. diplomatic, economic, and military relations with the Marshall Islands, Micronesia, and Palau. U.S. economic commitments to the Freely Associated States—totaling nearly $200 million in FY2015 —are administered by the Department of the Interior. The Compact of Free Association Review Agreement, signed by the United States and the Republic of Palau in 2010, awaits congressional approval. Since 2000, the Republic of the Marshall Islands has unsuccessfully sought additional compensation for damages related to U.S. nuclear testing on Marshall Islands atolls during the 1940s and 1950s.", "In 1947, the Marshall Islands, the Federated States of Micronesia, Palau, and the Northern Marianas, which had been under Japanese control during part of World War II, became part of the U.S.-administered United Nations Trust Territory of the Pacific Islands. In the early 1980s, the Marshall Islands and Micronesia rejected the option of U.S. territorial or commonwealth status and instead chose free association with the United States. Compacts of Free Association were negotiated and agreed by the governments of the United States, the Marshall Islands, and Micronesia, and approved by plebiscites in the Trust Territory districts and by the U.S. Congress in 1985 ( P.L. 99-239 ). Congress approved the Compact with Palau in 1986 ( P.L. 99-658 ), which Palau ratified in 1994. The Compacts were intended to establish democratic self-government and to advance economic development and self-sufficiency through U.S. grant and federal program assistance, and to further the national security of the Freely Associated States (FAS) and the United States in light of Cold War geopolitical concerns.\nUnder the Compacts, the FAS are sovereign nations that conduct their own foreign policy, but the United States and the FAS are subject to certain limitations and obligations regarding international security and economic relations. The United States is obligated to defend the Freely Associated States against attack or threat of attack. The United States may block FAS government policies that it deems inconsistent with its duty to defend the FAS (the \"defense veto\"), and it has the prerogative to reject the strategic use of, or military access to, the FAS by third countries (the \"right of strategic denial\"). The United States also may establish military bases in the FAS, and the Marshall Islands is home to a premier U.S. military facility (the Ronald Reagan Ballistic Missile Defense Test Site [RTS], also known as the Kwajalein Missile Range).\nThe Freely Associated States and their citizens are eligible for various U.S. federal programs and services. FAS citizens are entitled to reside and work in the United States and its territories as \"lawful non-immigrants\" and are eligible to volunteer for service in the U.S. armed forces. Several hundred FAS citizens serve in the U.S. military and roughly 12 FAS citizens serving in the U.S. armed forces died in the Iraq and Afghanistan war efforts. The Marshall Islands, Micronesia, and Palau were members of the U.S.-led coalition that launched Operation Iraqi Freedom in 2003.\nThe FAS economies depend heavily on U.S. support. The Department of the Interior provides direct economic or grant assistance to the FAS. Its Office of Insular Affairs is responsible for administering the Compacts. The Compacts with the Marshall Islands and Micronesia provided economic assistance totaling roughly $2.5 billion between 1987 and 2003, including payments for damages and personal injuries caused by U.S. nuclear testing on Marshall Islands atolls during the 1940s and 1950s. In December 2003, the Compacts were amended in order to extend economic assistance for another 20 years and establish trust funds that aim to provide sustainable sources of government revenue after 2023. Projected U.S. grant assistance and trust fund contributions to the Marshall Islands for the 2004-2023 period total $629 million and $235 million, respectively. Projected grant assistance and trust fund contributions to Micronesia for the same period total $1.4 billion and $442 million, respectively.", "In 1986, the United States and Palau signed a 50-year Compact of Free Association. The Compact was approved by the U.S. Congress but not ratified in Palau until 1993 (entering into force on October 4, 1994). The U.S.-Palau Compact provided for 15 years of direct economic assistance, the construction of a 53-mile road system, a trust fund, services of some U.S. federal agencies such as the U.S. Postal Service and the National Weather Service, and eligibility for some U.S. federal education, health, and other programs. Between 1995 and 2009, U.S. assistance totaled over $850 million, including grant assistance, road construction, and the establishment of a trust fund ($574 million), Compact federal services ($25 million), and discretionary federal program assistance ($267 million).\nUnder the Compact, direct economic assistance was to terminate in 2009 while annual distributions from the trust fund were to increase, to help offset the loss of economic assistance. However, Palauan leaders and some U.S. policymakers argued that continued assistance to Palau beyond 2009 was necessary. Furthermore, the value of the Compact trust fund fell from nearly $170 million to $110 million in 2008-2009 due to the global financial crisis, although it rebounded and was valued at approximately $184 million in 2015. In September 2010, the United States and Palau agreed to renew Compact economic assistance, but it awaits approval by Congress. (See Table 3 .)\nThe 2010 accord provided for $215.75 million in direct economic assistance over an additional 15-year period (2011-2024). According to some estimates, U.S. support, including both direct economic assistance and projected discretionary program assistance, would total approximately $427 million between 2011 and 2024. In addition, the agreement committed Palau to undertake economic, legislative, financial, and management reforms.\nAlthough there has been bipartisan support for continued assistance, Congress has yet to approve the renewal agreement, also known as the Compact of Free Association Review Agreement, largely for budgetary reasons. From FY2010 to FY2016, the U.S. government continued annual direct economic assistance to Palau at 2009 levels ($13.1 million), pending congressional approval of the 2010 agreement and resolution of funding issues. Other U.S. assistance pursuant to the agreement, however, remained unfunded.\nDuring the 114 th Congress, two bills were introduced in support of the agreement to extend Compact assistance to Palau. S. 2610 , A Bill to Approve an Agreement Between The United States and the Republic of Palau, would not significantly alter total U.S. economic assistance to Palau from the levels specified in the 2010 renewal agreement, although the assistance would be allocated in different increments due in part to the delay in implementing the agreement. H.R. 4531 , To Approve an Agreement Between the United States and the Republic of Palau, and for Other Purposes, would provide an additional $31.8 million as well as reschedule U.S. assistance. In addition, the conference report ( H.Rept. 114-840 ) to accompany S. 2943 , The National Defense Authorization Act for Fiscal Year 2017, included the following statement: \"The conferees believe that enacting the Compact Review Agreement is important to United States' national security interests and, as such, believe that the President should include the Compact Review Agreement in the Fiscal Year 2018 budget request.\"", "From 1946 to 1958, the United States conducted 67 atmospheric atomic and thermonuclear weapons tests on the Marshall Islands atolls of Bikini and Enewetak. In 1954, \"Castle Bravo,\" the second test of a hydrogen bomb, was detonated over Bikini atoll, resulting in dangerous levels of radioactive fallout upon the populated atolls of Rongelap and Utrik. Between 1957 and 1980, the residents of the four northern atolls returned to their homelands (Rongelap and Utrik in 1957; Bikini in 1968; and Enewetak in 1980). However, the peoples of Bikini and Rongelap were re-evacuated to other islands in 1978 and 1985, respectively, after the levels of radiation detected in the soil were deemed unsafe for human habitation. Although diving and tourist facilities have operated on Bikini on and off since 1996, and the U.S. government had declared some parts of Rongelap safe for human habitation following a $45 million cleanup effort, neither atoll has been resettled. Some experts claim that remediation techniques, primarily replacing surface soil in populated areas and adding potassium chloride fertilizer to agricultural areas, has made resettlement possible, although most of the displaced people have refused to return.", "The Compact of Free Association established a Nuclear Claims Fund of $150 million and a Nuclear Claims Tribunal (NCT) to adjudicate claims. Investment returns on the Fund were expected to generate revenue for personal injury and property damages awards, health care, resettlement, trust funds for the four atolls, and quarterly distributions to the peoples of the four atolls for hardships suffered. In all, the United States reportedly has provided over $600 million for nuclear claims, health and medical programs, and environmental cleanup and monitoring.\nThe Compact deems the Nuclear Claims Fund as part of a \"full and final settlement\" of legal claims against the U.S. government. However, the Fund was depleted by 2009 and was not sufficient to cover the NCT's awards of $96 million to approximately 2,000 individuals for compensable injuries. In addition, the Tribunal awarded, but was unable to pay, approximately $2.2 billion to the four atoll governments for remediation and restoration costs, loss of use, and consequential damages.", "The Marshall Islands government and peoples of the four most-affected atolls long have argued that greater U.S. compensation was justified for loss of land, personal injuries, and property damages. They have claimed that the nuclear tests caused high incidences of miscarriage, birth defects, and weakened immune systems, as well as high rates of thyroid, cervical, and breast cancer. In addition, some experts contend that more than a dozen Marshall Islands atolls, rather than only four, were affected. Some experts have disputed the Marshall Islands claims, pointing to some earlier studies.\nIn September 2000, the government of the Republic of the Marshall Islands (RMI) submitted to the U.S. Congress a Changed Circumstances Petition requesting additional compensation of roughly $1 billion for personal injuries, property damages, public health infrastructure, and a health care program for those exposed to radiation. The Petition based its claims upon the \"changed circumstances\" provision of Section 177 of the Compact, arguing that \"new and additional\" information, such as greater radioactive fallout than previously known or disclosed and revised radiation protection standards, constituted \"changed circumstances\" and that existing compensation was \"manifestly inadequate.\" In November 2004, the George W. Bush Administration released a report evaluating the Petition, Report Evaluating the Request of the Government of the Republic of the Marshall Islands Presented to the Congress of the United States of America , concluding that there was no legal basis for considering additional compensation payments.\nIn April 2006, the peoples of Bikini and Enewetak atolls filed lawsuits against the United States government in the U.S. Court of Federal Claims seeking additional compensation related to the U.S. nuclear testing program. The court dismissed both lawsuits on August 2, 2007. The U.S. Court of Appeals for the Federal Circuit upheld the lower court ruling on January 30, 2009, finding that Section 177 of the Compact removed U.S. jurisdiction. In April 2010, the Supreme Court declined to hear the case.\nIn April 2014, the RMI filed suits in the United States and the International Court of Justice in the Hague against the United States and eight other nuclear powers, claiming their failure to meet their obligations toward nuclear disarmament under Article VI of the Nuclear Non-Proliferation Treaty. The lawsuits did not seek compensation but rather action on disarmament. On February 3, 2015, a federal court in California dismissed the RMI suit against the United States, on the grounds that the RMI lacked standing to bring the case and that the case was resolvable by the political branches of government rather than the courts.", "Some policymakers, including Members of Congress, have expressed concerns about China's growing influence in the region. China has become a growing political and economic actor in the Southwest Pacific, and some observers contend that it aims to promote its interests in a way that potentially displaces the influence of traditional actors in the region such as the United States, Australia, and New Zealand. In the view of one analyst, \"China clearly does seek to become at least a leading power in the Western Pacific and perhaps the leading power in the Western Pacific.\" One expert reports that China's principal strategic activity in the region is signals intelligence monitoring. Toward this end, China reportedly has regularly sent vessels to the region that both track satellites and ballistic missiles and also gather intelligence.\nOther analysts argue that Beijing does not consider the South Pacific to be of key strategic importance, and note that Australian assistance remains significantly larger than that provided by Beijing. Some believe that although many Pacific Island leaders say they appreciate China's economic engagement and diplomatic policy of \"non-interference\" in domestic affairs, the region maintains strong ties to Australia and the West that are rooted in shared history and culture as well as migration.\nBeijing's engagement in the region has been motivated largely by a desire to garner support in international fora and find sources of raw materials. According to some analysts, China began to fill a vacuum created by waning U.S. attention following the end of the Cold War. While the United States does not maintain an embassy in several Pacific Islands countries, for example, Beijing has opened diplomatic missions in all eight of the Pacific Island countries with which it has diplomatic relations. China-Taiwan \"dollar diplomacy,\" in which the two entities competed for official diplomatic recognition through offers of foreign aid, has been a declining factor since the late 2000s.", "China is one of the top providers of foreign assistance in the Southwest Pacific, providing $150 million in foreign assistance per year on average during the past decade. China has held two China-Pacific Island Countries Economic Development and Cooperation Forums (2006 and 2013), where Chinese officials announced large aid packages, including pledges of preferential loans ($376 million in 2006 and $1 billion in 2013). In November 2014, Chinese President Xi Jinping travelled to Fiji to establish a strategic partnership between China and eight Pacific Island countries. China also has provided support to the Pacific Islands Forum and has helped finance some of the organization's activities and initiatives.\nDespite China's rise, Australia remains the dominant foreign aid donor in the region. Between 2006 and 2014, Australia reportedly provided approximately $7.7 billion in foreign aid to the region, compared to the United States ($1.9 billion), China ($1.8 billion), New Zealand ($1.3 billion), Japan ($1.2 billion), and France ($1.0 billion). In terms of grant-based aid, China's foreign assistance is relatively small. Unlike other major donors, which provide mostly grant assistance, nearly 80% of Chinese aid reportedly has been provided in the form of preferential loans, generally to finance infrastructure projects that use Chinese companies and labor.\nChina's foreign assistance to the Southwest Pacific, like its economic assistance to many other regions, largely consists of concessional loans, infrastructure and public works projects, and investments in the extraction of natural resources. Papua New Guinea is the largest Pacific recipient of Chinese aid, having received 35% of Chinese assistance to the region. Other major recipients include Fiji, Vanuatu, and Samoa. China's foreign assistance has resulted in 218 projects since 2006, including Chinese-built roads, sea ports, airports, hydropower facilities, mining operations, hospitals, government buildings, educational facilities, sports stadiums, and other public works. Other Chinese assistance areas include public health, education, fisheries conservation, the environment, and financial support for Fiji's elections in 2014. Recent, smaller forms of aid reportedly include rowing machines for Samoa, water supply systems for small towns in Tonga, and quad bikes for Cook Islands legislators. Beijing also reportedly has provided modest military equipment and training to Fiji, Papua New Guinea, and Tonga.\nSome observers have criticized Chinese assistance, arguing that some infrastructure projects are poor in quality and that some Chinese loans and aid activities lack transparency and exacerbate corruption, increase debt burdens, or harm the environment. Other concerns are that some Chinese economic projects and investments do not employ local labor or that they are not directly aimed at reducing poverty. Some experts contend that Chinese aid has reduced the regional influence of Australia, the United States, and European countries, while others dispute this contention. Another issue is the relatively recent influx of Chinese traders and shop owners in some urban areas, which reportedly has caused resentment among some native residents.\nChina is a major trading partner in the region, surpassing even Australia, and has economic interests in the following sectors: energy production (hydro power and gas), mining, fisheries, timber, agriculture, and tourism. (See Table 3 .) The largest Chinese investment project is the $1.6 billion Ramu Nickel mine in Papua New Guinea. China also has become a major source of tourists and is the only non-Pacific Island nation to be a member of the South Pacific Tourism Organization.", "The United States has relied upon Australia, and to a lesser extent New Zealand, to help advance shared strategic interests, maintain regional stability, and promote economic development in the Southwest Pacific. Australia has played a critical role in helping to promote security in places such as Timor-Leste, which gained its independence from Indonesia following a 1999 referendum that turned violent, the Solomon Islands, and Bougainville, which is part of Papua New Guinea. The 2016 Australia Defence White Paper articulates Australia's approach to the South Pacific:\nThe South Pacific region will face challenges from slow economic growth, social and governance challenges, population growth and climate change. Instability in our immediate region could have strategic consequences for Australia should it lead to increasing influence by actors from outside the region with interests inimical to ours. It is crucial that Australia help support the development of national resilience in the region to reduce the likelihood of instability. This assistance includes defence cooperation, aid, policing and building regional organisations.... We will also continue to take a leading role in providing humanitarian and security assistance where required.\nNew Zealand's Pacific identity, derived from its geography and growing population of New Zealanders with Polynesian or other Pacific Island ethnic backgrounds, as well as its historical relationship with the South Pacific, undergirds its relationship with the region. The June 2016 New Zealand Defence White Paper articulates New Zealand's ongoing interest in the South Pacific:\nGiven its strong connections with South Pacific countries, New Zealand has an enduring interest in regional stability. The South Pacific has remained relatively stable since 2010, and is unlikely to face an external military threat in the foreseeable future. However, the region continues to face a range of economic, governance, and environmental challenges. These challenges indicate that it is likely that the Defence Force will have to deploy to the region over the next ten years, for a response beyond humanitarian assistance and disaster relief. New Zealand will continue to protect and advance its interests by maintaining strong international relationships, with Australia in particular, and with its South Pacific partners, with whom it maintains a range of important constitutional and historical links.\nNew Zealand works closely with Pacific Island states on a bilateral and multilateral basis. It has played a key role in promoting peace and stability in the Southwest Pacific in places such as Timor-Leste, the Solomon Islands, and Bougainville, and Papua New Guinea. Approximately 60% of New Zealand's foreign assistance goes to the Southwest Pacific. In September 2015, Wellington pledged to increase foreign assistance to the region by $100 million to reach a total of $1 billion in expenditures over the next three years. New Zealand also has provided development and disaster assistance to the region. In 2015, New Zealand's then-Prime Minister John Key reaffirmed New Zealand's support for the Pacific Islands Forum and sustainable South Pacific economic development, including for sustainable fisheries. An estimated $2 billion worth of fish is taken legally from the waters of the 14 PIF countries, with an additional $400 million worth of fish thought to be taken illegally each year.", "France's decision to stop nuclear testing in the South Pacific in 1996 opened the way for improved relations with the region. Although much of France's regional military presence was withdrawn following its decision to stop nuclear testing, France continues to have a military presence that reportedly includes 2,800 personnel and 7 ships, including surveillance frigates and patrol vessels. France is also a member of the Quadrilateral Defense Coordination Group, along with the United States, Australia, and New Zealand, which seeks to coordinate maritime security in the South Pacific. France recently signed a $39 billion deal to provide 12 new submarines to the Australian Navy.", "Other external actors are becoming more active in the Southwest Pacific. Russia reportedly has sent a shipment of weapons with advisors to help train the Fijian military in the use of recently delivered equipment. India reportedly is exploring the possibility of establishing a satellite monitoring station in Fiji.\nIndonesia, too, has become more interested in the region, often with regards to its relations with the Melanesian countries. Indonesia has been a dialogue partner of the Pacific Islands Forum since 2001. Indonesian objectives related to the PIF include repositioning Indonesia's foreign policy towards a \"look east policy\" and getting \"closer to the countries of the Pacific region,\" maintaining \"the integrity of the unitary Republic of Indonesia,\" and improving the \"image of Indonesia.\" The PIF and Melanesian countries have criticized human rights abuses in West Papua, Indonesia, which has a large, ethnically Melanesian indigenous population. Alleged human rights violations include the harassment of human rights groups and arbitrary arrests of independence activists. Some Melanesian countries have supported self-determination for West Papua and its inclusion in the Melanesian Spearhead Group. Indonesia has responded that it is a democratic country that is committed to human rights. It has resisted \"interference in its domestic affairs\" and in 2015 refused to accept a PIF fact-finding mission to investigate human rights violations.", "Pacific Island countries have sought international support for helping them to cope with the impacts of climate change, reduce greenhouse gas (GHG) emissions, and increase renewable energy use and energy efficiency. U.S. assistance efforts in the region have focused on climate change adaptation and strengthening governmental capacity to attract international financing and successfully implement environmental programs. Many experts view the Pacific Islands as highly vulnerable to the effects of climate change and other environmental problems, such as sea level rise, ocean acidification, invasive species, and extreme weather events. These environmental issues can have adverse effects on agriculture, drinking water supplies, fisheries, and tourism.\nA report by the U.S. Fish and Wildlife Service states\nClimate change presents Pacific Islands with unique challenges including rising temperatures, sea-level rise, contamination of freshwater resources with saltwater, coastal erosion, an increase in extreme weather events, coral reef bleaching, and ocean acidification. Projections for the rest of this century suggest continued increases in air and ocean surface temperatures in the Pacific, increased frequency of extreme weather events, and increased rainfall during the summer months and a decrease in rainfall during the winter months.\nSome areas of the region lie only 15 feet above sea level, and if sea levels continue to rise as projected, Kiribati, Tokelau, and Tuvalu may be uninhabitable by 2050. Some experts predict that many Pacific Islanders face displacement over the coming decades. Kiribati reportedly is buying land in Fiji in case its population needs to relocate.\nMuch of the Republic of the Marshall Islands is less than six feet above the sea, and some experts say that rising sea levels may make many areas of the country unfit for human habitation in the coming decades . Bikini Islanders, with the support of the U.S. Department of the Interior, have asked to be allowed to resettle in the United States. They claim that Kili and Ejit, the islands to which Bikini Islanders were relocated before and after the nuclear tests of the 1940s and 1950s and where about 1,000 of them currently live, can no longer sustain them, due to a lack of resources and a greater frequency of bad weather. Recurrent flooding from storms and high tides has disrupted water supplies and destroyed crops. The Department of the Interior has proposed that the U.S. resettlement fund set up for Bikini Islanders help to support their relocation to the United States.", "Pacific Island states were very active in seeking to influence the outcome of the U.N. Climate Change Conference of the Parties (COP) in Paris, France, in 2015. The Paris Agreement includes several outcomes sought by Pacific Island countries, such as a commitment to limit temperature rise. The Agreement reaffirms \"the goal of limiting global temperature increase well below 2 degrees Celsius, while urging efforts to limit the increase to 1.5 degrees.\" Twelve Pacific Island countries signed the Paris Agreement on April 22, 2016.\nThe Pacific Islands Forum 2016 annual meeting continued the organization's focus on climate change. The Forum Communique included the following statement:\nLeaders reiterated the importance of the Pacific Islands Forum in maintaining a strong voice considering the region's vulnerabilities to the impact of climate change. Leaders welcomed the Paris Agreement and reinforced that achieving the Agreement goal of limiting global temperature increases to 1.5°C above pre-industrialised levels is an existential matter for many Forum Members which must be addressed with urgency. Leaders congratulated the eight Forum countries that have ratified the Agreement and encouraged remaining Members and all other countries to sign and ratify the Agreement before the end of 2016 or as soon as possible. Leaders called for ambitious climate change action in and across all sectors and encouraged key stakeholders to prioritise their support for the implementation of key obligations under the Agreement.", "Climate change and sea level rise are not the only environmental challenges \"substantially enhanced\" by anthropogenic activity facing the region. Ocean acidification is likely to have a severe impact on Pacific Island states. According to some experts, carbon dioxide, absorbed by seawater, creates acidification which in turn reduces the ability of many marine organisms, such as coral, from regenerating. Coral reefs play a key role in supporting fisheries and tourism which are two key components of the economy of many Pacific Island states. A recent study has found that coral cover in the Great Barrier Reef off the coast of Australia has declined by 50% over the past 30 years. Various studies have predicted that if current trends continue, ocean reefs will \"be the first major ecosystem in the modern era to become ecologically extinct\" by the end of the century. Others predict an earlier demise .", "The Southwest Pacific straddles the largest tuna fisheries in the world. According to one advocacy group, over half of the tuna consumed in the world is harvested from the Western and Central Pacific Ocean at an unsustainable rate. Many of the Pacific Islands states lack the capacity to effectively monitor and patrol their fisheries resources. In one example, Palau, a nation with a land area of 177 square miles and a maritime exclusive economic zone (EEZ) of 230,000 square miles, has a maritime police division of 18 personnel and one patrol ship. The global black market for seafood is estimated to be worth $20 billion with one in five fish caught illegally . As a result, poaching of fisheries is a major problem in the Pacific. In order to minimize poaching, the United States and nine Pacific Island states have entered into ship rider agreements. Under the program, enforcement officials from Pacific I sland states may ride U.S. Coast Guard ships while they are patrolling the EEZs of those states. U.S . Coast Guard ships are empowered to enforce the laws of the host nation .", "New Caledonia, a territory of France, and Bougainville, which is part of Papua New Guinea, are to hold referenda on independence in 2018 and 2019. Issues and areas of possible concern to Congress include U.S. assistance for the administration of free and fair elections, the building of political institutions, and the mitigation of potential conflict. Developments in Bougainville also may affect U.S. relations with Papua New Guinea.", "The French Overseas Territory of New Caledonia, annexed by France in 1853 and formerly used as a penal colony for French convicts, may become the world's next state. An estimated 39% of New Caledonia's 260,000 people are Kanaks while 27% are European, with the balance composed of \"mixed race\" persons and others from elsewhere in the Asia-Pacific. In the 1980s, the indigenous Kanaks clashed with pro-France settlers. In a referendum in 1987, which was boycotted by local independence groups, New Caledonians voted to remain with France. Under the Noumea Accord of 1998, signed by France, the Kanak Socialist Liberation Front, and the territory's anti-independence RCPR Party, a referendum on independence must be held by the end of 2018.", "The Bougainville conflict between the Papua New Guinea Defense Force and the pro-independence Bougainville Revolutionary Army began over disputes related to the Panguna copper mine on Bougainville in the late 1980s. Key grievances related to the mine included the influx of workers from elsewhere in Papua New Guinea and Australia, environmental damage caused by the mine, and Bougainville islanders' dissatisfaction with their share of mine revenue. Tensions over the mine and secessionist sentiment led to a decade-long, low-intensity war in which an estimated 10,000 to 20,000 government troops, militants, and civilians died. Peace between the government and rebels was restored in 1997 under a New Zealand-brokered agreement. Under the terms of the agreement, a referendum on self-determination is to be held by mid-2020. A target date of June 2019 has now been agreed to by the Papua New Guinea government and Bougainville regional government. Some factions reportedly have held onto their weapons out of concern that the PNG government will not go through with the referendum.", "" ], "depth": [ 0, 1, 2, 2, 1, 2, 3, 1, 2, 2, 2, 3, 3, 1, 2, 1, 2, 2, 1, 2, 2, 2, 1, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full h1_full", "", "h2_full h1_full", "h3_full h0_title", "h3_full h0_title", "h0_full", "", "", "", "", "", "", "h0_full", "", "", "", "", "", "", "", "", "h2_full", "", "", "" ] }

{ "question": [ "Why is the Pacific Island region important?", "What interest has the region captured of other countries?", "What role does Congress play in the Compacts of Free Association?", "What economic interests does the US have?", "What background does this report provide?", "What does the report discuss?", "What is out of scope of this report?", "What additional sections are included?", "What does the Southwest Pacific include?", "What will New Caledonia and Boughainville do in 2018 and 2019?", "What concerns have been expressed about the Pacific Islands?", "What alternate arguments have been made?", "What responsibilities does the US have in the Southwest Pacific region?", "What activities are US foreign assistance programs engaging in?", "What else is of concern to the US" ], "summary": [ "The Pacific Islands region, also known as the South Pacific or Southwest Pacific, presents Congress with a diverse array of policy issues.", "The region has attracted growing diplomatic and economic engagement from China, a potential competitor to the influence of the United States, Australia, and New Zealand.", "Congress plays key roles in approving and overseeing the administration of the Compacts of Free Association that govern U.S. relations with the Marshall Islands, Micronesia, and Palau.", "The United States has economic interests in the region, particularly fishing, and provides about $38 million annually in bilateral and regional foreign assistance, not including Compact grant assistance.", "This report provides background on the Pacific Islands region and discusses related issues for Congress.", "It discusses U.S. relations with Pacific Island countries as well as the influence of other powers in the region, including Australia, China, and other external actors.", "The report does not focus on U.S. territories in the Pacific, such as Guam, the Northern Mariana Islands, and American Samoa.", "It includes sections on U.S. foreign assistance to the region, the Compacts of Free Association, and issues related to climate change, which has impacted many Pacific Island countries.", "The Southwest Pacific includes 14 sovereign states with approximately 9 million people, including three countries in \"free association\" with the United States—the Marshall Islands, Micronesia, and Palau.", "New Caledonia, a territory of France, and Bougainville, which is part of Papua New Guinea (PNG), are to hold referenda on independence in 2018 and 2019.", "U.S. officials have emphasized the diplomatic and strategic importance of the Pacific Islands region to the United States, and some analysts have expressed concerns about the long-term strategic implications of China's growing engagement in the region.", "Other experts have argued that China's mostly diplomatic and economic inroads have not translated into significantly greater political influence over South Pacific countries, and that Australia remains the dominant power and provider of development assistance in the region.", "Major U.S. objectives and responsibilities in the Southwest Pacific include promoting sustainable economic development and good governance, administering the Compacts of Free Association, supporting regional organizations, helping to address the effects of climate change, and cooperating with Australia, New Zealand, and other major foreign aid donors.", "U.S. foreign assistance activities include regional environmental programs, military training, disaster assistance and preparedness, fisheries management, HIV/AIDS prevention, care, and treatment programs in Papua New Guinea, and strengthening democratic institutions in PNG, Fiji, and elsewhere.", "Other areas of U.S. concern and cooperation include illegal fishing and peacekeeping operations." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 1, -1, -1, -1, -1, 2, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "The Succession Question", "The Presidential Election", "Alternative Scenarios", "Possible Implications for U.S. Interests" ], "paragraphs": [ "", "Transfer of supreme political power in Russia can be a dicey business. Under the tsars, succession to the throne often was accompanied by intrigue and bloodshed. This held true during the communist period as well, although it became less deadly after Stalin. In December 1991, Yeltsin effectively overthrew Gorbachev and dissolved the Soviet Union in a bloodless coup. Eight years later, a politically moribund Yeltsin resigned as President of Russia three months before the end of his term and named Putin Acting President, circumventing the normal electoral process. With this \"leg-up,\" Putin easily won election in March 2000 and was reelected with no real opposition four years later. Putin's presidency was a period of relative political stability, but as the end of his second term drew near, the succession question reemerged as a burning issue.\nPutin is a very popular leader, enjoying nation-wide public approval ratings in the 70%-80% range during most of his presidency. Pro-Kremlin political parties in the Duma (the lower and by far more powerful chamber of Russia's bicameral legislature) have long held more than the two-thirds majority required to amend the constitution. The question on everyone's mind was, would Putin step down at the end of his second term? In 2007, many Russian officials and politicians publically urged Putin to stay on as president. Numerous scenarios appeared in the Russian press, suggesting that Putin might override, amend, or do an end-run around the constitution in order to retain power.\nOn September 10, 2007, Putin made a surprise announcement dismissing Prime Minister Mikhail Fradkov—whom he had plucked from obscurity to take that post in 2005—and nominated in his place the even more obscure Victor Zubkov, who had previously headed the Financial Monitoring Service, an arm of the Finance Ministry that investigates money-laundering. Zubkov is 65 years old and has no political power base or constituency of his own—other than Putin's backing. Putin explained this move as necessary to \"prepare the country\" for forthcoming elections, which immediately triggered speculation that Zubkov might be Putin's choice for president in 2008, perhaps as a \"place holder,\" a mechanism that would allow Putin to retain control and/or return to the presidency after a brief interregnum. This brought the issue of the \"Putin succession,\" which had been heating up since 2006, to a full boil.\nBut in Russia's election cycle, the vote for president (March 2, 2008) was preceded the parliamentary election (December 2, 2007), which was seen as a harbinger of the presidential contest. The Kremlin decided to make the 2007 parliamentary election a referendum on Putin and Putinism. And despite Putin's apparent genuine popularity, they were determined to take no chances on the outcome. In the run-up to the Duma election, the authorities used myriad official and unofficial levers of power and influence to assure an overwhelming victory for United Russia, the main Kremlin party. On October 1, 2007, Putin announced that he would run for parliament at the head of the United Russia ticket, making the outcome doubly certain. The state-controlled media heavily favored United Russia and largely ignored or disparaged the opposition. Opposition party literature was seized and their rallies often shut down or harassed. Potentially popular opposition candidates were bought off, intimidated, or barred from running on \"legal technicalities.\" In March 2007, for example, the Supreme Court ruled that Vladimir Ryzhkov's Republican Party—one of the few remaining liberal democratic parties—must be disbanded because it violated the 2004 law requiring parties to have at least 50,000 members and 45 regional offices. Russian authorities effectively prevented the main election observing body of the Organization for Security and Cooperation in Europe (OSCE) from sending an observer team, first by limiting their number to 70 (compared to 450 OSCE observers for the previous Duma election) and then delaying issuance of visas until the last minute, thus blocking normal monitoring of the election campaign.\nThe preordained result of the December 2, 2007 balloting for the Duma was a sweep by United Russia, which reportedly won 64.3% of the popular vote and 315 of the 450 seats—more than the two-thirds majority required to amend the constitution. A second pro-Kremlin party, A Just Russia—widely believed to have been created by Kremlin \"political technologists\" in 2007 to draw leftist votes away from the Communists —won 7.74 percent of the vote and 38 seats. The platforms of United Russia and A Just Russia consisted of little more than their slogan,\"For Putin!\" Vladimir Zhirinovsky's misnamed Liberal Democratic Party of Russia (LDPR), with 8.14% of the vote, won 40 seats. Despite Zhirinovsky's buffoonery and reputation for right-wing extremism, the LDPR is also a reliable supporter of Putin in the Duma. Thus, the Kremlin can count on the votes of 393 of the 450 Duma Deputies. The only opposition party in the Duma is the Communist Party, which, according to the official vote count, won 11.57% of the vote and 57 seats. The remaining parties failed to cross the 7% threshold required to win seats in the legislature. The traditional liberal democratic parties, Yabloko and the Union of Rightist Forces, reportedly received 1.59% and 0.96% of the vote, respectively. The official voter turnout was total 63%. (See CRS Report RS22770, Russia ' s December 2007 Legislative Election: Outcome and Implications , by [author name scrubbed].)\nDespite some allegations of ballot-box stuffing, voter intimidation, and other \"irregularities,\" there is little doubt that by dint of Putin's widespread popularity, an honest vote count would still have given United Russia a resounding victory. The main problem with the election was not the vote count, but the entire process leading up to the balloting. In the words of the deputy head of the OSCE's Parliamentary Assembly, \"the executive branch acted as though it practically elected the parliament itself.\"\nOn December 10, barely a week after the Duma election, Putin announced his choice for president: Dmitri Medvedev. The 42-year-old Medvedev, a long-time Putin protégé, had headed the Presidential Administration before Putin made him First Deputy Prime Minister in 2005. Like Putin and many of the Kremlin inner circle, Medvedev is a native of St. Petersburg (formerly Leningrad). But unlike so many of the inner circle, he does not have a background in the security services. His academic training is as a lawyer. He is viewed by many in Russia and the West as one of the most liberal of the generally illiberal cadre surrounding Putin.\nOne day after his anointment, Medvedev announced that, if elected, he would ask Putin to serve as prime minister. One week later, Putin formally accepted this offer. This carefully choreographed arrangement presumably was meant to assure political continuity for Putin and to dampen political in-fighting among the rival clans within the Putin camp. But it does not clearly define the forthcoming political constellation, nor does it assure political stability. Competing scenarios and rumors abound. One thing that all observers agreed on, however, was that Putin's selection of Medvedev made the later's victory in the March 2 presidential election a certainty.", "Immediately after Putin announced his support for Medvedev as his successor, Russia's bureaucratic and political elites raced to affirm their loyalty to the chosen one. The leaders of United Russia, A Just Russia, Civic Force, and the Agrarian Party all agreed to support Medvedev. \"Each of the parties, in its own way, is realizing its political program by supporting a single candidate.... [T]his shows how the political system in Russia is maturing, and we now have the chance to make consolidated decisions, despite our differences,\" enthused Aleksandr Babkin of A Just Russia. Pavel Astakhov, head of the For Putin! movement, called Medvedev \"a multifaceted person who suits the interests of completely different political forces and segments of society.\" Federation Council member Yury Sharandin observed, more pragmatically, that Medvedev would win the March 2 election in the first round because \"the popularity of Vladimir Putin will be transferred this time not to an entire party with an enormous number of people, but to one concrete person.\"\nPutin, apparently concerned that lack of credible opposition might lead to low voter participation, approved a law eliminating the requirement for a minimum 20% voter turnout for an election to the Duma and a 50% turnout for a presidential vote for an election to be valid.\nIn March 2007, Putin removed Aleksandr Veshnyakov as head of the Central Election Commission (CEC). Veshnyakov, who had served on the Commission since 1994 and been its chairman since 1999, criticized legislation that expands \"pretexts for [the authorities] to disqualify candidates they find inconvenient...\" and warned that Russia was in danger of becoming a one-party state. The new Chairmen, Vladimir Churov, said that \"the principal difference between me and...Veshnyakov is that I am less likely to comment on election legislation and more inclined to get things done.\"\nOne of Medvedev's few credible rivals was Mikhail Kasyanov, Putin's relatively liberal Prime Minister from 2000-2005. In 2006, a year after his dismissal, Kasyanov declared that he would form a new political party and run for president in 2008. The Federal Registration Service soon declared that it would not register Kasyanov's Russian Popular Democratic Union party because its registration documents \"did not meet technical requirements.\" Kasyanov's party was barred from taking part in the Duma election. Russia's election law stipulates that parties not represented in the Duma may not nominate presidential candidates. Independent candidates must in a few weeks time collect the signatures of 2,000,000 supporters to be listed on the ballot – a daunting requirement. After Kasyanov's petitions were submitted, the Central Election Commission ruled that 13% of his 2.4 million signatures were invalid. Kasyanov was barred from participating in the election.\nBesides the two pro-Kremlin parties that backed Mevedev, only Zhironovsly's LDPR and the Communist Party are represented in the Duma and thus had the automatic right to nominate presidential candidates. The LDPR nominated Zhironovsky and the Communist Party nominated its long-time leader, Gennady Zyuganov. One other name appeared on the ballot, Andrei Bogdanov, leader of the Democratic Party. Bogdanov, a former United Russia official, won control of the tiny Democratic Party with Kremlin backing after a leadership struggle with Kasyanov. Although the Democratic Party, usually seen as a Kremlin-backed pseudo-opposition group, won fewer than 90,000 votes nation-wide in the December 2007 Duma election, Bogdanov supporters apparently had little difficulty getting 2 million signatures and their man was certified as a candidate. This guaranteed that if Zyuganov dropped out of the race, as he had threatened, there would be at least the appearance of a contested election.\nRussian and foreign observers of the election campaign virtually all noted that news coverage was skewed overwhelmingly in Medvedev's favor. This was especially true of TV news, the principal source of political news for most Russians. All the nation-wide TV networks are owned or controlled by the state. The previous format of \"all-Putin, all the time\" was shifted to Medvedev. Not surprisingly, Medvedev refused to participate in public debates with any of his rivals. Moscow also imposed the same restrictions on the OSCE's election observers as during the Duma election, with the same result. The OSCE refused to send election observers under the conditions imposed by Moscow. Election commissions in the United States, the United Kingdom, Spain, France, and Germany all officially informed Moscow that they would not observe the presidential ballot.\nAccording to the final report of the CEC, Medvedev won 70.28% of the popular vote, slightly less than Putin's margin in 2004 (71.31%). Communist Party leader Zyuganov came in second with 17.2% of the vote. Zhirinovskiy polled 9.34% and Bogdanov garnered 1.29%. Zhirinovskiy's representative on the CEC stated that the results reflected the will of the people and Zhirinovskiy pledged to support the new president. Zyuganov claimed that election rigging had denied him an extra 5%-10% of the vote.\nWhile Russian and western observers understood that the outcome of this election was not really in doubt, there were major questions about what a Medvedev presidency might mean.", "Some speculate that Putin's obedient Duma majority may amend the constitution, shifting some power from the president to the prime minister. Under the present super-presidential constitution, the prime minister serves at the pleasure of the president and may be dismissed by the president at any time. According to \"unnamed Kremlin sources,\" the Presidential Administration was ordered to prepare a draft constitutional law that would require the president to secure approval of four-fifths of the Duma and two-thirds of the Federation Council (the upper chamber of parliament) in order to dismiss the prime minister. This is only one of many changes that would have to be made in order to shift power decisively from the president to the prime minister. It would require a major re-write of the constitution – a move that Putin has specifically said he does not contemplate.\nOthers suggest that President Medvedev may voluntarily cede substantial power to Prime Minister Putin, allowing the mentor to continue wielding real power. Proponents of this view note that Medvedev's entire political career has been under the direct tutelage of Putin and that the younger man is a totally loyal protégé. But such a \"dual power\" arrangement is viewed by some observers as inherently unstable. As former Russian presidential spokesman Vyacheslav Kostikov put it, \"the problem is who will be number one.\" Another insider wrote that \"the key problem will not be relations between Putin and Medvedev per se , but how this diarchy is able to handle the Kremlin inner circle, which is split up into competing factions.... [T]he regime will have another center of influence no less legitimate than Putin, to whom it will be possible to appeal. And for the first time there will be a situation in which Putin's decision may not be the final or decisive one.\"\nAnother scenario envisions Medvedev resigning after a \"decent interval,\" necessitating a new presidential election in which Putin would be eligible to run, since he would not have served more than two consecutive terms. This hinges on Medvedev's total loyalty to Putin. But could Putin count on that with complete certainty? The age-old lesson illustrated in Tolkein's Lord of the Rings is that power is seductively delicious and difficult to relinquish.\nStill others suggest that because Russian political institutions, per se , are weak, Putin would be able to retain the status of de facto national leader based on his popularity, prestige, and powerful connections with the security services, whose personnel he has placed in key positions throughout the government ministries and bureaucracy, the media, and leading economic enterprises.\nAlternatively, Putin might plan on remaining as a powerful prime minister for a year or two while making sure that Medvedev is an able and loyal successor—and be prepared to push Medvedev aside if the younger man proved unsatisfactory. But in this view, if Medvedev proved himself to be a worthy successor in Putin's eyes, Putin would gradually relinquish command of the ship of state, leaving the helm in Medvedev's hands.", "Russia is not as central to U.S. interests or the U.S. role in the world as was the Soviet Union in the Cold War era. But developments in Russia are still quite important to the United States. Russia remains a nuclear superpower and will play a major role in determining the national security environment in Europe, the Middle East, and Asia. Russia is also a major economic power with vast oil and gas reserves. The war on terrorism, arms control, efforts to contain WMD proliferation, the future of NATO, and energy security, inter alia , may all be affected by developments in Russia. Important specific, immediate issues on the U.S.-Russian agenda include missile defense in Europe, Kosovo, and Iran's nuclear activities.\nSome observers believe that the identity of the individual who wields power in the Kremlin after 2008 is not particularly important, because Putin has already succeeded in reestablishing traditional Russian authoritarianism and statism, i.e.: Putinism will prevail with or without Putin. Others argue that Russia's post-Soviet political evolution is still a work in progress, that the policies and preferences of Russia's paramount leader can be decisive in setting the nations' course – and its relations with the United States – as was the case when Mikhail Gorbachev ascended to the Kremlin and adopted policies that wrought profound, albeit sometimes unintended, consequences.\nThe question of whether Medvedev's election victory results in an actual transfer of power is in itself an important issue. If Medvedev replaces Putin as \"the decider,\" the act of honoring the two-consecutive-term constitutional limit itself will strengthen the rule of law in Russia. If, on the other hand, it turns out that Putin succeeds himself in one way or another, that will reinforce the tradition that Russia is ruled not by laws, but by men. It may not necessarily be true that a more democratic Russia will be a more friendly and accommodating partner for the United States. But there is a widespread belief that the more Russia adopts the values of democracy and free markets, the more likely is it to co-exist harmoniously with the industrial democracies of the West – whereas authoritarianism and statism are believed more likely to lead toward militarism and neo-imperialism in what many Russians still think of as the \"former Soviet space.\"\nThere is a broad consensus in the West that Putin, the career KGB/FSB professional, purposefully undermined nascent democratic trends that had arisen under Gorbachev and Yeltsin, in favor of statism and centralized authoritarianism. One of the hallmarks of Putin's administration is that he surrounded himself with current and former members of the security services, the so-called siloviki . Medvedev is one of the few in Putin's inner circle who does not share that background, having initially attained prominence as an outstanding young attorney and law professor. Some Russian and western observers view Medvedev as relatively liberal, compared to most other senior Kremlin insiders. Others dispute this view, arguing that Medvedev could not have attained his current position if he were significantly out of step with Putin's authoritarian tendencies.\nAs First Deputy Prime Minister, Medvedev was in charge of the Putin administration's four major \"national projects,\" high-profile government initiatives aimed at improving housing, health care, agriculture, and education. In his 2008 presidential campaign, Medvedev has focused on socioeconomic issues such as these, with the positive spin that \"this is what I can/will do for you.\" He notably does not repeat Putin's tactic in the recent Duma election campaign, of shrilly denouncing opponents as \"jackals\" and agents of sinister outside forces, conspiring to foist some sort of \"orange revolution\" on Russia. Nor has Medvedev been in the chorus of top Russian officials sharply and ostentatiously criticizing the Bush Administration, U.S. policies, NATO, and the West. It is an open question whether Medvedev, as president, would seek to, or be able to, moderate the tough anti-U.S. rhetoric and, more importantly, the policies behind that rhetoric. The answer to this question has potentially far-reaching implications for the United States." ], "depth": [ 0, 1, 1, 1, 1 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "h0_full", "h1_full", "" ] }

{ "question": [ "How did Medvedev come to power?", "Prior to this, what did Medvedev claim?", "What did the Putin regime do?", "How does the Russian Constitution limit political terms?", "What was causing political uncertainty?", "How was the uncertainty reduced?" ], "summary": [ "First Deputy Prime Minister Dmitri Medvedev, President Putin's chosen successor and long-time protege, was elected President on March 2, 2008, as expected, with about 70% of the vote. There was little real opposition.", "Medvedev had previously announced that if elected, he would propose Putin as Prime Minister and Putin has said that he will accept this post.", "The Putin regime has brought TV and radio under tight state control and virtually eliminated effective political opposition, assuring this \"transition.\"", "The Russian Constitution limits the president to no more than two consecutive four-year terms.", "President Putin's second term ends in May 2008.", "Uncertainty about the post-Putin succession had dominated and roiled Russian politics for most of 2007, until late in the year, when Putin made clear that he would relinquish the presidency and take the position of prime minister after Medvedev was elected president." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Contests in the State", "Examples of State Procedures", "Challenges to Electoral Count in Congress" ], "paragraphs": [ "A lthough it has national impact, the presidential election is, in essence, 50 state and District of Columbia elections for presidential electors held on the same day throughout the country. Therefore—and consistent with the states' traditional authority over the administration of elections within their jurisdictions—it is an individual state that has the initial responsibility for resolving a challenge, recount, or contest to the results of a presidential election within that jurisdiction. The state rules and procedures for filing election contests generally, and with respect to the selection of presidential electors specifically, may vary greatly from state to state. Candidates or electors who seek to challenge election results must follow the particular rules and meet the specific state deadlines for such actions within that jurisdiction.\nIt should be noted that the Electoral Count Act of 1887, as amended —which governs procedures for Congress to count the electoral votes and certify the presidential winner under Congress' Twelfth Amendment responsibility—contemplates that contests and challenges to the vote for presidential electors are to be initially handled in the states. The electoral count law provides that if a contest or challenge in a state to the election or appointment of presidential electors is resolved in that state by an established procedure before the sixth day prior to the meeting of the electors, that such determination shall be \"conclusive\" and shall \"govern\" when Congress counts the electoral votes as directed in the Twelfth Amendment. The Supreme Court has referred to this as the \"safe harbor\" provision. This year the presidential electors are scheduled to meet on December 19, 2016. Six days prior is December 13, 2016 which, therefore, would be the last day for a state to make a final determination in order for it to be \"conclusive\" when Congress counts the electoral votes.", "Under the U.S. Constitution, the states are delegated the initial and principal authority for the administration of elections within their jurisdictions, including elections to federal office. Such election administration in the states would generally include provisions for recounts, challenges, or contests to the results of such elections in the state that may be filed by the appropriate parties within a specific time frame and procedure established by state law.\nRecounts of election results generally involve a re-canvassing or re-tabulation of votes and/or vote tallies that were given and recorded in the state or in particular election districts. Such recounts may be automatic under state statute for particularly close election results, or may follow a request or petition for a recount made by a candidate under circumstances that allow such recounts.\nAn election contest, however, usually addresses allegations of fraud in voting, or mistake or irregularity in election administration, that has resulted in the wrong candidate having been found to have received the most votes in the election, or which has made the ascertainment of the winner \"reasonably uncertain.\" Courts have been historically cautious in interfering with and overturning the results of a popular election on the basis of allegations of fraud or election irregularities.\nAs is the case in general with civil law suits under American jurisprudence, the burden of proof is upon the challenger, that is, the moving party, not only to prove all of the allegations and charges with specific, credible evidence, but also—in the case of an election contest—to show that any fraud or irregularity proven was to such an extent that it would actually have changed the result of the election or rendered the actual outcome reasonably uncertain. This would mean, for example, that even if a candidate could show that there were, in fact, several hundred fraudulent votes in a particular election, if that candidate lost in the state by several thousand votes, the results of that election would not be affected by such fraud or errors. However, even where the number of illegal, fraudulent, or mistaken votes is shown to exceed the margin of victory, such showing may not, in most states, necessarily invalidate or overturn the results of an election. This is because it may be difficult for a challenger to show for whom those votes were given, or would have been given. In many jurisdictions it must be shown by \"direct evidence\" (or by some acceptable method of \"proportional deduction\") that any such illegal, fraudulent, or mistaken votes were for the \"winning\" candidate in such numbers that he or she would not have won the election.\nIt should be noted that there may be several different types and categories of potential voter or election \"fraud\" or irregularities that may occur in any particular election. With respect to in-person voting fraud, including voter \"impersonation\" or multiple voting by one person, such fraud to any extent that would affect the results of a statewide or nationwide election would appear to be unprecedented in recent American history, as several independent studies have shown. An academic analysis of contested federal elections concluded, for example, that \"[D]emonstrated cases of actual fraud are relatively uncommon, given the frequency with which Americans vote and the number of races involved.\" One reported study showed that over the last few decades, out of more than one billion total votes cast in the United States there were credible allegations of 31 fraudulent votes given in person on election day (and these allegations were not necessarily proven). The Government Accountability Office (GAO), in a report to Congress, pointed out both the difficulty in quantifying and the scarcity of examples of voting fraud in the states. In that report GAO quoted the Department of Justice as noting that \"... publicly available and related court records indicated that there were no apparent cases of in-person voter impersonation charged by DOJ 's Criminal Division or by U.S. Attorney 's offices anywhere in the United States, from 2004 through July 3, 2014.\"", "As noted, the procedures, deadlines, and rules for election contests (as well as for petitions or \"triggers\" for recounts in the states) may vary greatly from state to state. A candidate and/or electors who seek to challenge the results of an election of presidential electors within a state must, therefore, follow those state statutes, procedures, and deadlines for filing such challenges and contests. Several state procedures are discussed below as examples of those rules:\nColorado law provides that the Colorado \"supreme court has original jurisdiction for the adjudication of contests concerning presidential electors.... \" The Colorado Rules of Civil Procedure state that any \"qualified elector\" seeking to contest the election of presidential electors must, within 35 days after the canvass of the secretary of state, file in the office of the secretary of state a statement of an intent to contest. Within 35 days after the filing of the statement of intent to contest, the person contesting the election must file a complaint in the office of the clerk of the supreme court. The court will \"hear and determine the [case] in a summary manner\" without a jury.\nIn Florida , an election may be contested by the filing of a complaint in the circuit court by an unsuccessful candidate, or by an elector or taxpayer, within 10 days after the date that the election has been certified. The complaint must allege one of the four statutory grounds for overturning the results of the election (misconduct, fraud, or corruption of an election official; ineligibility of the successful candidate; receipt of a number of illegal votes or rejection of a number of lawful votes \"sufficient to change or place in doubt the result of the election\"; or proof of bribery of voters or election officials). Previous case law in Florida has shown that the filing party has the burden of proving the allegations made, and of showing that the proven fraud or illegality was in such numbers that \"but for\" those irregularities the result of the election would have been different, or that the true result of the election cannot be ascertained with reasonable certainty.\nNevada provides that a candidate or any registered voter may contest an election, including election to the office of presidential elector, by filing \"with the clerk of the district court\" a written \"statement of contest\" which includes general identifying information as to the contestant, the defendant, the office concerned, as well as an explanation of the \"particular grounds of contest.\" The statement of contest must be filed within five days after a recount is completed or, if there is no recount, no later than 14 days after the election. An election may be contested on following grounds:\n(a) That the election board or any member thereof was guilty of malfeasance.\n(b) That a person who has been declared elected to an office was not at the time of election eligible to that office.\n(c) That illegal votes were cast and counted for the defendant, which, if taken from the defendant, will reduce the number of the defendant's legal votes below the number necessary to elect the defendant.\n(d) That the election board, in conducting the election or in canvassing the returns, made errors sufficient to change the result of the election as to any person who has been declared elected.\n(e) That the defendant has given, or offered to give, to any person a bribe for the purpose of procuring his or her election.\n(f) That there was a possible malfunction of any voting or counting device.\nThe grounds of illegal votes given, or errors in canvassing returns must, therefore, be shown to be of such an extent that illegalities or errors would change the result of the election.\nNew Hampshire law does not appear to provide a specific statutory scheme for election contests relating to federal elections, but rather provides for a process for a recount and an appeal and hearing on such recount results. The New Hampshire statutes provide that \"any candidate for whom a vote was cast\" may apply for a recount, which application is to be made to the secretary of state no later than the Friday following the election. During the recount process, the candidates and their counsels and representatives may \"protest\" the counting or failure to count any ballot, and the secretary of state is to rule on such protest. An appeal of the recount results may be made within three days of the declaration of the results of the recount to the state ballot law commission, which may determine which candidate received the greatest number of votes. That determination may then be appealed to the state supreme court within five days of the board's decision. Although there is no specific statutory grounds or cause of action for an election contest to be brought in the case of an election for federal office, the New Hampshire statutes do recognize that nothing in their statutory scheme would necessarily prevent a common law cause of action and recourse \"to the superior court on other questions, within the jurisdiction of such court, relating to the legality or regularity of general elections or the results thereof.\"\nNorth Carolina provides that election contests are, as a general matter, to be filed with the county board of elections. However, because the county boards may rule that they cannot resolve the issue if an election is in more than one county, and because a petition may be taken up directly by the State Board of Elections, it would appear reasonable to file a petition directly to the State Board of Elections (or at least concurrently with a filing to the county board) with respect to irregularities or misconduct in the votes for presidential electors. The protest must state whether it concerns \"the manner in which votes were counted and results tabulated,\" or whether it relates to some \"other irregularity,\" and what remedy the protester is seeking. If the protest involves the manner in which votes were counted and results tabulated, then it must be filed before the beginning of the county board of election's canvass meeting (or if good cause for delay is shown, it may be filed up to 5:00 P.M. on the second business day after the county board of elections has completed its canvass and declared the results ). If the protest involves some other irregularity, then it must be filed before 5:00 P.M. on the second business day after the county board of elections has completed its canvass and declared the results. The State Board of Elections ̶ when a known group of voters cast votes that were beyond retrieval or where a known group of voters were given an incorrect ballot style–may authorize a county board to allow those voters to recast their votes during a period of two weeks after the canvass by the State Board of Elections. The State Board of Elections may order a new election if\n(1) Ineligible voters sufficient in number to change the outcome of the election were allowed to vote in the election, and it is not possible from examination of the official ballots to determine how those ineligible voters voted and to correct the totals.\n(2) Eligible voters sufficient in number to change the outcome of the election were improperly prevented from voting.\n(3) Other irregularities affected a sufficient number of votes to change the outcome of the election.\n(4) Irregularities or improprieties occurred to such an extent that they taint the results of the entire election and cast doubt on its fairness.\nAfter a decision by the State Board of Elections, an aggrieved party may appeal the decision to the Superior Court of Wake County within 10 days of the date of service of the final decision.\nOhio appears to be an exception as far as election contests with respect to elections for federal office are concerned, including elections of presidential electors. The contested election procedure set out in the Ohio Code expressly states that it does not apply to an election for presidential elector, or for other federal office. Rather, the Ohio law provides that any such contests for presidential electors, as well as for other federal offices, \"shall be conducted in accordance with the applicable provisions of federal law.\"\nIn Pennsylvania , an election contest dealing with the selection of electors for President and Vice President of the United States must be filed within 20 days after the election, regardless of whether a recount of that election is proceeding or not. The contest is initiated by the filing of a petition in the appropriate court of jurisdiction in Pennsylvania by affidavit of at least five petitioners who are registered electors in Pennsylvania and who voted in the election being contested. The complaint must \"concisely set forth the cause of the complaint, showing wherein it is claimed that the primary or election is illegal.\" An \"illegal\" election refers to allegations of fraud or wrongdoing in the casting, computation, and returns of votes, and must aver facts which, if proven, would definitely change the results of the election.\nIn Virginia a contest to the election of electors for President and Vice President may be filed by a written complaint of one or more of the unsuccessful candidates, and contest proceedings are to be held in the Circuit Court of the City of Richmond before a special judicial panel. Such notice to contest must be filed no later than 5:00 p.m. on the second calendar day after the State Board certifies the result of the election, and a copy of the complaint is to be served on each contestee within five days after the Board has certified the election. Grounds for the complaint are either objections to the eligibility of the contestee, or objections to the conduct or the results of the election \"accompanied by specific allegations which, if proven true, would have a probable impact on the outcome of the election.... \" The contest is to be heard and determined without a jury, shall be held \"promptly,\" and shall be completed at least six days before the time fixed for the meeting of the electors.", "The Twelfth Amendment to the U.S. Constitution provides that Congress shall meet in joint session to count and certify the electoral votes for President. Implicit in the express authority of Congress to count the electoral votes and to formally announce the winner of the presidential election, has been the authority (and practical necessity) to determine which electoral votes to count.\nWhen Congress meets to count the electoral votes in January following the meeting of the presidential electors in December, objections may be made to the counting of electoral votes from a particular state. Federal law, known as the Electoral Count Act of 1887, sets forth a detailed procedure for making and acting on objections to the counting of one or more of the electoral votes. When the certificate or equivalent paper from each state or the District of Columbia is read, \"the President of the Senate shall call for objections, if any.\" Any such objection must be presented in writing and must be signed by at least one Senator and one Representative. Furthermore, the objection \"shall state clearly and concisely, and without argument, the ground thereof,\" and no debate on the objection is to be made in the joint session itself. When a properly made objection is received, the joint session is temporarily dissolved and each house is to meet to consider the objection separately. For an objection to be sustained, it must be agreed to by each house of Congress meeting separately.\nBy way of example, due to alleged voting irregularities in the state, an objection was made to the Ohio electoral votes during the January 2005 joint session . In accordance with federal law, the chambers withdrew from the joint session to consider the objection, but neither the House nor Senate agreed to accept the objection. When the House and Senate resumed in joint session, \"because the two Houses have not sustained the objection,\" Ohio's electoral votes were counted as cast.\nSimilar to an election contest in the states, it appears that the burden of proof within Congress to overcome the presumption of regularity of an officially certified election may be significant. As noted earlier, the Electoral Count Act indicates the congressional determination that the states are to be the initial arbiter of election contests for presidential electors within their respective jurisdictions. Thus the provision of the Electoral Count Act known as the \"safe harbor\" provision expressly provides for final and \"conclusive\" determinations of the election of presidential electors in the states when timely contested under established state procedures.\nEven where no contest in a state has occurred, the election results and returns from each state that have reached the Congress, under the procedures of the Electoral Count Act, would have been officially certified by state officers. The official \"certificates of ascertainment\" regarding the election would have already been transmitted by the governor of each state to the National Archives and Records Administration and to the Presiding Officer of the joint session. With reference to contests relating to other federal elections ̶ federal congressional elections ̶ or in other challenges to the credentials of Members-elect, the practice in Congress has been to place a clear burden of proof upon the objecting party to overcome the presumption of validity of an election that has already been officially certified by the proper state officials. Regarding their own congressional elections, the House of Representatives and the Senate have adopted a \"but for\" test, requiring the contestant to prove that \"but for\" the alleged fraud or irregularity the result of the election would have b een different. It is likely that a similar standard as that applied in congressional precedents with respect to the burden of proof would at least influence Congress in the case of challenges to the results of a state-certified election of presidential electors." ], "depth": [ 0, 1, 1, 1 ], "alignment": [ "h0_title h1_title", "h0_full", "h0_full", "h0_full h1_full" ] }

{ "question": [ "How are presidential elections conducted?", "What responsibilities do states have in presidential elections?", "How are voters able to voice concerns about political elections?", "What happens after the election of presidential electors?", "How are elector votes cast and counted?", "What opportunity does this give states?", "How are objections handled and settled?" ], "summary": [ "Presidential elections are conducted in each state and the District of Columbia to select \"electors\" from that state who will meet and formally vote for a candidate for President on the first Monday following the second Wednesday in December.", "Under the U.S. Constitution, these elections for presidential electors are administered and regulated in the first instance by the states, and state laws have established the procedures for ballot security, tallying the votes, challenging the vote count, recounts, and election contests within their respective jurisdictions.", "A candidate or voters challenging the results of a presidential election in a particular state would thus initially seek to contest the results of that election in the state according to the procedures and deadlines set out in the laws of that specific state.", "After the results of an election for presidential electors are officially certified by the state, the selected presidential electors meet and cast their votes for President in December.", "The certificates indicating the votes of the electors are then sent to the federal government, and those certificates are opened and the electoral votes formally announced during the first week in January in a joint session of the U.S. Congress, under the directions of the Twelfth Amendment of the Constitution.", "The counting and the official tabulation of the electoral votes from the states within Congress provides a further opportunity to challenge and protest electoral votes from a state. Under federal law and congressional precedents, an objection may be made to the counting of electoral votes from a state by a formal objection made in writing by at least one Member of the House of Representatives and one Senator.", "Once made, each house of Congress separately debates and votes on the objection. If both houses of Congress sustain the objection, the electoral votes objected to are not counted; but if only one house, or neither the House nor the Senate, votes to sustain the objection, then the electoral votes from that state are counted." ], "parent_pair_index": [ -1, -1, -1, -1, -1, 1, 2 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2 ] }

{ "title": [ "Background", "Elementary and Secondary Education School Facilities", "Health Effects of Lead", "The Safe Drinking Water Act", "Lead in School Drinking Water", "EPA Guidance for Schools", "Roles and Responsibilities of Federal Agencies", "An Estimated 43 Percent of School Districts Reported Testing for Lead in Drinking Water and About a Third of These Districts Reported Finding Elevated Levels of Lead", "An Estimated 43 Percent of School Districts Reported Testing for Lead in Drinking Water in the Last 12 Months, but 41 Percent Have Not Tested", "Cost of Testing", "Plans to Conduct Testing on a Recurring Basis", "Reasons School Districts Reported for Not Testing", "An Estimated 37 Percent of School Districts That Reported Testing Found Elevated Levels of Lead in Drinking Water", "School Districts’ Lead Testing Efforts and Discovery of Elevated Lead Levels Varied Based on the Size, Population Density, and Location of the District", "All School Districts with Elevated Lead in Drinking Water Reported Taking Action, Such as Replacing Water Fountains or Flushing Pipes", "Several States Require School Districts to Test for Lead in Drinking Water and Additional States Provide Funding and Technical Assistance", "At Least Eight States Require School Districts to Test for Lead as of 2017, According to EPA", "Additional States Provided Funding and Technical Assistance to Support School District Efforts to Test for and Remediate Lead", "EPA Provides Several Resources on Lead, but EPA and Education Should Provide More Information to Support States and School Districts and Improve Collaboration", "EPA Provides Guidance, Training, and Technical Assistance on Lead Testing and Remediation, but States and School Districts Need Updated Guidance", "Education Has Not Played a Significant Role in Lead Testing and Remediation in Schools or Collaborated with EPA on These Efforts", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Web-based Survey of School Districts", "Site Visits to School Districts and Interviews with State and School District Officials", "Review of State Requirements", "Review of Federal Laws and Regulations, and Interviews with Federal Agency Officials", "Interviews with Stakeholder Organizations", "Appendix II: Survey of Lead Testing and Remediation Efforts", "Appendix III: Lead Testing and Remediation in Charter School Districts", "Appendix IV: Testing Components for Eight States That Require School Districts to Test for Lead in Drinking Water", "Action level and sample size Not specified", "Appendix V: EPA Guidance to the Public on Reducing Lead in Drinking Water", "Appendix VI: Memorandum of Understanding between EPA, Education, CDC, and Related Associations on Reducing Lead in School Drinking Water Effective June 2005", "Appendix VII: Comments from the Environmental Protection Agency", "Appendix VIII: Comments from the Department of Education", "Appendix IX: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "", "According to Education, 50.3 million students were enrolled in more than 98,000 public elementary and secondary schools nationwide in the 2014- 2015 school year. These individual public schools are overseen by approximately 16,000 local educational agencies (referred to in this report as school districts) which are, in turn, overseen and supported by state educational agencies. School districts can range in size from one school (for example, in rural areas) to hundreds of schools in large urban and suburban areas. For example, the 100 largest districts in the United States together have approximately 16,000 schools and enroll about 11 million students. In addition, charter schools are public schools created to achieve a number of goals, such as encouraging innovation in public education. Oversight of charter schools can vary, with some states establishing charter schools as their own school district and other states allowing charter schools to be either a distinct school district in themselves or part of a larger district. Charter schools are often responsible for their own facilities; these may be located in non-traditional school buildings, and may lease part or all of their space.\nTypically, state educational agencies are responsible for administering state and federal education laws, disbursing state and federal funds, and providing guidance to school districts and schools across the state. State educational agencies frequently provide funds for capital improvements to school facilities, which school districts may use to address issues related to lead in school drinking water, among other things. Different state agencies, including agencies for education, health, and environmental protection, may provide school districts with guidance on testing and remediation of lead in school drinking water. Within a school district, responsibility for water management may be held by individuals in different positions, such as facilities managers or environmental specialists.", "Lead is a neurotoxin that can accumulate in the body over time with long- lasting effects, particularly for children. According to the CDC, lead in drinking water can cause health effects if it enters the bloodstream and causes an elevated blood lead level. Lead in a child’s body can slow down growth and development, damage hearing and speech, and lead to learning disabilities. For adults, lead can have detrimental effects on cardiovascular, renal, and reproductive systems and can prompt memory loss. In pregnant women, lead stored in bones (due to lead exposure prior to and during pregnancy) can be released as maternal calcium used to form the bones of the fetus, reduce fetal growth, and increase risk of miscarriage and stillbirth. The presence of lead in the bloodstream can disappear relatively quickly, but bones can retain the toxin for decades. Lead in bones may be released into the blood, re-exposing organ systems long after the original exposure. The concentration of lead, total amount consumed, and duration of exposure influence the severity of health effects. The health consequences of lead exposure can differ from person to person and are affected by the cumulative dose of lead and the vulnerability of the individual person regardless of whether the lead exposure is from food, water, soil, dust, or air. Although there are medical therapies to remove lead from the body, they cannot undo the damage it has already caused. For these reasons, EPA, CDC, and others recommend the prevention of lead exposure to the extent possible, recognizing that lead is widespread in the environment.", "The SDWA authorizes EPA to set standards for drinking water contaminants in public water systems. For a given contaminant the act requires EPA to first establish a maximum contaminant level goal, which is the level at which no known or anticipated adverse effects on the health of persons occur and which allows an adequate margin of safety. EPA must then set an enforceable maximum contaminant level as close to the maximum contaminant level goal as is feasible, or require water systems to use a treatment technique to prevent known or anticipated adverse effects on the health of persons to the extent feasible. Feasible means the level is achievable using the best available technology or treatment technique.\nIn 1991 EPA issued the LCR, which it revised in 2000 and 2007, establishing regulations for water systems covered by the SDWA. Lead concentration in water is typically measured in micrograms of lead per liter of water (also referred to as “parts per billion” or ppb). The rule established a maximum contaminant level goal of zero, because EPA concluded that there was no established safe level of lead exposure. EPA decided not to establish an enforceable maximum contaminant level, concluding that any level reasonably close to the goal would result in widespread noncompliance, and therefore was not feasible. Instead, the rule established an “action level” of 15 micrograms of lead per liter (15 ppb) in a one liter sample of tap water, a level that EPA believed was generally representative of what could be feasibly achieved at the tap. The action level is a screening tool for determining when certain follow-up actions are needed, which may include corrosion control treatment, public education, and lead service line replacement. Sample results that exceed the lead action level do not by themselves constitute violations of the rule. If the lead action level is exceeded in more than 10 percent of tap water samples collected during any monitoring period (that is, if the 90th percentile level is greater than the action level), a water system must take actions to reduce exposure.\nSeveral amendments to the SDWA are relevant to testing for lead in school drinking water. In 1988, the SDWA was amended by the Lead Contamination Control Act (LCCA), which banned the manufacture and sale of drinking water coolers with lead-lined tanks containing more than 8 percent lead; the statute defined a drinking water cooler as containing 8 percent lead or less as “lead-free.” The LCCA also required states to establish testing and remediation programs for schools. However, in 1996 a federal circuit court held that this requirement was unconstitutional. In 2011, Congress passed the Reduction of Lead in Drinking Water Act, which amended the SDWA by lowering the maximum allowable lead content in “lead-free” plumbing materials such as pipes. This provision became effective on January 4, 2014. In 2016, Congress passed the Water Infrastructure Improvements for the Nation Act which, among other things, amended the SDWA, to establish a grant program for states to assist school districts in voluntary testing for lead contamination in drinking water at schools. As a condition of receiving funds, school districts are required to test for lead using standards that are at least as stringent as those in federal guidance for schools. In March 2018, Congress appropriated $20 million to EPA for this grant program.", "Lead can enter drinking water when service lines or plumbing fixtures that contain lead corrode, especially where the water has high acidity or low mineral content. According to EPA, lead typically enters school drinking water as a result of interaction with lead-containing plumbing materials and fixtures within the building. Although lead pipes and lead solder were not commonly used after 1986, water fountains and other fixtures were allowed to have up to 8 percent lead until 2014, as previously mentioned. Consequently, both older and newer school buildings can have lead in drinking water. Some water in a school building is not for consumption, such as water from a janitorial sink or garden hose, so lead in these water sources presents less risk to students. (See fig. 1.) The best way to know if a school’s water is contaminated with lead is to test the water after it has gone through a school’s pipes, faucets, and other fixtures.", "To facilitate testing efforts, EPA suggests that schools implement programs for reducing lead in drinking water and developed the 3Ts for Reducing Lead in Drinking Water in Schools: Revised Technical Guidance (3Ts guidance) in 2006, which provides information on: (1) training school officials about the potential causes and health effects of lead in drinking water; (2) testing drinking water in schools to identify potential problems and take corrective actions as necessary; and (3) telling students, parents, staff, and the larger community about monitoring programs, potential risks, the results of testing, and remediation actions.\nThe purpose of the 3Ts guidance is to help schools minimize students’ and staffs’ exposure to lead in drinking water. The guidance provides recommendations and suggestions for how to address lead in school drinking water, but does not establish requirements for schools to follow. According to the guidance, if school districts follow the procedures described in guidance, they will be assured their facilities do not have elevated levels of lead in their drinking water. The guidance recommends taking 250 milliliter samples of water from every drinking water source in a school building and having the samples analyzed by an accredited laboratory. Based on the test results of the samples, the guidance recommends remedial action if the samples are found to have an elevated concentration of lead, which is identified by using an action level. While school districts may have discretion to set their own action level, the 3Ts guidance strongly recommends taking remedial action if a school district finds lead at or above 20 ppb in a 250 milliliter sample of water.\nSchool districts can take a variety of actions including replacing pipes, replacing fixtures, running water through the system before consumption (known as flushing), or providing bottled water. However, since the amount of lead in school drinking water may change over time for a variety of reasons—for example, the natural aging of plumbing materials or a disturbance nearby, such as construction—the results obtained by one test are not necessarily indicative of results which may be obtained in the future.", "With no federal law requiring testing for lead in school drinking water, federal agencies play a limited role:\nEducation’s mission includes fostering educational excellence and promoting student achievement, and the agency disseminates guidance to states and school districts about lead in school drinking water, but does not administer any related grants.\nEPA’s Office of Ground Water and Drinking Water provides voluntary guidance to schools on how to test for and remediate lead in school drinking water, as part of EPA’s mission to inform the public about environmental risks. In addition, EPA’s Office of Children’s Health Protection is responsible for working with EPA’s 10 regional offices via their healthy schools coordinators, who communicate with schools and help to disseminate the 3Ts guidance.\nCDC administers the School Health Policies and Practices Study, a periodic survey to monitor national health objectives that pertain to schools and school districts. The 2016 data, the most recent available, provide information on the number of school districts that periodically test for lead in their drinking water.\nUnder the 2005 memorandum signed by these three agencies to encourage lead testing and remediation in schools, Education’s role includes working with EPA and other groups to encourage testing, and disseminating materials to schools. EPA agreed to update guidance for schools, and provide tools to facilitate testing for lead in school drinking water. CDC’s role includes identifying public health organizations to work with and facilitating dissemination of materials to state health organizations.", "Lead in School Drinking Water Survey Results at a Glance\nAn estimated 43 percent of school districts tested for lead in school drinking water, but 41 percent did not, and 16 percent did not know. o Some districts tested drinking water in all sources of consumable water in all of their schools, while other school districts tested only some sources. o Among the reasons for not testing, school districts said they either did not identify a need to test or were not required to do so.\nOf those that tested, an estimated 37 percent of school districts found elevated lead levels—levels of lead above the district’s threshold for taking remedial action—in school drinking water. o School districts varied in terms of the threshold they used, with some using 15 ppb or 20 ppb and others using a lower threshold.\nSchool districts varied in whether they tested for lead in school drinking water and whether they discovered elevated levels of lead. For example, an estimated 88 percent of the largest 100 school districts tested compared with 42 percent of other school districts.\nAll school districts that found elevated lead reported taking steps to reduce or eliminate the lead, including replacing water fountains or providing bottled water.", "Nationwide, school districts vary in terms of whether they have tested for lead in school drinking water, with many not testing. According to our survey of school districts, an estimated 43 percent tested for lead in school drinking water in at least one school in the last 12 months, while 41 percent had not tested. An estimated 35 million students were enrolled in districts that tested as compared with 12 million students in districts that did not test. An estimated 16 percent of school districts, enrolling about 6 million students, reported that they did not know whether they had tested or not. (See fig. 2.)\nOf school districts that tested for lead in school drinking water, some tested all consumable water sources in all of their schools, while others may have only tested some sources in all schools or all sources in some schools. Among the reasons provided by survey respondents for not testing in all schools, some said the age of the building was the primary consideration. For example, an official in one school district we visited told us they began testing in buildings constructed before 1989, but after receiving results that some water sources had elevated lead levels, the district decided to test all of their school buildings. Other reasons reported for testing some, but not all, schools included testing schools only when a complaint about discolored water was received or testing only new schools or schools that were renovated. In addition, school districts varied in whether they sampled from every consumable water source, or just some of the sources, in their schools. For example, one district official told us they took one sample from each type of water fountain in each school, assuming that, if a sampled fountain was found to have an elevated level of lead, then all of the other fountains of that type would also have elevated lead levels. However, EPA’s 3Ts guidance recommends that every water source that is regularly used for drinking or cooking be sampled. Further, stakeholders and environmental and educational officials we interviewed said that results from one water fountain, faucet, or any other consumable water source cannot be used to predict whether lead will be found in other sources.", "In our survey, the median amount spent by school districts to test for lead in school drinking water during the past 12 months varied substantially, depending on the number of schools in which tests were conducted (see table 1). School districts may have paid for services such as collecting water samples, analyzing and reporting results, and consultants. For example, an official in a small, rural school district—with three schools housed in one building—told us his district spent $180 to test all eight fixtures. In contrast, officials in a large, urban school district told us they spent about $2.1 million to test over 11,000 fixtures in over 500 schools. Some school districts, especially larger ones, incurred costs to hire consultants to advise them and help design a plan to take samples, among other things.\nEPA’s 3Ts guidance recommends determining how to communicate information about lead testing programs with parents, governing officials, and other stakeholders before testing. Of school districts that reported testing for lead in school drinking water in our survey, an estimated 76 percent informed their local school board and 59 percent informed parents about their plans to test; similar percentages provided information about the testing results. We identified a range of approaches to communicating testing efforts in the 17 school districts we interviewed. Some school districts reported issuing press releases, putting letters in multiple languages in students’ backpacks, sending emails to parents, holding public meetings, and releasing information through social media. Before testing, one district created a website with a list of dates when it planned to test the drinking water in every one of its schools. In contrast, other school districts communicated with parents and the press only upon request. Officials in one district we visited said they did not post lead testing results on their website, because they wanted to avoid causing undue concern, adding that “more information isn’t necessarily better, especially when tests showed just trace amounts of lead.”", "School districts generally have discretion to determine how frequently they test for lead in school drinking water except when prescribed in state law, and most school districts responding to our survey had no specific schedule for recurring testing. Specifically, an estimated:\n27 percent of school districts plan to test “as needed,”\n25 percent have no schedule to conduct recurring tests, and\n15 percent do not know.\nThe remaining school districts reported a range of frequencies for conducting additional tests or said they were developing a schedule to conduct tests on a recurring basis. School district officials and stakeholders we interviewed told us that it is important to test for lead in drinking water on a recurring basis, because lead can leach into school drinking water at any time.", "In our survey, we asked school districts reporting that they had not tested for lead in school drinking water in the last 12 months (41 percent of districts) to provide us with one or more reasons why they had not tested. Of these school districts, an estimated 53 percent reported that they did not identify a need to test and 53 percent reported they were not required to test (see fig. 3).", "Of school districts that reported testing for lead in school drinking water, an estimated 37 percent of districts found elevated levels of lead in school drinking water, while 57 percent of districts did not find lead (see fig. 4). Of those that found lead in drinking water, most found lead above their selected action level in some of their schools, while some districts found lead above their action level in all of their schools. For example, officials in one large school district told us they tested over 10,000 sources of water, including drinking fountains and food preparation fixtures, and found that over 3,600 water sources had lead at or above the district’s action level of 15 parts per billion (ppb). The findings resulted in extensive remediation efforts, officials said.\nFurther, district officials reported different action levels they used to determine when to take steps such as replacing a water fountain or installing a filter. School districts generally may select their own action level, resulting in different action levels between districts. Of school districts that reported testing for lead in school drinking water, an estimated 44 percent set an action level between 15 ppb and 19 ppb. The action levels chosen by the rest of the school districts ranged from a low of 1 ppb whereby action would be taken if any lead at all was detected to a high 20 ppb where action would be taken if lead was found at or above 20 ppb. (See appendix II for the estimated percentage of school districts that set other action levels.)", "Though fewer than half of school districts reported testing for lead in school drinking water, our analysis of school districts’ survey responses shows that these estimates varied depending on the size and population density of the district as well as its geographic location. For example, among the largest 100 school districts, an estimated 88 percent reported they had tested for lead in school drinking water in at least one school in the last 12 months compared with 42 percent of all other districts nationwide. An estimated 59 percent of the largest 100 school districts that tested discovered elevated levels of lead compared to 36 percent of all other districts that tested (see table 2).\nIn addition, an estimated 86 percent of school districts in the Northeast region of the United States tested for lead in school drinking water, compared to less than half of school districts in other geographic regions. Similarly, about half of school districts in the Northeast and about 8 percent in the South found elevated levels of lead, compared to their selected action level. (See fig. 5.)", "In our survey, every school district that reported finding lead in school drinking water above their selected action level reported taking steps to reduce or eliminate the lead. For example, an estimated 71 percent said they replaced water fountains, 63 percent took water fountains out of service without replacing them, and 62 percent flushed the school’s water system (see fig. 6).\nSchool districts officials we interviewed told us they took a range of remedial actions generally consistent with those reported to us in our survey. For example, an official in one district told us that 129 of the 608 fixtures tested above the district’s action level of “any detectable level.” He said they installed filters on all of the 106 sink faucets with elevated lead and replaced all of the 23 drinking fountains with elevated lead. The district official explained that they re-tested fixtures after the filters and new fountains were installed, and did not detect any lead in their drinking water. Officials in another school district told us that approximately 3,600 of their fixtures were found to have lead above their action level of 15 ppb. They told us the district turned off the water at the affected fixtures as an interim measure and provided bottled water to students and staff. Though they had not yet finalized their plans at the time of our interview, they said they were planning to replace the fixtures and replace old pipes with new pipes. District officials said they plan to pay for their remediation efforts using local capital improvement funds from a recently-approved bond initiative.\nSimilar to the cost of testing, the median amount spent by school districts to remediate lead in school drinking water during the past 12 months varied substantially, depending on the number of schools in which a district took action to remediate lead (see table 3). The median expenditure for school districts taking action in one to four schools was $4,000 compared to a median expenditure for school districts taking action in 51 or more schools of $278,000.", "", "EPA regional officials provided examples of eight states that have requirements for schools to test for lead in drinking water as of September 2017: California, Illinois, Maryland, Minnesota, New Jersey, New York, Virginia, and the District of Columbia. State requirements differ in terms of which schools are included, testing protocols, communicating results, and funding. (See fig. 7.) (For a list of testing components for the eight states, see appendix IV.)\nAccording to stakeholders we interviewed, most state legislation on testing for lead in school drinking water has been introduced in the past 2 years. Of the eight states, three states have completed one round of required testing, while other states are in the early stages of implementation or have not yet begun, according to state officials. School districts in Illinois, New Jersey, and New York completed a round of testing for lead in school drinking water by December 2017. Testing in the District of Columbia was in progress as of April 2018. Minnesota requires school districts to develop a plan to test by July 2018 and California requires that water systems sample all covered public schools in their service area by July 2019. According to state officials, schools in Maryland must test by July 2020. In Virginia, no timeline for testing is indicated in the requirement.\nIn addition, requirements in these eight states vary in terms of covered schools and frequency of testing. For example, in Maryland, all schools, including charter and private schools, are required to test their water for lead by July 2020 and must re-test every 3 years. After regulations were approved in July 2016, New Jersey required testing within a year in all traditional public schools, charter schools, and certain private schools, and re-testing every 6 years, according to state officials. Illinois’ requirement is for public and private elementary schools constructed before 2000 to test their drinking water for lead, and does not mandate re- testing. Seven of the eight states include at least some charter schools in their testing requirements (New York does not).\nState testing requirements also differ in terms of action level, sample sizes, and number of samples, according to state documents. States can choose their own lead threshold or action level for remediation, and the eight states have chosen levels ranging from any detectable level in Illinois to 20 ppb in Maryland. Six of the eight states have chosen to use 250 milliliter samples of water, while California is using a one liter sample size, and Virginia delegates to school districts to choose their action level and sample size. Some states specify that all drinking water sources in a building must be tested, such as in New York and New Jersey, or allow a smaller number of samples to be tested, such as in California, which recommends that water systems take between one and five samples per school. To implement its testing requirement, the District of Columbia has installed filters in all school drinking water sources, and plans to test the filtered water from each fixture for elevated lead annually.\nThe responsibility for the costs of testing and remediation also differ by state. According to state officials, in Minnesota, the costs of testing may be eligible for reimbursement from the state, and in the District of Columbia, the Department of General Services is responsible for the cost. California requires that public water systems cover the cost of testing for all public schools in their jurisdiction. In all other states we looked at, schools or school districts are at least partially responsible for the costs of testing. Additionally, most schools or school districts are responsible for the costs of remediation, although Minnesota, New York, and the District of Columbia will provide funds to help with the costs of remediation as well.\nSeven of the eight state requirements have a provision for communicating the results of lead sampling and testing in schools. For example, Minnesota requires all test results be made public and New York requires that results be communicated to students’ families. Maryland and New Jersey require that results above the action level be reported to the responsible state agency, such as the Department of the Environment or the Department of Education, and that sample results that find elevated levels of lead be communicated to students’ families. Illinois requires that all results be made available to families and that individual letters to families also be sent if lead levels over 5 ppb are found. In contrast, Virginia does not include a provision to communicate testing results in its testing requirement for schools.\nAccording to stakeholders and state officials we interviewed, states have several other common issues to consider in implementing a state testing and remediation program. First, states need to ensure that their efforts, which can be significant given the thousands of schools that operate in each state, can be completed with limited resources and by a legislated deadline. Second, coordination between relevant state agencies, which will vary by state, may be challenging. Because of the nature of testing for lead in school drinking water, multiple government agencies may be involved, necessitating a balance of responsibilities and information- sharing between these state agencies. Finally, state officials told us that imposing requirements without providing funding to implement them may be a challenge for schools in complying with testing and remediation requirements.", "Apart from the states with requirements to test for lead in school drinking water discussed in this report, at least 13 additional states had also provided funding or in-kind support to school districts to assist with voluntary lead testing and remediation, according to EPA regional offices. Those states are Arizona, Colorado, Idaho, Indiana, Maine, Massachusetts, Michigan, New Mexico, Ohio, Oregon, Rhode Island, Vermont, and Washington. In Massachusetts, for example, officials told us the state used $2.8 million from the state Clean Water Trust to fund a voluntary program for sampling and testing for all participating public schools in 2016 and 2017. Massachusetts contracted with a state university to assist schools with testing for lead in drinking water. When the program completed its first round of testing in February 2017, 818 schools throughout the state had participated, and the state has begun a second round of sampling with remaining funds from the Clean Water Trust. In Oregon, officials told us the state legislature provided funding for matching grants of up to $8 million to larger school districts for facilities improvements, and made $5 million of emergency funds available to reimburse school districts for laboratory fees associated with drinking water testing as part of the state’s efforts to address student safety.\nStates can also provide technical assistance to support school districts in their efforts to test for and remediate lead in drinking water. The five states we visited provided a range of technical assistance to school districts. For example, to implement the voluntary assistance program in Massachusetts, the contracted university told us they hired 15 additional staff and assisted schools in designing sampling plans, taking samples, and sending them for testing. University officials told us they oversaw the sampling of all drinking water sources in each participating school and sent the sample to state certified laboratories for analysis. State officials encouraged schools to shut off all fixtures in which water tested at or above the action level of 15 ppb and provided guidance on actions to take, such as removing and replacing fixtures, using signage to indicate fixtures not to be used for drinking water, and implementing a flushing program. The state developed an online reporting tool so that all test results could be publicly posted. State officials also supported schools in communicating lead testing results to parents and the community.\nOther states we visited provided technical assistance to school districts through webinars, guidance documents, in-person presentations, and responding to inquiries. In Oregon, the state Department of Education and the state Health Authority collaborated in 2016 to provide guidance to schools on addressing lead in drinking water. The Governor issued a directive requesting all school districts test for lead in their buildings and the Health Authority requested that districts send them the results. In Texas, officials at the Commission for Environmental Quality have made presentations to schools on water sampling protocols and provided templates for school districts to communicate results. Officials told us that an increased number of school districts have contacted them in the past year seeking guidance, and, in response, they directed districts to EPA’s 3Ts guidance and a list of accredited laboratories. In Illinois, state officials partnered with the state chapter of the American Water Works Association to provide a guidance document for drinking water sampling and testing to assist schools in complying with new testing requirements. In Georgia, officials at the Department of Natural Resources told us they promote the 3Ts guidance on their website and have offered themselves as a resource on school testing at presentations with local water associations.", "", "EPA provides several voluntary resources, such as guidance, training, and technical assistance, to states and school districts regarding testing for and remediation of lead in school drinking water, but some school districts we surveyed and officials we interviewed said more information would be helpful. The Lead Contamination Control Act of 1988 (LCCA) required EPA to publish a guidance document and testing protocol to assist schools in their testing and remediation efforts. EPA’s Office of Ground Water and Drinking Water issued its 3Ts guidance which provides information on training school officials, testing drinking water in schools, and telling the school and broader community about these efforts. Of the school districts that reported in our survey using the 3Ts guidance to inform their lead testing efforts, an estimated 68 percent found the guidance extremely or very helpful for conducting tests. The Office of Ground Water and Drinking Water also developed an additional online resource—known as the 3Ts guidance toolkit—to further assist states and school districts with their lead in drinking water prevention programs by providing fact sheets and brochures for community members, among other things. Some states have used the 3Ts guidance as a resource for their state programs, according to EPA officials. For example, a New York regulation directs schools to use the 3Ts guidance as a technical reference when implementing their state- required lead testing and remediation programs.\nThe Office of Ground Water and Drinking Water provides training to support states and school districts with their lead testing and remediation programs. In June 2017, EPA started a quarterly webinar series to highlight school district efforts to test for lead. These webinars include presentations from school officials and key partners that conducted lead testing and remediation. For example, on June 21, 2017, officials from Denver Public Schools and Denver Water presented on their efforts to test for lead in the public school system.\nEPA’s approach to providing guidance and technical assistance to states and school districts is determined by each of the 10 EPA regional offices. Some EPA regional offices provide the 3Ts guidance to school districts upon request and others conduct outreach to share the guidance, typically through their healthy schools coordinator when discussing other topics, such as indoor air quality and managing chemicals. EPA regional offices also provide technical assistance by request, typically through phone consultations with school districts that have questions regarding the 3Ts guidance, according to EPA headquarters officials. Officials also indicated that the agency has received more requests for technical assistance from schools over the past few years regarding lead in drinking water. Officials in EPA Regions 1 in Boston and 2 in New York City told us they provided technical assistance to school districts by conducting lead testing and analysis in school facilities and Region 9 in San Francisco provided technical assistance by reviewing school district testing protocols. For example, EPA Region 2 officials said between 2002 and 2016 they worked with one to two school districts per year to assist with their lead testing efforts. As part of this effort, the regional office provided funding for sampling and analysis. Officials said they prioritized school districts based on population size and whether the community had elevated blood lead levels. Other EPA regional office approaches included identifying resources and guidance for relevant state agencies and facilitating information sharing by connecting districts that have tested for lead with districts that are interested in doing so. However, most EPA regional offices do not provide technical assistance in the form of testing, analysis, or remediation to school districts, and some do little or no outreach to communicate the importance of testing for and remediating lead in school drinking water. According to federal standards for internal control, management should externally communicate the necessary quality information to achieve the entity’s objectives.\nEach EPA regional office’s approach to providing resources to states and school districts varies based on differing regional priorities and available resources, according to EPA headquarters officials. Additionally, officials said that this decentralized model of providing support and technical assistance related to lead testing and remediation in schools is appropriate because of the number of schools across the United States. However, based on our survey we found school district familiarity with the 3Ts guidance varied by geographic area (see fig. 8). An estimated 54 percent of school districts in the Northeast reported familiarity with the 3Ts guidance, compared with 17 percent of districts in the South. Furthermore, the Northeast was the only geographic area with more school districts reporting that they were familiar with the 3Ts guidance than not. This awareness corresponds with the efforts made by the state of Massachusetts and EPA’s regional offices in the Northeast to distribute the 3Ts guidance and conduct lead testing and remediation in school districts.\nBy promoting further efforts to communicate the importance of lead testing to schools to help ensure that their lead testing programs are in line with good practices included in the 3Ts guidance, EPA regional offices that have not focused on this issue could leverage the recent efforts of other regional offices to provide technical assistance and guidance, and other forms of support.\nEPA’s 3Ts guidance emphasizes the importance of taking action to remediate elevated lead in school drinking water, but the agency’s guidance on a recommended action level for states and school districts is not current and contains elements that could be misleading. Although the guidance recommends that school districts prioritize taking action if lead levels from water fountains and other outlets used for consumption exceed 20 ppb (based on a 250 milliliter water sample), EPA officials told us when the guidance was originally developed in response to the 1988 LCCA requirement, the agency did not have information available to recommend an action level specifically designed for schools. Furthermore, EPA officials told us that the action level in the 3Ts guidance is not a health-based standard. However, there are statements in the guidance that appear to suggest otherwise. For example, the guidance states that EPA strongly recommends that all water outlets in all schools that provide water for drinking or cooking meet a “standard” of 20 ppb lead or less and that school officials who follow the steps included in the document, including using a 20 ppb action level, will be “assured” that school facilities do not have elevated lead in the drinking water. The use of the terms “standard” and “assured” are potentially misleading and could suggest that the 20 ppb action level is protective of health.\nFurther, state and school district officials may be familiar with the 15 ppb action level (based on a 1 liter water sample) for public water systems aimed at identifying system-wide problems under the LCR, which may also create confusion around the 20 ppb action level included in the 3Ts guidance. According to our survey, an estimated 67 percent of school districts reported using an action level less than the 20 ppb recommended in the 3Ts guidance. We found that nearly half of school districts used action levels between 15 ppb and 19 ppb. Although these action levels— the 20 ppb from the 3Ts guidance and the 15 ppb from the LCR—are intended for different purposes, the difference creates confusion for some state and school district officials. Also, according to our survey, an estimated 56 percent of school districts reported they would find it helpful to have clearer guidance on what level of lead to use as the action level for deciding to take steps to remediate lead in drinking water. In addition, officials we interviewed in four of the five states we visited said there is a need for clearer guidance on the action level. EPA officials agreed that the difference between the two action levels creates confusion for states and school districts.\nIn addition to wanting clearer guidance on choosing lead action levels, about half of the school districts we surveyed said they would also like additional information to help inform their lead testing and remediation programs. Specifically, school districts reported that they want information on a recommended schedule for lead testing, how to remediate elevated lead levels, and information associated with testing and remediation costs (see fig. 9). For example, an estimated 54 percent of school districts responded that they would like additional information on a testing schedule, as did officials in 10 of the 17 school districts and one of the five states we interviewed. EPA’s 3Ts guidance does not include information to help school districts determine a schedule for retesting their schools. Officials in one school district told us they need information for determining retesting schedules for lead in their school drinking water, and that—without guidance—they chose to retest every 5 years, acknowledging that this decision was made without a clear rationale. Further, an estimated 62 percent of school districts reported wanting additional information on remedial actions to take to address elevated lead. For example, officials from the Massachusetts Department of Environmental Protection told us that they would like additional guidance on evaluating remedial actions to address elevated lead in the fixtures or the plumbing system. Officials with EPA’s Office of Ground Water and Drinking Water hold quarterly meetings with regional officials to obtain input on potential improvements to the 3Ts guidance, but have not made any revisions.\nEPA has not substantially updated the 3Ts guidance since October 2006 and does not have firm plans or time frames for providing additional information, including on the action level and other key topics such as a recommended schedule for testing. EPA officials said that they may update the 3Ts guidance before the LCR is updated, but did not provide a specific time frame for doing so. EPA has efforts underway to reconsider the action level for the LCR, which may include a change in the action level from one that is based on technical feasibility, to one that also considers lead exposure in vulnerable populations such as infants and young children, which EPA refers to as a health-based benchmark. EPA anticipates issuing comprehensive revisions to the LCR by February 2020. While the 3Ts guidance is not contingent on the LCR, EPA officials told us they would consider updates to the 3Ts guidance, including the 20 ppb action level, as they consider revisions to the LCR. By updating the 3Ts guidance to include an action level for school districts that incorporates available scientific modeling regarding vulnerable population exposures, EPA could have greater assurance that school districts are able to limit children’s exposure to lead.\nEPA has emphasized the importance of addressing elevated lead levels in school drinking water through its 3Ts guidance, but has not communicated necessary information about action levels and other key topics consistent with the external communication standard under federal standards for internal control. According to EPA, CDC, and others, eliminating sources of lead before exposure can occur is considered the best strategy to protect children from potential adverse health outcomes. EPA officials also told us that clear guidance is important because testing for lead in drinking water requires technical expertise. But without providing interim or updated guidance to help school districts choose an action level for lead remediation EPA will continue to provide schools with confusing information regarding whether to remediate, which may not adequately limit potential lead exposure to students and staff. Furthermore, without important information on key topics, such as a recommended schedule for lead testing, how to remediate elevated lead levels, and information associated with testing and remediation costs school districts are at risk of making misinformed decisions regarding their lead testing and remediation efforts.", "Education has not played a significant role in supporting state and school districts efforts to test for and remediate lead in school drinking water, and there has been limited collaboration between Education and EPA, according to officials. In 2005, Education, EPA, CDC, and other entities involved with drinking water signed the Memorandum of Understanding on Reducing Lead Levels in Drinking Water in Schools and Child Care Facilities (the memorandum) to encourage and support schools’ efforts to test for lead in drinking water and to support actions to reduce children’s exposure to lead. According to the memorandum, Education’s role is to identify the appropriate school organizations with which to work and facilitate dissemination of materials and tools to schools in collaboration with EPA. In addition, EPA’s role is to update relevant guidance documents for school districts—resulting in the production of the 3Ts guidance in 2006—raising awareness, and collaborating with other federal agencies and associations, among other things. Education officials told us that the agency does not have any ongoing efforts related to implementing the memorandum. However, Education and EPA officials were not aware of the memorandum being terminated by either agency and told us the memorandum remains in effect.\nAlthough Education does not have any ongoing efforts related to implementing the memorandum, the agency’s websites, including the Readiness and Emergency Management for Schools Technical Assistance Center (REMS TA Center) website, and the Green Strides portal, provide links to EPA guidance and webinars on lead testing and remediation. The REMS TA Center website, which is largely focused on emergency management planning, includes a link to EPA’s 3Ts guidance and other resources on lead exposure and children, but does not provide information regarding the importance of testing for lead in school drinking water. Education’s Green Strides portal includes a link to a number of EPA’s webinars on lead in school drinking water, but does not include all of the quarterly webinars started in June 2017 to highlight school district efforts to test for lead. An Education official told us that these EPA webinars are identified by Education without coordinating with EPA officials. Further, when searching on Education’s website for lead in school drinking water, the 3Ts guidance does not show up. Education officials acknowledged that information regarding lead testing and remediation is difficult to find on Education’s website and they could take steps to make federal guidance on lead in school drinking water more accessible.\nThe federal government has developed guidelines to help federal agencies improve their experience with customers through websites. One such resource is Guidelines for Improving Digital Services developed by the federal Digital Services Advisory Group. It states that federal agencies should take steps to make guidance easy to find and accessible. Making guidance easy to find and accessible such as by clarifying which links contain guidance; highlighting new or important guidance; improving their websites’ search function; and categorizing guidance on Education’s websites could help raise school district awareness of the guidance, which is currently low in most areas of the country.\nMany school districts are not familiar with EPA guidance related to lead testing and remediation. Specifically, an estimated 60 percent of school districts reported in our survey that they were not familiar with the EPA’s 3Ts guidance. Most school district officials from our site visits told us they did not have contact with EPA prior to or during their lead testing and some said they would not have thought to go to EPA for guidance. Likewise, EPA officials reported they had received feedback from school district officials indicating that they do not know where to go for information about testing for and remediating lead in drinking water. Rather, school district officials may look to their state educational agency or Education for guidance on lead testing and remediation, as they might do when looking for guidance on other topics.\nEducation and EPA do not regularly collaborate to support state and school districts’ efforts related to lead in school drinking water, according to EPA and Education officials. Education officials said the agency does not have a role in ensuring safe drinking water in schools, and that the mitigation of environmental health concerns in school facilities is a state and local function. Therefore, the agency does not collaborate with EPA to disseminate the 3Ts guidance beyond posting links to related guidance on their websites and newsletters. EPA officials told us they do not know which office they should collaborate with at Education. EPA regional officials also said they do not collaborate with Education to disseminate the guidance to states and school districts. However, in the 2005 memorandum, EPA and Education agreed to work together to encourage school districts to test drinking water for lead; disseminate results to parents, students, staff, and other interested stakeholders; and take appropriate actions to correct elevated lead levels.\nThere are many school districts that have not tested for lead in school drinking water, and some conducted testing without the assistance of federal guidance—although the large majority (68 percent) of school districts who use the guidance reported finding it helpful. Officials in 11 of 17 school districts we interviewed that had conducted lead testing told us they were familiar with the 3Ts guidance and 9 of those districts said they found it helpful for designing their lead testing programs. Increased encouragement and dissemination of EPA resources about lead in school drinking water by Education and EPA could help school districts test for and remediate lead in drinking water using good practices and reduce the potential risk of exposure for students and staff.", "Children are particularly at risk of experiencing the adverse effects of lead exposure from a variety of sources, including drinking water. While there is no federal law requiring lead testing for drinking water in most schools, some states and school districts have decided to test for lead in the drinking water to help protect students. However, there are a number of school districts that have not tested for lead and some that do not know if they have tested for lead in their drinking water, according to our nationwide survey. Even in states and school districts that have opted to test, officials may choose different action levels to identify elevated lead and may choose different testing protocols that do not test all fixtures in all schools.\nEPA has developed helpful guidance—3Ts—and webinars for states and school districts to support efforts to test and remediate lead in school drinking water. However, some EPA regional offices have not communicated the importance of testing for and remediating lead to states and school districts. By promoting further efforts to communicate the importance of lead testing to school districts to help ensure that their lead testing programs are in line with good practices, including the 3Ts guidance, regional offices that have not focused on this issue could build on the recent efforts of other regional offices to provide technical assistance and guidance and other forms of support.\nState and school district officials can use EPA’s 3Ts guidance to help ensure that their drinking water testing and remediation efforts are in line with good practices and said that it has been helpful for establishing their programs. However, statements in the guidance—which has not been updated in over a decade—that suggest the action level described will ensure that school facilities do not have elevated lead in their drinking water are misleading. In addition, state and school district officials told us that additional guidance—including information on a recommended schedule for retesting as well as on costs associated with testing and remediation—could help school districts make more informed decisions regarding their testing and remediation efforts. Without providing interim or updated guidance, EPA is providing schools with confusing and out of date information, which can increase the risk of school districts making uninformed decisions. EPA officials said they would consider updates to the 3Ts action level while the revisions to the LCR are being completed. However, the longer school districts are without the additional information they need to conduct their efforts in line with good practices and continue to rely on confusing and misleading information, the more challenges they will face in trying to limit children’s exposure to lead. After EPA revises the LCR, the agency would have greater assurance that school districts are limiting children’s exposure to lead by considering whether to develop, as part of its guidance, a health-based level for schools that incorporates available scientific modeling regarding vulnerable population exposures.\nFinally, although Education provides information to states and school districts on lead testing and remediation through the agency’s websites, that information is difficult to find. Further, Education’s website does not include all of EPA’s quarterly webinars to highlight school district efforts to test for lead. By making guidance accessible, Education could improve school district awareness of EPA resources about lead in school drinking water. In addition, EPA and Education should improve their collaboration to encourage and support lead testing and remediation efforts by states and school districts. EPA has the expertise to develop guidance and provide technical assistance to states and school districts, while Education, based on its mission to promote student achievement, should collaborate with EPA to disseminate guidance and raise awareness of lead in drinking water as an issue that could impact student success. Although over one-third of districts that tested found elevated levels of lead, many districts have still not been tested. Unless EPA and Education encourage additional school districts to test for lead, many students and school staff may be at risk of lead exposure.", "We are making a total of seven recommendations, including five to EPA and two to Education:\nThe Assistant Administrator for Water of EPA’s Office of Water should promote further efforts to communicate the importance of testing for lead in school drinking water to address what has been a varied approach by regional offices. For example, the Assistant Administrator could direct those offices with limited involvement to build on the recent efforts of several regional offices to provide technical assistance and guidance, and other forms of support. (Recommendation 1)\nThe Assistant Administrator for Water of EPA’s Office of Water should provide interim or updated guidance to help schools choose an action level for lead remediation and more clearly explain that the action level currently described in the 3Ts guidance is not a health-based standard. (Recommendation 2)\nThe Assistant Administrator for Water of EPA’s Office of Water should, following the agency’s revisions to the LCR, consider whether to develop a health-based level, to include in its guidance for school districts, that incorporates available scientific modeling regarding vulnerable population exposures and is consistent with the LCR. (Recommendation 3)\nThe Assistant Administrator for Water of EPA’s Office of Water should provide information to states and school districts concerning schedules for testing school drinking water for lead, actions to take if lead is found in the drinking water, and costs of testing and remediation. (Recommendation 4)\nThe Assistant Secretary for Elementary and Secondary Education should improve the usability of Education’s websites to ensure that the states and school districts can more easily find and access federal guidance to address lead in school drinking water, by taking actions such as clarifying which links contain guidance; highlighting new or important guidance; improving their websites’ search function; and categorizing guidance. (Recommendation 5)\nThe Assistant Administrator for Water of EPA’s Office of Water and the Director of the Office of Children’s Health Protection should collaborate with Education to encourage testing for lead in school drinking water. This effort could include further dissemination of EPA guidance related to lead testing and remediation in schools or sending letters to states to encourage testing in all school districts that have not yet done so. (Recommendation 6)\nThe Assistant Secretary for Elementary and Secondary Education should collaborate with EPA to encourage testing for lead in school drinking water. This effort could include disseminating EPA guidance related to lead testing and remediation in schools or sending letters to states to encourage testing in all school districts that have not yet done so. (Recommendation 7)", "We provided a draft of this report to EPA, Education, and CDC for review and comment. EPA and Education provided written comments that are reproduced in appendixes VII and VIII respectively. EPA also provided technical comments, which we incorporated as appropriate. CDC did not provide comments. We also provided relevant excerpts to selected states and incorporated their technical comments as appropriate.\nIn its written comments, EPA stated that it agreed with our recommendations and noted a number of actions it plans to take to implement them. For example, EPA said its Office of Ground Water and Drinking Water is holding regular meetings with regional offices and other EPA offices to obtain input on improving the 3Ts guidance. Potential revisions include updates to implementation practices, the sampling protocol, and the action level, including clarifying descriptions of different action levels and standards. Also, EPA said that while it has not yet determined the role of a health-based benchmark for lead in drinking water in the revised LCR, it sees value in providing states, drinking water systems, and the public with a greater understanding of the potential health implications for vulnerable populations of specific levels of lead in drinking water. EPA said it would continue to reach out to states and schools to provide information, technical assistance, and training and will continue to make the 3Ts guidance available. EPA also said it would work with Education to ensure that school districts and other stakeholders are aware of additional resources EPA is developing.\nIn its written comments, Education stated that it agreed with our recommendations and noted a number of actions it plans to take to implement them. In response to our recommendation to improve Education’s websites, Education said it would identify and include an information portal dedicated to enhancing the usability of federal resources related to testing for and addressing lead in school drinking water. Also, Education said it is interested in increasing coordination across all levels of government and it shares the view expressed in our report that improved federal coordination, including with EPA, will better enhance collaboration to encourage testing for lead in school drinking water. Education said it would develop a plan for disseminating relevant resources to its key stakeholder groups and explore how best to coordinate with states to disseminate EPA’s guidance on lead testing and remediation to school districts.\nAs 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 to interested congressional committees, the Administrator of the Environmental Protection Agency, the Secretary of Education, the Director of the Centers for Disease Control and Prevention, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact us at (617) 788-0580 or [email protected] or (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report.\nGAO staff who made key contributions to this report are listed in appendix IX.", "In this report, we examined three objectives: (1) the extent to which school districts are testing for, finding, and remediating lead in school drinking water; (2) the extent to which states require or support testing for and remediating lead in school drinking water by school districts; and (3) the extent to which federal agencies are supporting state and school district efforts to test for and remediate lead. To address these objectives, we conducted a web-based survey of school districts, interviews with selected state and school district officials, a review of applicable requirements in selected states, a review of relevant federal laws and regulations, and interviews with federal agency officials and representatives of stakeholder organizations.\nWe conducted this performance audit from October 2016 through July 2018 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.", "To examine the extent to which school districts are testing for and remediating lead in school drinking water, we designed and administered a generalizable survey of a stratified random sample of U.S. local educational agencies (LEA), which we refer to as school districts throughout the report. The survey included questions about school district efforts to test for lead in school drinking water, such as the number of schools in which tests were conducted, the costs of testing, and whether parents or others were notified about the testing efforts. We also asked questions about remediation efforts, such as whether lead was discovered in school drinking water, the specific remediation efforts that were implemented, and whether parents or others were notified about the remediation efforts. Further, we asked about officials’ familiarity with the Environmental Protection Agency’s (EPA) guidance entitled 3Ts for Reducing Lead in Drinking Water in Schools, (3Ts guidance) whether the guidance was used, and the extent to which it was helpful in conducting tests, remediating lead, and communicating with parents and others. We directed the survey to school district superintendents or other cognizant officials, such as facilities directors. See appendix II which includes the survey questions and estimates.\nWe defined our target population to be all school districts in the 50 U.S. states and the District of Columbia that are not under the jurisdiction of the Department of Defense or Bureau of Indian Education. We used the LEA Universe database from Department of Education’s (Education) Common Core of Data (CCD) for the 2014-2015 school year to our sampling frame. For the purpose of our survey, our sample was limited to school districts that: were located in the District of Columbia or the 50 states; had a LEA type code of 1, 2, 4, 5, 7, and 8; had one or more schools and one or more students; and were not closed according to the 2014-2015 School Year.\nThe resulting sample frame included 16,452 school districts and we selected a stratified random sample of 549 school districts. We stratified the sampling frame into 13 mutually exclusive strata based on urban classification and poverty classification. We further stratified the school districts classified as being in a city by charter status. We selected the largest 100 school districts with certainty. We determined the minimum sample size needed to achieve precision levels of plus or minus 12 percentage points or fewer, at the 95 percent confidence level. We then increased the sample size within each stratum for an expected response rate of 70 percent.\nWe defined the three urban classifications based on the National Center for Education Statistics (NCES) urban-centric locale code. To build a general measure of the poverty level for each school district we used the proportion of students eligible for free or reduced-price lunch (FRPL) as indicated in the CCD data and classified these into the following three groups:\nHigh-poverty – More than 75 percent of students in the school district were eligible for FRPL;\nMid-poverty – Between 25.1 and 75.0 percent of students in the school district were eligible for FRPL; and\nLow-poverty – 25 percent or fewer students in the school district were eligible for FRPL.\nWe assessed the reliability of the CCD data by reviewing existing documentation about the data and performing electronic testing on required data elements and determined they were sufficiently reliable for the purpose of our report.\nWe administered the survey from July to October 2017 (the survey asked school districts to report information based on the 12 months prior to their completing the survey.) To obtain the maximum number of responses to our survey, we sent reminder emails to nonrespondents and contacted nonrespondents over the telephone. We identified that four of the 549 sampled school districts were closed and one was a “cyber-school” with no building, so these were removed from the sample. Of the remaining 544 eligible sampled school districts, we received valid responses from 373, resulting in an unweighted response rate of 68 percent.\nWe conducted an analysis of our survey results to identify potential sources of nonresponse bias using a multivariate logistic regression model. We examined the response propensity of the sampled school districts by several demographic characteristics. These characteristics included poverty, urbanicity, and charter status. We did not find any other population characteristics significantly affected survey response propensity except those used in stratification (charter schools and the largest 100 school districts). Based on the response bias analysis and the 68 percent response rate across stratum, we determined that estimates based on adjusted weights reflecting the response rate are generalizable to the population of eligible school districts and are sufficiently reliable for the purposes of this report.\nWe took steps to minimize non-sampling errors, including pretesting draft instruments and using a web-based administration system. As we began to develop the survey, we met with officials from seven school districts to explore the feasibility of responding to the survey questions. We then pretested the draft instrument from April to June 2017 with officials in eight school districts—including one charter school district—in cities and suburbs in different states. In the pretests, we asked about the clarity of the questions and the flow and layout of the survey. The EPA also reviewed and provided us comments on a draft version of the survey. Based on feedback from the pretests and EPA’s review, we made revisions to the survey instrument. To further minimize non-sampling errors, we used a web-based survey, which allowed respondents to enter their responses directly into an electronic instrument. Using this method automatically created a record for each respondent and eliminated the errors associated with a manual data entry process.\nWe express the precision of our particular sample’s results as a 95 percent confidence interval (for example, plus or minus 10 percentage points). This is the interval that would contain the actual population value for 95 percent of the samples we could have drawn. As a result, we are 95 percent confident that each of the confidence intervals in this report will include the true values in the study population.\nTo analyze differences in the percentages of school districts that reported they tested for lead in school drinking water and those that discovered lead, we compared weighted survey estimates generated for school districts in different levels of the following subgroups:\nPoverty: low poverty, mid poverty, and high poverty;\nRacial composition: majority-minority and majority white;\nRegion: Northeast, South, Midwest, and West;\nPopulation density: urban, suburban, and rural/town;\nUrban charter school: in urban areas, charter district and non-charter\nLargest 100: largest 100 districts (based on student enrollment) and all other districts.\nFor each subgroup, we produced percentage estimates and standard errors for each level and used these results to confirm the significance of the differences between weighted survey estimates.", "To examine school districts’ testing and remediation efforts and state support of those efforts, we conducted site visits in five states—Georgia, Illinois, Massachusetts, Oregon, and Texas—from February to October 2017. We selected these states because they varied in the extent to which they required testing of school drinking water for lead and they are located in geographic areas covered by different EPA regional offices. Within these states, we selected 17 school districts that had tested for lead in school drinking water and to achieve variation in the size and population density (urban, suburban, and rural) of the district as well as including one charter school district.\nSite visits generally consisted of interviews with officials in state agencies and school districts and officials in the local EPA regional office:\nState interviews: We interviewed officials in state environment, education, and health agencies, depending on whether they had information related to school district testing for lead in school drinking water in their state. The topics we discussed were the agencies’ roles and responsibilities related to testing for and remediation of lead in school drinking water, any related state requirements, policies, and guidance, communication and public notification about testing and remediation efforts and, as appropriate, coordination among multiple state agencies. We also discussed similar topics related to lead-based paint. In Massachusetts, we interviewed representatives with the University of Massachusetts, because of their role in implementing the state’s program to support school district efforts to test for lead in school drinking water.\nSchool Districts: Within the five site visit states, we interviewed officials in 14 school districts in person and in three school districts by phone (because we were not able to meet with them in person). We also selected one charter school that functions as its own school district which had conducted tests for lead in school drinking water. Similar to our school district survey, the interview topics we discussed with district officials included testing for and remediation of lead in school drinking water, use of guidance (such as the 3Ts guidance) and efforts to communicate or coordinate with any federal, state, or local agencies, including any other school districts. Within 13 of the school districts, we visited at least one school in which the district had tested for lead in drinking water and, as needed, took remedial action in order to gain an in-depth understanding of their testing and remediation efforts.\nEPA Regional Offices: We interviewed officials in all 10 EPA Regional offices. We met in-person with officials in the regional offices 1, 4, 5, and 6 and conducted phone interviews with officials in regional offices 2, 3, 7, 8, 9, and 10. We generally discussed EPA officials’ roles and responsibilities related to testing for lead in school drinking water and paint and efforts in states and school districts in their region.\nInformation we gathered from these interviews, while not generalizable, represents the conditions present in the states and school districts at the time of our interviews and may be illustrative of efforts in other states and school districts.", "As part of our effort to examine school districts’ testing and remediation efforts and state support of those efforts, we reviewed related state requirements. To determine whether states had related requirements, we asked all EPA regional offices if states in their region had requirements related to testing for lead in school drinking water. EPA provided examples of eight states (California, Illinois, Maryland, Minnesota, New Jersey, New York, Virginia, and the District of Columbia that had such requirements. We reviewed relevant laws, regulations, and policy documents for these states. We then confirmed the details of the related requirements with the appropriate state officials via structured questionnaires. Also, we used available documentation to corroborate and verify the testing requirements of the states that EPA identified. GAO did not conduct an independent search of state laws.", "To examine the extent to which federal agencies have collaborated in supporting state and school district efforts to test for and remediate lead, we reviewed relevant federal laws, including the Water Infrastructure Improvements for the Nation Act of 2016, Reduction of Lead in Drinking Water Act of 2011, the Safe Drinking Water Act of 1974, as amended, and the Lead Contamination Control Act of 1988; regulations, such as the Lead and Copper Rule; and guidance, such as the 3Ts guidance. We also reviewed documentation including the\nMemorandum of Understanding on Reducing Lead Levels in Drinking Water in Schools and Child Care Facilities signed in 2005 by EPA, Education and the Centers for Disease Control and Prevention (CDC);\nFederal Partners in School Health Charter;\nEPA training webinar information; and other relevant guidance including the 3Ts guidance tool kit.\nWe interviewed officials from EPA’s Office of Ground Water and Drinking Water and Office of Children’s Health Protection and officials in all 10 of EPA regional offices regarding their approach to providing support to states and school district on lead testing and remediation. We interviewed officials from Education’s Office of Safe and Healthy Students and officials from the CDC. During these interviews, we interviewed officials about the Memorandum of Understanding and about the Federal Partners in School Health initiative, both of which represent collaborative efforts that address lead in school drinking water, among other topics.\nWe evaluated federal efforts to collaborate and support lead testing and remediation in schools against federal standards for internal control, which call for agencies to communicate quality information to external parties, among other things. We also evaluated federal efforts against the Memorandum of Understanding, in which EPA, Education, and CDC agreed to encourage testing drinking water for lead and communicate with key stakeholders, among other things.", "To inform all of our research objectives, we interviewed representatives with the National Conference of State Legislatures, National Center for Healthy Housing, National Alliance of Public Charter Schools, the DC Public Charter School Board, and the 21st Century School Fund. We also attended a workshop entitled “Eliminating Lead Risks in Schools and Child Care Facilities” in December 2017.", "The questions we asked in our survey of local educational agencies (referred to in this report as school districts) are shown below. Our survey was comprised of closed- and open-ended questions. In this appendix, we include all survey questions and aggregate results of responses to the closed-ended questions; we do not provide information on responses provided to the open-ended questions. Estimates noted with superscript “a” are based on 20 or fewer responses and were not included in our findings. For a more detailed discussion of our survey methodology, see appendix I. 1. Do any schools in your local educational agency (LEA) obtain drinking water from a public water system such as a city or municipal water plant? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nNo (Skip to 20)\nDon’t know (Skip to 20)\nSection B: Testing for Lead in School Drinking Water 2. Is there a requirement that the drinking water in your LEA’s schools be tested for lead? (Please answer “Yes” regardless of whether that requirement comes from your state, municipality, local educational agency or any other governmental entity.) (Check one.)\n95 percent confidence interval – lower bound (percentage)\n3. Regardless of whether your LEA is required to test for lead in school drinking water, have tests been conducted for lead in the drinking water in at least one of your schools in the past 12 months? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf yes to 3: 3A. What is the number of schools in which tests were conducted in the past 12 months?\nEstimated Number (Mean)\n95 percent confidence interval – lower bound (number)\n95 percent confidence interval – upper bound (number) (Respondent reported number)\n3B. About how many samples were taken from sources of drinking water such as water fountains and sinks in each school? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n3C. Did any of the following develop the sampling plan, draw the samples of water, and analyze the samples? (Check all that apply.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\n3D. What size samples were taken? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘other’ to 3D: What sample size was used? 3E: To the best of your knowledge, did the personnel drawing or analyzing samples follow a testing protocol that offers guidance on developing the sampling plan, drawing samples of water, or analyzing samples? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nNo (Skip to 3F)\nDon’t know (Skip to 3F)\nIf ‘yes’ to 3E: a. To the best of your knowledge, were any of the following entities involved in developing the protocol? (Check one per row.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nContractor / water testing company EPA or another federal government agency A local government agency (aside from your LEA)\nIf ‘other’ to 3Eh: What other entities were involved in developing the protocol? 3F. If tests were conducted in some schools in your LEA in the past 12 months—but were not conducted in every school—how was it determined which schools would be tested? (Check one per row.)\nNot applicable: tests were conducted in every school (Skip to 3G)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘other’ to 3Fe: In what other ways did your LEA use to determine which schools would be tested? 3G. How much do you estimate your LEA has spent on testing for lead in school drinking water in the past 12 months? (Please answer this question for lead testing only; the survey asks about expenditures to address concerns identified through testing later. Also, please include materials, labor, and any other expenditures related to lead testing in your estimate.)\nEstimated Number (Median)\n95 percent confidence interval – lower bound (number)\n95 percent confidence interval – upper bound (number) (Respondent reported number)\n3H. Did your LEA use any of the following sources of funding for the testing in the past 12 months? (Check one per row).\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘other’ to 3H: What other sources of funding did your LEA use? 3I. In the past 12 months, did your LEA notify the following groups that it was planning to test for lead in school drinking water before conducting the tests? (Check one per row).\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nGeneral public (e.g., media)\nIf ‘other’ to 3I: What other groups did your LEA notify that it was planning to test for lead in school drinking water before conducting the tests? 3J. In the past 12 months, did your LEA report the testing results to the following groups after completing the tests? (Check one per row).\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nGeneral public (e.g., media)\nIf ‘other’ to 3J: To what other groups did your LEA report the testing results? 3K. If ‘no’ to 3: Were any of the following a reason your LEA did not conduct any tests in any schools in the last 12 months? (Check one per row).\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘other’ to 3K: For what other reasons did your LEA not conduct any tests in any schools in the last 12 months? 4. Does your LEA have a schedule for recurring tests to determine the amount of lead in the drinking water in your schools within any of the following time frames? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nSection C: Remediation of Lead in School Drinking Water 5. Has your LEA discovered any level of lead in the drinking water of any of your schools (as a result of testing) in the last 12 months? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\n5A. What lead concentration (measured in “parts per billion” or “ppb”) did your LEA use to initiate remedial action? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘other’ to 5A: What lead concentration did your LEA use to initiate remedial action? 5B. In the last 12 months, how many schools had at least one test result–including as few as one sample in one school–greater than the lead level your LEA used to initiate action? (Please answer regardless of whether these results were discovered in the first of multiple rounds of testing.) 5C.To address lead discovered in school drinking water, has your LEA taken any of the following actions in any of your schools in the past 12 months?\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\n5D. If ‘no’ to every item in 5C: What are the reasons why your LEA has not taken actions in any of your schools in the past 12 months? 5E. If ‘yes’ to any item in 5C: How much do you estimate your LEA has spent on taking actions in the past 12 months? (Please include materials, labor, and any other expenditures related to lead remediation in your estimate.)\nEstimated Number (Median)\n95 percent confidence interval – lower bound (number)\n95 percent confidence interval – upper bound (number) (Respondent reported number)\n5F. Did your LEA use any of the following sources of funding to take actions in the past 12 months? (Check one per row).\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘other’ to 5F: What other sources of funding did your LEA use to take actions in the past 12 months? 5G. Did your LEA notify the following groups about its actions in the past 12 months? (Check one per row).\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nGeneral public (e.g., media)\nIf ‘other’ to 5G: What other groups has your LEA notified about its remedial actions in the past 12 months? 6. Does your LEA have a schedule to flush the water system as a result of concerns about lead in drinking water in at least one of your schools within any of the following time frames? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\n7. Does your LEA have plans to take actions to eliminate or reduce lead in school drinking water (for example, replace drinking water fountains, replace pipes) in at least one of your schools? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘according to a schedule’ to 7: how would you describe the schedule that your LEA has developed?\nSection D: Guidance Regarding Lead Testing and Remediation 8. Prior to receiving this survey, were you familiar with guidance issued by the U.S. Environmental Protection Agency entitled “3Ts for Reducing Lead in Drinking Water in Schools”? (Please answer “Yes” if you had read or used the”3Ts” prior to receiving this survey.) (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘yes’ to 8: did your LEA (or a contractor working on behalf of your LEA) follow or refer to “3Ts” during your efforts to test for or remediate lead in school drinking water? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘yes’ to 8A: How helpful was 3Ts for conducting tests for lead in your schools’ drinking water? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘yes’ to 8A: How helpful was 3Ts for remediating lead in your schools’ drinking water? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘yes’ to 8A: How helpful was 3Ts for communicating with parents and other stakeholders about lead in your schools’ drinking water? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nWhat else, if anything, would make 3Ts more helpful? 9. Did your LEA (or a contractor working on behalf of your LEA) use any other guidance (for example, best practices, manuals, protocols, webinars) in your LEA’s efforts to test for lead in your schools’ drinking water, take remedial actions, or for notification purposes? (Check one.)\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nWhat other guidance was used? 10. Would your LEA find any of the following helpful? (Check one per row).\n95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nClearer guidance on a level of lead in school drinking water at which we should take action Additional guidance on determining a schedule for 41 95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage) regularly testing for lead in school drinking water Additional guidance on actions to take if lead is found in school drinking water Information on the costs of testing for lead in school drinking water Information on the costs of remediating lead in school drinking water 18 95 percent confidence interval – lower bound (percentage)\n95 percent confidence interval – upper bound (percentage)\nIf ‘other guidance or information’ to 10: What other guidance or information would be helpful?\nSection E: Inspecting Schools for Lead Based Paint Section F: Remediation of Lead Based Paint in Schools Section G: Other Questions 16. How many schools are owned or operated by your LEA?\nEstimated Number (Mean)\n95 percent confidence interval – lower bound (number)\n95 percent confidence interval – upper bound (number) (Respondent reported number)\n17. How many schools in your LEA were built before 1986? (If a building has additions, we mean the original structure/the original part of the building.)\nEstimated Number (Mean)\n95 percent confidence interval – lower bound (number)\n95 percent confidence interval – upper bound (number) (Respondent reported number)\n18. How many schools in your LEA were built before 1978? (If a building has additions, we mean the original structure/the original part of the building.)\nEstimated Number (Mean)\n95 percent confidence interval – lower bound (number)\n95 percent confidence interval – upper bound (number) (Respondent reported number)\n19. Is there anything else you would like to share with us regarding lead testing, inspection, or remediation efforts in your school or LEA (drinking water or paint)? 20. What is the name, title, e-mail address, and telephone number of the person responsible for completing this survey?\nSection H: Completion 21. Please check one of the options below. Clicking on “Completed” indicates that your answers are official and final. Your answers will not be used unless you have done this. (Check one.)\n95 percent confidence interval – lower bound (percentage)", "Charter schools comprise a small but growing group of public schools. In contrast to most traditional public schools, many charter schools are responsible for financing their own buildings and other facilities. As a result, charters schools vary in terms of whether they own their own building or pay rent, and whether they operate in buildings originally designed as a school or in buildings which have been redesigned for educational purposes. Sometimes charter schools may also share space in their building with others, such as non-profit organizations. In addition to differences in facility access and finance, charter school governance also varies. In some states, charter schools function as their own school district, while in other states, charter schools have the option to choose between being a distinct school district or part of a larger school district.\nTo determine the extent to which charter school districts were testing for lead in school drinking water and finding and remediating lead, our survey included charter school districts in two ways: our sampling design included three strata specifically for charter school districts in urban areas; in addition, charter school districts were retained in the sampling population, such that they could be randomly selected in our other strata. While we generally received too few responses from charter school districts to report their data separately, we are able to estimate that about 36 percent of charter school districts tested for lead in school drinking water.\nTo learn more about experiences of charter schools, we visited one charter school district and interviewed representatives of the DC Public Charter School Board (DC PCSB).\nThe charter school district we visited consisted of one charter school in a building it leased. The school had 10 sources of consumable water, all of which were tested in 2016 and were found to have lead below the district’s selected action level of 15 parts per billion. Before testing, district officials met with the building owner who agreed to cover the cost of any remediation.\nOfficials with the DC PCSB told us that it paid to have tests conducted in every charter school in the District of Columbia. According to DC PCSB officials, between March and June 2016, 95 charter schools were tested, and lead above their action level of 15 parts per billion was discovered in 20 schools. Officials estimated their testing costs to be about $100,000, which was subsequently reimbursed by the District of Columbia’s Office of State Superintendent of Education. They also said that charter schools were responsible for taking steps to remediate the lead and recommended schools flush their water systems and use filters.", "", "Communication of results Not specified 5 ppb in a 250 ml sample (from filtered fixture)", "The Environmental Protection Agency (EPA) provides information on its website for the public on lead in drinking water. EPA’s website includes, among other documents, a December 2005 brochure for the public and school districts entitled “3Ts for Reducing Lead in Drinking Water in Schools” (see fig.10).", "", "", "", "", "", "In addition to the individuals named above, Diane Raynes (Assistant Director), Scott Spicer (Assistant Director), Jason Palmer (Analyst-in- Charge), Amanda K. Goolden, Rich Johnson, Grant Mallie, Jean McSween, Dae Park, James Rebbe, Sarah M. Sheehan, and Alexandra Squitieri made significant contributions to this report. Also contributing to this report were Susan Aschoff, David Blanding, Mimi Nguyen, Tahra Nichols, Dan C. Royer, Kiki Theodoropoulos, and Kim Yamane.", "Lead Paint in Housing: HUD Should Strengthen Grant Processes, Compliance Monitoring, and Performance Assessment. GAO-18-394. Washington, D.C.: June 19, 2018.\nDrinking Water: Additional Data and Statistical Analysis May Enhance EPA’s Oversight of the Lead and Copper Rule. GAO-17-424. Washington, D.C.: September 1, 2017.\nEnvironmental Health: EPA Has Made Substantial Progress but Could Improve Processes for Considering Children’s Health. GAO-13-254. Washington, D.C.: August 12, 2013.\nLead in Tap Water: CDC Public Health Communications Need Improvement. GAO-11-279. Washington, D.C.: March 14, 2011.\nEnvironmental Health: High-level Strategy and Leadership Needed to Continue Progress toward Protecting Children from Environmental Threats. GAO-10-205. Washington, D.C.: January 28, 2010.\nDrinking Water: EPA Should Strengthen Ongoing Efforts to Ensure That Consumers Are Protected from Lead Contamination. GAO-06-148. Washington, D.C.: January 4, 2006." ], "depth": [ 1, 2, 2, 2, 2, 2, 2, 1, 2, 3, 3, 3, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2, 2, 2, 2, 1, 1, 1, 2, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h2_title", "", "", "", "h2_full", "", "", "h0_full", "h0_full", "", "", "", "", "", "", "h2_title", "h2_full", "", "h1_title", "h1_full", "h1_full", "h1_full", "", "h1_full", "h3_full", "h3_full", "h3_full", "h3_full", "", "", "h0_full", "", "", "", "", "", "", "", "", "", "", "h2_full" ] }

{ "question": [ "How prevalent is lead in school drinking water?", "Is this potentially dangerous to students?", "How are districts with lead contaminated water rectifying the problem?", "What resources do school districts have for supplying safe drinking water?", "Is this resource considered helpful?", "What is GAO's assessment of this resource?", "Is this guidance used throughout the country?", "How does Education and EPA work together?", "What federal requirements are there for school drinking water?", "How does lead get into drinking water?", "What has driven awareness of unsafe drinking water?", "What was GAO asked to do?", "What does the report examine?", "How did GAO conduct their research?" ], "summary": [ "An estimated 43 percent of school districts, serving 35 million students, tested for lead in school drinking water in 2016 or 2017, according to GAO's nationwide survey of school districts. An estimated 41 percent of school districts, serving 12 million students, had not tested for lead.", "GAO's survey showed that, among school districts that did test, an estimated 37 percent found elevated lead (lead at levels above their selected threshold for taking remedial action.)", "All school districts that found elevated lead in drinking water reported taking steps to reduce or eliminate exposure to lead, including replacing water fountains, installing filters or new fixtures, or providing bottled water.", "EPA provides guidance and other resources to states and school districts regarding testing and remediating lead in drinking water, and the Department of Education (Education) provides some of this information on its websites.", "School district officials that used EPA's written guidance said they generally found it helpful.", "Although EPA guidance emphasizes the importance of addressing elevated lead levels, GAO found that some aspects of the guidance, such as the threshold for taking remedial action, were potentially misleading and unclear, which can put school districts at risk of making uninformed decisions.", "In addition, many school districts reported a lack of familiarity with EPA's guidance, and their familiarity varied by region of the country.", "Education and EPA do not regularly collaborate to support state and school district efforts on lead in drinking water, despite agreeing to do so in a 2005 memorandum of understanding. Such collaboration could encourage testing and ensure that more school districts will have the necessary information to limit student and staff exposure to lead.", "No federal law requires testing of drinking water for lead in schools that receive water from public water systems, although these systems are regulated by the EPA.", "Lead can leach into water from plumbing materials inside a school.", "The discovery of toxic levels of lead in water in Flint, Michigan, in 2015 has renewed awareness about the danger lead exposure poses to public health, especially for children.", "GAO was asked to review school practices for lead testing and remediation.", "This report examines the extent to which (1) school districts are testing for, finding, and remediating lead in drinking water; (2) states are supporting these efforts; and (3) federal agencies are supporting state and school district efforts.", "GAO administered a web-based survey to a stratified, random sample of 549 school districts, the results of which are generalizable to all school districts. GAO visited or interviewed officials with 17 school districts with experience in lead testing, spread among 5 states, selected for geographic variation. GAO also interviewed federal and state officials and reviewed relevant laws and documents." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 0, 0, -1, -1, -1, -1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 4, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "Current Focus on Medical Malpractice and Health Reform", "Insurance Fundamentals", "Risk Transfer and Financial Intermediation", "Insurance Operations and Pricing", "Market Cycles: Hard and Soft Markets", "Medical Malpractice Insurance", "Medical Malpractice's Long \"Tail\"", "Impact of Tort System", "Risk Segmentation", "Historical Experience in Medical Malpractice Insurance", "Evolution in the Insurance Market", "Policy Responses", "Expanding Market Supply", "Reducing Insurers' Costs", "Strengthening Regulation", "How Effective Have Policy Changes Been?" ], "paragraphs": [ "", "Insurance is a critical piece of a modern economic system, but it often goes unnoticed until it becomes prohibitively expensive or its availability is curtailed. Such problems occurred in the medical malpractice insurance market in the first half of this decade. Many physicians experienced substantial increases in insurance premiums, and there were reports of problems with the availability of physician services because of doctors retiring or relocating from areas that have seen high premium increases. There were also protests and job actions in some locations, with hospitals finding it necessary to curtail services and send patients to more distant facilities. Crises have been proclaimed in the past as well; similar events occurred in the latter half of both the 1970s and 1980s. Since 2004 or so, overall losses experienced by medical malpractice insurers have dropped significantly and overall premiums have moderated as well, although not nearly to the same extent as losses.\nThe recurring problems have provoked various reactions in the insurance marketplace and in legislatures both at the state level, where insurance law and tort law are normally shaped, and in Congress. In the 107 th ( H.R. 4600 ), the 108 th ( H.R. 5 and H.R. 4279 ), and 109 th ( H.R. 5 ) Congresses, the House passed bills whose central thrust was to limit damages for medical malpractice tort claims. The Senate, however, did not act on any of these House bills and failed to invoke cloture on the Senate bills addressing medical malpractice ( S. 11 , S. 2061 , and S. 2207 in the 108 th Congress; S. 22 and S. 23 in the 109 th Congress). The 110 th Congress did not consider any bills on the floor to address directly medical malpractice insurance.\nThe medical liability insurance market is not currently exhibiting widespread crisis symptoms. That is not to say that the affordability and availability of malpractice insurance are no longer issues, but such problems are not as acute as compared with other time periods. According to the latest summary information published by the Medical Liability Monitor, 2008 premiums for malpractice insurance are part of a \"downward trend of the past few years.\" By extension, physicians and physician groups (primarily the American Medical Association) are not responding to current market conditions in the same manner as during crisis periods, when they engaged in more public displays of dissatisfaction (e.g., participating in \"strikes\"). However, even during a non-crisis period, the malpractice system is characterized by issues with equity, access, and other problems. For example, the current system performs poorly with respect to compensating patients who have been harmed by malpractice, deterring substandard medical care, and promoting patient safety, among other issues.", "The current legislative interest in medical malpractice reform differs from the past in that it is largely driven by overall health reform, rather than an immediate crisis in medical malpractice insurance. As such, the focus is likely to be broadened. Beyond asking what can be done to stabilize premiums for medical malpractice, Congress may decide to ask what changes to the medical malpractice system might do for overall health reform? In terms of direct costs, medical malpractice insurance adds relatively little to the cost of health care. Medical malpractice premiums written in 2008 totaled approximately $11.2 billion, whereas health expenditures are estimated by the Congressional Budget Office (CBO) to total $2.6 trillion. Indirect costs, particularly increased utilization of tests and procedures by physicians to protect against future lawsuits or \"defensive medicine,\" have been estimated to be much higher than direct premiums. These conclusions, however, are controversial, particularly in light of synthesis studies that have concluded that national estimates of defensive medicine are unreliable.\nCBO has noted that there is no \"consistent evidence that changes in the medical malpractice environment would have a measurable impact on health care spending.\" CBO conducted its own analysis, as well as synthesized and analyzed previous studies on the relationship between medical malpractice and health care costs. These studies differed somewhat in their findings. For example, the studies' estimates for the reduction of health care spending attributable to state tort reforms varied, though they all found relatively little impact (4%-6%). Other studies not analyzed by CBO have found even less of an impact.\nTo date, of the health reform proposals that have been reported out of the three committees of jurisdiction in the House (Ways and Means, Energy and Commerce, and Education and Labor) and the Senate Health, Education, Labor and Pensions Committee, only the one reported out of House Energy and Commerce includes language addressing issues with the medical malpractice system. The Energy and Commerce version would allow states to receive incentive payments to enact and implement a medical liability law. The state law would be required to provide for an \"early offer\" system, a \"certificate of merit\" program, or a combination of both. The Secretary of Health and Human Services would determine that a state law was compliant if she were satisfied that the state had enacted and was currently implementing the law, and if she found the law to be \"effective.\" To determine the effectiveness of a law, the Secretary would consider whether it (1) made the medical liability system more reliable through the prevention of, or prompt and fair resolution of, disputes; (2) encouraged the disclosure of health care errors; and (3) maintained access to affordable liability insurance.", "", "The most obvious function of insurance is to allow a person or corporation facing some risk, such as the risk that a physician will be sued for medical malpractice, to transfer this risk to another economic entity. Typically the entity accepting the risk will be a company, resulting in this risk then being spread across the owners of the insurer, either the stock holders in a normal incorporated insurance company or other policy holders in the case of a mutual insurance company. Risk is also spread from one insurer to others through reinsurance.\nTransferring risk, however, is not the only role that insurance plays. In the course of receiving payment for accepting risk, large amounts of capital are generated. This capital is then invested, allowing for its productive use to generate jobs and economic growth in addition to providing a reserve against future losses. Although the risk transfer and sharing aspect of insurance is the most obvious, the financial intermediation aspect is an equally integral part of the modern operations of insurance companies. The gains from investment of capital typically allow an insurer to offer lower rates to the insured than would be the case if the insured was paying completely for the transfer of risk. This also means, however, that the insured face some of the volatility in premium amounts inherent in relying upon investment returns. This can be seen in the alternating market cycles that are discussed below.", "Insurance involves complex calculations regarding uncertain outcomes of future events, although the basic operations can be explained in simple terms. A company begins with a certain amount of capital, or \"policyholders surplus,\" to allow it to promise credibly to provide insurance in the future, as well as enough to satisfy regulators that it will be able to fulfill this promise. It offers insurance policies against whichever risks it is willing to assume. Money flows into an insurer primarily from two sources: premiums from customers of insurance and investment income from the company's reserves. Money flows out of an insurer primarily to pay for claims made for events for which the insurer has agreed to bear the risk, including costs such as defending against lawsuits in the case of medical liability insurance.\nThe ability of insurance to fulfill its role as a financial intermediary, as well as the solvency of individual insurers, rests critically on keeping the inflows and outflows balanced over time. This means estimating the future return on investments as well as estimating future losses from claims. The accuracy of these estimates can vary widely and insurers have relatively little direct control over what either actual value will turn out to be. Insurers can affect their returns somewhat by varying the mix of their investments, but this mix is subject to state regulation. In the United States, most investments are relatively stable investments such as bonds, but even bonds are subject to the vagaries of the marketplace. Many insurers also try to minimize claims through sharing information with policy holders on reducing risks and offering incentives to policy holders who take action to minimize risks.\nThe one variable that an insurer does directly control, subject to the pressures of the marketplace and sometimes state insurance regulators, is the price or premium that it charges for a certain amount of insurance. This price should cover the value in today's dollars (the \"present value\") of any future loss, multiplied by the expected probability of this loss. If a physician wants to insure against the risk of paying a $1 million malpractice claim today, and the insurance company believes that there is a 1% chance that this claim will occur today, then it will charge approximately $10,000 for this insurance. If the insurance extends for a length of time further into the future, then the future amounts of money to be paid out would be adjusted based on the expected inflation rate, or the expected rate of return, that the insurer foresees over the period of time the insurance is in place.\nBecause insurance pricing is theoretically based on the risk that is being transferred, this implies charging a different premium to people or companies with different inherent levels of risk. Without the ability to segment different risks into different categories, and charge these different categories different rates, the price charged to everyone will be relatively high reflecting the possibility that the purchaser is in a high risk category. A high price would tend to lead those who believe their own risks are low not to buy insurance or to underinsure, whereas those who believe their risks are high would tend to continue to buy insurance or even to overinsure. This tendency is known as \"adverse selection\" and usually results from the insured having more information than the insurer regarding their own risk. Adverse selection results in a higher overall level of risk in the pool of those who buy insurance and thus results in higher than expected claims. Higher claims are eventually followed by higher prices, which are then followed by lower risk clients not buying insurance and so on. The extreme result of this would be a situation where an insurance market essentially ceases to exist.", "Insurance in general, and property and casualty insurance (of which medical malpractice is a part) in particular, has experienced alternating periods of \"soft\" markets and \"hard\" markets. This cycle is usually ascribed to changes in the investment climate, although it may be more accurate to think about it as due to changes in the comparison between insurers' financial inflows and outflows.\nA soft market typically occurs when the investment climate is good and insurers make returns on the capital that they are holding in reserve that are high relative to expected insurance payouts. These high investment returns allow insurers to offer lower prices on insurance, sometimes selling insurance at a premium that they know will result in losses, and then offsetting these losses by the gains from investing the premium. Soft markets are usually marked by increases in the number of insurers and by the expansion in the geographic area or types of insurance offered by existing insurers.\nA hard market typically occurs when the investment climate worsens and returns drop. Low investment returns imply that the premium paid for insurance must cover more of the actual loss that is expected from this insurance. This means higher premiums and can lead to withdrawals from poorly performing lines of insurance or from particular geographic areas that remain unprofitable. For an insurer offering only one type of coverage in a specific geographic area, such withdrawal is not an option. Such companies must either raise rates or eventually withdraw from the business of insurance if the investment returns do not increase or if costs are not somehow lowered. At the beginning of a hard market, especially when it is preceded by a long soft market, very large increases in premiums occur as the premium level comes closer to the value of the actual losses due to the risk that is being transferred.\nBecause of high capital mobility and interdependence in financial markets, hard markets might be expected to be a nationwide or even international phenomenon. The experience in the United States, however, has been that periods of market hardening have a disparate impact among the various states. This suggests that when market problems develop, there may be more at work than simply a general hard market due to lower investment returns. If different insurers offer insurance in the various states, it also may be that particular insurers' investment portfolios perform differently.", "Different insurance markets have very different characteristics. Life insurance, for example, tends to be stable because the amounts that are to be paid out are known and the estimates that are used for life expectancy are generally reliable. Insuring against hurricane damage is less stable; it is much harder to predict how many hurricanes might hit, where they might hit, and how much damage they might do. With enough historical and other data, however, insurance can operate effectively even in such uncertain environments. Insuring against medical malpractice liability offers some particular difficulties as compared to other lines of insurance and it has proven challenging for companies to operate in this field over time. Among the difficulties are the longer time frames inherent in malpractice claims, high and uncertain claim amounts, and uncertainty in recognizing and segmenting high-risk from low-risk healthcare providers.", "Medical malpractice liability insurance has what is known in the insurance industry as a long \"tail.\" Liability policies in general are often written to cover the claims arising from a certain period of time. In fire insurance, for example, this is relatively unproblematic; whether a fire has occurred is generally straightforward and uncomplicated. There may be disputes arising about the extent of damage that should be paid or whether there was some sort of malfeasance involved, but, at a minimum, a company will know at the end of the insurance period or shortly thereafter whether a claim will be made. In contrast, injuries from medical malpractice, and thus the claims that arise from them, can take a longer time to manifest themselves, as many as several years in some cases. Even after injuries are noticed, the time before a full amount an insurer must pay is known and actually paid out is often measured in years because litigation can be complex and demand long discovery processes with various medical experts examining the case.\nTo address the tail problem, many insurers have changed their policies from an \"occurrence\" policy, which covers claims resulting from an action that occurred during the period that the insurance was in effect, to a \"claims made\" policy, which covers only claims actually made during the insured period. Such a shift has an immediate impact in reducing the uncertainty for the insurer, but the effect is largely a one time phenomenon. If a claims made policy stays in effect for several years, the total risk to the insurer under this type of policy converges with the risk that the insurer would bear under an occurrence policy.", "The claim amounts that medical malpractice insurers pay out are generally determined either through the tort system, or by threats to use the tort system. The details of tort law vary from state to state, but compensatory damages under tort law are often separated into two types: economic damages and noneconomic damages. Economic damages are generally intended to redress direct economic loss, such as lost wages and costs for medical care. Noneconomic damages are not tied to direct out-of-pocket expenses and include damages due to pain and suffering. Another primary type of damages is punitive damages. Punitive damages are noncompensatory damages that are intended to punish a defendant for egregious conduct.\nEconomic damages generally have the greatest impact on medical malpractice claims through the medical cost component. The damage from medical malpractice usually requires additional medical treatment to repair, sometimes an entire lifetime of medical treatment. As a result, medical costs tend to be a higher component of medical malpractice claims than most other types of insurance claims. Coupled with this is the experience that medical costs have typically risen faster than the general rate of inflation. All other things being equal, this implies that the rates for medical malpractice insurance will rise faster than most other types of insurance.\nAlthough the medical cost component of economic damages tends to drive medical malpractice insurance generally higher than other insurance, noneconomic and punitive damages add another aspect to malpractice claims: unpredictability. By definition, noneconomic and punitive damages are more subjective and difficult to quantify than economic damages. Different juries in the same town or city can and do come to different conclusions as to the monetary value of a plaintiff's pain and suffering or the amount of punitive damages warranted to punish willful misconduct, for example. Jury awards are even more variable when comparisons are made involving different parts of the country. The conclusions reached on such damages can also be difficult to dispute in contrast to damages that are specifically related to concrete economic factors. This unpredictability reduces the accuracy of the estimations of expected losses that are at the heart of insurance pricing.", "Risk segmentation and adverse selection in the health care field are particularly problematic because information to judge accurately the quality of a provider, and thus ostensibly to estimate accurately his or her risk of a malpractice claim, is sparse. Some of this is due to past public policy choices, which have resulted in few mechanisms to track the quality of health care, but some is also due to the inherent difficulties in doing this tracking. It can be very difficult to distinguish between a physician with poor skills and one with high skills who takes on sicker patients and more difficult cases. Both may have poor patient outcomes but without a careful examination of the incoming patient population, which is rarely practicable to undertake, an insurer is likely to charge both physicians similar rates. Risk segmentation in medical malpractice insurance is generally based on geographic area and specialty type, but relatively little is based on some measure of provider quality or on malpractice claims history.\nOne of the particular aspects of the historical evolution of the medical malpractice insurance market, which is discussed in greater detail below, has been the proliferation of small insurers, particularly provider-owned companies. This success runs contrary to one of the theoretical fundamentals of insurance, namely spreading risk across as wide a base as possible. A small, provider-owned company transfers risk away from individual physicians or other health care providers, but still leaves the risk to the company itself more concentrated relative to a bigger, shareholder-owned company.\nSmaller companies, however, may do a better job at reducing the risk that they choose to bear, rather than just spreading it. This risk reduction could come, for example, if smaller insurers were more able to persuade physicians to adopt lower risk practices or if they could better identify doctors who are at greater risk for operating in a manner that might invite malpractice claims and either charge them a higher premium or choose not to insure such doctors. One advantage of mutual insurers, particularly small ones, may be reduced moral hazard because the insured are also the owners of the company. Smaller companies can also reduce the concentration of risk that they take on by purchasing reinsurance and this device is used often by insurers.", "Particular problems in medical malpractice insurance have been observed for many years. As far back as 1969, a report of a Senate subcommittee concluded the following:\n1. The number of malpractice suits and claims is rising sharply in certain regions of the country. The size of judgments and settlements is increasing rapidly.\n2. Most malpractice suits are the direct result of injuries suffered by patients during medical treatment or surgery. The majority have proved justifiable. These suits are the indirect result of the deterioration of the traditional physician-patient relationship.\n3. The publicity given to the higher malpractice judgments and settlements, based frequently on new legal precedents, is likely to trigger increased litigation in other States. The situation threatens to become a national crisis.\n4. Already higher judgments and settlements are having the following direct results:\n(a) Companies providing malpractice insurance are increasing the cost of coverage.\n(b) These costs—in the form of higher charges—are being passed on to patients, their health care insurance companies, and Federal health care programs.\n5. The rising number of malpractice suits is forcing physicians to practice what they call defensive medicine, viewing each patient as a potential malpractice claimant. Physicians often order excessive diagnostic procedures for patients, thereby increasing the cost of care. Moreover, they are declining to perform other procedures, which in themselves, may entail some risk of patient injury.\n6. At present, it appears no one affected by the rise in malpractice suits and claims has been able to deal with this problem in a manner that promises to alleviate this situation.\n7. The lion's share of the total cost to the insurance companies of malpractice suits and claims goes to the legal community.\n8. There is a definite Federal role in the malpractice problem.\nThere is certainly continuing dispute over some of these conclusions, but such a list might very well have been prepared during the recent debate rather than 40 years ago.", "Until the mid-1970s, medical malpractice insurance coverage was dominated by traditional insurers who offered it as one of several different lines of insurance. A list of the top 10 companies in 1976 was composed of primarily diversified shareholder-owned insurers with 61% of the market among them. With the market hardening in the mid- to late 1970s, many of these diversified insurers pulled back from offering medical malpractice insurance, leaving a void in the market. In response to this void, numerous new companies were created specifically focusing on insuring medical malpractice liability. Not only were these companies specialized, they also were largely owned by small groups of medical providers or by the entire group of their policy holders. These companies were also usually focused on a geographic area, often serving only one state. Some were, and still are, affiliated with a particular state's medical society.\nWith additional capacity in the market, and the aforementioned shift to claims-made policies, the difficulties of the 1970s abated and were replaced by a soft market for the first half of the 1980s. The shift in market structure away from larger, diversified insurers, however, seems to have been permanent. By 1986, six of the top 10 medical malpractice insurers were provider-owned and market concentration was somewhat less, with the top 10 companies holding 56% of the market. One exception to this shift was The St. Paul Companies, Inc. The St. Paul is a diversified shareholder-owned insurance company and grew from 11% of the nationwide market in 1976 to 21% in 1986. Taking this company out of the situation gives a view of a more pronounced splintering of the market. The total market share of numbers two through 10 on the list of top insurers dropped from 51% of the market in 1976 to only 36% of the market in 1986.\nThe market cycle turned again in 1985-1986 and problems arose that bear many of the hallmarks of the situation in the early 2000s, including reports of physician work stoppages and problems with access to care. This situation was broader than just physicians or healthcare liability insurance and included difficulties in access to many other forms of liability insurance. In healthcare, larger providers, such as hospitals and nursing homes, were more severely affected than individual physicians. The market response was again the formation of new smaller insurance companies. These new companies, however, were not just more traditional mutual insurance companies, but also a large number of captive insurers. Many of these captive insurers were located offshore in such locales as the Cayman Islands and thus operated outside of the U.S. tax and regulatory system. The offshore nature of these entities makes it difficult to ascertain reliably the size and scope of this market, but overall growth has been significant. One of the captives that was not offshore, Health Care Indemnity, a captive of the HCA hospital chain, grew over seven-fold from 1993 to 1994 to become the fourth largest medical malpractice insurer at the time.\nThe 1990s saw predominantly a soft market with high investment returns fueling low rates and strong competition across various insurance lines. Medical malpractice insurance followed this trend with an increase in competition in many forms. Some traditional shareholder-owned insurers entered or reentered the market whereas some captives and mutuals converted to stock companies or expanded their geographic base into areas beyond their initial ones. This increased competition can be seen in the total number of companies directly underwriting medical malpractice premiums as reported by the National Association of Insurance Commissioners (NAIC). There were 398 of such companies in 1991, but by 1995, the number had jumped to 623 and it reached a high of 666 in 1997.\nThis soft market began to harden in the late 1990s, a trend exacerbated by the unexpected losses from the September 11, 2001 attacks. Starting in 1999, the malpractice insurance market saw increasing premiums along with both general withdrawals from the market and contractions in the geographical areas covered by companies. The insurance rating firm A.M. Best reports that aggregate medical malpractice premiums increased 15.6 % in 2001, 22.5% in 2002, and 13.5% in 2003. Perhaps the most striking occurrence in this time period was the decision in December 2001 by The St. Paul to withdraw completely from writing medical malpractice insurance as part of an \"effort to improve profitability.\" Withdrawal typically occurs gradually through non-renewal of policies, but because The St. Paul's market share approached 50% in some states, the impact of even gradual withdrawal was significant.\nThe hard market in medical malpractice insurance seems to have peaked between 2002 and 2004. Statistics from A.M. Best show a 5.5% increase in aggregate premiums in 2004 and only 0.5% in 2005. In 2007, A.M. Best's statistics show aggregate premiums dropping by 6.5%, followed by a drop of 5.3% in 2008. The individual premiums reported in surveys done by Medical Liability Monitor (MLM) lag to some degree the aggregate statistics from A.M. Best. In 2003 and 2004, the MLM surveys showed increases of 20.4% and 20.5% respectively, with a 9.5% increase in 2005. Rates increased only 0.7% and 0.4% according to the 2006 and 2007 surveys, with individual rates falling by 4.3% in 2008.", "When problems of availability or affordability of insurance have arisen, the situations have been met with more than just marketplace evolution; various policy changes have been made as well. Some of these changes have been intended to facilitate market supply, such as the creation of alternative sources of insurance, whereas others have addressed the problem from the cost side through various changes in the tort system. In addition, there have been attempts to address the problem through direct regulation of insurance, with California's Proposition 103 being the primary example as discussed below.", "The basic legal structures for the mutual insurers that arose in response to the market difficulties of the 1970s have been in place for some time. Mutual insurers existed essentially as long as insurance has existed. Captives are a newer concept, dating from the 1950s and 1960s, but they also serve many areas outside of medical malpractice. In some cases, however, states went beyond the existing mutual or captive framework to allow for medical malpractice insurance. For example, in Florida, statutes were passed in the 1970s specifically allowing for medical malpractice self-insurance trusts. This statute was amended in 1992 to disallow its future use, but a governor's task force recommended rescinding this action given the difficulties in Florida's medical malpractice market. States also created nonstandard entities, such as joint underwriting associations (JUA). JUAs are nonprofit pooling arrangements intended to provide an \"insurer of last resort\" for healthcare providers who are unable to find insurance elsewhere.\nThe federal government, although not the primary regulator in the insurance markets, has also taken an interest in the market supply of liability insurance. The Liability Risk Retention Act of 1986 allows for the establishment of risk retention groups and risk purchasing groups. Risk retention groups operate much like a mutual insurer. They are made up of groups of entities involved in a similar business who wish to spread the risk among group participants. Such groups can be formed under state law, but the federal law allowed for reduced regulation because under federal law these groups are regulated only in the state where they are chartered rather than in every state where they write insurance. Risk purchasing groups essentially allow for group purchasing of insurance with the expectation that such purchase will be lower cost than individual purchase.\nThe initial 1981 act was limited to manufacturers, and was not widely used because of the soft market that prevailed at its time of passage. The 1986 law, however, amended the availability to include nearly all types of liability insurance, including medical malpractice. Companies offering medical malpractice liability insurance under the act began as early as 1987 with the Ophthalmic Mutual Insurance Company. The act's usage has continued in the most recent crisis. For example, at the beginning of 2003, 10 risk retention groups formed in the previous year were offering medical malpractice insurance in Pennsylvania, one of the states then experiencing market difficulties.", "As detailed above, the primary outflow of money from a medical malpractice insurer is driven by the tort system. The tort system has thus been a primary focus of attempts to reduce insurer costs. It is beyond the scope of this report to discuss in detail issues surrounding tort changes, but it should be noted that a cap on noneconomic damages for medical malpractice claims is not the only change that has been implemented at the state level. There have also been limits on other damages, lawyers' fees, and joint and several liability. Some states allow or encourage arbitration in place of litigation to resolve medical malpractice disputes or have implemented patient compensation funds, which limit insurer liability. Some states, such as Florida and Virginia, have implemented very limited \"no-fault\" systems, bypassing the question of liability altogether.\nA frequently cited example of tort reform, as well as the expressed model for the previous bills considered by Congress, such as H.R. 5 in the 109 th Congress, was passed by California in 1975: the Medical Injury Compensation Reform Act (MICRA). MICRA placed a $250,000 limit on noneconomic damages, such as pain and suffering, forced disclosure of other sources of payment to injured parties, limited lawyer fees, and strengthened the system that disciplines doctors. After passage in 1975, MICRA was challenged in the courts over several years before finally being upheld in 1984 and 1985.", "The first two policy responses implicitly treat an insurance \"crisis\" as the result of what might be described as normal market forces. An alternative explanation, however, is that the increasing prices and reduced availability that have marked medical malpractice crises are the result of improper market manipulation rather than a confluence of market forces. This concern has been raised at the federal level where the McCarran-Ferguson Act gives a limited antitrust exemption to the insurance industry. It is not clear what the impact of removing this exemption might be, since some observers believe the information sharing facilitated by the exemption helps the industry operate more efficiently, possibly leading to lower premiums.\nIn response to difficulties in the medical malpractice insurance market, Senator Patrick Leahy's Medical Malpractice Insurance Antitrust Act of 2003 and of 2005 (108 th Congress' S. 352 and 109 th Congress' S. 1525 ) were aimed at the antitrust exemption as it relates to medical malpractice insurance. Broader concerns over the insurance industry prompted bills by Senator Leahy and Representative Peter DeFazio (110 th Congress' S. 618 / H.R. 1081 ) to repeal the antitrust exemption for all insurance. Representative DeFazio also introduced this bill, H.R. 1583 , in the 111 th Congress.\nSuch federal action would be relatively indirect compared to what individual states have done or might do. The insurance industry is highly regulated at the state level, with many states, for example, requiring prior approval before a company can adjust rates, change policy forms, or even withdraw from writing certain lines of insurance. The most dramatic action taken on the insurance regulatory front since the recurring market problems began was Proposition 103, a ballot initiative approved by California voters in 1988. Proposition 103 was a broad change that was not specifically aimed at medical malpractice insurance but affected all property-casualty insurers in California. It created an elected, not appointed, insurance commissioner, forced insurers to justify their rate increases to the insurance commissioner, required insurance companies to open their books so regulators could determine if they needed rate increases, and allowed citizens to challenge proposed rate increases.", "Assessing the effectiveness of any of the various policy changes over the past three decades is empirically difficult and strong conclusions have often equally been strongly disputed. For example, after the Liability Risk Retention Act of 1986, the U.S. Department of Commerce issued a report concluding that the 1981 and 1986 Acts were effective in reducing problems with the availability of liability insurance, citing among other things the numbers of insured then covered by risk retention groups. In contrast, the NAIC saw no improvement from the formation these groups, indicating that the market cycle would inevitably have turned and that these insureds would have been able to find insurance in the commercial market. As noted before, risk retention groups were still being formed to deal with the medical malpractice market situation at the time, but this alone does not prove conclusively that either of the previous Department of Commerce or NAIC positions were correct. Coming to this or any other conclusion requires assessing both what has happened and what would have happened in the absence of the law.\nThe most voluminous debate has been over California's experience. California has experienced significantly lower medical malpractice premium growth over the years since the passage of MICRA in 1975. This is cited by some as evidence that tort reforms work and should be more widely adopted. Countering this, others have argued that most of the slow growth, or even declines, in California premiums have come since Proposition 103 in 1988, suggesting the effectiveness of strengthened regulation. A difficulty in economic analysis of the two arguments stems from the relative closeness of the two policy changes, particularly because MICRA was not finally upheld in court until 1985. As was discussed earlier, the pricing of insurance is a long-term economic enterprise fraught with many uncertainties. In such an endeavor, underwriters may wait to see what definite effect a policy change has on their losses before making dramatic changes to insurance pricing. Another difficulty in judging the California experience is the fact that liability insurance in general was experiencing a hard market in the mid-1980s and these market conditions may arguably have temporarily overwhelmed the effect of other policy changes." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 3, 3, 3, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h0_full h2_full", "h1_title", "h1_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How is insurance viewed in modern society?", "How is this evident in the medical field?", "How did this directly impact physicians?", "What is the purpose of insurance?", "What are the risk of determining premium prices?", "What else influence premium pricing?", "How has Congress addressed medical malpractice?", "What action did the Senate take?", "What is Congress' current focus on medical malpractice?" ], "summary": [ "Insurance is a critical piece of a modern economic system, but it often goes unnoticed until it becomes prohibitively expensive or its availability is curtailed.", "Insurance is a critical piece of a modern economic system, but it often goes unnoticed until it becomes prohibitively expensive or its availability is curtailed. Such problems occurred in the medical malpractice liability insurance market most recently in the early part of the 2000s.", "Many physicians experienced substantial increases in insurance premiums, and there were reports of problems with availability of physician services due to doctors retiring or relocating from areas that had seen high premium increases.", "The fundamental purpose of insurance is to transfer an indefinite risk from one party to another for a definite premium.", "The pricing of this premium is critical, but determining this price is uncertain because it depends on estimates of the chance of a future loss, as well as the estimated value of that loss.", "The premium will also depend on estimates of future investment gains or losses because an insurer also acts as a financial intermediary and invests the capital that is held in reserve against future losses.", "Congress has not directly addressed medical malpractice liability insurance since the 109th Congress, when the House passed a bill, H.R. 5, whose centerpiece was a limitation on tort claims for medical malpractice; similar bills passed the House in the previous two Congresses.", "The Senate, however, did not act on any of these House bills and failed to invoke cloture on the Senate bills addressing medical malpractice.", "Although the medical malpractice insurance market is not currently in the midst of a crisis, Congress has again focused on medical malpractice in the 111th Congress as a part of overall healthcare reform." ], "parent_pair_index": [ -1, 0, 1, -1, -1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 3, 3, 3 ] }

{ "title": [ "Background", "U.S. Agencies Participate in Various Programs with PIF or PIF-owned Entities", "OPIC, PIF, and Commercial Banks Are Co-Lenders to the Affordable Mortgage and Loan Program in the West Bank", "OPIC and PIF Are Co-Guarantors to the Loan Guarantee Facility in the West Bank", "USAID Has Funded Two Assistance Programs at the American International School in Gaza, a PIF-Owned Entity", "OPIC’s and USAID’s Processes for Vetting PIF or Entities and Individuals in Programs Involving PIF Rely on Various Information Sources", "OPIC and Other Relevant Entities’ Processes for Vetting the AMAL and LGF Programs Rely on Various Information Sources", "USAID’s Process for Vetting the Technical Assistance and Training and AISG Programs Was Based on Its Mission Order 21 and Relied on Various Information Sources", "Agency and Third Party Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Time Line of Key Events in the Development of the Palestine Investment Fund", "Appendix III: Legal Framework for Terrorist Vetting by USAID and OPIC", "Government-Wide Antiterrorism Laws and Executive Orders", "Government-Wide Implementing Regulations", "USAID Policies and Procedures", "OPIC Policies and Procedures", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "The West Bank and Gaza are comprised of about 2,400 square miles and have a combined population of 4.3 million people. The Palestinian Authority and Israel administer areas within the West Bank, and the Hamas-controlled de facto authorities operate in Gaza.\nA negotiated two-state solution to the Israeli-Palestinian conflict is a core U.S. national security objective, according to State. The U.S. government’s foreign assistance program in the West Bank and Gaza is designed to advance progress toward the two-state solution by helping the Palestinian Authority build the institutions of a future Palestinian state, creating an atmosphere that supports negotiations, and improving the everyday lives of Palestinians, thereby contributing to the overall stability and security of the region.\nThe U.S. government has provided assistance to the West Bank and Gaza both bilaterally and multilaterally for several decades. According to the State Department, the U.S. government is one of the largest donors to the Palestinian Authority. According to State and USAID, the U.S. government provided about $3 billion in bilateral assistance for fiscal years 2008 through 2012 to support education and social services, economic development, and humanitarian assistance, among other sectors. According to USAID, the U.S. government plans to provide $427 million in fiscal year 2013. USAID is the agency that is primarily responsible for implementing bilateral development and economic assistance, while State oversees annual contributions for multilateral programs. In support of the educational and financial sectors, USAID has provided awards to implementing partners to carry out programs and initiatives in the West Bank and Gaza. OPIC has supported the financial sector by providing loans and loan guarantees to eligible entities.\nPIF was established by Palestinian Authority presidential decree in 2002 and became operational in 2003 as an investment company aimed at strengthening the Palestinian economy through strategic investments. As of 2012, the year of the most recent annual report available, PIF managed about $780 million in assets through multiple wholly owned subsidiaries, as well as minority ownership investments, with Palestinian investments accounting for 84 percent of its total investments. PIF is governed by a board of directors and a general assembly appointed by the Palestinian Authority President, and manages investments throughout a number of sectors, including real estate and hospitality, infrastructure, finance, capital markets, small-and-medium-sized enterprises (SMEs), and manufacturing. Appendix II provides a time line of key events in the development of PIF.\nU.S. agencies must comply with certain restrictions under U.S. law when providing funds for Palestinian assistance programs, including restrictions reflecting U.S. policy to deny U.S. funds and other support to individuals or organizations that engage in or otherwise support terrorist activity. This policy is established in laws, executive orders, and regulations that, according to USAID and OPIC officials, provide the basis for USAID and OPIC terrorism vetting policies and procedures used to vet PIF and other entities and individuals associated with PIF-related programs in which USAID and OPIC are involved. Appendix III of this report outlines the legal framework for U.S. antiterrorism policy and describes applicable USAID and OPIC vetting policies and procedures.", "Two U.S. agencies—OPIC and USAID—are involved in programs with PIF and a PIF-owned entity. OPIC participates in home mortgage financing and small business loan guarantee programs along with PIF. USAID provided technical assistance and training to benefit participating banks in the Loan Guarantee Facility (LGF) program and has participated in educational programs at the American International School in Gaza, which is owned by PIF through a special purpose vehicle.", "OPIC, PIF, and local and regional commercial banks are co-lenders to the for-profit Affordable Mortgage and Loan Company (AMAL) in the West Bank, which is aimed at encouraging mortgage lending to low- and medium-income borrowers. AMAL was established in 2010, and OPIC officials told us that the purpose of the program is to purchase home mortgage loans from participating banks, as a means to reduce the banks’ risk in mortgage lending. According to OPIC, as of April 2013, the two participating banks—the Cairo-Amman Bank and the Bank of Palestine—have agreed to issue mortgages under the AMAL program. OPIC officials told us that when fully operational, AMAL will purchase and refinance mortgages from the participating banks with combined financing from all of the co-lenders, including OPIC and PIF. AMAL will oversee and administer the mortgage financing, while the originating banks will continue to service the mortgages and interface with the borrowers. According to OPIC, as of April 2013, AMAL is partially operational and has originated and disbursed approximately four mortgages, all of which are directly funded by the participating banks. OPIC officials stated that OPIC and PIF have not yet financed any mortgage purchases under the AMAL program.\nUnder the AMAL Common Agreement, OPIC has committed to lend $313 million to AMAL (about 65 percent of the total debt commitment), while PIF has committed to lend $72 million (about 15 percent of AMAL’s total debt commitment). According to the Common Agreement, when the Cairo-Amman Bank and the Bank of Palestine cumulatively originate up to $10 million in eligible mortgage loans, the funding of the OPIC and PIF financial commitments to AMAL will take effect. Figure 1 shows a graphical representation of the complex relationship of AMAL’s financial structure and U.S. involvement in the program.\nIn the event of a default, the United Kingdom Department for International Development has committed £13.33 million (about $20 million, based on the exchange rate as of July 10, 2013) in first loss coverage to AMAL’s co-lenders; and according to OPIC, additional losses will be incurred by all lenders on a pro-rata basis, determined by each co-lender’s principal proportion at risk. Under the AMAL Shareholders Agreement, AMAL is owned by five shareholders that have provided a total investment of $3.5 million and, according to OPIC, will be paid dividends based on AMAL’s performance. The Palestinian Affordable Housing Association (SAKAN), a Palestinian non-governmental organization, received assistance from PIF and the United Nations Human Settlements Program (UN Habitat) to fund its investment in AMAL. Under this agreement, SAKAN holds 50 percent of AMAL’s shares, while two U.S. non-profit organizations—Global Communities (formerly CHF International) and the Middle East Investment Initiative (MEII), a non-profit U.S. entity created by the Aspen Institute —account for 30 percent of AMAL’s ownership, with the participating banks holding the remainder of AMAL’s shares.", "In 2007, OPIC, along with PIF and MEII, launched a $160 million loan guarantee facility (LGF), which OPIC officials told us is aimed at encouraging commercial banks to provide loans to SMEs in the West Bank. According to the LGF Framework Agreement, participating banks receive assurance that OPIC and PIF will together cover 70 percent of each loan in the event of a default.\nUnder the LGF Framework Agreement, OPIC has committed $110 million to guarantee 48 percent of each eligible bank loan, through MEII, while PIF, as co-guarantor, has committed $50 million to guarantee 22 percent of each loan, in the event a borrower defaults on a LGF loan. According to OPIC officials, as of February 2013, OPIC has issued guarantees on about $85 million in LGF loans (about 77 percent of its total commitment) to MEII, which manages the LGF and serves as a coordinating agent between the loan guarantors and the banks. Figure 2 provides a detailed graphical depiction of the complexities of the U.S.’s involvement with the LGF program and a potential default scenario.\nUnder the Guaranty Facility Agreement, MEII serves as the coordinating agent and, according to OPIC and MEII officials, only disburses OPIC funds in the event of a default by a borrower of an LGF loan. According to OPIC, as of February 2013, it has paid out about $1.2 million in default claims for LGF loans, while its share of outstanding loans in default was about $660,000 (48 percent of the total outstanding amount of about $1.4 million). PIF’s share of outstanding loans in default was about $300,000 (22 percent), while the banks’ share was about $410,000 (30 percent), according to OPIC. As shown in the lower panel of figure 2, the commercial bank that originates a loan is responsible for 30 percent of the defaulted loan amount. The remaining 70 percent is covered by OPIC (48 percent) and PIF (22 percent). Under the Guaranty Facility Agreement, the participating banks are required to pay a 1.375 percent guarantee fee, which is applied to the outstanding principal amount of all LGF loans, with payments divided between OPIC and PIF in proportion to their guaranty commitment. According to OPIC officials, as of March 2013, OPIC has collected about $1.4 million in guarantee fees, which has covered the amount the agency has expended due to defaults.\nAccording to USAID and Global Communities officials, USAID has provided assistance to banks participating in the LGF program through a grant that ended in 2011. They stated that USAID provided $2.1 million to Global Communities, formerly CHF International, through a prime awardee, for a 3-year program to provide technical assistance and training to banks participating in LGF to enhance these banks’ lending practices.Training program complemented the LGF program, it was an independent program with the goal of improving the capacity of Palestinian financial sector institutions.", "Beginning in 2010, USAID provided assistance to the American International School in Gaza (AISG), a private school that offers a Western-style curriculum, as part of the agency’s educational initiatives in the West Bank and Gaza. According to USAID and a PIF official, AISG is legally owned by the Palestine Technology and Education Complex (PTEC),as a “special purpose vehicle” through which PIF owns AISG. According to the PIF official, AISG operates at a loss and PIF funds the school to close the school’s deficit, as part of PIF’s social corporate responsibility program. Over the past 6 academic years, PIF’s funding of AISG has ranged from about $255,000 to about $465,000 annually. a PIF-owned entity. PTEC was described to us by a PIF official According to USAID, it has granted awards to three implementing partners in support of AISG, providing an estimated $1.3 million in assistance from 2010 to 2013. These awards funded two projects providing need-based scholarships, technical assistance, supplies, and capacity building initiatives at AISG. According to USAID officials, USAID’s primary AISG assistance program, originally implemented by the Democracy Council—a U.S. non-profit entity— was a 2 ½ -year, about $2 million award that focused on building the operational capacity, management efficiency, and academic levels of AISG.stated that the bulk of the project funds were used for technical and in- kind assistance to AISG with no money directly transferred to the school; however, they stated that the Democracy Council provided 21 need- based scholarships ($63,000 total) for students to attend AISG, with funding deposited into AISG’s bank account. USAID cancelled the Democracy Council award early because, according to USAID officials, the Democracy Council was unable to achieve programmatic goals and comply with the terms of the award. According to USAID officials, because USAID funds awards incrementally, about $1 million of the award had been funded and spent at the time of cancellation. After cancellation, USAID continued the need-based scholarship component of the award through the 2012-2013 academic year for 15 students ($45,000 total), implemented under the Mercy Corps’ Palestinian Community Assistance Program. According to USAID, the scholarships will not be continued beyond the 2012-2013 academic year and the agency does not have any additional planned involvement at AISG.\nAccording to USAID officials, while this award was for $22.1 million, $21.1 million was obligated.\nJune 2013. Figure 3 depicts the complex structure of U.S. involvement with AISG.\nAccording to USAID officials, USAID provided implementing partners in support of AISG an estimated total of about $1.3 million in assistance from 2010 to 2013. Table 1 shows the amount provided.", "OPIC’s and USAID’s processes for vetting PIF, a PIF-owned entity, or other entities and individuals in the AMAL, LGF, and AISG assistance programs rely on various information sources, including information provided by their implementing partners. Our description of the vetting processes and information sources is based on OPIC and USAID vetting policies and procedures; interviews with OPIC and USAID officials as well as officials of their implementing partners; and information in each program’s agreements.", "According to OPIC officials, OPIC’s vetting of PIF and other non-U.S. entities and key individuals involved in the AMAL and LGF programs is based primarily on the agency’s Character Risk Due Diligence policies and procedures and the applicable program’s agreements. The purpose of Character Risk Due Diligence is to uncover any derogatory information—including risks for terrorist financing and money laundering—about projects in which OPIC is involved, the project sponsors, investors, or key personnel. In performing due diligence, a project team is to make use of information sources that may include (1) OPIC’s Information Center databases, (2) the FBI’s Terrorist Screening Center database and Treasury’s Financial Crimes Enforcement Network, (3) the U.S. Embassy, any local counsel, and when required, Outsourced Foreign Searches through the Information Center, (4) the State Department Bureau of Intelligence and Research, and (5) Office of Investment Policy, with respect to derogatory information regarding social responsibility, corporate image, and environmental accountability.\nThe banks, AMAL, and OPIC conduct vetting to help ensure that there is no unacceptable derogatory information regarding non-U.S. entities and individuals participating in the AMAL program that might prevent OPIC support, according to OPIC.\nUnder the AMAL agreements, when borrowers and guarantors request loans from the Bank of Palestine and Cairo-Amman Bank, they are to provide specific information, such as their national identity card, passport, or similar identification to the banks, which are to conduct security and character vetting. Using this information, the Bank of Palestine and Cairo- Amman Bank are required to check borrowers and guarantors in accordance with specified internationally accepted Know-Your-Customer Check standards.\nSpecifically, the banks must verify at the time the mortgage loan is approved that each borrower and guarantor does not appear on the Palestine Monetary Authority Central Bank Blacklist, Treasury’s Office of Foreign Asset Control Specially Designated Nationals and Blocked Persons List (OFAC’s list), and the Compendium of United Nations Security Council Sanctions Lists. Under the AMAL mortgage origination guidelines, the banks must certify completion of satisfactory vetting before a mortgage application can be approved for a loan under the AMAL program.\nUnder AMAL agreements, AMAL is to verify that the banks’ origination criteria, including Know-Your-Customer Checks, were met for at least the first 100 mortgage loans to assess compliance with the origination guidelines. In addition, AMAL has the right to sample or audit subsequent mortgage loans.\nAccording to OPIC, it vetted the participants in the AMAL program— including PIF’s board of directors and senior executives, non-U.S. board members of AMAL, non-U.S. AMAL shareholders, and key individuals of the banks—against the OFAC list, the FBI Terrorist Screening Center database, and other relevant databases. Also, officials of Global Communities, a U.S. NGO contracted by AMAL for vetting assistance, said that PIF and other co-lenders follow OPIC’s lead in determining which loans are eligible for the program. OPIC officials said that OPIC has conducted extensive vetting of PIF, including its board of directors and senior executives through discussions with the U.S. Consulate General in Jerusalem, which represents the United States in Jerusalem, the West Bank, and the Gaza Strip. In addition, OPIC officials said that OPIC vetted the board of directors, senior executives, and major shareholders with greater than 5 percent ownership of the Bank of Palestine and Cairo-Amman Bank. OPIC stated that it has vetted both the Bank of Palestine and Cairo-Amman Bank through Treasury’s Office of Terrorist Financing and Financial Crimes and discussed the banks with the Palestine Monetary Authority, clearing the banks before OPIC entered into an agreement with them. Further, OPIC stated it has vetted the non- U.S. board members of AMAL, as well as AMAL shareholders, including the Palestinian Affordable Housing Association. Individual borrowers who have applied for loans should have been vetted by the banks subject to AMAL’s origination guidelines, according to OPIC.\nThe private banks and microfinance institutions (lenders), the coordinating agent (MEII), and OPIC conduct vetting to help ensure that there is no unacceptable derogatory information regarding entities and individuals participating in the LGF program that might prevent OPIC support, according to OPIC.\nUnder the LGF Guaranty Facility agreements, prior to concluding loan agreements with SMEs, the LGF participating banks and microfinance institutions are to check the SMEs for potential terrorist connections against OFAC and the Compendium of United Nations Security Council Sanctions Lists and provide the vetting results to MEII. The agreements state that if a borrower is found to be on a screening list, the guarantee would not be approved; and if a borrower is found to be on a screening list after the guarantee has been allowed, the guarantee would no longer be in effect.\nAs the coordinating agent for the LGF program, MEII is to vet all borrowers and lenders. MEII contracted with Global Communities to assist in reviewing loan applications and vetting the participants. Global Communities officials informed us that they checked the borrowers against the OFAC list to help ensure that borrowers were not blocked by Treasury’s sanctions. According to OPIC, MEII took over this function directly in June 2010.\nBased on the LGF operational manual, once a lender has indicated interest in participating in the LGF program, MEII is to confirm whether the lender is licensed to operate in the West Bank and Gaza under the Palestine Monetary Authority and whether it meets the minimum requirement of a 51 percent private sector ownership of the lending institution. MEII is to obtain a written affirmation from the authority that the lender is in good standing with the authority, has government consent to operate, and complies with best banking practices, corrupt practices laws, and other standards.\nMEII is to collect the necessary information from the lender to begin the U.S. government security and character vetting process, which includes vetting the lender as an institution, vetting all owners having more than 5 percent ownership, and vetting executive management. MEII is then to present the lender nomination proposal to OPIC and PIF officials who, according to OPIC, approve or reject the participation of the lenders.\nAccording to OPIC officials and as provided in the LGF guaranty facility agreement, MEII is to provide the vetting results on the borrowers and lenders with other identifying information to OPIC. In addition, for all loans less than $500,000, MEII makes the loan decision based on credit eligibility requirements and subject to OPIC’s ultimate decision pertaining to security and character vetting.\nAccording to OPIC, it vets participants (lenders, borrowers, and guarantors) under the LGF program. OPIC said it provides information about each proposed participating bank to Treasury’s Office of Terrorist Financing and Financial Crimes and inquires whether there is any unacceptable derogatory information in Treasury’s databases that might prevent OPIC from supporting a particular lender. OPIC said that it has vetted and cleared all nine participating banks in the LGF program.\nAccording to OPIC, for all loans, regardless of size, when an LGF participating bank submits loan proposals to LGF management, it checks the names and identification information on individual owners, directors, and senior executive management of each borrower and guarantor through the FBI’s Terrorist Screening Center database before loans are approved. According to OPIC, from a credit standpoint, in cases where borrowers were seeking loans greater than $500,000, or if loans are provided to companies in Gaza, the loan application is sent to the three- person decisional committee representatives (from OPIC, MEII, and PIF). The officials stated that the loan is approved only if the decisional committee unanimously agrees, which means that any committee representative can veto a loan for any reason. However, OPIC stated that it ultimately approves each loan with regard to character vetting, and that it has denied loans proposed by LGF management when the borrower did not pass the Terrorist Screening Center database review.\nIn vetting PIF as a co-guarantor, OPIC stated that it also checked individual directors and senior executive management of PIF through the FBI’s Terrorist Screening Center database. OPIC officials said that it also performed Character Risk Due Diligence through its own Information Center, consulted with the U.S. Consulate General in Jerusalem and the State Department, and had discussions with officials of the Palestinian Authority and Israeli Ministry of Defense. OPIC and MEII officials said that PIF would recuse itself if any of its subsidiaries applies for a loan, and that PIF does not have control over the lenders.\nFurther, OPIC said it checks information relating to the banks and microfinance institutions against other databases through OPIC Information Center databases (including the Compendium of United Nations Security Council Sanctions Lists and “Do Not Pay” list, as applicable), as well as with the U.S. Consulate General in Jerusalem and other sources.\nTreasury officials also informed us that, based on OPIC’s request, Treasury has vetted PIF for the two projects PIF is involved in with OPIC. In addition, Treasury officials told us that its policy office made inquiries regarding how PIF’s money is managed to help ensure it is not directly or indirectly being funneled to terrorists or terrorist organizations. According to Treasury officials, in both instances, Treasury did not find any derogatory information on PIF or any linkage to terrorist financing.", "According to USAID officials, USAID’s process for vetting key participants of the Technical Assistance and Training program for Palestinian banks and the AISG program was based on the U.S. Mission to the West Bank and Gaza’s Mission Order 21. Mission Order 21 establishes USAID’s policies and procedures to help ensure that its assistance does not inadvertently provide support to entities or individuals associated with terrorism, including guidance on vetting and antiterrorism certification by USAID awardees.\nUSAID stated that as part of USAID’s broader program to support Palestinian financial institutions, Global Communities, a U.S. sub- awardee, provided technical assistance and training to senior staff of participating banks in the LGF program, for which OPIC and PIF are co- guarantors. Based on Mission Order 21, if vetting was required, Global Communities was to obtain information on the banks and microfinance institutions’ key individuals before they participate in training and provide the information to USAID. According to USAID, USAID’s Vetting Center in Washington, D.C. would check the names of key individuals through law enforcement and intelligence community systems accessed by USAID’s Office of Security. In addition, USAID stated that for sub-grants and certain in-kind assistance, such as technical assistance, USAID submits the information to the U.S. Consulate General in Jerusalem for additional review. According to USAID, each of the banks participating in the Technical Assistance and Training program was subject to USAID’s formal vetting procedures.\nAccording to USAID, Mission Order 21 vetting procedures also apply to vetting for the AISG program. As described previously, AMIDEAST and Democracy Council were U.S. implementing partners through whom USAID implemented scholarships and in-kind assistance at AISG (a non- U.S. entity).\nUSAID officials told us that AED/FHI 360, the prime awardee (implementing partner), is responsible for providing USAID with the names of key individuals and organizations that require vetting.\nAMIDEAST and Democracy Council officials said that they provided information about AISG owners and key personnel to USAID, as required by the terms of their contracts. Specifically, AMIDEAST and Democracy Council officials said they provided information such as name, date and place of birth, occupation, and copies of passport or national identification cards for AISG owners and employees to USAID for vetting of AISG.\nAccording to USAID and based on Mission Order 21, it vetted key individuals of PTEC, such as members of the board of directors, as well as AISG’s management, such as the principal and vice-principal of the school, against law enforcement and intelligence community systems accessed by USAID’s Office of Security and through discussions with U.S. Consulate General in Jerusalem, as applicable. USAID officials stated that it was not necessary to vet PIF, the parent company of PTEC, because PTEC is legally responsible for AISG. USAID stated that the students who received scholarships and their parents were not vetted, consistent with Mission Order 21, because the students, who were the beneficiaries, were under the age of 16.", "We provided a draft of this report to OPIC and USAID for their review and comment. OPIC and USAID provided technical comments, which we incorporated in this report as appropriate. We also provided portions of a draft of this report to PIF for review. PIF provided technical comments, which we incorporated as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution of this report until 30 days from the report date. At that time, we will send copies of this report to interested congressional committees, the Secretary of State, the Administrator of USAID, the President and Chief Executive Officer of the Overseas Private Investment Corporation, the appropriate congressional committees and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-3149 or [email protected]. Contact points for our Office 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 were to describe (1) the nature and scope of U.S. government involvement with the Palestine Investment Fund (PIF), and (2) OPIC’s and USAID’s processes for vetting PIF and other non-U.S. entities and individuals participating in programs involving PIF and PIF- owned entities.\nTo address our first objective, we reviewed and analyzed program agreements, annual reports, and other documents from OPIC, USAID, PIF, and OPIC’s and USAID’s implementing partners (AMIDEAST, CHF International/Global Communities, Democracy Council, Middle East Investment Initiative (MEII), and Mercy Corp). To describe the Affordable Mortgage and Loan (AMAL) and the Loan Guarantee Facility (LGF) programs in which OPIC is involved with PIF, we reviewed various documents, including the AMAL Common Agreement, AMAL’s Mortgage Loan Origination and Purchase Agreement, OPIC’s press release regarding its involvement with PIF in the AMAL program, PIF’s description of the AMAL program, AMAL organization structure, the LGF Guaranty Facility Agreement, OPIC’s signed LGF agreement, LGF Operational Manual, LGF organizational structure, as well as various documents containing responses to our questions from OPIC. To describe USAID’s Technical Assistance and Training (TAT) and the American International School in Gaza (AISG) programs in which USAID is involved with a PIF- owned entity, we reviewed CHF International/Global Communities LGF- TAT quarterly, annual, and final reports for 2009-2011, USAID’s West Bank/Gaza fact sheet on the Expanded and Sustained Access to Financial Services program (ESAF) under which USAID provides TAT, USAID’s AISG project fact sheet, USAID’s fact sheet on the Model School Network, Democracy Council’s brochure on AISG, the AMIDEAST Model School Network Final Report, as well as various documents containing responses to our questions from USAID. We interviewed USAID officials about funds spent in support of programs at AISG and determined that the data were sufficiently reliable for our purposes. Further, we reviewed PIF’s 2006 to 2012 annual reports to determine the involvement of U.S. agencies with PIF.\nTo address our second objective, we reviewed U.S. government-wide antiterrorism laws, executive orders, and regulations that provide the basis for USAID’s and OPIC’s terrorism policies and procedures for vetting PIF and other entities and individuals participating in programs involving PIF. (Appendix III provides the general legal framework for the U.S. antiterrorism policy and OPIC’s and USAID’s terrorist vetting policies and procedures.) For the AMAL and LGF programs in which OPIC is involved, we reviewed OPIC’s Character Risk Due Diligence Policies and Procedures, the AMAL program’s common agreement, AMAL’s Fixed Rate Financing and Floating Rate Financing Agreements, AMAL Shareholders Agreements, excerpts from the LGF Operational Manual, and the LGF agreements. For the USAID TAT and AISG programs, we reviewed CHF International/Global Communities’ LGF-TAT quarterly, annual, and final reports for 2009 to 2011, as well as various documents containing responses to our questions from USAID. In addition, we reviewed USAID’s Mission Order No. 21, which establishes USAID’s vetting policies and procedures for its programs in the West Bank and Gaza. We also reviewed Treasury’s Licensure No. 7, which allows U.S. entities to engage with Palestinian entities in the West Bank and Gaza. Further, we reviewed prior GAO reports that discuss USAID’s vetting procedures for programs in which it is involved in the West Bank and Gaza. We described the information sources represented to us as being used by OPIC, USAID, and other entities to vet PIF and program recipients; however, we did not determine the extent to which OPIC and USAID implemented or complied with their vetting policies and procedures or assessed the effectiveness of OPIC’s and USAID’s vetting because it is beyond the scope of this review. In addition, we did not travel to the region to assess these programs or the agencies’ vetting procedures.\nFor both objectives, we interviewed officials from OPIC, State, Treasury, USAID, PIF, CHF International/Global Communities, Middle East Investment Initiative, AMIDEAST, and Democracy Council and received written responses to our questions from Mercy Corps.\nWe conducted this performance audit from October 2012 to July 2013 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.", "1993-1994: The Palestinian Authority Granted Control over Parts of the West Bank and Gaza. The government of Israel and the Palestine Liberation Organization signed the Oslo Peace Accords, which called for the withdrawal of Israeli forces from parts of the West Bank and Gaza and affirmed the Palestinian right to self-government within those areas, under the Palestinian Authority. The Palestinian Authority was established in May 1994 to begin assuming self-governing responsibilities in the West Bank and Gaza Strip. 1994: PCSC, Forerunner of the Palestine Investment Fund (PIF), Established as a Holding Company. The Palestinian Authority began acquiring shareholdings in a number of companies across various sectors of the economy. According to a report by the World Bank,commercial undertakings were placed under the umbrella of a holding company, the Palestine Commercial Services Company (PCSC), managed by the economic advisor to the Palestinian Authority’s then- president, Yasser Arafat. According to the World Bank Report, the PCSC had full equity ownership of the Cement Company, which held an exclusive contract for the import of cement from Israel. In addition, the report stated that PCSC had partnerships with private investors in numerous businesses, including hotels, casinos, cigarettes, telecoms, real estate, flour milling, and other sectors. 1997: Inquiry Finds PCSC Profits Diverted Outside of Palestinian Authority Budget. According to the World Bank report, following a public inquiry, the Palestinian Legislative Council found that PCSC was not monitored by the external audit body of the Palestinian Authority, known as the General Audit Institute, and that PCSC generated significant profits, which were diverted outside of the Palestinian Authority budget. Additionally, the report stated that the finances of the PCSC were not released to Palestinian Legislative Council members or the public. 2000: Initiative Calls for PIF Creation. The International Monetary Fund (IMF) and President Arafat initiated the Economic Policy Framework reform which, among other reforms, called for the creation of a Palestine Investment Fund, although no action was taken to establish such a fund at that time. According to a report by the IMF,Framework initiative resulted in two achievements: the consolidation of excise tax revenue within the Minister of Finance’s office, and the auditing of the assets of the PCSC. 2000: External Audit Values PCSC’s Asset at $345 million. An external audit of PCSC’s 1999 operations found that the PCSC had net profits of $77 million and assets valued at $345 million. In addition to this audit, an IMF report found that many of PCSC’s commercial operations were funded from diverted tax revenue. These commercial activities generated profits which, according to the IMF report, were also being diverted away from the Palestinian Authority budget. Because PCSC did not publish balance sheets or annuals reports, the IMF reported that it was difficult to determine PCSC’s profits between 1995 and 2000; however, the IMF estimated that about $300 million in profits from PCSC were channeled outside of the Palestinian Authority budget from 1995 to 2000. 2002 (June): Reform Plan Prepared. A new Palestinian Authority cabinet was appointed and a ministerial committee prepared a 100-day reform plan, which, according to an IMF report, began addressing revenue consolidation, budget reform, and monopolies, among other reforms. 2002 (October): PIF Formally Established. According to the World Bank report, as part of broader reforms the Palestinian Authority was undertaking under the 100-day plan, PIF was formally established by presidential decree, to consolidate all Palestinian Authority commercial activities and asset ownership. According to the report, it became illegal for the Palestinian Authority to conduct any commercial activity or hold any assets outside of PIF.\nAccording to a PIF official, the President appointed a board of directors, which included the Minister of National Economy and was chaired by the Minister of Finance.\nThe report noted that the board of directors ordered a full valuation and transparency assessment of Palestinian Authority assets— previously held under PCSC—to be transferred to PIF. 2003: External Assessment Values PIF Assets at $633 million. The Democracy Council and Standard and Poor’s published the valuation and transparency assessment of Palestinian Authority assets, as ordered by the board of directors.\nAs of January 1, 2003, PIF assets were valued at $633 million, including 67 commercial entities and liquid assets. 2006-2007: PIF Governance Structure Changed Following Hamas Legislative Election Victory. According to PIF and U.S. officials, following the Hamas victory in the Palestinian legislative elections, President Abbas initiated major changes in the governance structure of PIF. According to a PIF official, the changes to the governance structure were initiated to insulate PIF’s assets from Hamas interference. By Presidential decree, both the Minister of National Economy and the Minister of Finance were removed from the board and replaced by external appointees. 2008: President Appointed 30-member General Assembly. According to its annual report, PIF added a 30-member general assembly to its governance structure to provide strategic guidance to the board of directors, with the Palestinian Authority President appointing each assembly member to serve a 3-year term. According to a PIF official, this change was made in accordance with existing Palestinian corporate law and to enhance accountability, transparency, and good governance. 2011: Hamas Seized PIF Assets in Gaza. Hamas seized a number of PIF assets in Gaza, including PIF’s branch office, a commercial building, and a juice factory. Following the seizure of assets, PIF officials released a statement denouncing the seizures as illegal and in violation of Palestinian law. A PIF official estimated the value of these assets at around $10 million, which PIF had to write off. According to this official, as of February 2013, PIF’s only remaining asset in Gaza is vacant land, valued at about $5 million. The official also told us that PIF has no control over or access to the vacant land, which Hamas has publicly stated it has seized. However, the official noted that PIF continues to keep the land on its books because Hamas has not taken physical control of the land. 2013 (June): PIF currently governed by Board of Directors and Generally Assembly. According to PIF’s audited financial statements and a PIF official, PIF is governed by a board of directors and a general assembly, both appointed by the Palestinian Authority President. The board of directors is comprised of 11 members responsible for setting and overseeing PIF’s goals and objectives, while the general assembly, comprised of 30 members, provides strategic guidance to the board. According to PIF’s publicly available annual financial statements, Ernst and Young was PIF’s external auditor from 2006 to 2012. According to a PIF official, internal auditing functions at PIF are performed by Deloitte, to help ensure there are adequate internal controls and that management complies with the law and standards governing administrative and investment operations. This official also noted that PIF is audited by the Palestinian State Audit and Administrative Control Bureau.", "U.S. agencies must comply with restrictions under U.S. law when providing funds for Palestinian assistance programs, including restrictions reflecting U.S. policy to deny U.S. funds and other support to individuals or organizations that engage in or otherwise support terrorist activity. This policy is established in laws, executive orders, and regulations that provide the basis for USAID and OPIC terrorism vetting policies and procedures used to vet PIF and other entities and individuals associated with PIF-related programs in which USAID and OPIC are involved.", "Various federal laws and executive orders dealing with terrorism allow the blocking or “freezing” of targeted assets located in the United States or under the control of a U.S. person outside of the United States. The International Emergency Economic Powers Act (IEEPA) (50 USC §§ 1701-1706) grants the president authority in times of emergency to block assets in the United States in which any foreign nation or national has an interest. Executive Order 12947 (Jan. 23, 1995, amended Aug. 20, 1998), issued pursuant to the IEEPA, declared an emergency with respect to “grave acts of terrorism committed by foreign terrorists that disrupt the Middle East peace process,” and blocked all property subject to U.S. jurisdiction in which there is any interest of certain Middle East terrorist organizations included in an annex to that executive order.\nThe Antiterrorism and Effective Death Penalty Act of 1996 (the Antiterrorism Act) contains several relevant provisions. Section 302 of the Antiterrorism Act (18 USC § 2339A) makes it a criminal offense to, among other things, provide material support or resources to or conceal or disguise material support or resources with knowledge that such support or resources are to be used in the commission of a terrorist act. Section 303 of the Antiterrorism Act (18 USC § 2339B) makes it a criminal offense to provide material support or resources to such foreign organizations and requires financial institutions to block all funds in which foreign terrorists organizations or their agents have an interest. Under 8 USC § 1189, the Secretary of State is authorized to designate organizations as “foreign terrorist organizations” for purposes of Section 303 of the Antiterrorism Act. Section 321 of the Antiterrorism Act (18 USC § 2332d) makes it a criminal offense for U.S. persons, except as provided in regulations issued by the Secretary of the Treasury in consultation with the Secretary of State and the Attorney General, to engage in financial transactions with the governments of countries designated under section 6(j) of the Export Administration Act of 1979 (50 USC App. § 2405) as supporting international terrorism.\nThe USA Patriot Act broadened the president’s authority under the IEEPA by allowing the blocking of assets during the pendency of an investigation. Executive Order 13224 (Sept. 23, 2001), was issued pursuant to the IEEPA and the USA Patriot Act. This executive order prohibits all U.S. persons from engaging in any kind of transactions with persons, groups, or entities, or their supporters or associates, who commit, threaten to commit, or support terrorism and authorizes the Department of the Treasury to block all U.S. assets of certain individuals and entities listed in the executive order as “Specially Designated Global Terrorists” (SDGTs) and to list additional SDGTs.\nIn addition, since fiscal year 2003, annual foreign operations appropriations laws have included provisions requiring the Secretary of State, prior to obligation of Economic Support Funds (ESF) for assistance for the West Bank and Gaza, to take “appropriate steps to ensure that assistance is not provided to or through any individual, private or government entity, or education institution, that the Secretary knows or has reason to believe advocates, plans, sponsors, engages in, or has engaged in, terrorist activity.” Since fiscal year 2005, annual foreign operations appropriations laws have also included provisions prohibiting provision of any funds appropriated under those laws for purposes of recognizing or otherwise honoring individuals who commit or have committed terrorist acts.", "The Department of the Treasury’s Office of Foreign Asset Control (OFAC) administers various U.S. sanctions programs, including the terrorism sanctions programs in 31 CFR Parts 595, 596 and 597 which implement the above-cited laws and executive orders government-wide. The Terrorism Sanctions Regulations at 31 CFR Part 595, which implement Executive Order 12947, were issued pursuant to the IEEPA. The Terrorism List Governments Sanctions Regulations at 31 CFR Part 596 implement section 321 of the Antiterrorism Act. The Foreign Terrorism Organizations Sanctions Regulations at 31 CFR Part 597 implement sections 302 and 303 of the Antiterrorism Act and 8 USC § 1189.\nA license is an authorization from OFAC to engage in a transaction that otherwise would be prohibited. There are two types of licenses: general licenses and specific licenses. A general license authorizes a particular type of transaction for a class of persons without the need to apply for a license. A specific license is a written document issued by OFAC to a particular person or entity, authorizing a particular transaction in response to a written license application. prohibited funding for a power-sharing government of which Hamas is a member or that results from an agreement with Hamas and over which Hamas exercises undue influence, though under certain conditions, assistance may be provided to such a power-sharing government. See Consolidated Appropriations Act, 2010, Pub. L. No. 111-117, §7040(f), 123 Stat. 3034 at 3367-68, Dec. 16, 2009, and Consolidated Appropriations Act, 2012, Pub. L. No. 112-74, §7040(f), 125 Stat. 786 at 1222, Dec. 23, 2011.", "The USAID Mission to the West Bank and Gaza developed USAID/West Bank and Gaza Mission Order 21 to implement E.O. 13224 and the vetting provisions in annual foreign operations appropriations legislation. The Mission’s antiterrorism policies and procedures, as provided in revised Mission Order 21, state that the Mission must vet certain non- U.S. recipients of USAID funding, which involves checking recipients’ names and other identifying information against databases and other information sources to determine if they are involved with terrorism. In addition, the order clarifies how its antiterrorism policies and procedures apply to USAID assistance instruments, by requiring, among other things, that (1) all solicitations and awards for such assistance instruments contain an antiterrorism clause that reminds award recipients that they must comply with U.S. executive orders and laws prohibiting transactions with terrorists and the provision of resources and support to individuals or organizations associated with terrorism; (2) all U.S. and non-U.S. organizations sign an antiterrorism certification before being awarded a grant or cooperative agreement to certify that the organization does not provide material support or resources for terrorism; and (3) all assistance instruments contain a naming clause that states that no assistance shall be provided under the instrument for any school, community center, or other facility that is named after any person or group that has advocated, sponsored, or committed acts of terrorism.\nUSAID has also issued various policy directives since 2002 that implement Executive Order 13224 and applicable antiterrorism laws that require antiterrorism certification and antiterrorism clauses with respect to all awards. Among other things, those directives require USIAD personnel to check OFAC’s SDGT list prior to making an award (see AAPD 02-04 , ADS 302.3.5.5 and -.3.6.12 , and PEB 2005-12 ); require all U.S. and non-U.S. organizations to certify, before being awarded a USAID grant or cooperative agreement, that the organization does not provide material support or resources for terrorism, (ADS 303 Jan. 30, 2007) and AAPD 04-14 (Sept. 24, 2004); and require inclusion of a mandatory clause in all solicitations and awards for contracts, grants, cooperative agreements, and subcontracts and subawards that reminds USAID contractors and implementing partners of their legal duty to comply with applicable antiterrorism laws (AAPD 02-04 and PEB 2005-12).", "OPIC has developed “Security and Character Reference/Due Diligence (CRDD) Procedures, contained in the OPIC Operations Manual, which are intended to uncover any derogatory information—including risks for terrorist financing and money laundering—about projects in which OPIC is involved, the project sponsors, investors, and key personnel. According to OPIC’s CRDD procedures, in performing CRDD for a project, a project team must make use of necessary information sources that may include (1) OPIC’s Information Center databases; (2) the FBI’s Terrorist Screening Center and Treasury’s Financial Crimes Enforcement Network; (3) relevant U.S. Embassy, any local counsel, and when required, Outsourced Foreign Searches (OFS) Information Center; (4) State Department Bureau of Intelligence Research; and (5) OIP, with respect to derogatory information regarding social responsibility, corporate image, and environmental accountability.\nOPIC’s policies regarding loan guarantees and affordable mortgage programs relating to PIF and other entities in the West Bank and Gaza are based on the U.S. government security/ character vetting process, according to OPIC officials.", "", "", "In addition to the individual named above, Godwin Agbara (Assistant Director), Barbara Shields, Martin De Alteriis, Karen Deans, Etana Finkler, Ernie Jackson, and Nicholas Jepson made key contributions to this report. Other contributors include Shirley Brothwell, Brian Egger, Kay Halpern, Mathew Scire, and Steven Westley.", "Foreign Assistance: U.S. Assistance to the West Bank and Gaza for Fiscal Years 2010 and 2011. GAO-12-817R. Washington, D.C.: July 13, 2012.\nForeign Assistance: U.S. Assistance to the West Bank and Gaza for Fiscal Years 2008 and 2009. GAO-10-623R. Washington, D.C.: May 14, 2010.\nForeign Assistance: Measures to Prevent Inadvertent Payments to Terrorists under Palestinian Aid Programs Have Been Strengthened, but Some Weaknesses Remain. GAO-09-622. Washington, D.C.: May 19, 2009.\nForeign Assistance: Recent Improvements Made, but USAID Should Do More to Help Ensure Aid Is Not Provided for Terrorist Activities in West Bank and Gaza. GAO-06-1062R. Washington, D.C.: September 29, 2006.\nForeign Assistance: Middle East Partnership Initiative Offers Tool for Supporting Reform, but Project Monitoring Needs Improvement. GAO-05-711. Washington, D.C.: August 8, 2005." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2, 2, 2, 1, 2, 2, 1 ], "alignment": [ "h2_full", "h0_full", "h0_full", "h0_full", "h0_full", "h1_full", "h1_full", "h1_full", "", "h3_full", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How are US agencies involved with the PIF or associated entities?", "What kind of actions do US agencies and PIF participate in together?", "How are OPIC and PIF involved with the LGF program?", "How are the US entities helping the LGF banks?", "What are the academic associations between these two entities?", "How do OPIC and USAID vet PIF and non-US entities involved with PIF?", "What offices are utilized for information relating to this vetting process?", "How are the vetting processes backed up by a secondary source?", "How has OPIC vetted the LGF program?", "What has USAID stated about their vetting process and how it is verified?", "In what way is the US government connected to the Palestinian Authority?", "What is the extent of the US government's provisions to the Palestinian Authority?", "What is the history of the Palestinian Investment Fund?", "How are GAO and the Palestine Investment Fund related?", "What does GAO's report outline?", "From which sources did GAO gain the information for this vetting process?" ], "summary": [ "U.S. agencies and implementing partners participate in various programs with the Palestine Investment Fund (PIF) or PIF-owned entities that include home mortgage financing, loan guarantees, and educational initiatives.", "First, the Overseas Private Investment Corporation (OPIC) along with PIF and other entities have committed to lend $485 million to the Affordable Mortgage and Loan Company (AMAL) to support mortgages for low- and medium-income borrowers in the West Bank. OPIC has committed to lend about $313 million; PIF has committed about $72 million, and two banks account for the balance of the committed lending.", "Second, OPIC and PIF are co-guarantors in a Loan Guarantee Facility (LGF) program in the West Bank, guaranteeing up to $110 million and $50 million in loans, respectively, to nine regional banks to support lending to small- and medium-sized enterprises.", "Third, USAID officials stated that, in 2009, USAID provided a U.S. implementing partner $2.1 million for technical assistance and training to enhance the lending practices of participating banks in support of the LGF.", "Finally, according to USAID, it provided about $1.3 million from 2010 to 2013 to three U.S. implementing partners to provide technical, in-kind, and scholarship assistance to the American International School in Gaza (AISG), which is owned by the Palestine Technology and Education Complex, a PIF-owned entity. According to USAID, its involvement with AISG ended in June 2013.", "OPIC's and USAID's processes for vetting PIF and other non-U.S. entities and individuals in programs involving PIF and PIF-owned entities rely on various information sources.", "For the AMAL program, the two banks that issue mortgages are required under the AMAL agreements to vet potential borrowers for terrorist financing against such information sources as Treasury's Office of Foreign Asset Control Specially Designated Nationals and Blocked Persons List (OFAC) and the Compendium of United Nations Security Council Sanctions Lists; AMAL and OPIC are to conduct additional vetting.", "OPIC officials stated that OPIC has vetted PIF's board of directors and senior executives, the non-U.S. board members and shareholders of AMAL, and key officials of the banks against information sources such as the FBI Terrorist Screening Center database, OFAC list, and OPIC's Information Center databases.", "For the LGF program, OPIC said that, based on OPIC's procedures and the LGF agreements, it has vetted all the participating banks and has vetted key officials of each borrower and guarantor before loans are approved using information sources such as Treasury's Office of Terrorist Financing and Financial Crimes and FBI's Terrorist Screening Center databases. According to USAID officials, its process for vetting key participants of the Technical Assistance and Training program and the AISG program was based on documented vetting procedures for the West Bank and Gaza Mission.", "USAID officials said that all banks that participated in the LGF program that received training and technical assistance from USAID were subject to USAID's formal vetting process. USAID said it vetted information about AISG's owners and management against law enforcement and intelligence community systems accessed by USAID's Office of Security and through discussions with the U.S. Consulate General in Jerusalem, as applicable.", "According to the State Department (State), the U.S. government is one of the largest donors to the Palestinian Authority.", "According to State, the U.S. government provided about $3 billion in total bilateral assistance for fiscal years 2008 through 2012.", "PIF was established by Palestinian Authority presidential decree in 2002 and became operational in 2003 as an investment company aimed at strengthening the Palestinian economy through strategic investments.", "GAO was asked to provide information on U.S. involvement with the Palestine Investment Fund.", "This report describes (1) the nature and scope of U.S. government involvement with PIF, and (2) OPIC's and USAID's processes for vetting PIF and other non-U.S entities and individuals participating in programs involving PIF and PIF-owned entities.", "GAO reviewed documents and interviewed officials from U.S. agencies, PIF, and implementing partners." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 0, -1, -1, -1, -1, 0, -1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Overview", "Background", "Political Situation", "Internal ZANU-PF Struggles", "The Movement for Democratic Change (MDC)", "Division in the Opposition", "Opposition Defiance Against a Ban on Protests and Rallies", "Restrictions on Political Freedoms", "Political Violence", "Developments Surrounding the 2008 Elections", "South African Mediation", "Election Preparations", "Alleged Vote Buying", "Pre-Election Violence", "Election Monitoring", "Press Restrictions", "March 2008 Election Results", "Parliament", "The Presidency", "Runoff Elections Called", "June 2008 Runoff Election", "Post-Election Violence", "The Power Sharing Agreement and the New Coalition Government", "Other Humanitarian Issues", "Operation Murambatsvina", "Political Motivations?", "The International Response", "Continued Evictions and Operation Garikai", "Violations of Domestic and International Law", "Food Insecurity", "Operation Taguta", "Food as a Political Weapon?", "HIV/AIDS", "Cholera and the Healthcare System Collapse", "The Economy", "The IMF and the World Bank", "Attempts to Revive Agriculture Industry", "The Mining Industry", "Illegal Mining", "\"Blood Diamonds\"?", "\"Look East\" Policy", "The Military and the Economy", "International Perspectives", "U.S. Policy", "Sanctions", "Congressional Response", "U.S. Support for African Diplomacy", "U.S. Assistance", "Other International Perspectives", "United Kingdom", "European Union", "Commonwealth", "China and Iran", "Nigeria", "South Africa", "The African Union", "SADC", "Prospects for the Future" ], "paragraphs": [ "", "On September 15, 2008, Robert Mugabe, president of Zimbabwe for more than two decades, and opposition leader Morgan Tsvangirai signed a power-sharing arrangement to resolve a political standoff stemming from flawed elections earlier in the year. The Global Political Agreement (GPA) laid the foundations for a transitional government and outlined a time frame for the drafting and adoption of a new constitution. As part of the deal, which was not implemented until February 2009 under pressure from regional powers and the international community, Tsvangirai became prime minister of a new coalition government. Cabinet positions have been divided among the parties. Many observers remain skeptical that the parties will be able to work together to implement the remaining political reforms deemed necessary by international donors. The coalition government has faced considerable challenges in prioritizing development needs, attracting donor funding, and making the reforms necessary for the country's economic recovery. For further discussion of the coalition government and other current events, please see CRS Report RL34509, Zimbabwe: The Transitional Government and Implications for U.S. Policy , by Lauren Ploch.", "After years of economic sanctions by the international community and a decades-long civil war that resulted in more than 30,000 dead, the white minority rule government of Southern Rhodesia concluded a series of agreements with the black majority in 1979 that resulted in the establishment of the government of the Republic of Zimbabwe. Among the greatest challenges facing the new government was the demand by the majority for greater equity in land distribution. At independence, the white minority, who composed less than 5% of the population, owned the vast majority of arable land. Many observers at that time considered the country's white-owned commercial farms crucial to the country's economy, although there was a general recognition that land reform was necessary. Britain initially funded a \"willing buyer, willing seller\" program to redistribute commercial farmland, offering to compensate amenable white farmers.\nDissatisfaction with the pace of land reform grew and led in the 1990s to spontaneous and often violent farm invasions. At the same time, the country's labor movement and a segment of its urban middle class were becoming increasingly critical of the government's economic performance. Facing rising political and economic challenges, the government of Zimbabwe began to implement aggressive land expropriation policies, leading Britain and other donors to begin withdrawing financial support for resettlement.\nIn 2000, the government held a referendum to approve changes to the constitution that would allow land seizures without compensation, a responsibility that in its view lay with Britain. The referendum was rejected by 55% of voters and was seen as a victory for a new opposition party, the Movement for Democratic Change (MDC). Within days of the vote war veterans and ruling party supporters moved onto an estimated 1,000 white-owned farms, and, months later, the president invoked emergency powers to take land without compensation. During this time there were numerous attacks against white farmers and their employees, as well as against supporters of the MDC; more than 30 people were killed.\nFrom 2000 onward, the country's problems deepened. Substantial political violence and human rights violations have accompanied elections. The broad scale of such abuses in the wake of the 2008 elections brought international condemnation, but little consensus on how best to stop the violence. Reports of government-orchestrated human rights abuses continued for months afterward. Zimbabwe's political difficulties were accompanied by a sharp decline in living standards, with more than 80% of the population living on less than $1 per day by 2009. Once touted as a potential \"breadbasket of Africa,\" a significant portion of Zimbabwe's population became periodically dependent on food aid. An estimated 13.7% of adults are infected by the HIV/AIDS virus, and life expectancy fell from an estimated 56 years in 1990 to 44 in 2008. Foreign Policy magazine ranked Zimbabwe second in its index of failed states, behind Somalia, in 2009. Its ranking \"improved\" to that of fourth in the 2010 index and sixth in 2011, but the classification suggests considerable room for progress. Observers are concerned that the difficulties confronting Zimbabwe have affected neighboring countries and deterred investors from the country and the wider region.", "Zimbabwe has been ruled since independence by the Zimbabwe African National Union - Patriotic Front (ZANU-PF), which has come under increasing scrutiny from human rights activists, both at home and abroad, in the past decade. Although ZANU-PF now technically shares power in the coalition government, the party still controls the presidency and key security ministries. Critics have cited high levels of corruption, political violence, and strictly enforced laws restricting basic freedoms. The party contends that its detractors have engaged in a \"propaganda war\" backed by Britain and the United States, using democracy and human rights as a cover to push for regime change. Many domestic and international observers have judged elections since 2000 to be \"far from free and fair.\" The country's main opposition party, the MDC, split over tactical issues in 2005; Morgan Tsvangirai's faction remains dominant. ZANU-PF has also suffered internal competition, and some observers suggest that opposition to President Mugabe's continued rule has grown within the party.", "In view of President Mugabe's advanced age, the issue of presidential succession continues to be a matter of intense interest to observers. Some analysts have expressed concern that Zimbabwe could experience a violent succession struggle or a possible military coup in the event of his death. Under the constitution, the president may designate one of his two vice presidents to serve as acting president until the next election should he leave office, but Mugabe has never done so. One of the vice presidential posts was vacant prior to ZANU-PF's 2004 party conference, setting off a power struggle that transformed the political scene by revealing internal party divisions. Mugabe, who will turn 90 in 2014, appears to be in no rush to relinquish his post, although some rumors suggest his health is deteriorating.\nPrior to the 2004 party conference, Emmerson Mnangagwa, then speaker of the parliament and a political veteran long touted as Mugabe's heir, campaigned actively for the position of ZANU-PF's second vice president. His selection to that position would likely have assured his appointment as vice president of the country, but Mnangagwa was caught off guard when Mugabe decided that the country should have a woman in the post. Mugabe's choice for the position, Joice Mujuru, was inevitably elected by the party to serve as Zimbabwe's second vice president, alongside Vice President Joseph Msika. Mujuru, a veteran of the liberation war and a women's movement leader, had been serving as Minister of Water Resources and Infrastructure.\nAccording to reports, neither the Mnangagwa nor Mujuru camps initially supported Mugabe's proposal in 2007 to extend his term, which was set to expire after the 2008 elections, to 2010. Once a strong Mugabe ally, retired General Solomon \"Rex\" Mujuru, Joice's husband, was vocal in his disapproval and is rumored to have been pivotal in blocking the proposal at the national conference. Some have suggested that Mujuru covertly backed another ZANU-PF official, Simba Makoni, over his wife as a potential successor to Mugabe. Makoni, a technocrat, was considered by some to be a compromise candidate, untainted by the corruption scandals that have plagued others. Mugabe's own choice for a successor is unknown. Mnangagwa appears to have reconciled with Mugabe, leading the party's 2008 election efforts and taking a central role in guiding the country's security forces. He leads the Ministry of Defense in the transitional government.\nThe outcome of any succession struggle within ZANU-PF may be affected by the country's ethnic and clan divisions. Mugabe and other key party officials are from the Zezuru clan of the Shona people, who are dominant in a wide area around the capital, Harare. Solomon Mujuru, who like his wife is Zezuru, was a close advisor to Mugabe and was once regarded as a king-maker. His death in August 2011 in a house fire has been viewed with suspicion by many in Zimbabwe. Emmerson Mnangagwa is seen as a representative of the large Karanga clan, which reportedly feels that its turn to control the reins of power has come. Mnangagwa's viability as a presidential contender has been hampered by accusations that he led the purge of alleged regime opponents in provinces of Matabeleland in the 1980s, which is believed to have resulted in the deaths of 20,000 Ndebele civilians. The events of the 1980s help to explain why Zimbabwe's second-largest city, Bulawayo, has long been regarded as a center of opposition to the government, although Mugabe has sought to gain support by elevating Ndebele to party and government posts.\nVice President Joseph Msika died in August 2009 at age 86. According to some reports, Mnangagwa lobbied, but failed, in the following months to have Joice Mujuru replaced as vice president with a candidate of his own as the party reconsidered its leadership slate. In December 2009, delegates at ZANU-PF's party congress re-elected Mujuru as vice president and chose then-party national chairman John Nkomo to replace Msika. Both Msika and Nkomo are Ndebele.", "The MDC party emerged out of the Zimbabwe labor movement. As poverty deepened in Zimbabwe in the late 1990s, and allegations of corruption against regime leaders became more frequent, the Zimbabwe Congress of Trade Unions (ZCTU) organized a number of strikes and protests. In September 1999, the MDC was formed on this trade union base with support from many in Zimbabwe's churches and in urban areas. In February 2000, MDC members elected the ZCTU secretary general, Morgan Tsvangirai, born in 1952, as MDC president.\nThe MDC proved formidable in the 2000 referendum and in the 2000 parliamentary election; some contend their success may have prompted a range of repressive actions against the party and its supporters. Among the retaliatory measures alleged, several leaders of the MDC, including Tsvangirai himself, were arrested and charged with treason two weeks before the MDC leader first ran against Mugabe, in the 2002 presidential elections.", "In late 2004, the MDC became increasingly divided in its strategy to challenge ZANU-PF dominance. MDC officials initially decided that the party would not participate in the 2005 parliamentary race unless the government took steps to assure free and fair elections. Several members argued that this would deprive the MDC of any influence in parliament and hand control of parliament to Mugabe on a \"silver platter.\" Tsvangirai supported a boycott, arguing that the elections should be postponed until substantial reforms could be implemented. The party ultimately participated \"under protest,\" but did not do as well as in previous polls.\nAs the subsequent 2005 Senate elections approached, the MDC was again divided on whether to participate. Supported by some civil society groups who suggested the elections were \"meaningless\" and \"a waste of time and resources,\" Tsvangirai argued that participating would legitimize previous \"rigged\" elections, and vowed instead to lead the opposition through mass action. He was opposed by a group led by the MDC's secretary-general, Welshman Ncube and MDC vice president Gibson Sibanda. In October, the party's national council voted 33-31 to participate in the election, but Tsvangirai overruled the vote and, reportedly in violation of the MDC constitution, expelled 26 senior officials from the party. Only the Ncube faction fielded candidates in the Senate race; they gained only seven seats.\nBoth factions held party conferences in 2006; Tsvangirai was confirmed the leader of one faction, while Ncube ceded control of the \"pro-senate\" faction to Arthur Mutambara, a noted student leader in the 1980s. The factions attacked each other in the press, and there were allegations that the Tsvangirai faction was behind a violent assault on Member of Parliament (MP) Trudy Stevenson and several other Mutambara supporters. Stevenson identified the youths who attacked her as known followers of Tsvangirai, who denied the charges and denounced the beatings.", "In February 2007, the Zimbabwe government announced a three-month ban on political rallies and public demonstrations in Harare \"due to the volatile situation in the country.\" The MDC appealed to the High Court to lift the ban, which coincided with an increase in public activity by the opposition and civic groups. On February 18, despite a High Court decision allowing Morgan Tsvangirai to launch his presidential campaign at a rally in Harare, police reportedly used batons and water cannons to break up the event. A rally planned by the Mutambara faction in Bulawayo was similarly dispersed, and numerous opposition supporters were arrested. The ban was announced three days later, and police subsequently arrested several hundred civic activists.\nOn March 11, 2007, police broke up a prayer meeting attended by both Tsvangirai and Mutambara, arresting an estimated 50 members of the opposition and civil society, including both MDC leaders. Police shot and killed one opposition supporter after MDC youth reportedly began throwing stones at police. The following day, police arrested an estimated 240 opposition supporters during a demonstration protesting the March 11 crackdown. Media and human rights reports suggest that Tsvangirai was severely beaten while in custody, and he appeared in court days later showing signs of head trauma. Other opposition and civic leaders also reportedly sustained injuries after their arrest. The protestors were released into the custody of their lawyers on March 14 after prosecutors reportedly failed to appear at their court hearing. The Zimbabwean government contended that the MDC incited violence and was responsible for attacks on several civilian targets and a Harare police station.\nThe March 2007 incident spurred international media attention and drew considerable criticism from many world leaders. U.S. Secretary of State Condoleezza Rice issued a strong statement, saying, \"The world community again has been shown that the regime of Robert Mugabe is ruthless and repressive and creates only suffering for the people of Zimbabwe.\" U.N. Secretary-General Ban Ki-moon also condemned the \"reported beating of those leaders in police custody\" and criticized the ban, noting that \"such actions violate the basic democratic right of citizens to engage in peaceful assembly.\" Several of Zimbabwe's neighbors, including South Africa and Zambia, issued statements of concern regarding the incident, and Ghanaian President John Kufuor, then chairman of the AU, called the event \"very embarrassing.\"", "Legislative actions by Zimbabwe's parliament, led by ZANU-PF until the 2008 elections, contributed to concerns about human rights in Zimbabwe. Laws that critics contend have been used to quiet dissent and influence political developments include the following:\nThe Access to Information and Protection of Privacy Act (AIPPA). This 2002 act requires that all media services be licensed, and that all journalists, including foreign correspondents, be officially accredited. The government, citing AIPPA, closed The Daily News , at the time the only remaining independent daily, in 2003 (it began printing again in March 2011). The Media Institute of Southern Africa (MISA) has called AIPPA \"one of the most effective legal instruments of state control over the media and civil society communication anywhere in the world.\" ZANU-PF counters that AIPPA encourages responsible journalism. The African Commission on Human and People's Rights (ACHPR) ruled in 2009 that two sections of AIPPA should be repealed. The Public Order and Security Act (POSA), the Criminal Law (Codification and Reform) Act (\"Criminal Law Code\"), and the Miscellaneous Offences Act (MOA). POSA, also enacted in 2002, prohibits statements deemed to be \"abusive, indecent, obscene, or false\" about the president or considered to \"undermin(e) public confidence\" in the security forces, and prohibits false statements prejudicial to the state. The measure has been used in the arrest of thousands of political opponents and to break up public meetings and rallies. Zimbabweans overheard criticizing the president in public have also been jailed. The MOA criminalized \"conduct likely to cause a breach of the peace,\" and was often used with POSA against activists. Police and \"persons assisting the police\" may use \"all necessary force\" to stop unlawful gatherings. In 2006 many offences under POSA and MOA were transferred to a new Criminal Law Code. The Private Voluntary Organizations (PVO) Act. Critics suggest that the government has used the 2002 PVO Act to limit the activities of domestic NGOs, who are required to register with the government. A \"probe team\" of intelligence officers has wide powers to investigate groups and demand documents related to activities and funding. The ACHPR has recommended that it be repealed.\nIn 2005, ZANU-PF won over two-thirds of the seats in the House of Assembly, giving it the power to amend the constitution. The parliament then passed several controversial constitutional amendments which some analysts contend breach international human rights standards. The 2005 Constitution of Zimbabwe Amendment Act (No.17) allowed the government to limit the right to freedom of movement when it is in \"the public interest\" or in \"the economic interests of the State\" and restricts the right to leave Zimbabwe. Journalists, MDC officials, and union leaders had their passports revoked under the act, with the government charging that they planned to lobby abroad for sanctions or military intervention against the country. The act also prevents land owners from challenging the acquisition of agricultural land by the state. It paved the way for passage of Gazetted Land Act in late 2006, making it illegal for former farm owners to occupy nationalized land and allowing the government to evict farmers and resettle the land without compensation. The 2005 constitutional amendment also revived the upper house of parliament.\nThe MDC, prior to taking a majority in the House of Assembly in the 2008 elections, had limited success in preventing ZANU-PF from passing other legislation that it contended would restrict freedoms. An Interception of Communications Bill, which would allow the government to monitor all Internet, email, and telephone communications for threats to national security, was initially stalled by the Parliamentary Legal Committee (chaired by an MDC MP), but was later revised and approved in June 2007. Critics suggest that the revisions were cosmetic.\nNegotiations led by South Africa between Zimbabwe's political parties prior to the 2008 elections resulted in amendments to both AIPPA and POSA. Critics suggest the amendments did not fully address human rights concerns and have not been adequately implemented. The Media Institute of Southern Africa dismissed the AIPPA changes as \"dwelling … on inconsequential issues which will not advance basic freedoms.\" Numerous MDC rallies were blocked prior to the 2008 runoff, despite court orders allowing the events. Political space for civil society has widened since the formation of the coalition government, but police continued to use POSA on occasion to arrest civil society leaders. In December 2010, the MDC majority in the House passed legislation to amend POSA; to date, the ZANU-PF Senate has not approved the bill.", "Human rights groups have documented numerous accounts of political violence in Zimbabwe in the past decade. In 2006, Freedom House declared that \"Zimbabwe's descent into the ranks of the world's most repressive states continued unabated.\" In 2007, the State Department reported that Zimbabwe's government has \"engaged in the pervasive and systematic abuse of human rights, which increased significantly during the year\" and contended that \"state-sanctioned use of excessive force increased, and security forces tortured members of the opposition, student leaders, and civil society activists.\" Amnesty International was similarly critical. The State Department's most recent human rights report, issued in April 2011, suggests that abuses continue, in spite of the transitional government's formation:\nSecurity forces, the police, and ZANU-PF-dominated elements of the government continued to commit numerous, serious human rights abuses. ZANU-PF's dominant control and manipulation of the political process through trumped-up charges, arbitrary arrest, intimidation, and corruption effectively negated the right of citizens to change their government. There were no politically motivated killings by government agents during the year, however, security forces continued to torture, beat, and abuses non ZANU-PF political activists and party members, student leaders, and civil society activists with impunity. Projections of an early election in 2011 also led to an increase in the number of cases of harassment and intimidation... Security forces continued to refuse to document cases of political violence committed by ZANU-PF loyalists against members of other political parties... Security forces, which regularly acted with impunity, arbitrarily arrested and detained activists not associated with ZANU-PF, members of civil society, labor leaders, journalists, demonstrators, and religious leaders; lengthy pretrial detention was a problem. Executive influence and interference in the judiciary continued... The government continued to use repressive laws to suppress freedom of speech, press, assembly, association, and movement... High-ranking government officials made numerous public threats of violence against demonstrators and political activists not associated with ZANU-PF....\nPresident Mugabe has, on occasion, publicly condoned police and military brutality against Zimbabwean citizens. In 2006, during Heroes' Day, a holiday honoring war veterans, Mugabe warned that his security forces would \"pull the trigger\" against protesters. A month later, in an incident caught on video, Zimbabwean police conducted a particularly violent crackdown against leaders of the Zimbabwe Congress of Trade Unions (ZCTU), who had planned a civic protest to highlight the impact of inflation on the country's citizenry. Mugabe sanctioned the police action, saying, \"Some people are now crying foul that they were assaulted, yes you get a beating … when the police say move, move, if you don't move, you invite the police to use force.\"\nMugabe received international attention for his statement; the U.N. Country Team in Zimbabwe announced \"a profound sense of dismay\" over comments that \"might be interpreted as condoning the use of force and torture to deal with peaceful demonstrations by its citizens.\" The U.N. Special Rapporteur on Torture repeatedly requested an invitation from Zimbabwe to investigate, and the Harare magistrate who heard the case against the ZCTU leaders ordered an independent investigation into the allegations of police brutality. The Rapporteur received an invitation from Prime Minister Tsvangirai to visit Zimbabwe, but was blocked from entering the country when he tried to visit in October 2009.\nHuman rights activists suggest that acts of political violence, such as abductions and beatings of opposition supporters, became \"more systematic and widespread\" after the events of March 2007. Despite provisions in the Electoral Laws Amendment Act banning such acts and assurances by security officials that the government would take a \"zero tolerance\" approach to violence, reports of attacks on opposition supporters further rose dramatically after the March 2008 elections. The State Department's annual human rights report on Zimbabwe states that over 289 died from injuries sustained during violence targeting the opposition in 2008, and that, according to one non-governmental organization, as many as 22,000 victims have sought treatment for political violence sustained that year. The State Department reports that, as of the most recent publication of its report, in April 2011, there had been no prosecutions or convictions related to any of the politically related killings that occurred in 2008.\nHuman rights reports suggest party youth militia and so-called war veterans have been the most common perpetrators of political violence, but that the police have also played a significant role. The Geneva-based International Commission of Jurists, which investigated the 2007 detention and beating of lawyers, expressed shock at the role of police in the attacks and at the \"cavalier response of Zimbabwean authorities.\" The State Department has documented multiple reports of police using excessive force and cruel, inhuman or degrading treatment against those in custody.", "", "International criticism of the political situation in Zimbabwe grew after the March 2007 opposition arrests, even among former allies on the continent. In one of the most critical statements from African leaders, Zambia's President Levy Mwanawasa compared the country to \"a sinking Titanic whose passengers are jumping out to save their lives.\" In South Africa, a senior Foreign Ministry official told their parliament, \"the South African government wishes to express its concern, disappointment, and disapproval of the measures undertaken by the security forces in dealing with the political protests,\" blaming the current situation on an \"absence of open political dialogue.\" SADC leaders convened an emergency summit on March 28, 2007.\nGiven the strong statements made by some southern African leaders, many observers expected the SADC heads of state to increase pressure on Mugabe to make reforms. Reports suggest that in private the leaders may have been tough on the Zimbabwean president, who was in attendance, but their public response was deemed disappointing by human rights activists and critics of the regime. During the summit, the SADC leaders resolved to promote dialogue within the country, at the same time suggesting that Western countries should drop their sanctions against the Mugabe government and that Britain should provide funding to assist in land reform efforts. South African President Thabo Mbeki was appointed to mediate between the Zimbabwean government and the opposition. Mbeki, who opposed calls for regime change, pushed instead for elections, saying \"you might question whether these elections are genuinely free and fair ... but we have to get the Zimbabweans talking so we do have elections that are free and fair.\" Talks between the Mugabe Administration and the MDC factions began in Pretoria in June 2007.\nAccording to human rights activists and the U.S. Department of State, political violence against opposition leaders and supporters continued in spite of the negotiations. The Mugabe Administration accused the opposition of being responsible for a series of bombings targeting shops, trains, and police stations, although some observers suggest the attacks were an attempt to frame the opposition. Harassment of university students by police also reportedly increased. In November 2007, 22 members of the National Constitutional Assembly, a pro-democracy civil society organization, reportedly sustained severe beatings during a peaceful protest set to coincide with a visit by President Mbeki to Harare.\nAlthough the South African negotiations resulted in several agreements between the parties, leading to the amendment of some laws seen to restrict press freedom and political activity, the talks were abandoned after Mugabe announced that elections would be held on March 29, 2008. Despite Mbeki's report to SADC leaders that his mediation had achieved \"commendable achievements,\" Tsvangirai announced in February 2008 that \"nothing has changed ... changes in the law, negotiated by President Mbeki, have not changed the behavior of the dictatorship.\"", "Civil society activists reported significant pre-election irregularities prior to the March 2008 elections. Critics charged that the Zimbabwe Election Commission lacked independence, and that it was further crippled by limited administrative capacity and budget shortages. Reports from domestic groups suggest that the registration process was, at best, inconsistent, and there is no indication that the ZEC addressed alleged inaccuracies in the voters' roll from previous elections.\nThe 2008 elections were Zimbabwe's first attempt at holding \"harmonized\" elections for all levels of government (local, National Assembly, Senate, and presidential) simultaneously. In addition to the logistical challenges this posed, civic groups argued that the complexity of a four-ballot election required a nationwide voter education campaign. They claim that the ZEC's education efforts were inadequate and that independent NGOs were barred from engaging in voter education programs of their own.\nThe Zimbabwe Election Support Network (ZESN), a domestic observer group composed of 38 NGOs, alleges that the ruling party redrew constituencies to ensure its continued hold on power. In its pre-election report, ZESN argued that there were not enough polling stations designated for urban areas, where the MDC is believed to have its strongest support. ZESN's report also suggested that, as in past elections, the ruling party manipulated state resources for campaign purposes. And despite amendments to POSA and AIPPA, advocacy groups argue that the police selectively interpreted the laws and significantly limited the MDC's ability to campaign. Sections of POSA which prohibit false statements \"prejudicial\" to the state and criminalize statements construed as engendering hostility toward the president remained in effect.", "In addition to the allegedly partisan administration of the elections, many observers contend that the government used public resources to buy votes. In the weeks preceding the polls, President Mugabe announced significant salary increases for the military and civil servants and signed into law the Indigenization and Economic Empowerment Bill, requiring foreign-owned firms to transfer 51% of their shares to domestic investors. His administration also reportedly distributed vehicles and agricultural equipment worth millions of U.S. dollars to ZANU-PF supporters. At the same time, in a country where almost half the population was considered by the World Food Program at that time to be malnourished, domestic groups reported numerous incidents of opposition supporters being denied access to state food supplies. NGOs operating in Zimbabwe reported that the ban on their distribution of food and other humanitarian aid prior to the runoff continued until August, despite claims by the government that it had been lifted.", "According to domestic human rights groups, the year prior the 2008 elections was marked by a significant increase in incidents of politically motivated violence from previous years. The government routinely deployed riot police to break up demonstrations, meetings and rallies, despite changes to the laws regulating freedom of assembly. In January 2008, police allegedly tear-gassed and assaulted protestors in Harare after a local magistrate overruled a police order banning their march. In February, members of the Progressive Teachers Union of Zimbabwe reported being abducted and beaten by ZANU-PF supporters; according to their accounts several members of the police and intelligence service were present during the attacks. According to reports, the perpetrators were not arrested, but the union leaders were charged with violating a law that prohibits the distribution of pamphlets in public areas.\nSeveral of the country's security service chiefs, including the heads of the army and the police, publicly announced that they would not recognize an electoral victory by anyone other that Mugabe. In speeches and statements to the press, they and other public officials, including the president himself, referred to opposition leaders as traitors or puppets of the West. In October 2007, the International Bar Association issued a report accusing Zimbabwe's police of being \"blatantly partisan\" and suggesting that the force's failure to guarantee equal protection of the law \"is a major obstacle to democracy in Zimbabwe and a considerable impediment to free and fair elections.\" As part of the 2008 electoral reforms, police were banned from the polling stations to allay fears of intimidation. However, just over a week before the elections President Mugabe issued a decree allowing police into polling stations, purportedly to help disabled voters.", "The government of Zimbabwe reportedly invited election observers from over 40 countries and regional organizations, including the Southern African Development Community (SADC) and the African Union (AU), but barred observers from countries considered to be critical of its policies. CNN and other Western media organizations and journalists were reportedly denied permission to cover the elections. The AU observer mission, led by former President of Sierra Leone Tejan Kabbah, issued a preliminary statement after the elections suggesting that the vote was generally free and fair and expressed the will of the people. He urged all parties to accept the results. The SADC mission found the elections to be \"a credible expression of the will of the people\" but noted concerns regarding opposition access to the media, inflammatory statements by senior security officials, the presence of police officers at polling stations, and the delay in the publication of the voters' roll. Two members of the delegation, both from South Africa's largest opposition party, refused to sign the report, calling the elections \"chaotic\" and \"deeply flawed.\" Other observer groups differed with the SADC findings. The delegations of the World Council of Churches and the African Council of Churches found the elections to be \"skewed in favor of the incumbent who openly utilized state resources to his advantage\" and reported media bias, \"violence, intimidation and outright confrontation,\" and the use of food as a \"political tool.\"", "Two international journalists, one a Pulitzer Prize-winning American correspondent for the New York Times , were arrested in April 2008. After several days in jail, they were released on bail but blocked from leaving the country. They were later acquitted. Several other journalists, both domestic and foreign, were arrested after the elections. The director of the ZESN was detained by police in April and questioned about possible ties to the Washington-based National Democratic Institute, which monitors elections worldwide. The editor of The Standard , the only remaining independent newspaper, was arrested for printing an editorial by opposition leader Arthur Mutambara entitled, \"A Shameful Betrayal of National Independence.\" He was later released, but charged with publishing statements prejudicial to the state. Mutambara was arrested weeks later.", "", "The MDC, which split into two factions in 2005 (known as MDC-T and MDC-M for their respective leaders, Morgan Tsvangirai and Arthur Mutambara), remained divided for the March elections, and this division likely cost the party several parliamentary seats. The ZEC, widely criticized for its delayed release of the electoral results, announced the National Assembly results four days after the election. The MDC factions won a majority in the 220-seat National Assembly with 109 seats, over ZANU-PF's 97. Three weeks after the elections, the electoral commission conducted a recount of 23 races, an overwhelming majority of which were won by the opposition. The original results were upheld. On April 6, the ZEC announced that the ruling party had retained its majority in the Senate, where over one-third of the 93 members are appointed by the president. Of the 60 seats directly elected, ZANU-PF won 30, MDC-Tsvangirai 24, and MDC-Mutambara 6. Several senior ruling party members lost their parliamentary seats, including the Ministers of Justice, Agriculture, Mines, Energy, and Transport; several senior MDC-M parliamentarians, including Mutambara, lost to MDC-T candidates.", "The MDC's decision to contest the election while still divided may also have cost the party a clear victory in the initial presidential race. In February 2008, then-ZANU-PF senior member Simba Makoni announced his intention to run against President Mugabe in the upcoming elections. He was subsequently expelled from the party and ran as an independent, although he was rumored to have been supported by several senior ruling party officials. MDC faction leader Arthur Mutambara, who had planned to run against Mugabe and Tsvangirai, withdrew as a presidential candidate and expressed his support for Makoni. It is unclear how many supporters of his faction voted for Makoni instead of Tsvangirai.\nThe main MDC faction claimed victory for Tsvangirai days after the election with over 50% of the votes cast, basing its claim on tallies of poll results posted outside the polling stations and constituency centers immediately following the elections. Some have differed with the MDC count, suggesting that while Tsvangirai almost certainly received more votes than Mugabe, he may not have achieved the necessary 50% to avoid a runoff. ZESN reported that results were not posted in three constituency tabulation centers despite a legal requirement to do so.\nThe results of the presidential race were not officially announced until five weeks after the elections. The opposition called for a nationwide strike on April 14 to protest the delayed release of results, asking supporters to stay home rather than to demonstrate publicly. Dozens of opposition supporters, including a newly elected member of parliament, were reportedly arrested that day for allegedly trying to incite violence or for obstructing the freedom of movement. According to reports, the strike was unsuccessful. With over 90% unemployment, some analysts suggest many Zimbabweans could not afford to miss a day's wages; other Zimbabweans said they had not heard of the strike. On the evening of May 2, the ZEC declared that Tsvangirai had received 47.9% of the votes, while Mugabe received 43.2% and Makoni 8.3%. Some in the international community questioned whether the government's delay in releasing the presidential results should be considered a political coup. The MDC had appealed unsuccessfully to the courts to have the results released earlier, but the electoral commission claimed that it could not do so until a \"process of verification of the presidential ballots\" was complete.", "Although the opposition accused the government of manipulating the presidential results and initially objected to participating in a runoff, Morgan Tsvangirai agreed to stand against President Mugabe in a second round of voting. ZESN also questioned the validity of the presidential results, saying, \"ZESN cannot substantiate ZEC figures as the network is not aware of the chain of custody of the ballot materials during the aforementioned period\" and claiming that the delayed announcement of the presidential results undermined the impartiality of the ZEC. These concerns were echoed by the United States and others.\nHaving waited for over a month to hear the final results from the first round of elections, Zimbabweans faced another significant delay before the second round. While the electoral law requires the government to hold a runoff within 21 days of announcing the initial results, the ZEC declared that the runoff would not be held until June 27, three months after the first round. Some analysts questioned whether the government could afford another election, estimated to cost up to $60 million. According to official Reserve Bank figures, government borrowing in the first three months of 2008 was 43% above the projected budget deficit for the year.\nThe MDC initially called for the immediate deployment of election observers from outside Africa (in addition to the SADC and AU observers) as well as the deployment of regional peacekeepers during the runoff. The party later modified its demands, saying that an increased SADC and AU observer presence would be sufficient, if combined with an immediate repeal of restrictions on the MDC's ability to campaign and an end to political violence. The opposition remained largely unable to hold public rallies, which were banned by police in the capital in mid-April. Tsvangirai, who left the country a week after the elections amidst MDC concerns about his safety, returned on May 25. Given statements by government officials accusing him of treason, many believed he would not be allowed to campaign freely inside the country. The MDC leader had already been tried, and acquitted, for treason in 2004. Based on interviews with high-ranking Zimbabwean officials, the International Crisis Group issued a report warning that a Tsvangirai victory in the runoff could trigger a military coup.", "During the weeks following the announcement of the presidential results, reports of political violence increased dramatically. Critics contend that the violence was a government-orchestrated attempt to punish opposition supporters and ensure a Mugabe victory in the runoff. According to media reports, security forces and militias manned roadblocks and detention centers across the country, despite the increased presence of over 500 SADC and AU monitors. The Washington Post reported on the government's alleged campaign of violence against the opposition, and suggested that ZANU-PF's inner circle was divided on the effort, which reportedly targeted mid-level MDC organizers and ordinary citizens for severe beatings or death. President Mugabe was quoted saying, \"We shed a lot of blood for this country. We are not going to give up our country for a mere X on a ballot. How can a ballpoint pen fight with a gun?\"\nTsvangirai was detained by police several times during the runoff campaign, and on two occasions sought refuge in the Dutch Embassy. The MDC's Secretary General, Tendai Biti, was arrested in June 2008 upon return from South Africa and was charged with treason. After two weeks in jail, he was released on bail. On June 13, former U.N. Secretary-General Kofi Annan joined over 40 African leaders and former heads of state, including the group known as the Elders, in a letter calling on the government to stop the violence, postpone the runoff, and ensure conditions for free and fair elections.\nOn June 22, less than a week before the runoff, ZANU-PF supporters, armed with sticks, iron bars, and rocks, blocked an MDC rally in Harare. Citing the high number of attacks against MDC supporters and the lack of a level playing field, Tsvangirai withdrew from the race the following day. Despite public comments from African observer missions and a presidential statement from the U.N. Security Council arguing that conditions for a free and fair election did not exist due the high level of violence, the government held the runoff as scheduled. Mugabe was declared the winner with over 85% of the vote and inaugurated on June 29, 2008.\nSADC fielded over 400 observers for the second round poll. In a preliminary report, the observers found the pre-election environment marred by \"politically motivated violence resulting in loss of life, damage to property, and serious injuries sustained and hindering political activities.\" They also noted the \"disruption of campaigning of the opposition party and the regrettable inaction of the law enforcement agencies,\" and cited harassment of their observers. The SADC mission found that the pre-election period did not conform to SADC Principles and Guidelines Governing Democratic Elections, damaging the credibility of the electoral process. Ultimately, the delegation reported that runoff \"did not represent the will of the people of Zimbabwe.\"\nThe observer delegation from the Pan-African Parliament (PAP) was similarly critical of the runoff, saying, \"political tolerance in Zimbabwe has deteriorated to the lowest ebb in recent history.\" The delegation reported witnessing roadblocks and \"male-dominated groups [that] intercepted voters and gave them pieces of paper on which they were required to write the serial number of their ballots\" at many polling stations. The PAP's report questioned the impartiality of the ZEC, and found that \"the current atmosphere prevailing in the country did not give rise to the conduct of free, fair and credible elections.\" The African Union team echoed the SADC and PAP findings, declaring that process fell short of accepted AU standards.", "As noted above, although observers suggest that the March 29 election day was largely peaceful, reports of politically motivated violence subsequently increased to a level not seen in two decades, according to advocacy groups. In May, the Zimbabwe Association of Doctors for Human Rights reported that its doctors had treated hundreds of victims with injuries consistent with assault and torture since the elections, and that \"the violence is now on such a scale that it is impossible to properly document all cases.\" In total, almost 300 people died as a result of the political violence in 2008, according to the State Department. U.S. Ambassador James McGee implicated the ruling party in orchestrating the attacks.\nZANU-PF and the Zimbabwean military have denied involvement with the violence, although the army; police; intelligence service; \"war veterans;\" and Zimbabwe's National Youth Service, also known as the \"Green Bombers,\" were all implicated. One week after the elections, self-styled war veteran leader Jabuli Sibanda warned, \"It has come to our realization that the elections were used as another war front to prepare for the re-invasion of our country.... As freedom fighters, we feel compelled to repel the invasion,\" echoing a frequent Mugabe refrain that an opposition victory would be tantamount to the British reinstating colonial rule. The state-owned Herald newspaper, contributed to fears of a white takeover in the wake of the election, reporting, \"an increasing number of white former commercial farmers are reportedly threatening resettled black farmers throughout the country with eviction from their farms or face the wrath of an anticipated 'incoming MDC government.'\" These pronouncements coincided with farm invasions throughout the country, and by April 16, the Commercial Farmers Union reported that over 100 of the estimated remaining 400 white farmers had been forced off their lands.\nSince independence, ZANU-PF had employed terminology associated with military-style campaigns for government programs ranging from the implementation of price controls, known as Operation Reduce Prices, to the demolition of informal urban settlements, or Operation Murambatsvina (translated as \"Clean Out the Filth\"). Reports suggest that the post-election round of violence had its own campaign name, Operation Mavhoterapapi (\"Who did you vote for?\"). Critics note the government's historic use of violent tactics against political opponents, pointing to the infamous Operation Gukurahundi (\"The rain that washes away the chaff\"), the violent \"pacification\" campaign by a North Korean-trained military unit, the 5 th Brigade, in the 1980s against alleged dissidents and supporters of ZANU-PF's political rival, the Zimbabwe African People's Union (ZAPU). Gukurahundi , sometimes referred to as the Matabeleland Massacres, resulted in the deaths of over 10,000 civilians, mostly from the Ndebele ethnic group in the southwest. That 5 th Brigade was led by then-Lt. Col. Perence Shiri, now commander of the Air Force. Other officials involved in the campaign were elevated to senior government posts, including former Defense Minister Sydney Sekeremayi (now Minister of State for National Security) and Emerson Mnangagwa. Mnangagwa, then Minister of State Security in charge of intelligence, once reportedly warned that the government would burn down \"all the villages infested with dissidents.\" He is rumored to lead the Joint Operations Command (JOC), a secretive group of security chiefs and top commanders that some allege controls the government.\nZimbabwe's rural areas appear to have been the hardest hit by the post-election violence; the U.S. Embassy in Harare documented thousands who fled the countryside for urban areas in the months after the March elections. Most Harare medical clinics were at full capacity during the height of the violence, according to the U.S. Agency for International Development (USAID). Zimbabwe's largest farmers' union reported that militias displaced over 40,000 farm workers, and there were widespread reports of burned homes, granaries, and livestock. Human Rights Watch detailed the \"re-education\" and torture of more than 70 MDC supporters, seven of whom reportedly died from their injuries, in Mashonaland province on May 5. Amnesty International reported that victims were often denied medical access and that humanitarian organizations have been targeted by militias for providing assistance. The United Nations' resident representative in Zimbabwe declared, \"there is an emerging pattern of political violence inflicted mainly, but not exclusively, on suspected followers of the MDC.\" The level of violence was confirmed by a SADC mission, \"we have seen it, there are people in hospital who said they have been tortured, you have seen pictures, you have seen pictures of houses that have been destroyed.\"\nSome who fled to the cities faced further intimidation. Police repeatedly raided the offices of both the MDC and ZESN. Hundreds were arrested in the MDC raids, many of whom had reportedly already suffered attacks in their rural homes and fled to the MDC offices for refuge. In these raids, the police, allegedly looking for subversive documents, took computers and documents. On May 9, police arrested the leaders of the Zimbabwe Congress of Trade Unions (ZCTU) based on speeches made at a worker's day rally. The head of the Progressive Teacher's Union was also arrested. On May 5, more than 50 people were beaten by riot police during a protest against the ongoing violence in Bulawayo; 11 members of a women's advocacy group were arrested.\nSome Zimbabwean officials, including the police chief, accused the MDC of rigging and inciting violence. More than ten newly elected MDC legislators were arrested in the wake of the March elections. Over 100 election officers were arrested on charges of committing fraud and abusing public office in favor of the MDC. Independent reports suggest that teachers, who held many of the election officer positions, were specifically targeted by government supporters.", "On September 15, after several weeks of negotiations overseen by Thabo Mbeki, Mugabe and Tsvangirai signed the Global Political Agreement (GPA). The text of the agreement left oversight of the police undetermined, and debate over which party would control the force delayed the agreement's implementation for over four months. Amid concern that the parties would abandon compromises made in the GPA, SADC renewed pressure for the agreement to be implemented in January 2009. Tsvangirai agreed to join a coalition government on January 31, and, after Zimbabwe's parliament amended the constitution to allow its creation, Tsvangirai and new MDC ministers were sworn in as members of the new government in early February 2009.", "", "In May 2005, the government of Zimbabwe initiated Operation Murambatsvina (variously translated as \"Restore Order\" or \"Clean Out the Filth\"), a massive demolition program aimed at destroying allegedly illegal urban structures, such as informal housing and markets. By early July 2005, an estimated 700,000 urban Zimbabweans had been rendered homeless or unemployed by the operation, and an estimated 2.1 million (in total, almost 20% of the population) were indirectly affected by the demolitions. These are considered \"low-end estimates;\" some reports suggest the number affected was much higher. According to some sources, 70% of the country's urban population lost shelter, while approximately 76% lost their source of income. Security forces reportedly arrested forty thousand for allegedly illegal activities and told those whose homes were destroyed to \"return to their rural origins,\" although many had no rural home to which they could return.\nOperation Murambatsvina had a severe impact on the nation's economy and on the livelihood of its citizens. For many, this was not the first time they had been forcibly removed from their homes. As a result of the 2000 land reform program, an estimated 400,000 black laborers on commercial farms lost their livelihoods and/or homes, and many fled to urban areas to find work. Political violence surrounding the 2002 elections forced others from their homes, reportedly displacing more than 100,000. In 2004, under a new phase of land resettlement, an estimated 500,000 who settled on farms during the 2000 invasions were evicted. Many of the displaced inhabited the urban \"slums\" prior to the demolitions, making their living from trading on the black market. Given the collapse of the formal economy, 40% of the labor force was estimated to be informally employed prior to Murambatsvina , while 44% worked in the communal sector (including the agriculture industry), and 16% worked in the formal sector. Of those living in towns and cities, an estimated 70% were involved in informal trading prior to the demolitions.", "The government described Murambatsvina as a program designed to restore the capital city to its former image as \"the Sunshine City,\" ridding the country's urban areas of illegal structures that foster criminal activity and stemming the black market trade in foreign currency. Launched shortly after the disputed 2005 parliamentary elections, many contend the demolitions were a political move aimed either at preventing mass protests over the growing economic crisis or at punishing the reputed urban support base of the MDC. The Harare Commission that initiated the campaign was established in order to contravene the authority of the elected city council, of which the MDC held the majority. The mayor of Harare, an MDC politician who was elected by 80% of the vote, was fired in April 2004, along with 19 MDC-allied city councilors, after having been arrested in 2003 under POSA for holding a public meeting without prior state approval.\nA high court ruling challenged the legality of the Harare Commission, which was appointed by the Minister of Local Government, finding that the commission did not have the authority to fire the mayor. A new election was supposed to be held within 90 days, according to law, but when no election occurred, the commission was reappointed. The remaining MDC councilors resigned in protest. With the exception of Harare, the local authorities of the other areas (many of which were MDC-controlled) affected by Murambatsvina reported that they were not informed of the demolitions prior to the event. The implications of this breakdown in governance are reflected in findings of the United Nations, which noted that Murambatsvina \"was implemented in a highly polarized political climate characterized by mistrust, fear and a lack of dialogue between Government and local authorities, and between the former and civil society.\"", "International reaction to Murambatsvina was highly critical. U.N. Secretary-General Kofi Annan named Tanzanian Anna Tibaijuka, Executive Director of UN-HABITAT, as the U.N. Special Envoy on Human Settlements Issues in Zimbabwe to investigate the humanitarian impact of the demolitions. Following a fact-finding trip, she issued a comprehensive report, which concluded:\nOperation Restore Order, while purporting to target illegal dwellings and structures and to clamp down on alleged illicit activities, was carried out in an indiscriminate and unjustified manner, with indifference to human suffering and, in repeated cases, with disregard to several provisions of national and international legal frameworks.\nThe report also described police preventing civil society and humanitarian organizations from assisting those affected by the demolitions, and suggested that the groups were operating in a \"climate of fear\" and practicing \"'self-censorship' to avoid being closed down or evicted.\" The Chairman of the African Union sent his own envoy, but he was prevented from conducting an assessment (see \" International Perspectives ,\" below). The presentation of the U.N. envoy's report to the U.N. Security Council stirred controversy as China, Algeria, Benin, and Russia objected to debate on the report. The majority of Security Council members voted to allow its discussion, albeit in a closed session. Secretary-General Annan also issued a strong statement condemning Murambatsvina , calling on the government of Zimbabwe to stop the evictions and allow unimpeded access for humanitarian assistance:\n\"Operation Murambatsvina\" has done a catastrophic injustice to as many as 700,000 of Zimbabwe's poorest citizens, through indiscriminate actions, carried out with disquieting indifference to human suffering. I call on the Government to stop these forced evictions and demolitions immediately, and to ensure that those who orchestrated this ill-advised policy are held fully accountable for their actions ... the Government must recognize the virtual state of emergency that now exists, allow unhindered access for humanitarian operations, and create conditions for sustainable relief and reconstruction.", "Many observers suggest the Zimbabwean government did little to respond to U.N. Envoy Tibaijuka's recommendations. Reports indicate that forced evictions continued, despite government declarations to the contrary. As was the case during the initial evictions, several thousand of those made homeless were taken, in some cases reportedly against their will, to police-run \"transit camps\" in late 2006. Conditions in these camps were described as dire, often lacking shelter, water, or basic latrine facilities. In keeping with the U.N. report findings, Amnesty International alleged that the government repeatedly prohibited aid agencies, including the United Nations, from providing temporary shelters, such as tents, for the displaced. Secretary-General Annan expressed his concern in October 2005 over the government's rejection of U.N. assistance to \"tens of thousands,\" noting \"there is no clear evidence that subsequent Government efforts have significantly benefitted these groups.\" The United Nations was subsequently permitted to erect approximately 2,300 shelters, a fraction of their target of 40,000.\nIn response to international criticism of Murambatsvina , the government announced a new housing scheme, Operation Garikai , in June 2005. Under Garakai , also known as \"Hlalani Kuhle\" (Live Well), new housing for those rendered homeless was to be built with public funds. The ambitious reconstruction program would allegedly create tens of thousands of new homes, but given the shortage of building materials and the government's budgetary problems, it is highly unlikely the original target of 5,275 homes was met. Reports suggest that few houses were actually completed, and, instead of going to victims of Murambatsvina , the newly built houses were more likely to be occupied by soldiers, police, and members of the ruling party. The government denied these allegations.\nAmnesty International and a domestic group, the Coalition Against Forced Evictions, issued a May 2010 report on the progress of the government's re-housing scheme. The report argued that, five years after Murambatsvina , many victims continued to live in plastic shacks without basic essential services. The groups have been critical of the transitional government's response. According to 2010 Housing Ministry estimates, as many as 500,000 were still on the waiting list for housing in Harare alone, with the national backlog in urban areas possibly over 1 million.", "In the wake of Murambatsvina , human rights organizations raised questions about how Zimbabwe and the international community should respond to what some have termed \"crimes against humanity,\" as defined by Article 7 of the Rome Statute of the International Criminal Court (ICC), and whether there was a \"responsibility to protect\" those affected by the campaign or subsequent government actions. Among the Murambatsvina report recommendations, the U.N. envoy suggested:\nAlthough a case for crime against humanity under Article 7 of the Rome Statute might be difficult to sustain, the Government of Zimbabwe clearly caused large sections of its population serious suffering that must now be redressed with the assistance of the United Nations and the international community. The international community should encourage the Government to prosecute all those who orchestrated this catastrophe and those who may have caused criminal negligence leading to alleged deaths, if so confirmed by an independent internal inquiry/inquest. The international community should then continue to be engaged with human rights concerns in Zimbabwe in consensus building political forums such as the UN Commission on Human Rights, or its successor, the African Union Peer Review Mechanism, and in the Southern African Development Community.\nThe report provided legal analysis of Murambatsvina through international, regional, and national frameworks, ultimately finding that \"The Government of Zimbabwe is collectively responsible for what has happened\" during Murambatsvina , but that \"it appears there was no collective decision-making with respect to both the conception and implementation. Evidence suggests it was based on improper advice by a few architects of the operation.\" One media source, however, quoted Zimbabwe's State Security Minister saying, \"All the decisions to do with the operation emanated from the [party] politburo and were sent through me to the government.\"\nSeveral groups, including the International Bar Association (IBA), have called for President Mugabe's government to be brought before the ICC, not only for violations related to the demolitions, but also for its alleged support of political violence against its critics. Responding to President Mugabe's comments supporting the beating of trade union leaders in 2006, the Executive Director of the IBA made the following statement:\nMugabe's statements add to the weight of evidence that torture and other serious violations of international law are sanctioned at the highest level in Zimbabwe. This underscores the urgent need for international and regional action to hold the Zimbabwean Government to account ... the torture of the trade union activists is not an isolated incident, but part of a dangerous and illegal system of repression which constitutes crimes against humanity in international law. Decisive action is required by both the United Nations and the African Union to end impunity and violence in Zimbabwe.\nIn May 2008, the IBA Executive Director reiterated his call for an ICC investigation of President Mugabe for crimes against humanity.\nThe government of Zimbabwe has yet to prosecute those who might be responsible for crimes related to Murambatsvina or the subsequent evictions. The victims, in most cases, lack the financial resources to seek redress in court, although human rights lawyers have represented groups of victims on several occasions. In one case, in November 2005, residents of a Harare suburb were given a temporary stay of eviction by the High Court, but police ignored the order and forcibly moved the group to a transit camp. Four cases involving Zimbabwe, two involving land reform cases and two related to evictions under Murambatsvina, are pending before the African Commission on Human and People's Rights. SADC's regional tribunal, established to ensure that SADC member states adhere to the SADC treaty and protocols, protect the rights of citizens, and provide for the rule of law, ruled against the Zimbabwe government in several cases between 2008 and 2010, finding, for example, that the government had undermined the rule of law by refusing to compensate nine victims of state-sponsored violence and torture as had been ordered by the Zimbabwean High Court. Zimbabwe's Justice Minister claims the tribunal has no jurisdiction over Zimbabwe, and the government refused to enforce the judgments. In August 2010, SADC heads of state ordered a review of the tribunal's role and mandate, effectively suspending its operations. Civic activists have argued that the inability of the Zimbabwe's judicial system to protect its citizens or their property in such cases, or to provide due process to those seeking remedy or compensation, suggests a fundamental breakdown in the rule of law.", "Several Southern African countries have suffered from chronic food insecurity in the past decade, stemming from a combination of weather-related and man-made factors, including prolonged drought, floods, poor economic performance, and the impact of HIV/AIDS. Zimbabwe was particularly hard hit. Experts have attributed this primarily to severe crop failure, but some suggest Murambatsvina and other government policies also significantly limited the population's ability to feed itself, particularly in urban areas. Aid organizations estimated that some seven million Zimbabweans, almost three-quarters of the country's population, required food assistance between late 2008 and early 2009. That figure has declined significantly in the last two years – an estimated 3.5 required food aid in 2009/2010, and 1.7 million are estimated to require food aid in 2011. USAID reports that food production has slightly increased, but attributes the continued need to a number of factors, including localized food insecurity, limited access to currency, and displacement due to localized political violence.\nDrought is in part to blame for the country's food shortages, but many analysts have argued that disruptions to the farming sector resulting from Mugabe's land seizure program resulted in reduced food production. Others suggest while the fast-track land reform program did result in a major restructuring of the country's agricultural sector, not all of the effects have been negative. Nearly all of the country's white-owned 4,500 commercial farms have now been taken over; less than 300 white-owned commercial farms remain in operation. From independence to 1999, roughly three million hectares of commercial farmland were transferred under a land reform program largely funded by the British, and a further eight million hectares were subsequently re-allocated after 2000. The government's land redistribution program has reportedly been plagued by inefficiencies, and critics suggest large portions of redistributed land are not actively farmed. Thousands of experienced farm workers were reportedly forced to flee seized commercial farms, and many of those who received farmland had no previous agricultural expertise. Farming inputs have been in short supply for those without start-up assets.", "In late 2005, the Zimbabwe government established Operation Taguta (or \"Eat Well\"), a move seen by many as an acknowledgment that farm resettlement policies had failed to meet the country's agricultural production needs. With food distribution already under the control of the Grain Marketing Board, then reportedly led by military officers, the government established a command agriculture system, in which the military would be responsible for not only the distribution, but also the production of food. Under Taguta , there were numerous reports of the illegal seizure of farm equipment, destruction of the cash crops small-scale farmers grow to sell at market to support their families, and even army brutality against farmers. Some critics of the government suggest Operation Taguta was used by the government as an excuse to deploy military forces throughout the country to control the population. A Zimbabwe journalist was jailed in March 2009 for reporting on allegations of corruption within the Grain Marketing Board. Its power has been reduced under the coalition government.", "The ZANU-PF government's stance on food aid led many observers to suspect that it used food as a political weapon, a charge the government denied. Despite international donor agency assessments suggesting the need for food assistance, President Mugabe confounded observers in the mid-2000s by repeatedly declaring the country was running a maize surplus and would not need food aid. In 2004, the government stopped a U.N. food needs assessment and later halted general food aid distribution by donors (targeted food aid to vulnerable groups continued), despite independent estimates that suggested 4.8 million would require assistance. In March 2005, the government finally acknowledged serious food shortages, but delayed signing an agreement to allow the World Food Program and its implementing partners to provide assistance until December of that year. Reports suggested that the government maintained tight control of food distributions, before banning the distribution of aid by NGOs prior to the 2008 runoff. The government accused aid agencies of using food to turn Zimbabweans away from ZANU-PF.\nCritics accused the government of distributing food only in areas where people would agree to vote for ZANU-PF. During past elections, civil rights groups and the opposition reported instances of ZANU-PF holding campaign rallies in conjunction with government food distributions. In some areas, officials distributing food required recipients to show a party card—MDC supporters were reportedly turned away. Two 2005 court rulings supported these claims, finding that ZANU-PF candidates politicized distributions and used violence against the MDC.", "In the midst of its political and economic crises, Zimbabwe has been ravaged by HIV/AIDS. The country's HIV prevalence rate is among the world's highest. The United Nations estimates that Zimbabwe has one of the highest percentages globally of children who have been orphaned by AIDS. The epidemic has caused a severe strain on the country's healthcare system; reports suggest that majority of hospital admissions are AIDS-related, leaving few beds or resources for other patients. To compound this problem, the economic crisis has resulted in the exodus of many of the country's medical professionals. The AIDS epidemic is having a crippling effect on the economy—the inability of infected agricultural workers to adequately contribute to food production further hamstrings the struggling industry.\nAlthough its infection rate remains high, Zimbabwe is one of several countries in Sub-Saharan Africa in which HIV prevalence rates have declined, after reportedly peaking at 36% in the mid-1990s. Changes in sexual behavior and prevention programs have been credited, but mortality among diagnosed cases during the peak of the epidemic also contributed to the decline. Zimbabwe's government has claimed significant resolve to fight the disease. The country was the first to introduce a tax to finance HIV/AIDS programs (3% on taxable income). President Mugabe committed Zimbabwe to universal access to antiretroviral therapy (ART) by 2010, but access remains relatively low, with less than half of those requiring treatment on ART in 2010.", "From August 2008 to June 2009, over 98,500 suspected cases of cholera, including almost 4,300 deaths, were reported, according to the U.N. World Health Organization (WHO). Neighboring countries reported confirmed cases in border areas. Cholera, an acute diarrheal infection, is spread by contaminated food and water. In Zimbabwe, the reported case fatality rate (CFR) reached almost 6% at its peak in January 2009, much higher than the normal 1% CFR rate for cholera cases globally. Following significant international intervention, the country's CFR has since decreased substantially. Cholera remains a localized problem, however, from January through May 2011, there were almost 880 cases reported, but only 38 deaths.\nMany health experts attribute the severity of Zimbabwe's 2008/2009 cholera outbreak to the collapse of the country's healthcare, water, and sanitation systems. According to reports, water treatment and delivery had dramatically declined in the late 2000s, and the decline of many other basic social services, such as trash collection, posed significant health risks. Public healthcare providers lacked basic medications, supplies and functioning medical equipment, and, by 2008, many public hospitals and clinics had closed due to understaffing as health workers migrated to neighboring countries in search of work. Despite subsequent water infrastructure improvements, an estimated one-third of rural Zimbabweans still lacked access to clean drinking water in 2011.", "The turmoil in Zimbabwe in the past decade led to a severe economic contraction, a sharp drop in living standards for the rural and urban poor, and a massive exodus of Zimbabweans in search of work. According to the Solidarity Peace Trust, founded by clergy from Zimbabwe and South Africa, well over three million Zimbabweans were living outside the country by 2004. The Trust calculated that this amounted to 25%-30% of the total population, or 60%-70% of productive adults. Many more are believed to have fled Zimbabwe since then. Some who left the country because of economic hardship have faced difficult conditions in their new host countries. Many in Zimbabwe still reportedly rely on remittances from family abroad.", "Dubbed \"the world's fastest shrinking economy\" by 2008, Zimbabwe's Gross Domestic Product (GDP) declined over 50% in the ten-year period from 1998. World Bank and International Monetary Fund (IMF) lending was suspended in 2000 due to nonpayment of arrears, and foreign currency for essential imports has periodically been in short supply. Zimbabweans have faced steep rises in the prices of food and non-food items in recent years. The transitional government's adoption in 2009 of multiple currencies, including the U.S. dollar, stabilized prices, but the cost of living remains high.\nIn December 2003, Mugabe selected Gideon Gono, credited with turning around a troubled commercial bank, as governor of the Reserve Bank of Zimbabwe (RBZ). Critics maintain that his measures to fight corruption and discover illegally held foreign exchange were used to damage government opponents and further the interests of ZANU-PF, and international assessments of Zimbabwe's economic prospects remained bleak. Ignoring the advice of the IMF, the government refused to devalue the official exchange rate. Instead, in June 2006, Gono devalued the Zimbabwe dollar, removing three zeros in an effort to mitigate inflation.\nUnder \"Operation Sunrise,\" the government printed new \"rebased\" currency, known as \"little heroes,\" in an effort to combat corruption and money laundering, according to the government. Zimbabweans were given only 21 days to exchange their old currency. Individuals were restricted from exchanging more than Z$100 million (USD$1000) of the old notes without clearance from tax authorities (companies were allowed to exchange Z$5 billion). Police arrested thousands at roadblocks for holding currency over the individual limit and seized a reported $40 million. Analysts suggest the devaluation did little to reverse the foreign exchange rate shortages. Gono devalued the currency again in early 2009, removing 12 zeros from the Zimbabwe dollar.\nIn late September 2008, Zimbabwe began officially trading in foreign currency in an effort to lower prices, and in February 2009, under the direction of Finance Minister Tendai Biti of the MDC, the government began issuing civil servant salaries in vouchers good for $100 U.S. dollars. Biti and Prime Minister Tsvangirai pledged to pay salaries in foreign currency in an effort to get Zimbabweans to return to work. Zimbabwe officials continue to report that without a significant influx of foreign currency, salaries will remain low. Most salaries have risen slightly since early 2009, but remain extremely low in comparison to the cost of living or by regional standards.\nZimbabwe is currently restricted from borrowing from the IMF, to which the country still owes $134 million. The government paid $120 million in 2005 and $9 million in 2006 to settle other outstanding arrears with the Fund and to avoid compulsory withdrawal from the IMF. Mugabe has dubbed the IMF a \"political instrument\" and \"monster\" for regime change. Zimbabwe also owes an estimated $807 million to the World Bank, $510 million to the African Development Bank, and $239 to the European Investment Bank, among others; in total the country's external debt is estimated at $8.8 billion, including payment arrears of $5.9 billion (80% of GDP at the end of 2010). In response to the September 2008 power sharing agreement, the IMF's Managing Director encouraged the Zimbabwe government discuss policy reforms with the Fund and to \"take steps to show clear commitment to a new policy direction.\" Following a consultation visit to the country in March 2009, the IMF noted positive steps toward fiscal discipline and offered to provide further policy advice, but warned that IMF funding would not be renewed until Zimbabwe begins to repay its debts and establishes \"a track record of sound policy implementation [and] donor support.\" The IMF again noted progress after March 2010 and 2011 visits, but has suggested that the country remains in debt distress and that the economy will not recover without debt relief. The World Bank has pledged technical assistance to the coalition government, but like the IMF has predicated major support on Zimbabwe's payment of its arrears.", "In addition to the ZANU-PF government's attempts to revive its flagging agriculture industry through the introduction of a command agriculture system (see \" Food Insecurity \", above), the government introduced long-term leases in an effort to provide security of tenure for farmers willing to cultivate land nationalized in the 2005 constitutional amendment. One of the unintended side effects of the 2000 land reform strategy, which resulted in the abolition of land tenure, was that farmers were unable to use their land as collateral to obtain bank loans to invest in their farms. As a result, few commercial farmers were able to find the capital to maintain productivity. The government began to distribute 99-year leases in November 2006. Among the initial recipients were 19 white farmers, shocking many given Mugabe's declaration in July 2005 that his land reform program would be complete only when there was \"not a single white on the farms.\" Some banks have reportedly been reluctant to accept these leases as collateral, given that the government reserves the right to cancel a lease if it deems the farm unproductive.\nZimbabwe continues to suffer from electricity shortages, and its internal power generation capacity is reportedly capable of meeting only half of the country's demand. Periodic electricity shortages, caused by supply cuts from Mozambique, South Africa, and Zambia, compounded Zimbabwe's economic woes in recent years, periodically cutting the production capacity of the manufacturing and mining sectors by as much 50%. The MDC Minister for Energy and Power Development asserted in 2009 that country's power infrastructure is in disrepair and up to $1 billion will be needed to fix the crumbling energy sector.", "Zimbabwe's mining industry has brought much-needed income into the country, accounting for almost half the country's total foreign currency revenues in recent years. Zimbabwe has the world's second-largest reserves of platinum, behind South Africa. In 2006, the government announced plans to take a 51% share of all foreign-owned mines for local black investors; 25% of that share would be acquired at no cost to the government, and mines that refused to part with their shares would be expropriated. After industry officials cautioned that the plan would deter foreign investment, the proposal was modified, allowing firms that invested in community projects to keep their majority share. Parliament voted to approve similar plans to take a majority share in all foreign-owned businesses in 2007; the legislation became law in March 2008. The government insisted that it would not expropriate foreign-owned companies and that the law would not be applied to every company, but rather \"on the basis of capital and employment levels.\" A ZANU-PF controlled-ministry has introduced subsequent indigenization regulations related to the mining sector that are the subject of ongoing debate within the transitional government; critics argue the law further deters much-needed foreign investment.\nThe coalition government has sought to encourage investment in the mining sector, despite uncertainty regarding the indigenization regulations. Under the previous administration, gold miners were required to sell their product to the Reserve Bank of Zimbabwe. As the bank's foreign currency reserves dwindled, it reportedly ceased to pay miners for the gold, and many of the country's gold mines closed. The coalition government now allows the mines to market their own gold and accept payment in foreign currency. It has also cut the tax on gold export revenues.", "The Zimbabwe government has taken various steps in recent years to crackdown on illegal mining, although some suggest that members of ZANU-PF may be complicit. Police arrested an estimated 20,000 illegal miners in 2006, including several hundred reportedly legal small-scale miners, confiscating gold, diamonds, emeralds, and gold ore. According to reports, most of the miners were released after paying fines. Security forces have been accused of serious human rights abuses related to some illegal mining crackdowns. As a result of the collapse of the formal economy, many of the country's unemployed have resorted to illegal mining, selling their goods on the black market.", "The World Diamond Council (WDC), a diamond industry organization that aims to prevent the trade of conflict diamonds, raised initial concerns in December 2008 that rough diamonds from Zimbabwe were being exported illegally, rather than through the Kimberly Process (KP), an international government certification scheme designed to prevent the \"blood diamond\" trade. According to civil society reports, Zimbabwean soldiers in the Marange diamond fields have forced villagers to labor in the mines and then smuggled the stones from the country. Rough stones from Zimbabwe have reportedly been confiscated in India and Dubai. The European Union pressed for an investigation into Zimbabwe's compliance with its Kimberly obligations in early 2009, and a high level KP delegation visited Zimbabwe in March to express the group's concern with reports of violence and smuggling from the Marange area. The KP Secretariat refrained from suspending Zimbabwe from the certification scheme, however. During a KP Plenary meeting in November 2009, the body called for stringent export controls on diamonds from Marange. The Zimbabwe government reported later that month that security forces had begun withdrawing from the area, and a judge ordered that the Reserve Bank of Zimbabwe hold all diamonds from the area until legal claims regarding the Marange mines are resolved. Some argue that \"Zimbabwe poses a serious crisis of credibility for the KP\" The U.S. government and others called for Zimbabwe to be suspended from the Process if the controls recommended at the KP Plenary were not implemented. In June 2011, the KP Chair, held by Mathieu Yamba of the DRC, announced that exports from Marange could resume. The United States and other Western governments, along with several human rights and industry groups, have protested the move, arguing that KP decisions are supposed to be based on consensus.\nThe Kimberly Process had previously investigated allegations that \"blood diamonds\" from the Democratic Republic of Congo (DRC) were being smuggled along with rough stones from Zimbabwe into South Africa for export. The Mugabe government dismissed those claims as a Western attempt to promote regime change. Zimbabwe has been previously linked to conflict diamonds; senior officials were named in a 2003 U.N. report for profiting from illicit trade during Zimbabwe's military operations in the DRC.", "Blaming the United States, the United Kingdom, and other Western governments for the country's economic crisis, President Mugabe sought to engender investment and trade opportunities with Asia, particularly China. Dubbed the \"Look East\" policy, Mugabe's efforts were criticized by his own party as insufficient to address the economy's slide. In December 2006, the Parliamentary Portfolio Committee on Budget, Finance, and Economic Development, chaired by a ZANU-PF MP, accused the central bank governor of exacerbating inflation with \"quasi-fiscal activities\" and warned the administration that \"the Far East destinations be viewed as a market in its infancy and that the traditional market of the West should not be neglected as the nation moves toward regularizing relations with the international community.\" China has reportedly provided a number of sizable loans to the transitional government to support Zimbabwe's economic recovery in return for mining concessions.", "Critics contend that President Mugabe has bought the continued loyalty of the country's security forces through patronage and bribery. Some observers suggest that loyalty of the security forces may have come at a heavy cost to the economy. Observers continue to speculate on how the government has paid for its military purchases from China, including a reported $240 million in fighter jets. In addition to allegations of land and housing handouts to security personnel, critics of the government highlight a significant number of current and former military officers who have been appointed to senior civilian government positions. Mugabe previously placed current or former military officers in control of the Ministries of Energy and Industry, the Zimbabwe Revenue Authority, the electoral commission, the state railway, the Grain Marketing Board, and the parks authority, and several have served in the Senate and ambassadorial posts abroad. Several of these individuals still hold senior offices in the government.\nAs the economy contracted in the mid 2000s, signs emerged that the government might be running out of funds to maintain its security forces. During a parliamentary hearing in 2007, the Defense Minister reportedly suggested that soldiers were dissatisfied with their low salaries and that the forces were running out of food and might have to suspend training if new funds were not released. Later that month, Zimbabwean intelligence officials reportedly uncovered a coup plot led by several senior military officials. Unconfirmed reports suggest that as many as 400 members of the army, air force, and police may have been involved in the plan, which allegedly aimed to remove Mugabe and to install Emmerson Mnangagwa as president. Mnangagwa denied any knowledge of the plot. Other sources suggest Vice President Joice Mujuru and her husband were behind the coup attempt and used Mnangagwa's name to discredit him. Neither Mnangagwa nor the Mujurus were officially accused of involvement, although some reports suggest Solomon Mujuru may have been placed under house arrest for a limited time. In late 2008, soldiers looted Harare stores after they were unable to access their paychecks. Like other civil servants, the military and police now receive regular salary payments under the transitional government.", "The international community has been divided on how to respond to Zimbabwe's economic and political crises. In general, Western nations and institutions have expressed opposition to Robert Mugabe's methods of rule, and have pursued policies intended to pressure the Zimbabwe government for reforms. Mugabe has enjoyed greater support in Africa, where he has been viewed as an elder statesman and a leader of the anti-colonial struggle, and among the Non-Aligned nations generally. This has changed to an extent in recent years, however, with some African leaders concluding that the Zimbabwe situation has been damaging to regional interests and that political and economic reforms are needed. Nevertheless, African countries supported Zimbabwe in its successful bid to chair the United Nations Commission on Sustainable Development in 2007, allegedly to show African solidarity against Western opposition. AU member states were unable to come to a conclusion on how to address Zimbabwe's political situation at the 2008 AU Summit in Egypt, despite election observer reports from the AU, SADC, and the Pan-African Parliament finding that the June runoff was not free or fair. The African Union subsequently deferred to SADC's mediation role on Zimbabwe.\nThe international donor community has generally expressed support for the new coalition government, but has predicated significant assistance on improvement in the following areas:\nthe release of all political prisoners;\nthe end of farm disruptions;\nthe cessation of politically motivated violence;\nthe establishment of a credible and transparent Reserve Bank team;\nan end to harassment and intimidation of the media;\nand a commitment of all stakeholders to holding credible elections in a timely manner.", "The United States government has been critical of Robert Mugabe and ZANU-PF for their poor human rights record and lack of respect for the rule of law, but has expressed cautious support for the transitional government. Key elements of U.S. policy toward Zimbabwe have included targeted sanctions against high-ranking ZANU-PF members and their affiliates, support for South Africa to spearhead an African effort to restore democracy, and assistance intended to help the country's poor and strengthen civil society. Former Secretary of State Condoleezza Rice told Congress during her 2005 confirmation hearing that Zimbabwe was one of six \"outposts of tyranny\" worldwide and that the United States stood with the oppressed people there. These remarks provoked an angry personal response from Mugabe. Prior to the formation of the unity government, Secretary of State Hillary Rodham Clinton told the Senate in January 2009 that \"the suffering inflicted on the Zimbabwean people by the illegitimate government of Robert Mugabe is appalling.\" Under her leadership, the State Department has welcomed the transitional government but warned, \"we will not consider providing additional development assistance or even easing sanctions until we see effective governance.\"", "The Mugabe administration has routinely blamed its economic crisis on sanctions from the west. The United States does not currently have trade sanctions against Zimbabwe, with the exception of a ban on transfers of defense items and services to the country. The U.S. government has, however, frozen government-to-government aid. Zimbabwe is not eligible for trade benefits under the African Growth and Opportunity Act (AGOA) because of its poor record of economic management and human rights abuses.\nThe White House has annually renewed U.S. sanctions against ZANU-PF leaders. The sanctions are intended to punish those responsible for Zimbabwe's difficulties without harming the Zimbabwe population at large. The initial sanctions, imposed in 2003, ban travel to the United States by \"senior members of the government of Robert Mugabe and others ... who formulate, implement, or benefit from policies that undermine or injure Zimbabwe's democratic institutions or impede the transition to a multi-party democracy.\" Persons who benefit financially from business dealings with such individuals are also banned, as are the spouses of people in either group. In 2003, President Bush issued an executive order freezing assets held in the United States by more than 70 high-ranking Zimbabwe officials and Mugabe's wife, Grace. Nine companies and commercial farms were added in 2004, and the list has been further expanded since then. The executive order also allows the Secretary of the Treasury, in consultation with the Secretary of State, to go beyond previous authority and block the property of additional persons who \"have engaged in actions or policies to undermine Zimbabwe's democratic processes or institutions,\" their immediate family members, and any persons assisting them. President Obama most recently renewed the sanctions in March 2011, stating,\nWhile some advances have been made in Zimbabwe, particularly on economic stabilization, since the signing of the power-sharing agreement, the absence of progress on the most fundamental reforms needed to ensure rule of law and democratic governance leaves Zimbabweans vulnerable to ongoing repression and presents a continuing threat to peace and security in the region and the foreign policy of the United States. Politically motivated violence and intimidation, and the undermining of the power-sharing agreement by elements of the Zimbabwe African National Union-Patriotic Front party, continue to be of grave concern.", "Congress expressed its opposition to Robert Mugabe's policies in the Zimbabwe Democracy and Economic Recovery Act of 2001 ( P.L. 107-99 ), which criticized \"economic mismanagement\" and \"undemocratic practices\" in Zimbabwe. This legislation called for consultations with allies on economic sanctions and a travel ban. In the 109 th Congress, the House of Representatives passed H.Res. 409 in December 2005, condemning Operation Murambatsvina , which it termed a \"humanitarian disaster that has compounded the country's humanitarian food and economic crises.\" The resolution also called on the United Nations and African regional bodies to investigate the impact of the demolitions and requested that the Administration use its influence to advocate further action by the IMF against the Zimbabwe government. Senator Russ Feingold introduced S.Amdt. 1254 , providing $4 million for democracy and governance activities in Zimbabwe, which was included in the final version of the FY2006 foreign operations appropriations bill ( P.L. 109-102 ).\nThe 110 th Congress was also active on Zimbabwe. In April 2007, the House of Representatives passed H.Con.Res. 100 , sponsored by Representative Tom Lantos, condemning the Zimbabwe government's recent actions against opposition and civil society activists. In June 2007, the Senate passed parallel legislation, S.Con.Res. 25 , introduced by then-Senator Barack Obama. Former Senator Hillary Rodham Clinton introduced S. 1500 , the Support for Democracy and Human Rights in Zimbabwe Act of 2007, which would have authorized up to $10 million to support democracy and human rights programs in the country.\nSeveral Members of Congress issued statements highly critical of the Mugabe Administration surrounding the 2008 elections and the related political violence. Some wrote letters to Bush Administration officials or African leaders. On April 25, the Senate passed S.Res. 533 , introduced by Senator John Kerry, calling for the immediate release of the presidential results, an end to the political violence and intimidation, and a peaceful transition to democratic rule. The resolution also supported calls for an international arms embargo and other targeted sanctions against the Mugabe regime, and encouraged the creation of a comprehensive political and economic recovery package in the event a democratic government is installed. The House passed H.Res. 1230 , sponsored by Representative Donald Payne and all the House Members of the Congressional Black Caucus, among others, condemning the violence and calling for a peaceful resolution to the political crisis. H.Res. 1270 , sponsored by Representative Ileana Ros-Lehtinen, was also passed, calling for an international arms embargo, urging the United Nations to deploy a special envoy to Zimbabwe, and encouraging the parties to discuss the creation of a government of national unity. Prior to the June runoff, Representative Adam Schiff introduced legislation calling on the Zimbabwe government to postpone the election. Representative Tom Tancredo also introduced legislation, H.Con.Res. 387 , calling for the United States to sever diplomatic ties with Zimbabwe.\nThe 111 th Congress monitored the progress of the transitional government and commenced a review existing U.S. policy toward Zimbabwe. In March 2009, Representative Ros-Lehtinen introduced H.Res. 238 , declaring the economic and humanitarian crisis in Zimbabwe to be a threat to international security. Seven months after the new government's formation, the Senate Foreign Relations Africa Subcommittee held a hearing, Exploring U.S. Policy Options Toward Zimbabwe's Transition . Following that hearing, Subcommittee Chairman Russ Feingold called the transition a \"great opportunity ... to help advance real reform and recovery,\" noting that while the transition remains incomplete and abuses in Zimbabwe continue, \"we need to seize this opportunity and look for ways that we can proactively engage and help strengthen the hands of reformers in Zimbabwe's transitional government.\" In May 2010, Senator Feingold, Senator John Kerry, and Senator Johnny Isakson introduced S. 3297 , the Zimbabwe Transition to Democracy and Economic Recovery Act of 2010. According to Senator Feingold, S. 3297 aimed to \"update U.S. policy and to provide the necessary direction and flexibility for the United States to proactively push for democracy and economic recovery in Zimbabwe.\" Also in support of \"democratic and economic recovery,\" Representative Payne introduced H.R. 5971 , the Zimbabwe Renewal Act of 2010 in July 2010, which, among other items, would have authorized debt forgiveness for Zimbabwe by U.S. government agencies. Other legislation on Zimbabwe during the 111 th Congress included S. 3722 , the Zimbabwe Sanctions Repeal Act of 2010, introduced by Senator James Inhofe, which would have repealed ZDERA.", "During President Bush's visit to South Africa in 2003, he praised the work of Thabo Mbeki as the \"point man\" in seeking a Zimbabwe solution. The statement suggested to some that the United States was stepping back from a lead role on the Zimbabwe issue and would accede to Mbeki's \"quiet diplomacy\" (see \" South Africa \" section, below) as the best means of achieving reform in Zimbabwe. Mbeki reportedly assured President Bush at that time that he would be able to bring about talks between ZANU-PF and the MDC, which did not occur until 2007. In 2004, former U.S. Assistant Secretary of State for Africa Jendayi Frazer, who was Ambassador to South Africa at the time, called for the formation of a \"coalition of the willing\" to deal with Zimbabwe. Frazer reiterated South Africa's position of leverage, and insisted more needed to be done by African states to return Zimbabwe to democracy. The Obama Administration has expressed support for South African President Jacob Zuma's role as the SADC facilitator on Zimbabwe issues.", "The United States remains the leader in humanitarian relief aid to the Zimbabwean people, supplying an estimated $1 billion in assistance since 2002. In FY2008, U.S. assistance included $271 million in food aid and $22 million in other humanitarian assistance, as well as over $22 million in health programs and over $10 million for democracy and governance support. During President Obama's June 2009 meeting with Tsvangirai, President Obama pledged $73 million in new governance, education, and health assistance to Zimbabwe; in total, the U.S. government obligated over $292 million in foreign aid in FY2009. The U.S. government provided over $7.3 million in FY2009 specifically to address the cholera outbreak, in addition to $8.6 million for other water and sanitation programs. U.S. assistance to Zimbabwe in FY2010 totaled over $168 million, including almost $80 million in humanitarian aid. The Obama Administration has requested almost $110 million in non-humanitarian aid funding for Zimbabwe for FY2012, including over $70 million for health programs, $21 million for governance programs, and over $16 million for economic growth initiatives. The Administration maintains that the provision of non-humanitarian assistance directly to the government remains predicated on progress toward political reforms, although the U.S. government is providing some technical assistance to reform-minded ministries and to parliament. Zimbabwe is not among the countries eligible to participate in the Millennium Challenge Account program, nor is it a focus country for the President's Emergency Plan for AIDS Relief.\nUSAID has supported local democracy advocates in Zimbabwe through a variety of programs aimed at ensuring media freedom and strengthening civil society and the legislative process. USAID partners were reportedly instrumental in documenting the demolitions and human rights violations during Operation Murambatsvina and recent bouts of political violence, and USAID continues to prioritize protecting human rights defenders. Legal restrictions have limited the ability of journalists and independent newspapers to provide alternative source for news, and the Zimbabwean government has controlled all domestic radio and television broadcasting stations until recently. Reforms made under the coalition government have laid the foundation for independent media to operate, but reports suggest that restrictions on free speech remain. USAID has provided funding for Voice of America to broadcast Studio 7, a daily program on shortwave and AM radio. Studio 7, along with UK-based Shortwave (SW) Radio Africa and the Dutch-funded Voice of the People (VOP) have had their broadcasts periodically interrupted by the ZANU-PF government using Chinese jamming equipment.\nThe U.S. State Department lifted its warning for Americans traveling to Zimbabwe in 2009, although it suggests that the situation in the country is \"unpredictable and could deteriorate quickly without warning\" and has warned that Americans have been detained for expressing their views about the political regime in Zimbabwe or President Mugabe. In 2006, a delegation of the U.S. Coalition of Black Trade Unionists (CBTU), led by AFL-CIO Vice President William Lucy, was expelled from the country. Then-U.S. Ambassador Christopher Dell said,\nClearly, the Zimbabwe government's decision not to honor the delegation's visas is the result of the events of 13 September, when security forces brutally suppressed planned peaceful demonstrations by the Zimbabwe Congress of Trade Unions.... This transparent attempt to deflect international attention from the vicious beatings is itself an example of the Zimbabwean government's repression and of its fear of the truth.... There is increasing acknowledgment that a man who was regarded as a liberator of his people is an oppressor.", "", "In 2002, in conjunction with the United States and the European Union, the British Parliament imposed targeted sanctions on leading members and affiliates of the ZANU-PF regime, as well an arms embargo and an asset freeze. The UK has imposed travel bans on over 100 members of the ZANU-PF and close affiliates of the party. Britain continues to provide humanitarian aid in Zimbabwe. Concurrently, the UK has maintained its willingness to release funds to Zimbabwe to pay for parts of an orderly land redistribution program if Mugabe retires and the rule of law is returned. It is unclear whether Britain will concede to release such funds while President Mugabe is still in office. He was extremely hostile toward former British Prime Minister Tony Blair, a persistent critic. Speaking at his 81 st birthday celebration, Mugabe said the upcoming election would \"kill once and for all the machinations of that man in Number 10 Downing Street, who for some reason thinks he has the divine power to rule Zimbabwe and Britain.... On March 31, we must dig a grave not just six feet but 12 feet and bury Mr. Blair and the Union Jack.\" Prime Minister [author name scrubbed] maintained his predecessor's position, boycotting the December 2007 EU-Africa Summit to protest Mugabe's attendance. In an April 2008 speech to the House of Commons, Brown called for an international arms embargo against Zimbabwe, accusing the government of rigging the March elections and calling the political situation \"completely unacceptable.\" Britain's Queen Elizabeth stripped Mugabe of an honorable Knighthood he received in 1994. Mugabe allies do not appear to view Prime Minister David Cameron with the same hostility they viewed his predecessors.", "The European Union was among the first to take action against Mugabe's government in the early 2000s. The EU imposed targeted sanctions on 19 members of Zimbabwe's elite and their spouses after pulling the EU election observer team out of Zimbabwe in February 2002. These \"light\" sanctions were later expanded and have been renewed yearly. Several individuals were removed from the list in 2010 and another 35 were removed in 2011. Current EU sanctions include a travel ban on over 160 members and beneficiaries of the ZANU-PF, an arms embargo, and an asset freeze. Mugabe defied the travel ban in 2005 to attend the funeral of Pope John Paul II. The EU has continued to provide humanitarian and limited development assistance.", "The Commonwealth of Nations sent a team of observers to the March 2002 presidential election in Zimbabwe, and the group found \"that the conditions in Zimbabwe did not adequately allow for the free expression of the will of the electors.\" Consequently, a special committee appointed to monitor and respond to the vote, consisting of Australia, South Africa and Nigeria, determined that Zimbabwe would be suspended from the Commonwealth for one year. The suspension was the first public action against Mugabe by a body that included influential African countries. In December 2003, the Commonwealth, including 19 other African members, voted to suspend Zimbabwe indefinitely. On this occasion, the decision was strongly criticized by President Thabo Mbeki, who had by then committed to his policy of quiet diplomacy, and by other governments in southern Africa. Mugabe responded by withdrawing Zimbabwe from the Commonwealth and ruling out any further discussions or a possible return. Some speculated, as a result, that the Commonwealth's action had backfired by placing Zimbabwe fully outside the bounds of its influence. Others argued that indefinite suspension by a body including many African members had important symbolic value in Africa and worldwide.", "While many Western governments moved to isolate the ZANU-PF government in the last decade, China and Iran strengthened ties and deepened their involvement in Zimbabwe's economy. China, which became active on the continent in the 1950s and 1960s to gain global influence, now looks to Africa for natural resources to meet the needs of its growing population. A longtime ally of ZANU-PF, which it backed during the liberation struggle, China is reported to be Zimbabwe's second-largest trading partner, after South Africa, and its largest investor. Many observers see Zimbabwe's platinum concessions as a major draw for Beijing, and Chinese firms are playing roles in the cell phone industry, as well as in television, radio, and power generation. China holds controlling interest in the country's electricity generator.\nSome critics worry China's investment in Zimbabwe has come without the \"strings attached\" that Western governments might require, such as commitments to human rights, accountability, and anti-corruption. Arms agreements between China and Zimbabwe have attracted considerable attention in recent years, as most Western governments continue to enforce an arms embargo against the country. Zimbabwe's reported $240 million purchase of 12 Chinese fighter jets drew questions from analysts as to why a country that faces no immediate external threat from its neighbors would need such an air force. Reports indicate that Zimbabwe also ordered riot gear, water cannons, armored vehicles, and AK-47 rifles from China. How impoverished Zimbabwe could pay for arms from China is a subject of much speculation; Defense Ministry officials have admitted to being in arrears for the 2005 arms purchases. Some observers suspect that the acquisitions are covered in some way by China's growing economic role in Zimbabwe.\nIn the face of Western condemnation and isolation, Zimbabwe also found an ally in Iran. During a 2006 visit to Tehran, President Mugabe reportedly secured commitments from Iran for direct aid and Iranian assistance to its energy, agriculture, and mining industries. Reports indicate that Iran or one of the Gulf countries may also be provide technical assistance to Zimbabwe to revive the country's only oil refinery, built 40 years ago to process Iranian crude. Most of Zimbabwe's fuel comes by road from South Africa.\nIn addition to investment and economic assistance, Zimbabwe's Asian partners have occasionally offered President Mugabe diplomatic support. A Chinese official visiting in 2004 said that his government \"appreciates the reasons for the land issue\" and was opposed to any interference by foreign governments. China played a lead role in trying to quiet U.N. efforts to condemn Zimbabwe for Murambatsvina , and has vetoed proposed sanctions against the Mugabe Administration by the Security Council. China continues to press Western governments to lift their sanctions on Zimbabwe. Iranian President Mahmoud Ahmadinejad has expressed similar support, once saying \"We believe Zimbabweans have every right to defend their sovereignty and land. We are happy that Zimbabwe has once again taken control over its resources and we support the land redistribution programme.... We strongly condemn the bullying tactics of a number of (Western) governments against Zimbabwe.\"", "Although an observer team from Nigeria, a significant player in African politics, endorsed the 2002 presidential election in Zimbabwe, Nigeria's former president, Olusegun Obasanjo, attempted to mediate the country's crisis. He was reportedly concerned about the consequences of the Zimbabwe situation for the credibility of the New Partnership for Africa's Development (NEPAD). NEPAD was an AU initiative aimed at demonstrating Africa's capabilities for resolving its own problems in exchange for increased aid, trade, and investment. Obasanjo supported Zimbabwe's suspension from the Commonwealth, and in 2004, he held a long discussion with Tsvangirai and an MDC delegation in the Nigerian capital. The former Nigerian leader then took the Zimbabwe visitors on a personal tour of his farm—an unusual privilege. After the 2005 elections, Obasanjo met again with Tsvangirai, and the government-owned Herald newspaper accused the Nigerian president of funding the MDC. Obasanjo's successor, Umaru Yar'Adua, expressed his own concern with the situation in Zimbabwe, telling journalists at a German-African summit in October 2007 that developments in the country were \"not in conformity with the rule of law.\" After an August 2011 meeting with Prime Minister Tsvangirai, current Nigerian President Goodluck Jonathan gave assurances that Nigeria would support the efforts of SADC and the AU to achieve peaceful and credible elections in Zimbabwe.", "Former President Thabo Mbeki's \"quiet diplomacy\" toward Zimbabwe drew criticism from some for its slow pace, although many credit Mbeki with playing a critical role in the 2008 power sharing agreement. Some analysts suggest that his reluctance to openly confront or condemn President Mugabe be viewed through the historical lens of the liberation struggles of Southern Africa. Mugabe lent aid and shelter to the African National Congress (ANC), now the ruling party in South Africa, during its long struggle against white minority rule, creating a bond of gratitude. Mugabe has enjoyed considerable popularity around Africa and in South Africa itself, not least because of his moves to seize lands owned by comparatively wealthy white farmers.\nNonetheless, many have been dissatisfied that South Africa, a regional heavyweight both politically and economically, and which has extensive control over Zimbabwe's transport links to the outside world, as well as over its electricity supplies, has not played a more proactive role in resolving Zimbabwe's outstanding political disputes. As Zimbabwe's largest trading partner, many consider South Africa in a position to exert substantial leverage. At the same time, South Africa must weigh the unintended effects of such leverage—state collapse across its northern border, for example, could produce a sharp increase in illegal migration and have a substantial impact on South Africa. In May 2008, as economic collapse and election violence in Zimbabwe pushed rising numbers to migrate south, Zimbabwean and other African immigrants became targets of xenophobic violence throughout South Africa. At least 60 were killed.\nThrough his policy of engagement, former President Mbeki repeatedly brought the Zimbabwean government and the MDC together to discuss Zimbabwe's future. Mbeki's offer of economic incentives and an exit strategy for Mugabe in exchange for negotiations with the opposition and a commitment to free and fair elections were unsuccessful. In 2005, as the IMF threatened to expel Zimbabwe from the Fund for debt payment arrears, the country requested a loan from South Africa for fuel, food, and electricity, as well as to address the IMF payments. Amid rumors that the South African government would make any loan conditional on economic and political reforms, the negotiations stalled and Mugabe found another source from which to repay the IMF dues. In early 2006 speech, Mugabe warned Mbeki that he should \"keep away\" from interference in Zimbabwe's affairs.\nMbeki's Zimbabwe policies drew criticism from within his country; former President Nelson Mandela, Nobel laureate Archbishop Desmond Tutu, former opposition leader Tony Leon, and even the ANC's ally, the Congress of South African Trade Unions (COSATU), were vocal detractors. COSATU, South Africa's powerful labor confederation, strongly opposed the quiet diplomacy policy. A certain sympathy on the part of COSATU toward the MDC may be inevitable, since the MDC has its roots in the union movement. COSATU delegations have been forcibly expelled from Zimbabwe twice, first in 2004 and more recently in late 2006, when COSATU members traveled to Harare to express their support for the ZCTU after the incidents of police violence. One COSATU leader remarked, \"we are not quiet diplomats,\" and \"we will not keep mum when freedom does not lead to respect for workers and human rights.\" When the Mbeki government issued a terse initial statement following the March 2007 arrest of MDC and civil society activists, COSATU criticized the government for a \"disgraceful\" response, \"in the face of such massive attacks on democracy and human rights, especially coming from those who owed so much to international solidarity when South Africans were fighting for democracy and human rights against the apartheid regime.\"\nDefenders of Mbeki's approach argued that he was the only leader with the influence and prestige needed to sway Mugabe. Some observers expressed hope for Mbeki's mediation role when the president and Morgan Tsvangirai met in October 2004, after Tsvangirai's acquittal. Tsvangirai, who had been critical of quiet diplomacy in the past, said after the meeting that he welcomed President Mbeki's efforts to mediate. But Mbeki stunned the MDC and many supporters of democracy in Zimbabwe in March 2005, when he told a press conference that he had \"no reason to think that anyone in Zimbabwe will militate in a way so that the elections will not be free and fair.\" He insisted that \"there will be a free and fair election in Zimbabwe\" and that \"things like access to the public media, things like violence-free election have been addressed.\" Earlier, he had termed Secretary Rice's description of Zimbabwe as an outpost of tyranny as \"an exaggeration.\" These remarks left critics questioning the substance behind Mbeki's diplomacy.\nThe future of South Africa's policy toward Zimbabwe is now in the hands of Mbeki's successor. Mbeki, who resigned in late September 2008, was temporarily succeeded by ANC Deputy President Kgalema Motlanthe. Former Deputy President Jacob Zuma, who was elected as president of the ANC in December 2007, became South Africa's fourth post-apartheid president in early May 2009. Zuma has previously referred to the Zimbabwean president as \"a monster,\" and although he did not immediately call for Mbeki to step down as mediator after the 2008 elections, he did encourage African leaders to \"assist\" Mbeki, \"given the gravity of the situation.\" President Zuma himself assumed the role of SADC facilitator on the Zimbabwe situation in December 2009. South Africa's opposition parties have encouraged strong action on Zimbabwe.", "The African Union (AU) and its predecessor, the Organization of African Unity (OAU), have been supportive of Mugabe in the past. In 2002, an OAU observer team labeled Mugabe's election victory legitimate, free, and fair. In 2004, when the AU allowed a report critical of the Mugabe government to be circulated at its annual summit, some believed the regional body might be indicating a change in its approach. The 114-page report, prepared by a delegation from the African Commission for Human and People's Rights (ACHPR) that visited Zimbabwe in 2002, reportedly criticized the Zimbabwe government for police abuses, press censorship, and compromising the judiciary. The AU tabled the report at the summit, however, and declared it would keep its contents secret until Zimbabwe has had a chance to respond in detail. According to some media reports, the Zimbabwean government used procedural regulations and technicalities to prevent its release. The ACHPR passed a resolution in 2005 calling on the \"government of Zimbabwe to respect the fundamental rights and freedoms of expression\" and to allow a second fact-finding mission to enter the country. The ACHPR resolution was hailed by human rights advocates, who suggested, \"This will exert a lot of pressure on Zimbabwe - this is the first time such a significant body, so close to African heads of state, observes and condemns such defiance of human rights compliance.\" But like the previous report, the second mission's findings were rejected by the AU's Council of Ministers because of \"irregularities and procedural flaws.\"\nSome observers and international human rights organizations such as the International Press Institute (IPI), suggest that the AU's repeated rejection of ACHPR resolutions on Zimbabwe tarnished the integrity of the body. As one AU official warned, \"If we continue to throw out every human rights report that comes before us, people out there will stop taking us seriously.\" IPI also suggests that refusal of the AU to act on the ACHPR resolutions or to condemn human rights abuses in Zimbabwe damages the credibility of the African Peer Review Mechanism (APRM) initiative, a vital part of NEPAD.\nSome suggest that criticism from the AU would have little effect on Zimbabwe, unless it is accompanied by more substantial policy changes. President Mugabe has routinely ignored his detractors and has frequently denied those who might be critical of the regime access to the country. In 2005, AU Commission Chairman Alpha Konare sent Tom Nyanduga, Special Rapporteur on Refugees, Internally Displaced Persons, and Asylum Seekers in Africa, as his envoy to investigate Operation Murambatsvina . The Zimbabwean government prevented Nyanduga from conducting his assessment and deported him, accusing the envoy of \"western collusion and agenda adoption.\" In November 2008, the government reportedly rejected the visa applications of several members of the Elders, a group of senior world leaders, including Kofi Annan and former U.S. President Jimmy Carter.", "Many of the 14 members of the Southern African Development Community (SADC) are linked to Zimbabwe by a common historical experience, as well as cultural and economic ties, and the organization was seen as disinclined to publicly criticize the actions of President Mugabe or his government until recently. At a 2004 summit in Mauritius, SADC approved new electoral principles and guidelines for all its member nations. Analysts were hopeful that these rules might motivate meaningful democratic reforms in Zimbabwe, particularly since they laid out detailed guidelines for SADC observer missions. The signatory countries, including Zimbabwe, are pledged to allow SADC observers freedom of movement and access. As noted above, the SADC observer delegation's favorable report for Zimbabwe's 2005 elections was considered by critics of the Mugabe administration to be disappointing.\nAlthough Mugabe's neighboring leaders have not publicly singled him out for criticism, with the exception of Botswana, they have been increasingly concerned with the impact of Zimbabwe's crisis on their own countries. Southern African leaders blamed Zimbabwe and Swaziland for undermining economic growth in the region at a SADC Summit in Lesotho in 2006. Botswana has spoken out in the past on regional problems attributed to Mugabe's policies, including the burden placed on the country by Zimbabwe's refugees. In March 2007, following the arrest of Tsvangirai and other opposition members, Tanzanian President Jakaya Kikwete traveled to Harare to discuss the incident, and after the SADC summit, President Mbeki was nominated as mediator. SADC's election observer mission to the June 2008 runoff found that the election \"did not represent the will of the people of Zimbabwe,\" and called for dialogue among all political stakeholders toward a negotiated solution. Botswana refused to recognize Mugabe as president after the June 2008 runoff.\nPressure from SADC does appear to have brought the Zimbabwe parties to join together in the transitional government, but it remains unclear to what extent they might be willing to enforce the deal if the parties continue to struggle to work together. In March 2011, the SADC \"Troika,\" a trio of regional leaders representing the SADC Organ on Politics, Defense and Security, which is charged with coordinating efforts to promote peace and stability in the region, met in Livingstone, Zambia, to discuss, among other items, the Zimbabwe situation. President Jacob Zuma, in his role as mediator, briefed his counterparts on the latest developments, including a recent appeal by Prime Minister Tsvangirai for greater intervention to resolve outstanding political disputes and facilitate a path to credible elections. In his opening remarks at that meeting, Zambian President Rupiah Banda warned that the recent uprisings in North Africa were a warning of what could happen if the will of the people is not respected, a comment many observers considered to be a veiled warning regarding Zimbabwe. In the SADC Troika's official statement, referred to as the \"Livingstone Communiqué,\" the Troika noted disappointment with \"insufficient progress\" in the implementation of the GPA and noted a \"resurgence of violence, arrests, and intimidation\" in Zimbabwe. The communiqué called for an end to the violence and harassment and called for SADC to \"assist\" Zimbabwe to prepare guidelines for peaceful, free and fair elections. President Mugabe and members of his party have expressed displeasure with the Troika's findings.\nIn a June 2011 SADC Summit in Sandton, South Africa, President Zuma issued a new report on Zimbabwe, reiterating the findings referenced in the Livingstone Communiqué and calling for an immediate end to the violence, harassment, and other actions that contradict the GPA. At the Summit, the SADC heads of state confirmed a decision to expected to appoint three officials from the region to support Zimbabwe's mechanism for monitoring the implementation of the political agreement. ZANU-PF has opposed the concept, arguing that it impinges on national sovereignty. The MDC continues to press for SADC to take a more forceful position on security sector reforms and other efforts to prevent the type of violence that surrounded the 2008 polls. The Obama Administration has been supportive of SADC efforts on Zimbabwe under President Zuma's leadership, but continues to differ with SADC on the issue of lifting sanctions against Mugabe and senior ZANU-PF officials.", "Despite hopes that the transitional government would bring change to Zimbabwe, life for many of the country's people remains a daily struggle. The rate of unemployment and the cost of living remain high, and salaries for those with jobs are far below regional standards. The controversial issues of property rights and land reform have yet to be seriously addressed by the government. Prospects for Zimbabwe's youngest generation remain poor.. Many teachers have returned to work since 2008, but salaries remain low and enticing the thousands who have left the country to return will be a major challenge. Many families still struggle to afford basic food items, not to mention medicines or doctors. Analysts have cited a number of reasons for Zimbabwe's economic problems in the past decade, including recurrent drought, difficulties encountered in implementing economic reforms, and industrial competition from comparatively cheap South African imports. At the same time, analysts place considerable responsibility for Zimbabwe's problems on the policies adopted and actions taken by the government since 1997.\nZimbabwe is at a critical juncture. Prior to the power sharing agreement, the government took some fiscal measures to reverse the economic downturn, but hyperinflation continued, and the measures were largely ineffective. The MDC controls the Ministry of Finance under the transitional government, but Zimbabwe is in debt distress and it remains unclear how effective the MDC's economic policies will be without major donor financing for its recovery plans, estimated to require up to $8 billion. Many donor governments and institutions have been reluctant to release significant funds until they can determine whether the transitional government's establishment will result in changes to the policies that brought about sanctions in the first place. The MDC and ZANU-PF, long-standing political foes, must now demonstrate their willingness to work together to put the country's economy on the path toward recovery." ], "depth": [ 0, 1, 1, 1, 2, 2, 3, 3, 2, 2, 1, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4, 3, 3, 3, 1, 2, 3, 3, 3, 3, 2, 3, 3, 2, 2, 1, 2, 2, 2, 3, 3, 2, 2, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h3_full h1_full", "h0_full", "h3_full h0_title h1_full", "", "h0_full", "", "", "", "h1_full", "h2_title h1_title h3_title", "", "h2_title h1_title h3_title", "", "h3_full", "", "", "h2_title h1_title", "h1_full", "h2_full", "", "", "", "", "h2_title h1_title", "", "", "", "", "", "h2_full h1_title", "", "h1_full", "h2_full", "", "h2_full", "h2_full", "", "", "", "", "h2_full", "", "h0_full h3_full h2_title h1_title", "h2_title h1_title h3_title", "h3_full h2_full", "h1_full", "", "", "h0_title", "", "", "", "h0_full", "", "", "", "", "h2_full" ] }

{ "question": [ "What was Zimbabwe's political outlook in the late twentieth century?", "How did the MDC impact Zimbabwe during this time?", "What was the outcome of the referendum?", "What did Zimbabwe's government do in response to the failure of the referendum?", "How was President Mugabe's authority viewed by the public?", "Why was his authority riddled with such poor opinions by the public?", "What was the MDC's response to the inadequate authority of Mugabe's government?", "What was Tsvangirai's involvement in Zimbabwe after this response of the MDC?", "What was the general state of the Zimbabwean economy in the years preceding the 2008 agreement?", "How has Zimbabwe's overall prospects looked since the agreement?", "How did Zimbabweans react to the poor conditions of the country in these years?", "What is Zimbabwe's current outlook?", "How is Robert Mugabe perceived as an African politician?", "What was the response of the international community to Mugabe's damaging policies?", "What was a specific action of the international community in response to Mugabe's actions?" ], "summary": [ "Zimbabwe's prospects appeared promising in 1980, as it gained independence after a long liberation war. However, rising inflation and unemployment bred discontent in the 1990s and led in 1999 to the formation of the opposition Movement for Democratic Change (MDC).", "The MDC surprised many with its initial success, campaigning against a 2000 referendum that would have legalized the president's continued rule, made government officials immune from prosecution, and allowed the uncompensated seizure of white-owned land for redistribution to black farmers.", "The referendum failed, and the MDC won nearly half the seats in the 2000 parliamentary election.", "President Robert Mugabe's ruling party subsequently took numerous actions to bolster its power that were deemed undemocratic by many in the international community.", "President Mugabe's government was seen as increasingly autocratic and repressive by its critics, and its human rights record was poor.", "The government suppressed freedom of speech and assembly, and many contend that the ruling party restricted access to food, already scarce, in opposition areas.", "The MDC, divided over how to respond, split into two factions in 2005, hampering its ability to challenge the ruling party. Reports of political violence rose sharply after Zimbabwe's March 2008 elections, when, for the first time since independence, Mugabe's party lost its majority in the National Assembly. Mugabe's re-election as president in the June runoff was viewed as illegitimate by the United States and the United Nations Secretary-General, among others. In September 2008, after several weeks of negotiations, Mugabe and MDC leader Morgan Tsvangirai signed a power-sharing arrangement aimed at resolving the political standoff.", "As part of the deal, Tsvangirai became prime minister of a new coalition government in February 2009, and cabinet positions were divided among the parties.", "Zimbabwe's economic output had decreased dramatically in the decade prior to the signing of the power-sharing agreement in 2008. At that time, many considered the economy to be in a state of collapse, with official inflation having risen above 200,000,000%.", "Although the economy has since stabilized, unemployment remains over 90%. An adult HIV prevalence rate of almost 14% has contributed to a sharp drop in life expectancy, and a nationwide cholera outbreak from late 2008 through early 2009 resulted in almost 100,000 infections and over 4,300 deaths. The number of Zimbabweans requiring food aid has declined significantly since 2008, but chronic malnutrition rates remain high and localized food insecurity persists.", "The deterioration of economic and humanitarian conditions over the past decade led many to emigrate to neighboring countries, which has created a substantial burden on the region.", "Zimbabwe appears to be making a gradual shift from humanitarian crisis toward recovery, but much of the population remains highly vulnerable. Political uncertainty continues to threaten the country's economic outlook.", "Robert Mugabe has historically enjoyed considerable popularity in Africa as a former liberation leader, but some African leaders have viewed his policies as increasingly damaging to the continent and have urged democratic reforms in recent years.", "Following controversial elections in 2000 and citing abuses of human rights and the rule of law, the United States and some other former allies of the government became vocal critics.", "The United States has enforced targeted sanctions against top Zimbabwe officials and associates since 2002." ], "parent_pair_index": [ -1, -1, -1, 2, -1, -1, -1, 2, -1, -1, -1, -1, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "Background", "Pit Fabrication Options", "Options Using Modules", "Options Using Existing Buildings", "Analytical Chemistry Options", "Options at Sites Other Than Los Alamos", "Options at Los Alamos", "Questions for Congress" ], "paragraphs": [ "", "Congress is involved in the long-running and costly decision regarding the future production of \"pits\"; a pit is the plutonium core of the primary stage of a nuclear weapon. When imploded by high explosives, a pit becomes so compressed that it results in a nuclear explosion that provides the energy to detonate the weapon's main (secondary) stage. During the Cold War, the Rocky Flats Plant (CO) made pits on an industrial scale, sometimes over 1,000 pits per year (ppy). Rocky Flats ceased pit production in 1989. Since then, the United States has made at most 11 ppy despite several failed attempts to build a facility able to produce pits at a higher rate. Yet the Department of Defense (DOD) requires the National Nuclear Security Administration (NNSA), the separately organized component of the Department of Energy (DOE) in charge of the U.S. nuclear weapons program, to have the capacity to make 50-80 ppy by 2030.\nU.S. policy is to \"not develop new nuclear warheads … or provide for new military capabilities.\" However, weapon components age, so life extension programs (LEPs) are underway or planned for each existing weapon type in sequence. Some LEPs will use a weapon's original pit, and other LEPs may use retired pits from other weapon types. Still other LEPs may use newly manufactured pits, such as to replace original pits that have deteriorated or to incorporate new safety and security features. Some experts argue that additional pit manufacturing capacity is needed to replace pits that encounter problems out of sequence or to hedge against unanticipated geopolitical developments. Others reply that a capacity much less than 80 ppy would suffice. While there is debate over what capacity is needed, this report has a different focus: how to achieve a capacity of 80 ppy. This report summarizes the much more detailed CRS Report R43406, U.S. Nuclear Weapon \"Pit\" Production Options for Congress , by [author name scrubbed].\nPit production involves precisely shaping plutonium, a hazardous, radioactive, physically quirky metal. Production also requires supporting tasks, notably analytical chemistry (AC, defined below). Currently, Los Alamos National Laboratory (LANL) (NM) produces pits at its PF-4 building, and conducts AC and other supporting tasks at its Chemistry and Metallurgy Research (CMR) building.\nSeveral terms are essential for understanding pit production options:\nMaterial At Risk (MAR): DOE defines this term as \"the amount of radioactive materials … available to be acted on by a given physical stress.\" For LANL, earthquakes pose the most severe anticipated physical stress. Each building using radioactive material has a MAR allowance specific to that building. Hazard Category (HC): A categorization of buildings based on the amount of radioactive material a building is designed to hold. The HC system defines the construction type and safety systems needed to keep radiation dose to persons within limits defined by DOE in the event of an accident or building collapse. Radiological Facility: The lower limit for radioactive material in a building in the HC system is about 26 grams of weapons-grade plutonium (WGPu), which contains mostly plutonium-239 but also other isotopes of plutonium. Buildings with less than this quantity are \"Radiological Facilities.\" They require no special security measures because they have so little material. Security Category (SC): A categorization of buildings based on the amount and form of radioactive material in a building. The intent of the SC system is to determine what level of security a building needs based on the \"attractiveness\" of its materials, especially to terrorists. For example, WGPu in metallic form, in quantities sufficient to make a bomb, would be highly attractive, and a building containing large quantities of it requires armed guards, intrusion detection systems, special fencing, and the like. In contrast, WGPu dissolved in a large quantity of acid is much less attractive, so requires much less security. Analytical Chemistry (AC): AC analyzes many plutonium samples taken from each pit at various stages in its manufacture. AC determines the isotopic composition of WGPu, the amount of other materials added to WGPu, and the amount of impurities. Most AC uses tiny samples, such as a few milligrams of plutonium dissolved in a small amount of acid, so it is low-MAR and low-SC. On the other hand, AC requires a substantial amount of laboratory floor space. Plutonium-238 (Pu-238): Pu-238 is highly radioactive. Is main use is to power space probes. It bears on pit production options because it occupies 9,600 sf in PF-4 out of 60,000 sf, and accounts for 40% of PF-4's MAR allowance.", "The basis for the following options is that PF-4 is the only U.S. building able to produce pits, as it has high security, a high MAR allowance, and pit production equipment. Increasing its capacity to 80 ppy would entail more production equipment and more MAR. Thus higher capacity requires making MAR and space available. Some space is currently available; more might be as well. Three main tasks contribute to MAR in PF-4: Pu-238 work, pit fabrication, and recovery of plutonium from acid solution. Of these, only Pu-238 may plausibly be moved to another site.", "One option is to build \"modules\" at LANL so high-MAR work like processing Pu-238 or casting pits could be moved from PF-4. Preliminary plans envision modules as buried reinforced-concrete structures with 3,000 to 5,000 sf of lab space. Each would be built for a specific task. They would be a few hundred yards from PF-4, and connected to it by a tunnel.\nArguments for modules follow: Since each module would be built for a specific task, each would meet regulatory requirements that apply only to it, rather than having to meet the most stringent regulatory requirements that apply to any work in an entire large building. Modules would draw on many support features offered by that building, such as shipping and receiving, security, temporary waste storage, and a storage vault for nuclear materials. Modules would arguably be faster and less costly to build than the large facilities proposed in the past that were canceled or deferred due to cost growth and schedule slippage. Reducing MAR in PF-4 would extend the life of that building if its MAR allowance were reduced over time as a result of more stringent regulations, problems that emerge in the building, increased calculation of seismic threat, etc.\nArguments against modules follow: Modules would not be needed if high-MAR work could be done in existing buildings, as described below. Even if modules are needed, they are arguably not needed now, as PF-4's service life could be extended. While they could use some of PF-4's infrastructure, they would need much infrastructure of their own, such as for ventilation and fire suppression, as well as special filters to prevent plutonium from escaping into the air in the event of an accident. Modules might cost billions of dollars because they would be high-HC and, for pit casting, high-SC as well. NNSA's cost estimation for major weapons and facilities projects has fallen short in the past; could Congress have confidence in cost estimates for modules?", "Another approach is to use existing buildings. Most of the nuclear weapons complex was built during the Cold War and was sized to produce, at times, over 1,000 weapons per year. Thus existing buildings in the complex have much unused space, some of which is suitable for high-MAR work. These buildings might require modifications.\nAt least two sites could house the Pu-238 mission. Idaho National Laboratory (INL) and Savannah River Site (SRS) (SC) have both done work with Pu-238. Both have buildings that could be used for this purpose, Building CPP-1634 at INL and H Canyon and HB-Line at SRS. DOE prepared a study in 2013 on these options and found that both sites could be used for this purpose, at a cost between $122 million and $272 million. This cost estimate is preliminary.", "There are two sources of demand for AC capacity. CMR, most of which was built in 1952, does most AC for pit production, but is scheduled to halt operations around 2019; its work would have to be moved elsewhere. Higher capacity also requires more AC, as the two increase in tandem. PF-4 is not suitable for most AC work. Thus increased pit production would also require finding one or more sites for AC.", "Several approaches could provide AC space. Some AC could be done at a site other than LANL, as most AC is confirmatory rather than time-urgent, allowing some leeway in when samples are analyzed. During the Cold War, SRS produced WGPu for as much as several hundred ppy. All this plutonium required AC, and SRS has two facilities, F/H Laboratory and Building 773-A, that conducted AC and remain suitable for AC. Each has enough space for AC for 80 ppy.\nBuilding 332 at Lawrence Livermore National Laboratory (LLNL) used to have the same HC and SC as PF-4, and formerly handled large quantities of WGPu, such as to build nuclear explosive devices for testing. However, NNSA directed LLNL to remove almost all the plutonium from this building to lower its Security Category. This work was completed in 2012. This action greatly reduced the security cost and the amount of weapons-usable material potentially vulnerable to theft. However, the building has ample space and other attributes suitable for AC work, and could handle AC for 80 ppy. Both SRS and LLNL could handle the MAR associated with AC in support of producing 80 ppy, though shipment of samples to LLNL would have to be staggered to avoid breaching its MAR limit.", "Analysts have argued that it would not be desirable to perform all AC at a site other than LANL. All plutonium work requires AC. LANL, as the \"center of excellence\" for plutonium, requires AC, and would need a significant AC capacity for pit production, such as for quick-turnaround analyses, for solving problems, for maintaining expertise and equipment, and for training. On the other hand, it may be desirable to have one or perhaps two other sites perform AC to support pit production to distribute expertise, to cross-check AC at LANL, to accommodate a surge in demand, and to have a backup in case of problems with AC facilities at LANL.\nPF-4 performs some AC, and could perform somewhat more. However, it is unsuitable for large-scale AC because most AC is best done in open-front hoods, which require a massive ventilation capacity to draw air into the hoods in order to keep acid and plutonium from contaminating lab rooms. It would be very costly, if not impossible, to retrofit that capacity into PF-4. Besides, low-MAR activities like AC are an inefficient use of the valuable high-MAR space at PF-4. Another possibility is to use an existing building at LANL, the Radiological Laboratory-Utility-Office Building (RLUOB, pronounced rulob). RLUOB was completed in FY2010, has 19,500 sf of laboratory space, and has a massive ventilation system. There are three possibilities.\nUse RLUOB for AC with 26 grams of WGPu. Since it is a Radiological Facility, that is the most it can hold under existing regulations. Twenty-six grams is enough to perform a substantial amount of AC because many AC samples are a few milligrams of plutonium dissolved in a small amount of acid. However, 26 grams of plutonium—the volume of two nickels—is nowhere near enough for large-scale AC. LANL has not studied how much plutonium the AC for 80 ppy would require, but it estimates the figure is on the order of 500 to 1,000 grams. Similarly, LANL has not studied in detail how much floor space the AC for 80 ppy would require, but estimates that if all laboratory space in RLUOB could be used with 500-1,000 grams of plutonium and if some additional space could be made available for AC in PF-4, that might suffice. Convert RLUOB from a Radiological Facility to an HC-3 building, which would permit it to hold 1,750 grams of WGPu. LANL estimated that this conversion would cost between $15 million and $50 million. This cost estimate is preliminary and would require further study and validation. Create an exemption for RLUOB to hold HC-3 quantities of plutonium without being converted to HC-3. This approach would probably permit NNSA to halt work in CMR by 2019, removing workers and plutonium from a building that is much more at risk of collapse from an earthquake than is RLUOB. While RLUOB is not HC-3, LANL calculated that the radiation dose resulting if RLUOB, with 1,000 grams of WGPu, collapsed in an earthquake would be far below the standard set by DOE. On the other hand, some would object to modifying regulations, especially for buildings housing radioactive material.", "This report shows that many options could address DOD's requirement for 80 ppy, but it cannot determine which, if any, could meet this requirement because data do not exist on how much MAR and space are needed for AC and pit fabrication for 80 ppy. Likewise, there are little to no data on cost. However, this report raises questions that Congress may wish to have answered in order to decide how to proceed. Questions include:\nIs an 80-ppy capacity needed? If so, how much space and MAR in PF-4 would fabrication of 80 ppy require? Could that amount of space be made available by repurposing PF-4 space? If not, what changes would be needed? How could enough MAR allowance be made available? What would be the cost? What are the pros, cons, and costs of Pu-238 options? Are modules needed, or are other options preferable? The FY2014 National Defense Authorization Act permits NNSA, once certain conditions have been met, to build two modules. One module of 5,000 sf could take on most of the Pu-238 MAR from PF-4 and would free up about 5,000 sf in that building. Would the additional freed-up MAR and space permit PF-4 to fabricate 80 ppy? If so, would there be a need for a second module? What would be the cost of the first module? Would a second module cost less? How much space and MAR would AC for 80 ppy require? What are the pros, cons, and costs of having SRS or LLNL perform some AC? What would it cost to convert RLUOB to HC-3? What would be the adverse consequences if RLUOB were operated as is with 1,000 g of WGPu?" ], "depth": [ 0, 1, 1, 2, 2, 1, 2, 2, 1 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h0_full h2_full h1_full", "h3_full h1_title", "h1_full", "", "h0_full h4_full", "h4_full", "h4_full", "h4_full h1_full" ] }

{ "question": [ "What is a current debate in Congress concerning nuclear weapons?", "When did this debate start to be relevant and who is responsible?", "What did the US government do in response to Rocky Flats Plant's production?", "What is the extent of the DOE's nuclear output at these facilities?", "What is the future outlook of nuclear weapons in the United States?", "Under what circumstances can the US government maintain these existing nuclear weapons?", "What are the ramifications of such a high capacity for the DOE to maintain the weapons?", "What does pit production necessitate in chemical terms?", "What does pit fabrication require in the physical domain?", "How is the output of plutonium regulated safety in pit production?", "How are pits fabricated?", "What would be the ramifications of increasing pit production to 80 ppy capacity?", "How could such an increase in capacity be accomplished?", "What are other potential ramifications of higher output capacity of pit production?", "What are additional requirements of increasing pit production, specifically in regards to AC?", "How would this be accomplished given that the current space is not suitable enough for AC?", "What are the additional requirements the LANL would need to be a sufficient space for pit production in this way?" ], "summary": [ "Congress is involved in the long-running and costly decision regarding the future production of \"pits\"; a pit is a nuclear weapon's plutonium core.", "Rocky Flats Plant (CO) mass-produced pits during the Cold War; production ceased in 1989.", "The Department of Energy (DOE), which maintains U.S. nuclear weapons, then established a small pit manufacturing capability at PF-4, a building at Los Alamos National Laboratory (LANL) (NM). PF-4 has made at most 11 pits per year (ppy). DOE also proposed higher-capacity facilities; none came to fruition.", "PF-4 has made at most 11 pits per year (ppy).", "U.S. policy is to maintain existing nuclear weapons.", "To do this, the Department of Defense has stated that it needs DOE to have the capacity to produce 50-80 ppy by 2030.", "A separate debate, not discussed here, is the validity of the requirement; a lower capacity would be simpler and less costly to attain.", "Pit production requires many tasks, but this report focuses on two: pit fabrication, which forms plutonium into precise shapes, and analytical chemistry (AC), which monitors the composition of each pit.", "Any feasible option requires sufficient \"space\" (laboratory floor space) and \"Material At Risk\" (MAR) allowance.", "Each building for plutonium work is permitted a specified amount of MAR, that is, radioactive material (adjusted for radioactivity) that could be released by an event like an earthquake.", "Pits can only be fabricated in PF-4.", "Increasing its capacity to 80 ppy would require making more MAR and more space available in that building, which in turn would require moving out radioactive material and freeing up space.", "Both could be done, for example, by moving pit casting or work on plutonium-238 (Pu-238), which is much more radioactive than the plutonium used in weapons, out of PF-4.", "Higher capacity also requires more AC, which increases in tandem with capacity. Most AC is not time-sensitive, so some of it could be done at sites other than LANL.", "PF-4 is not suitable for most AC work. Thus increasing pit production would also require finding one or more sites for AC. AC requires much less MAR and much more space than pit fabrication, so AC options differ from pit fabrication options.", "Buildings at Lawrence Livermore National Laboratory (CA) and SRS have ample space suitable for AC.", "LANL would also need a significant AC capacity to support pit production and other work. An option would be to modify the new Radiological Laboratory-Utility-Office Building (RLUOB) so it could handle more plutonium, permitting it to do more AC." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, -1, -1, -1, -1, -1, -1, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 3, 3, 3, 5, 5, 5, 5 ] }

{ "title": [ "Background", "Roles and Responsibilities for State and DHS Components", "E-2 Eligibility Requirements", "E-2 Nonimmigrant Adjudication Processes", "State and USCIS Adjudicated About 54,000 E-2 Visa Applications or Petitions Per Year From Fiscal Years 2014 through 2018; Roles, Business Sectors, and Countries Varied", "State Adjudicated About 45,000 E-2 Visas Annually, About 90 Percent of Which Were Issued", "USCIS Adjudicated an Average of About 9,400 E- 2 Petitions Annually, 83 Percent of Which Were Approved", "State and USCIS Have E-2 Guidance and Procedures, But Officials Identified Challenges with Respect to E-2 Adjudication", "State and USCIS Have Agency-Specific Guidance and Resources, Procedures, and Training", "State and USCIS Officials Identified Challenges in the E-2 Adjudication Process and State Officials Identified the Need for Additional Training", "State Officials Identified Challenges and Training Needed for Adjudicating E-2 Visa Applications", "E-2 Company Registration Programs Create Processing Efficiencies at Some Posts But State Does Not Have Minimum Standards for Program Implementation", "Some State E-2 Application Documents Were Not Retained as Required", "State and USCIS View Risk of E-2 Fraud Differently and Interagency Coordination On E-2 Fraud Efforts Is Limited", "State Has Resources Available to Consular Officers to Help Identify Potential Fraud, but State Generally Considers E-2 Visa Fraud to Be Low Risk", "USCIS Has Identified E-2 Fraud as a Priority and Is Analyzing Its Fraud Risk in a Pilot Project", "State and USCIS Efforts to Coordinate E-2 Anti-Fraud Activities Are Limited", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: List of Treaty Countries Eligible for E-2 Status", "Appendix III: E-2 Adjudication Statistics", "State", "Post Adjudication Outcomes for E-2 Status Holders", "Appendix IV: Comments from the Department of Homeland Security", "Appendix V: Comments from the Department of State", "Appendix VI: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments" ], "paragraphs": [ "", "Several State and DHS components have roles and responsibilities in the E-2 adjudication process, as shown in Table 1.\nDepending on which agency (State or USCIS) is conducting the E-2 adjudication, as well as the foreign national’s role in relation to the E-2 business, foreign nationals are described using various terms, as shown in table 2.", "Both the business and foreign national seeking E-2 status must meet specific eligibility requirements, as shown in table 3. The E-2 eligibility requirements for nationals of treaty countries and their qualified family members (i.e., dependents) are defined in the INA, as amended, as well as in federal regulation. Foreign nationals seeking E-2 status must provide evidence and supporting documentation to State’s consular officers or USCIS’s immigration officers showing that they and their related business meet these requirements.", "There are two pathways for an individual seeking E-2 status: (1) applying for an E-2 visa through State at a post abroad, and then being inspected and admitted at a U.S. port of entry by CBP, or (2) filing with USCIS to extend, or change to E-2 status if already in the United States in E-2 or other nonimmigrant status, as shown in figure 1.\nPrior to the expiration of the 2-year period typical for E-2 nonimmigrants, a foreign national seeking to remain in E-2 status must either petition USCIS for an E-2 extension; or depart the country, reapply for an E-2 visa with State at a U.S. embassy or consulate, and seek entry at a U.S. port of entry. However, if the E-2 visa is still valid after having departed, the foreign national may present that visa to apply for admission again at a U.S. port of entry.\nIf applying through State, consular officers are responsible for adjudicating E-2 visa applications at one of State’s 220 posts. Although all posts can adjudicate E-2 visas, approximately 140 posts adjudicated at least one E-2 visa in fiscal year 2018.", "Taken together, State and USCIS adjudicated an annual volume of E-2 visa applications or petitions of more than 50,000 from fiscal years 2014 through 2018. State accounted for over 80 percent of these adjudications. About 90 percent of State’s E-2 visa applications were issued, and about 83 percent of USCIS’s E-2 petitions were approved. See appendix III for additional State and USCIS data on the characteristics of foreign nationals seeking E-2 status, including annual statistics, the relatively low number of E-2 nonimmigrants who remain in the United States beyond the conclusion of their authorized period of stay (i.e., overstay), and other post-adjudication outcomes.", "The volume of State’s E-2 visa adjudications increased from fiscal years 2014 through 2017, and decreased slightly in fiscal year 2018, as shown in figure 2. During this time period, State consular officers adjudicated an average of about 45,000 E-2 visas per year. Also during this time period, 44 percent of adjudications were for dependents, and a combined 53 percent were for principals, including 14 percent for the investor, 20 percent for managers, and 19 percent for essential employees.\nFrom fiscal years 2014 through 2017, the average E-2 visa refusal rate— that is, the number of refused visas divided by the total number of visas adjudicated during that time period—was about 8 percent, which is generally lower than for other types of nonimmigrant visas (see sidebar). We do not present the fiscal year 2018 refusal rate in figure 3 because that rate is subject to change until the end of fiscal year 2019. Specifically, an application adjudicated in fiscal year 2018 may require the applicant to submit additional information to demonstrate eligibility for an E-2 visa. In such cases, the application is refused under INA § 221(g). The applicant has one year after the date of refusal to overcome the refusal by, for example, providing missing or supplemental information. After one year, the applicant must reapply. As of November 2018, 8,184 of the 11,255 refusals in fiscal year 2018 were refused under INA § 221(g). Depending on the extent to which applicants refused in fiscal year 2018 under INA § 221(g) are able to overcome their refusals, State officials stated that they expected the fiscal year 2018 refusal rate to be similar to prior fiscal years.\nIn addition to analyzing State data on adjudications and refusals, we also analyzed data to identify trends in refusal rates by applicant type, refusal reasons, nationality of applicants, and business sectors, and level of investment, as described below.\nRefusal Rates by Applicant Type. Our analysis showed that for fiscal years 2014 through 2018, average refusal rates were highest for investors (24 percent), followed by dependents (12 percent), managers (9 percent), and essential employees (6 percent). Figure 4 shows the refusal rates by fiscal year for each applicant type, and appendix III includes additional information on refusal rates for fiscal year 2018. According to State officials, refusal rates may be higher for investors because such applicants are typically the first in their company applying for an E-2 visa; if denied, then future E-2 applicants (e.g., manager or essential employee) would need to wait until such investor is approved or find another individual or business investor to form the basis for their E-2 employment status.\nRefusal Reasons. Our analysis showed that approximately 10 percent of E-2 visa adjudications from fiscal years 2014 through 2017 were refused. The majority of E-2 visa refusals for fiscal years 2014 through 2017 (75 percent) were because the applicant did not meet eligibility requirements. The next largest reason for refusal (22 percent) was INA § 221(g) for inadequate documentation. Few E-2 visa applicants are refused for other reasons, such as prior immigration violations, fraud, or terrorist activities. For example, in total, less than 4 percent of all E-2 visa adjudications during this time period were refused for other reasons, such as security or criminal-related ineligibilities, fraud or misrepresentation, and immigration violations, among others.\nNationality. Our analysis showed that about 80 percent of E-2 visa adjudications from fiscal years 2014 through 2018 were for nationals from nine countries: five European countries (Germany, France, United Kingdom, Italy, and Spain), two Asian countries (Japan and South Korea), and two North American countries (Canada and Mexico). Japan was the largest country of nationality, with 29 percent, followed by Germany (10 percent), Canada (7 percent), and France (7 percent). Figure 5 shows the top ten countries by percentage of E-2 visa adjudications from fiscal years 2014 through 2018.\nBusiness Sectors. To obtain information on additional characteristics of E-2 visa principal applicants (i.e., investor, manager, and essential employee), such as their business sector and investment amounts, we reviewed a generalizable sample of 120 fiscal year 2018 E-2 visa applications. Based on our analysis, we estimate that about three- fourths of principal E-2 visa applicants were associated with 4 business sectors: manufacturing (44 percent), food services (13 percent), retail (11 percent), and professional services (10 percent). Figure 6 includes examples of the businesses we found within each of these sectors.\nInvestment. Based on information reported by fiscal year 2018 principal applicants in our generalizable sample of issued visas, we estimate 64 percent of applications were for principal applicants associated with investments reportedly over $10 million, as shown in figure 7. Of these, 30 of 40 applications were for those in the manufacturing sector, particularly for the automotive sector, such as large automobile manufacturers.", "From fiscal year 2014 through 2018, USCIS adjudicated an average of about 9,400 E-2 petitions per year. During this time period, USCIS adjudicated petitions to extend E-2 status for an average of about 5,900 beneficiaries per year, about 60 percent of which were for E-2 dependents (i.e., an E-2 principal’s spouse or children). Also during the same time period, USCIS adjudicated petitions for an average of about 3,500 beneficiaries per year who were seeking to change to E-2 status from another nonimmigrant category. Of these, about 47 percent of which were E-2 principal beneficiaries (i.e., investors, managers, and essential employees). Figure 8 shows the number of petitions to extend or change to E-2 status from fiscal years 2014 through 2018.\nThe average denial rate for E-2 petitions for fiscal years 2014 through 2018 was about 17 percent. Denial rates were higher for petitions to change status from another nonimmigrant category to E-2 (27 percent) than for petitions to extend E-2 status (11 percent), as shown in figure 9. Further, the denial rate for both extension and change of status petitions increased from fiscal years 2014 through 2017, but fell by several points in 2018.\nIn addition to analyzing USCIS data on adjudications and denials, we also analyzed data to identify trends in country of birth, prior status, date of last U.S. entry, reasons for denial, business sectors, and level of investment, as described below.\nCountry of Birth. Our analysis showed that the top countries of birth for individuals seeking to extend their E-2 status from fiscal years 2014 through 2018 were South Korea, Mexico, and Japan, and the top countries of birth for those seeking to change to E-2 status from another nonimmigrant category were South Korea, Pakistan, and Turkey, as shown in table 4. Although there are similarities with the top countries of nationality for State E-2 visas (see previous figure 5), there are some differences as well. For example, both Pakistan and Thailand are among the top countries of birth for petitioning with USCIS to extend or change to E-2 status, but are not among the top countries of nationality for State E-2 visas.\nPrior status. Our analysis showed that individuals seeking to change to E-2 status from another nonimmigrant category from fiscal years 2014 through 2018 were most often changing status from a tourist, business, or student visa, as shown in figure 10. For example, more than half (53 percent) of all petitions to change to E-2 status were for beneficiaries that were tourists (B-2) or business visitors (B-1). In addition, about 4 percent of beneficiaries were seeking to change status within the E-2 classification. For example, a child or spouse of an E-2 investor may later work at the company as a manager and therefore would need to petition to change from dependent to principal E-2 status as a manager.\nDate of last entry into the United States. On the basis of our review of a generalizable sample of petitions of E-2 principals (i.e., investors, managers, and essential employees), we estimate that one third of principal beneficiaries had been in the United States since 2014 or earlier at the time they sought to change to or extend E-2 status in 2018, some as long as 18 years, as shown in figure 11. Such beneficiaries may have changed status from other kinds of nonimmigrant status, or may have requested to extend their E-2 status multiple times. There is no limit on the number of times a foreign national may request to extend their E-2 status.\nReason for denial. On the basis of our review of a generalizable sample of fiscal year 2018 denied petitions for E-2 principals, we estimate that the top reasons petitions were denied included (1) the enterprise was not real and operating, and (2) the investment was not substantial, as shown in table 5. Of the denied petitions in fiscal year 2018, about one-third were either withdrawn by petitioner or abandoned, meaning that the petitioner did not respond to USCIS requests for additional evidence.\nBusiness Sectors. On the basis of our review, we estimate that the majority of E-2 principal beneficiaries were associated with 4 business sectors, as shown in figure 12: food services (38 percent), retail (18 percent), manufacturing (9 percent), and professional services (13 percent). Comparing our two generalizable samples, a smaller percentage of USCIS’s E-2 principal beneficiaries were associated with manufacturing (44 versus 9 percent) and more with food services (13 versus 38 percent) than State’s E-2 principal visa applicants.\nInvestment. We estimate that about two-thirds of the approved petitions were for principal beneficiaries associated with investments of $200,000 or less, as shown in figure 13. We found that about 30 percent of USCIS’s E-2 principal beneficiaries were associated with investment amounts of $100,000 or less and 7 percent were associated with investments over $10 million.", "State and USCIS have agency-specific guidance, procedures, and training intended to ensure E-2 applicants and petitioners, respectively, meet E-2 eligibility requirements. However, officials from both agencies identified challenges in the E-2 adjudication process. Some of State’s posts have developed E-2 company registration programs to help streamline the E-2 adjudication process, but there are no minimum standards for these programs, which may result in different processing of companies and applicants across posts. Further, State and USCIS require that consular and immigration officers retain certain documentation for all E-2 applications and petitions; however, during our case file review of E-2 applications and petitions adjudicated in fiscal year 2018, we found that State did not consistently retain all required documents.", "State and USCIS have guidance and resources to help officers adjudicate E-2 applications and petitions. Both agencies have similar high-level procedures for adjudicating E-2 applications and petitions, but there are some key differences in how each agency implements these procedures based on their specific roles and responsibilities. Further, both agencies provide their staff with some training on E-2 eligibility requirements.\nGuidance and resources. State and USCIS have guidance and resources available to staff who adjudicate E-2 visas and petitions to help ensure that applicants and petitioners meet E-2 eligibility requirements. Although the guidance documents have some minor differences, they are based on the same eligibility requirements. For example, the main guidance documents for State and USCIS—State’s Foreign Affairs Manual (FAM) and USCIS’s national E-visa standard operating procedures—both include the same eligibility criteria and provide additional explanation on each of the eligibility requirements. State also provides supplementary resources for consular officers on its intranet, such as E-2 adjudication best practices, an adjudication guide, and case studies. State and USCIS both provide headquarters-based legal advisors and attorneys with whom officers can consult for case-specific guidance. For example, a State consular officer at one post we visited told us that he requested such assistance for an application from an investor whose company had a particularly complex ownership structure that made it difficult to determine if at least 50 percent of the company was owned by nationals of a treaty country.\nAdjudication procedures. State and USCIS high-level procedures for adjudicating E-2 applications and petitions are generally similar, but there are some key differences based on their specific roles and responsibilities. As shown in figure 14, both agencies require foreign nationals to submit an E-2 application or petition, and pay any relevant fees. Additionally, both agencies vet individuals by conducting security checks and reviewing submitted information to ensure that all E-2 eligibility requirements are met.\nThere are four key differences in State and USCIS procedures for adjudicating E-2 visa applications and petitions: Interviews. State requires in-person interviews of most E-2 applicants. According to USCIS officials, USCIS does not conduct interviews of beneficiaries and petitioners because they do not have the resources or facilities to do so. In any case, USCIS’s process for adjudicating nonimmigrant visa petitions for foreign nationals who have already been lawfully admitted into the United States, in E-2 or other nonimmigrant status does not include an interview requirement.\nLocally Employed Staff (LES) and E-2 Visa Adjudication Consular officers and managers stated that LES play an important role in E-2 visa processing and adjudication. LES are employees hired under the local compensation plan at a U.S. post overseas. LES include foreign service nationals, U.S. citizens residing abroad, third country nationals, and eligible family members of State employees. LES can provide the institutional knowledge and expertise in E-2 visa issues, as consular officers rotate posts every 2 years but LES do not rotate. Consular managers at 4 of the 14 posts we interviewed or visited stated that their post specifically hired LES to work on E-2 visas because of their specialized knowledge and backgrounds in business or law. For example, a consular officer may consult with LES on an application to better understand the legal relationship between two companies, as some LES have a background or developed expertise in financial law.\nLocally Employed Staff (LES) initial processing and prescreening. In addition to consular officers, State employs local residents in its host country to help with consular services (see sidebar). For example, at some posts State’s LES prescreen visa applications before consular officers adjudicate the application. Procedures for LES varied at the posts we interviewed and visited. For example, LES at some posts provide administrative help and processing—such as scanning application documents, checking applications for completeness, and scheduling interviews. LES at other posts provide additional analytical support—such as by summarizing applications, completing eligibility checklists, and maintaining databases on previously issued E-2 visas. Regardless of the kind of help LES may provide at post, only consular officers adjudicate E-2 visa applications and make decisions on whether or not the visa is issued. The number of LES supporting E-2 visa applications at the 14 posts we visited or interviewed ranged from one part-time position to five full-time LES. Consular managers and officers at all four of the posts we visited described the role of LES in processing E-2 visas as critical (see sidebar). Although USCIS’ California Service Center has staff who assist with processing petitions, such as by organizing folders with the petition materials, immigration officers generally perform the analytical tasks themselves.\nStaffing model. Depending on E-2 visa application volume, staffing considerations, and workload arrangements, the number of consular officers adjudicating E-2 visas at the 14 posts abroad we interviewed ranged from one to six per post. Further, on the basis of our observations and interviews with consular officials at 14 posts, we found that State’s posts have generally developed three different staffing models for adjudicating E-2 visa applications, as shown in table 6. Consular managers stated that the kind of model used at a post may depend on E-2 visa volume, as well as other factors. For example, a consular manager at a post we visited explained that the specialist model worked well at his post because it had a relatively low volume of E-2 adjudications each year, which meant that a single officer could focus on such visas. In contrast, a consular manager at a post we visited that was staffed with a hybrid of generalists and specialists had higher E-2 visa volume and stated that their model allowed them to balance efficiency and specialization. For USCIS, a specialized office of five immigration officers review and adjudicate all E-petitions (including E-1 and E-2) at one location –USCIS’ California Service Center, as of July 2018.\nTraining. State and USCIS provide training to their respective E-2 processing and adjudication staff on E-2 eligibility requirements. State’s consular officers assigned to adjudicate E-2 visas receive the majority of their adjudication training at post, with a brief introduction to E-2 visas during a mandatory 6-week Foreign Service Institute training course taken prior to serving as a consular officer overseas. According to Foreign Service Institute officials, the course provides consular officers with an overview of the various visa classes they may adjudicate, but focuses on visas that all consular officers will address at post. Because E-2 visas are not adjudicated at every post, and consular officers typically cannot specialize in only one particular classification like USCIS counterparts who have a dedicated E-2 unit, the course does not concentrate on that visa classification. Instead, State relies on the individual posts to provide training to prepare consular officers to adjudicate E-2 visas on an “as needed” basis.\nOn the basis of our interviews and observations, we found that E-2 training programs for consular officers at post generally consist of three components. First, consular managers and senior consular officers at post provide the consular officer who will be adjudicating E-2 visa applications for the first time with an overview of the E-2 eligibility requirements along with any supplementary E-2 training resources, such as illustrative examples of challenging E-2 visa cases the post has previously adjudicated. Second, new consular officers are to observe senior consular officers adjudicate E-2 visas for 1 to 3 weeks, which helps the new officer to learn how the requirements are applied. Finally, new officers adjudicate E-2 visas under the supervision of a senior consular officer with experience adjudicating E-2 visa applications, with 100 percent of their adjudications reviewed by consular managers until management determines that the new officer is proficient. As needed, supervisors will meet with new officers to discuss specific adjudications, including whether the officer properly documented their decision.\nState’s E-2 training for LES is entirely at post. According to consular managers and LES, LES training generally consists of a review of eligibility requirements and supervision. First, new LES assigned to E-2 visa processing and prescreening receive an overview of the E-2 eligibility requirements from a senior LES. According to LES we interviewed, the overview of the eligibility requirements helps them to identify the types of documents E-2 applicants typically submit to establish E-2 eligibility. Second, new LES are observed by senior LES until management determines that the LES is proficient at processing and prescreening.\nAs noted above, USCIS has staff dedicated to E-2 petitions and USCIS provides training to new E-2 immigration officers that include the same basic components as State, such as a review of eligibility requirements and job shadowing. First, immigration officers who will work on E-2 adjudications receive 3 weeks of classroom training during which they review the E-2 eligibility requirements. The classroom training is followed by a 1-week practicum session where USCIS immigration officers apply the classroom training to sample E-2 petitions. Specifically, immigration officers explained to us that during the practicum they are given example cases to which they are to apply their classroom training. After each officer has adjudicated the example case, they discuss how each applied the various E-2 eligibility requirements and reconcile any differences with the assistance of the immigration supervisor facilitating the training. Second, after the 4 weeks of training, USCIS immigration officers begin to adjudicate E-2 petitions under the guidance of an E-2 immigration supervisor. Third, new E-2 immigration officers have 100 percent of their cases reviewed by their supervisor until they are deemed proficient.", "State’s consular officers and LES, as well as USCIS officials, stated that given the complexity of adjudicating E-2 applications and petitions, and the level of documentation and time required, the E-2 adjudication process can present challenges with respect to the analysis of the E-2 eligibility requirements. Consular officers and LES we spoke with stated that additional training on E-2 eligibility requirements would be beneficial. USCIS officials said that while E-2 petitions can be challenging to adjudicate, additional training was not necessary.", "Consular officers we spoke with noted that E-2 visa adjudications are particularly complicated and resource-intensive, involving potentially complex business issues, and often requiring more documentation and time to adjudicate than is typically needed to adjudicate other visas. Specifically, consular officers at 10 of 14 posts we interviewed stated that E-2 visas are among the most difficult nonimmigrant visas to adjudicate because of the amount of supporting documentation that is required to demonstrate that both the business and applicant meet all eligibility requirements, as well as the time required to prescreen and adjudicate the application package. For example, E-2 application packages can include 200 pages or more of supporting documentation, and include a range of detailed business and financial documents (see sidebar). Further, consular officers told us that it can take between 45 minutes to 4 hours to review a single E-2 application with its supporting documents. Consular officers explained that, in contrast, other nonimmigrant visa categories do not require the same amount of time or number of documents to adjudicate. For example, business and tourism nonimmigrant visas typically take less than 10 minutes to adjudicate and do not require that any documentation be submitted by the applicant prior to the adjudication.\nConsular officers at the 14 posts we visited or interviewed identified challenges with respect to the analysis of the E-2 eligibility requirements. Table 7 provides examples of some of these challenges, as identified by consular officers at the 14 posts.\nSubstantial investment requirement: No prescribed minimum amount of capital, although it must be substantial in proportion to the cost of the business. Sufficient to ensure the investor’s financial commitment to the successful operation of the business. Large enough to ensure the likelihood of success of the business.\nDetermining substantial investment. Consular officers at 10 of 14 posts indicated that it can be challenging to determine substantiality of capital investment amounts. According to the FAM, there is no set amount of capital which is considered substantial; instead, various factors must be considered to ensure there is a large enough investment to support the business. Consular officers noted that it can be difficult to determine how much capital is needed to support the many types of businesses that consular officers see in E-2 applications, which can range from small restaurants to technology start-ups to large automobile manufacturers. For example, a consular officer may be presented with an application for an investor seeking an E-2 visa to open a business that the consular officer has never seen before in an E-2 visa application, such as an airport internet café that rents hourly sleeping pods to travelers on long layovers. The consular officer may be initially unfamiliar with what is considered to be a more unique type of business, and may not know immediately how much investment would be sufficient to ensure the successful operation of the business. In such cases, the officer might gather additional information from the applicant on similar businesses, which the officer could use to inform their determination as to the amount of capital that would be needed to support successful operation of the business in the United States.\nReal and operating business requirement: The business is a real and active commercial or entrepreneurial undertaking that produces goods (i.e. commodities) or services for profit, and meets applicable legal requirements for doing business in the particular jurisdiction of the United States.\nDetermining real and operating business. Consular officers at 7 of 14 posts indicated that it can be challenging to determine whether the business is real and operating. Consular officers explained that particularly difficult issues may arise for new businesses, which may not be operational yet at the time of the interview. Consular officers stated that it can be very clear when a business is not yet operating, but that additional analysis is required for newly-formed businesses that do not yet have customers or revenue but may have taken other actions to start the business. Consular officers at one post explained it is sometimes very clear that a business is not operating because, for example, the business has not yet made any contracts with clients, does not have a website advertising its services, and has no evidence of any expenses made on behalf of the business. As for newly-formed businesses, consular officers at another post we visited provided a hypothetical example of a restaurant whose owner had a lease for the restaurant space, bought equipment, and hired employees, but had not opened to customers yet because it was waiting for the chef to receive an E-2 visa as an essential employee. The officers indicated that in such a hypothetical scenario in which a business’s qualification as an E-2 business depends on E-2 visa issuance of a key worker, it may not be immediately clear without further analysis, whether such business would be considered real and operating.\nManager requirement: The individual is an employee in an executive or supervisory position.\nDetermining manager qualifications. Consular officers at 6 of 14 posts indicated that it can be challenging to determine whether a prospective manager had or will have sufficient executive or supervisory duties to meet the E-2 managerial requirement. Consular officers provided a hypothetical example in which a consular officer may interview an applicant seeking an E-2 visa to become a manager at a restaurant, but the applicant may not have any prior management experience nor will she have any subordinates in the restaurant. Such a situation may pose challenges to the consular officer to determine if the applicant would be eligible for an E-2 visa as a manager. Officers noted that the FAM requirements did not specifically state that the applicant must have prior experience or subordinates to qualify as a manager. In such situations, consular officers said they might request additional information from the applicant about the restaurant, her skills and experience, and the nature of her managerial role in the business.\nEssential employee requirement: The individual is employed in a lesser capacity than a manager, but possesses special qualifications (i.e. skills and/or aptitudes) essential to the business’ successful or efficient operations in the United States.\nDetermining essential employee qualifications. Consular officers at 6 of 14 posts indicated that it can be challenging to determine whether a prospective essential employee has special qualifications (i.e. essential skills or aptitudes). Consular officers noted that they can ask questions and obtain information about the applicant’s specialized skills, but that often further research is needed to determine if those skills are essential to the business’ operations in the United States. For example, an officer at one post we interviewed provided a hypothetical example of a pet groomer seeking an E-2 visa as an essential employee for a pet grooming service. Although one might be skeptical that pet grooming is a specialized skill and that such an employee would be considered essential, in such a situation, the officer noted that he would likely conduct further research. In doing so, he might determine that the applicant is a well-known expert who specializes in grooming certain breeds of exotic or show animals, and that the grooming service is planning to target that type of animal.\nOther requirements. Consular officers told us that some of the other E-2 eligibility requirements are not particularly challenging. For example, consular officers at all 14 posts told us that it is relatively straightforward to determine if the applicant has a clear intent to depart the United States upon termination of E-2 status because applicants typically provide an affidavit attesting to their nonimmigrant intent. Further, consular officers stated that it is easy to determine if the applicant is an eligible dependent because consular officers are familiar with local identity information (e.g., birth and marriage certificates) and there are no nationality requirements for dependents.\nIn addition to potential challenges with respect to the analysis of the eligibility requirements, consular officers at 4 of 14 posts also identified challenges in understanding business and financial documents that are provided in support of an E-2 application. For example, at one post we visited, a consular officer explained the challenges he faced in understanding U.S. tax documentation and the differences between various types of corporations. Further, consular managers at two posts stated that officers without prior knowledge in basic business concepts can find E-2 visa adjudication challenging when they first arrive at post. A manager from a third post stated that the complexity of some E-2 visa cases requires knowledge of business and finance acquired through substantial experience or education.\nMore than marginal business requirement: The investment must be made in a business that has the capacity to generate more than enough income to provide a minimal living for the treaty investor or employee and family, or has the present or future capacity (generally within five years) to make a significant economic contribution.\nAlthough LES do not adjudicate visas, LES at 6 of 14 posts also indicated that they had encountered challenges with respect to the analysis of the E-2 eligibility requirements. For example, LES at one post indicated that it can be challenging to determine whether a company is more than marginal (see sidebar) because the size, type or investment sector of each E-2 company presents unique facts and circumstances. LES at one post told us that they needed additional examples of how applicants can meet the various criteria, which would help the LES flag potential areas of concern for the consular officer. Further, LES also expressed challenges in understanding some business and financial aspects of prescreening. For example, LES at two posts stated that determining the nationality of large companies can be difficult because they need to trace back ownership to the original, parent company, and that corporate structures can be very complicated.\nGiven the complexity of adjudicating E-2 visas, the majority of consular officers and consular managers we spoke with stated that additional training and resources would be beneficial, such as online training, conferences to share best practices, or documents clarifying eligibility requirements. Specifically, consular officers at 9 of 14 posts and consular managers at 8 of the 14 posts stated that additional E-2 training or resources would be beneficial to consular officers. For example, a consular manager at one post noted that the additional resources provided on State’s intranet, such as the adjudication guide and case studies, have already helped to improve clarity on the eligibility requirements, but more resources and training are needed. Further, consular managers at 4 posts stated that additional training related to tax and business concepts would be useful. For example, one manager stated that additional training on how to read and analyze U.S. tax returns could be helpful to accurately evaluate a company’s overall financial health and make a determination that a business meets the requirement to be “more than marginal.”\nFurther, LES at all 14 posts in our review also stated that additional training or resources would help them perform their responsibilities. For example, LES at one post we visited stated that additional training and resources that clarify the eligibility standards would allow them to better prepare application packages for the consular officers to adjudicate. Further, consular managers at 9 of the 14 posts in our review also stated that additional training and guidance for LES would be helpful. For example, one consular manager suggested that State develop an online training course for both E-2 adjudicating officers and LES that reviews common business documents. Another manager stated that a training or workshop would provide opportunities to LES and E-2 adjudicating officers to learn best practices from other posts that adjudicate E-2 visas.\nAlthough State provides guidance and training on adjudicating E-2 visas, consular officers, managers, and LES identified challenges in the E-2 adjudication process, such as ensuring adjudicators adequately understand supporting financial and business documents. Many of these officials indicated that given the complexity of E-2 adjudications, additional training and resources would help them in making E-2 eligibility determinations. State officials noted that eligibility requirements are broadly defined so as to cover various business types and investment amounts. According to the Standards for Internal Control in the Federal Government, management establishes expectations of competence for key roles to help the entity achieve its objectives, which requires that staff have the relevant knowledge, skills, and abilities, needed to carry out their responsibility. Such knowledge, skills, and abilities can be obtained by on-the-job training, formal training, and other training resources, which should be available to all staff performing such roles, regardless of their post. Providing additional E-2 training or related resources would help better ensure that all consular officers and LES prescreening and adjudicating these visas have the necessary knowledge, skills, and abilities to carry out their responsibilities effectively. Such training or other resources should cover topics that include information on E-2 eligibility requirements and how to understand business- and tax-related documents.\nUSCIS Immigration Officers Identified Challenges in Adjudicating Petitions and Noted Ways in Which They Address Them USCIS immigration officers we spoke with communicated challenges with respect to the analysis of E-2 eligibility requirements, but explained that they are able to overcome these challenges with local resources. For example, USCIS immigration officers indicated that it is sometimes challenging to determine whether a prospective “essential employee” has requisite special qualifications, or a business is “more than marginal.” For example, immigration officers indicated that determining if an employee is considered essential depends on the relevant facts and circumstances. Further, immigration officers noted that the non-marginality eligibility requirement can be difficult to determine in some cases because the officer may have to project how successful the business will be in the future. However, the immigration officers explained that their colocation with all of the other immigration officers who adjudicate E-2 petitions helps to mitigate the challenges because the officers can coordinate with each other to determine how USCIS has typically adjudicated such cases. Generally, the USCIS immigration officers stated that additional training or resources for E-2 adjudication was not needed.", "As of April 2019, 7 of the top 10 E-2 adjudicating posts worldwide have implemented E-2 company registration programs. An E-2 company registration program is a process by which posts assess companies against applicable E-2 eligibility requirements. Companies that meet eligibility requirements are placed on an approved or registered companies list. Companies on the registered list do not have to be reassessed for eligibility each time one of their employees seeks an E-2 visa, which creates processing efficiencies for these posts.\nConsular managers stated that E-2 company registration programs are intended to give consular officers reasonable assurance that a company meets the minimum E-2 business and investment eligibility requirements, allowing the adjudicating officer to focus the majority of their effort on evaluating the applicant ‘s E-2 eligibility. In fact, we found that at posts with E-2 company registration programs, the consular officer may not need to collect or review any supporting documentation related to the company prior to adjudicating the visa. In contrast, E-2 adjudicating posts without an E-2 company registration program would assess both the company and the applicant against the E-2 eligibility criteria each time they review and adjudicate an E-2 visa application.\nWhile State has identified E-2 company registration programs as a potential best practice, these programs are not mentioned in the FAM and State has not developed guidance or minimum standards for how these programs should be implemented. Instead, State has permitted posts to develop and implement their own registration programs, which has led to variation in how the programs are implemented depending on post- specific factors. Specifically, we found that posts with E-2 company registration programs varied in three ways:\nRegistration criteria: Three of the 7 posts with E-2 registration programs require all companies to register, while the remaining 4 posts established criteria so that only certain companies can register, such as large companies or companies with multiple E-2 visa issuances. For example, at one post, only companies with more than 500 employees in the United States are allowed to register. At posts that require all companies to register, the number of registered companies ranged from approximately 2,200 to 4,000. At posts that allow only certain companies to register, the number of registered companies ranged from about 100 to 200.\nDocumentation requirements: Employees of E-2 registered companies seeking to obtain an E-2 visa provide different types of documentation during their E-2 adjudication, depending on the requirements of the post. For example, at two posts, applicants of registered E-2 companies must provide their resume and a company letter that outlines the applicant’s specific role within the company, and do not need to provide any other supporting documentation regarding the company or underlying investment. At these posts, consular officers review their E-2 company registration database to ensure that the company in question is registered with the post’s E-2 company registration program.\nRevetting policy: Two of 7 posts with E-2 company registration programs vet registered companies annually while the remaining five posts vet companies every 5 years. Consular managers added that if changes, such as changes in ownership, occur without the post knowing it, prospective applicants may no longer be eligible for the visa. However, according to consular managers, companies on the list are required to contact their post sooner than the 5- or 1- year renewal period if there are any changes in the company that would impact visa eligibility for company investors or employees.\nAlthough such programs may allow posts to more efficiently adjudicate E- 2 visas, the variation in these programs may result in different processing of companies and applicants across posts, as well as acceptance of varying levels of risk by posts. The more time a post allows companies before reassessing the company’s eligibility for registration, the more risk that post is assuming, as the companies may no longer meet the eligibility requirements and continue to send or keep employees in the United States on E-2 visas for which they are not eligible. According to Standards for Internal Control in the Federal Government, management should design and implement policies and procedures that enforce management’s directives to achieve the entity’s objectives and address related risks. However, State’s Bureau of Consular Affairs has not provided posts with minimum standards governing the implementation of E-2 company registration programs, and thus, it is unclear whether the variations among these programs are consistent with the agency’s requirements and objectives. Establishing minimum standards for posts that choose to implement such programs would better ensure that all posts’ E-2 visa adjudication processes are aligned with State’s policies, objectives, and risk tolerance.", "State and USCIS require certain information and documents be retained for all E-2 applications and petitions; however, during our file review of State and USCIS E-2 adjudications, we identified that some required documents were missing from State files; USCIS was able to provide copies of all the documents required to be retained for each file we reviewed.\nState. State’s FAM includes requirements related to the collection of E-2 visa application information for all E-2 principals (i.e. investors, managers, and essential employees). Principal investors provide their information when they complete their application online, which is automatically uploaded to State’s consular database system. However, managers and essential employees provide some information by completing a paper form DS-156E, and the FAM requires officials to scan the forms each applicant’s record.\nOn the basis of our file review, we estimate that about 20 percent of fiscal year 2018 E-2 application files for managers and essential employees were missing required documentation, either in part or in full. Specifically, 14 percent of E-2 applications were missing the entire DS- 156E, and 8 percent (6 of 80) were missing pages of the DS-156E. According the Standards for Internal Control in the Federal Government, management performs ongoing monitoring of the design and operating effectiveness of the internal control system as part of the normal course of operations. Ongoing monitoring includes regular management and supervisory activities. According to State officials, the responsibility for ensuring that document retention is consistent with standards rests with posts, and consular managers are responsible for ensuring compliance. State officials noted that the Bureau of Consular Affairs does not have an ongoing monitoring process in place to ensure that posts are complying with the FAM requirement. Developing a process to ensure that posts are retaining all required E-2 visa documentation by monitoring implementation of the requirement could better position State to be able to access applicant information, should it be needed for law enforcement, anti-fraud, or security purposes later.\nUSCIS. According to USCIS officials, USCIS requires the I-129 petition, supporting documentation, and decision letters for refused petitions to be retained for all petitioners. As part of our review of petition files, we requested 124 randomly selected fiscal year 2018 petition files for investors, managers, and essential employees. In response, USCIS was able to provide us with all of the required elements for each of the petition files.", "", "State has resources to help combat nonimmigrant visa fraud, including for E-2 visas. State officials said that the resources available and the steps they take if E-2 fraud is suspected are similar for all types of visa fraud. If a consular officer reviewing an E-2 visa application suspects fraud— either during prescreening or after the interview—the officer is to make a fraud referral to the post’s fraud prevention manager or to diplomatic security officials. According to State officials, not every case with potential fraud concerns will be referred for additional investigation. If a consular officer does not find the applicant to be qualified or overcome immigrant intent, officers may refuse the case without additional fraud assessments. Fraud prevention managers, who are part of State’s Bureau of Consular Affairs, investigate fraud cases and provide information on fraud trends to consular officers. At some posts, State’s Bureau of Diplomatic Security’s ARSO-Is specialize in criminal investigations of visa fraud and coordinate with local law enforcement. Both fraud prevention managers and ARSO-Is are to conduct additional research to determine if fraud exists, such as through open source searches, interviews, and coordination with other U.S. and local government entities.\nState officials we spoke with stated that they take fraud in all visa fraud categories seriously, but generally consider E-2 visa fraud to be lower risk relative to other visa categories because they believe the large amount of complex paperwork required for the visa would discourage malicious actors. For example, consular officers at 12 of the 14 posts we interviewed stated that E-2 visas were a low fraud risk. Similarly, consular managers at 10 of the 14 posts stated that E-2 visa fraud was generally not a concern at their post. State headquarters officials attributed the low fraud risk to the large amount of paperwork that is required, which includes complex financial documents and U.S. government produced tax forms. For example, State headquarters officials indicated that, given the documentation burden for both the applicant and the company, the E-2 nonimmigrant classification may be less susceptible to fraud than other nonimmigrant classifications.\nAccording to State’s E-2 fraud data, the number of E-2 fraud referrals has decreased since fiscal year 2015, but the number of confirmed fraud cases was consistent from fiscal years 2014 through 2018, as shown in figure 15. There was an initial increase in referrals from fiscal year 2014 to 2015, which State officials attributed to consular staff more consistently making such requests through the official system of record rather than by email. From fiscal years 2015 through 2018 the number of E-2 visa fraud referrals decreased each year, from 664 in fiscal year 2015 to 280 in fiscal year 2018. Throughout this time period, the number of confirmed fraud cases stayed about the same, ranging from 39 to 59 cases per year.\nAlthough consular officials at 12 of the 14 posts considered E-2 visas to be low fraud risk, consular officers also identified country-specific E-2 fraud trends and indicators that they monitored at their post, as appropriate, such as the type of business, the location of the business, or the nationality of the applicant.\nSome of the posts in our review have taken additional actions to address E-2 fraud, such as additional fraud reviews and conducting validation studies:\nAdditional fraud review: Consular managers at one post told us that the post has devoted additional resources to ensure that all E-2 visa applications undergo an additional fraud review, given that E-2 visas can have a relatively long validity period than most nonimmigrant visas. At this post, all E-2 visa applications are sent to the fraud prevention manager and the ARSO-I, both of whom conduct additional research and look for fraud indicators.\nValidation study: Validation studies determine the extent to which foreign nationals who were issued visas later overstayed or misused their visa, and can be conducted by post officials for any visa classification. One post in our review conducted a validation study that focused on E-2 visas that post had issued to foreign nationals associated with food service companies (e.g., restaurants) to determine how many remained in business and how many E-2 visa holders continued to travel or stay in the United States after the business failed. According to this 2016 validation study, the post had concluded that almost one-quarter of food service companies in its study had failed within about three years, and nearly half of E-2 visa holders for those companies did not depart after the company had failed or continued to travel to the United States on their E-2 visa. According to the post’s fraud team, the study showed that even prospective E-2 visa enterprises that meet the applicable requirements at the time of application can become unqualified over time, and that adjudicators should take long-term viability into account when determining the marginality of a business. The post’s fraud team also stated that other posts may wish to consider standardized follow- ups for approved E-2 enterprises and routine confirmations of vetted E companies as the E-2 visa category continues to grow in popularity.", "USCIS officials stated they consider E-2 fraud to be a significant issue and take several steps to identify fraud, including fraud referrals, fraud assessment technology, and site visits. First, according to USCIS officials, immigration officers reviewing the E-2 petition look for anomalies and other indicators of fraud and send a fraud referral for any potential fraud cases by forwarding the case to the service center’s fraud detection office. Immigration officers in the fraud detection office then are to conduct further research, such as reviewing open sources (e.g., company website) or may request a site visit to the business.\nSecond, USCIS uses a fraud assessment technology on all petitions to determine if an E-2 company exists and is financially viable. Specifically, the Validation Instrument for Business Enterprises (VIBE) is a technology that helps immigration officers to determine if a business is operating, financially strong and viable, has good credit, and has not been involved in past fraud. According to USCIS officials, VIBE reviews existing business-related information on an enterprise, such as an office supply store account or utility bills, to determine if it is real and operating.\nFinally, immigration officers may request site visits based on their review of the application or VIBE results. During such site visits, immigration officers visit the business location to determine if the business is performing as stated in the petition and in compliance with the E-2 visa eligibility requirements. The results of the site visit are sent back to the originating location for adjudication. According to USCIS officials, if a larger conspiracy is uncovered, such as fraud involving multiple beneficiaries, the immigration officer may make a referral to U.S. Immigration and Customs Enforcement for further criminal investigation and potential prosecution, but added that this is very rare.\nUSCIS immigration officers made 252 requests for site visits based on VIBE results from fiscal year 2014 through 2018 for E-2s. Of these site visits, USCIS determined there was confirmed fraud for 25 percent (63), as shown in figure 16. Of the 63 confirmed fraud cases, 42 enterprises were not located at the site provided in the petition and 14 enterprises had provided fraudulent documents or otherwise mispresented the facts. For example, in one case, the beneficiary paid a dental laboratory to assign her in a fictitious position of office manager so that she could obtain E-2 status, but the beneficiary had never worked there. In another example, an investor seeking E-2 status in May 2015 submitted a petition based on a discount store that had gone out of business in January 2013. According to USCIS officials, when fraud is confirmed, the immigration officer will deny the petition, review any pending or previously approved petitions from the petitioner, and fraud finding will be entered into VIBE, which affects the applicant’s ability to obtain future immigration benefits, including visa application or petition approvals from the United States government.\nState consular officers can also request that USCIS conduct site visits to help in its adjudication of E-2 visa applications, but USCIS data indicate that such requests are rare. According to USCIS, the agency received 10 external site visit requests from State from fiscal years 2014 through 2018. Of the 10 requests, USCIS conducted site visits to seven businesses and found one incidence of fraud involving a restaurant.\nAccording to State officials, site visits are considered to be resource intensive for the USCIS and can take several weeks or months to complete. The officials added that if a consular officer determines that an applicant is unqualified for the visa, it would not be considered an effective use of the post’s resources to conduct additional investigations or request a U.S.-based site visit from USCIS.\nBased on the results of the site visits and other factors, USCIS officials stated that they have prioritized E-2 fraud, and initiated a site visit pilot program in February 2018 to better determine the extent to which fraud exists. This pilot program focuses on businesses associated with individuals approved for an E-2 status extension and certain eligibility criteria. According to USCIS officials in July 2019, the most commonly encountered fraud or noncompliance issues thus far have involved enterprises that were not operational, not engaged in any business activities, or were not operating as stated in the petition. USCIS plans to continue the E-2 pilot into fiscal year 2020 and to share the results with State.", "State’s and USCIS’s respective roles in the E-2 process, along with a current lack of coordination on E-2 anti-fraud efforts, may contribute to the differences in the way the agencies view and prioritize the risks of E-2 fraud. Drawing on the results of its site visit pilot project, USCIS has said it views E-2 fraud as a significant issue and plans to prioritize efforts to combat E-2 fraud moving forward. While State has taken some steps to examine and combat E-2 visa fraud, officials we spoke with at posts and at headquarters told us that E-2 fraud is rare and generally low risk. The E-2 validation study that one post conducted, noted earlier, also provided evidence that E-2 fraud occurred, at least in that business sector from that particular country. While it is possible that additional validation studies across different posts and business sectors would uncover fraud trends, State officials noted that validation studies are resource intensive, and that E-2 visas represent only a small fraction of the total visas they adjudicate each year. Therefore, State officials stated that such studies are likely to be focused on more common visa types, such as tourist and business visitor visas.\nAlthough some factors may explain why USCIS and State view the risk of E-2 fraud differently, both agencies encounter foreign nationals seeking the E-2 status in the United States. Officials from both agencies stated that USCIS may be more likely to uncover fraud than State because USCIS processes E-2 status extensions for individuals already in the United States. E-2 principals (i.e., investors, managers, and essential employees) would have had up to 2 years to try to run, manage, or work for their business, with the intention to depart at the conclusion of their authorized period of stay. If they failed, gave up, or ended employment, but still sought an E-2 status extension, any materially false representations made as to their eligibility could be considered fraudulent. Officials from both agencies suggested that State may be adjudicating visas for more new businesses, which may qualify at the time of initial adjudication but could ultimately fail. However, during our observations and file reviews, we found that USCIS also adjudicates petitions for new businesses for beneficiaries seeking to change to E-2 status, and State also adjudicates E-2 visa applications for existing businesses that have previously been associated with E-2 visa holders. Further, neither State nor USCIS collect data that track the number of new businesses seeking E-2 status for their employees. As such, we cannot verify the accuracy of this reason for explaining why or if USCIS is more likely to encounter fraud among individuals seeking E-2 status than State.\nBoth State and USCIS collect information that could potentially be useful to each other’s activities to identify and address E-2 fraud, but the agencies do not have a mechanism for regular coordination on fraud. For example, as previously noted, consular officers adjudicating E-2 visas overseas learn to identify country-based fraud trends as well as trends specific to E-2 visas. USCIS immigration officers can identify similar trends, and the results of USCIS’s site visits may further identify potential fraud trends that would be useful for State consular officers.\nHowever, interagency coordination is ad hoc, generally among headquarters officials only, and relatively rare. For example, both State and USCIS officials stated that the main formal mechanism of coordination on all E-2 visa issues is a quarterly teleconference. However, such meetings were cancelled 7 out of 8 times in fiscal years 2017 and 2018 because officials did not identify agenda topics to discuss, according to State and USCIS officials. Further, such meetings have not included discussions of E-2 fraud issues. State officials stated that they share country fraud summaries with USCIS. However, these fraud summaries do not focus on E-2 visas, but fraud trends more generally.\nAccording to A Framework for Managing Fraud Risks in Federal Programs, agencies should establish collaborative relationships with stakeholders to share information on fraud risks and emerging fraud schemes, as well as lessons learned related to fraud control activities. Managers can collaborate and communicate through a variety of means, including task forces, working groups, or communities of practice. Although State and USCIS have some informal mechanisms in place to share fraud-related information, such as emails among headquarters officials and by sharing high-level country fraud reports, formal information sharing mechanisms have not been regularly operating. Although the two entities view the risk of E-2 fraud visa differently, both State’s and USCIS’ E-2 antifraud efforts would benefit from ensuring that they regularly share information on fraud risks. Doing so will help both entities to better identify emerging fraud trends, prevent foreign nationals from fraudulently obtaining E-2 status, and identify areas for potential collaboration and resource sharing.", "The E-2 nonimmigrant classification helps to facilitate foreign investment in the United States, which contributes to the U.S. economy each year. State and USCIS share the responsibility for adjudicating thousands of E- 2 visa applications and petitions annually for foreign nationals seeking E- 2 status. Both State and USCIS officials stated that given the complexity of adjudicating E-2 applications and petitions, and the level of documentation and time required, the E-2 adjudication process can present challenges with respect to the analysis of E-2 eligibility requirements. State consular officers, managers, and LES noted that additional training and resources are needed to help them better understand the eligibility requirements and supporting financial and business documents. Enhancing E-2 training and providing additional resources such as documents clarifying E-2 eligibility requirements would help better ensure that consular officers and LES prescreening and adjudicating these visas have the necessary knowledge, skills, and abilities to carry out their responsibilities effectively across posts worldwide.\nAdditionally, some overseas State posts have developed E-2 company registration programs to more efficiently process and adjudicate E-2 visa applications. Although there are benefits to such programs, the variation in the standards of these programs may result in different processing of companies and applicants across posts, as well as acceptance of varying levels of risk by posts. Establishing guidance or minimum standards for posts that choose to implement such programs would better ensure that all posts’ E-2 visa adjudication processes are consistent with State’s policies, objectives, and risk tolerance. Further, State and USCIS require certain information and documents be retained for all E-2 applications and petitions; however, during our file review of State and USCIS E-2 adjudications, we identified that some required documents were missing from State files. Ensuring that posts retain all required E-2 documentation would better position State to be able access applicant information, which could be needed for law enforcement, anti-fraud, or security purposes later. Finally, although State and USCIS collect information that could potentially be useful to each other’s activities to address E-2 fraud, coordination between State and USCIS on E-2 fraud has been ad hoc, generally among headquarters officials only, and relatively rare. Developing regular coordination mechanisms would help both entities to better identify emerging fraud trends and prevent foreign nationals from fraudulently obtaining E-2 status.", "We are making the following five recommendations to State and USCIS:\nThe Assistant Secretary of State for Consular Affairs should provide additional training or related resources to consular officers and locally employed staff on adjudicating E-2 visas, to cover topics that include the E-2 eligibility requirements and understanding business- and tax- related documents. (Recommendation 1)\nThe Assistant Secretary of State for Consular Affairs should develop minimum standards for E-2 company registration programs, such as standards for how often companies are to be re-vetted. (Recommendation 2)\nThe Assistant Secretary of State for Consular Affairs should develop and implement a process to ensure that posts maintain required E-2 visa application documentation. (Recommendation 3)\nThe Secretary of State, in coordination with the Director of USCIS, should establish regular coordination mechanisms to share information on E-2 fraud risks. (Recommendation 4)\nThe Director of USCIS, in coordination with the Secretary of State, should establish regular coordination mechanisms to share information on E-2 fraud risks. (Recommendation 5)", "We provided a draft of this report to State and DHS for their review and comment. State and DHS provided written comments, which are reproduced in appendices IV and V, respectively. Both State and DHS concurred with our recommendations. State and DHS also provided technical comments, which we incorporated as appropriate.\nState concurred with all four recommendations addressed to it in the report (recommendations 1, 2, 3, and 4), and described actions it plans to take in response. To address recommendation 1, State plans to increase the frequency and specificity of E-2 content through webinars, workshops, and guidance, and by developing subject matter experts domestically who can provide consultative services on an as-needed basis for business and tax-related documents. To address recommendation 2, State plans to require a minimum 5-year mandatory review of companies registered at any post using a company registration program. To address recommendation 3, State plans to reinforce its E-2 visa documentation retention policy in regular policy guidance to consular managers. To address recommendation 4, State plans to hold regular, high-level coordination meetings with USCIS to include coordination on E visa adjudication standards. DHS concurred with recommendation 5, and stated that the department plans to share the results of its site visits during quarterly coordination meetings with State. These actions, if effectively implemented, should address the intent of our recommendations.\nWe are sending copies of the report to the Acting Secretary of Homeland Security, Secretary of State, and appropriate congressional committees. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact Rebecca Gambler at (202) 512-8777 or [email protected] or Jason Bair at (202) 512-6881 or [email protected]. 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 reviews the Department of State’s (State) and Homeland Security’s (DHS) U.S. Citizenship and Immigration Services’ (USCIS) oversight and implementation of E-2 adjudications. Specifically, this report examines (1) the outcomes and characteristics of foreign nationals who have sought or received E-2 status during fiscal years 2014 through 2018, (2) State’s and USCIS’s policies and procedures to ensure that individuals meet E-2 eligibility requirements, and (3) State’s and USCIS’s efforts to assess and address potential fraud in the E-2 adjudication process.\nTo determine the outcomes and characteristics of foreign nationals who have sought or received E-2 status, we analyzed data from State’s Bureau of Consular Affairs and USCIS on E-2 visa applications and petitions adjudicated from fiscal years 2014 through 2018. For example, the data we analyzed included E-2 role (e.g., investor, manager, essential employee, and dependents), adjudication outcome (i.e., issued or refused), and nationality, among other data points. To assess the reliability of the E-2 data, we interviewed State and USCIS officials that maintain the data and checked the data for missing information, outliers, and obvious errors, among other actions. For example, we identified and removed duplicate entries in State’s data. On the basis of these steps, we determined that the data were sufficiently reliable for the purposes of our reporting objectives, including providing summary statistics on E-2 adjudications, outcomes, and the characteristics of those seeking E-2 status.\nTo obtain additional data points, such as types of business and investment amount, we analyzed generalizable stratified random samples of E-2 visa applications and petitions adjudicated in fiscal year 2018. Specifically, we reviewed 124 E-2 petitions from USCIS and 120 State applications for E-2 investors, managers, and essential employees. The documents in our file review included, for example, State’s DS-160 online nonimmigrant visa application and DS-156E supplemental application, USCIS’s I-129 petition for nonimmigrant workers, and supporting documents, when available. To collect information from the applications and petitions, we created a data collection instrument and established standard procedures to ensure that we accurately collected the information from the original forms. We chose sample sizes to achieve precision levels for a percentage estimate of plus or minus 10 percentage points for important sub-populations, such as denied petitions and role (e.g., investor, manager, and essential employee). As a result, all percentage estimates presented in this report have a precision of plus or minus 10 percentage points or fewer, unless otherwise noted. Further, we classified the types of businesses in the applications and petitions using the North American Industry Classification System by conducting a content analysis of the business description field in the applications and petitions to group related business types into larger groups, such a food service and manufacturing.\nFurther, we also collected and analyzed data and information from USCIS and U.S. Customs and Border Protection on post E-2 adjudication outcomes, including changing status from E-2 to another nonimmigrant category, adjusting from E-2 status to lawful permanent residency, and E- 2 nonimmigrants who remain in the United States beyond the expiration of their authorized period of stay, known as overstays. We present the results of this analysis in Appendix III. To assess the reliability of these data, we interviewed officials that maintain the data and checked the data for missing information, outliers, and obvious errors, among other actions. On the basis of these steps, we determined that the data were sufficiently reliable for the purpose of providing summary statistics on E-2 post adjudication outcomes.\nTo assess State and USCIS policies and procedures to ensure that individuals meet E-2 eligibility requirements, we reviewed relevant State and USCIS guidance documentation, including State’s Foreign Affairs Manual and USCIS’s E-2 standard operating procedures. We also reviewed relevant provisions of the Immigration and Nationality Act and implementing regulations, which set forth the E-2 eligibility requirements. We interviewed officials from State’s Bureau of Consular Affairs and Foreign Service Institute, and USCIS on their respective agencies’ E-2 processes and procedures, as well as training provided to State’s consular officers and USCIS’s immigration officers. Further, we assessed State’s and USCIS’s policies and procedures to ensure that individuals meet E-2 eligibility requirements against control environment, control activities, and monitoring internal control standards in Standards for Internal Control in the Federal Government, as well as documentation retention requirements in agency guidance.\nWe conducted site visits to State and USCIS locations that adjudicate E-2 visas and petitions, respectively. For State, we conducted site visits to four posts abroad—London, United Kingdom; Seoul, South Korea; Tokyo, Japan; and Toronto, Canada from October through December 2018. For our site visits, we selected posts that (1) were among the 10 highest E-2 adjudicating posts by volume in fiscal year 2017, (2) had different staffing models for processing E-2 visa adjudications, such as posts that had a single officer specializing in E-2 visas or posts that had all consular officers adjudicate E-2 visas, and (3) were geographically dispersed. During these visits, we observed the prescreening and adjudication of E-2 applications and used a data collection instrument to collect information on the cases we observed, such as adjudication outcome and other non- personally identifiable information about the case. We interviewed consular officers and managers, locally employed staff (LES), fraud prevention managers, and the assistant regional security officer- investigators (ARSO-I), where available, about topics such as E-2 visa adjudication policies, procedures, resources and training available at post. Our observations from these site visits provided useful insights into State’s E-2 adjudication procedures, but are not generalizable to all posts that adjudicate E-2 visas. For USCIS, in November 2018, we visited the California Service Center in Laguna Niguel, California—which is the only USCIS service center that adjudicates E-2 petitions—to observe E-2 petition adjudications and interview USCIS officials.\nIn addition to our site visits, we conducted telephonic interviews with consular officers and LES who are responsible for prescreening and adjudicating E-2 visa applications at the remaining six of the top 10 posts in terms of E-2 annual adjudications, as well as four randomly selected low-volume posts. The 4 low-volume posts were selected at random from a list of posts that had adjudicated at least 100 E-2 visa applications in fiscal year 2017. We collected copies of post-specific standard operating procedures and local E-2 visa adjudication tools (e.g., checklists), as available, from the 14 posts we visited or interviewed. Further, we reviewed written responses from the consular managers responsible for supervising E-2 visa adjudications at these 14 posts to a set of questions regarding E-2 adjudication processes and procedures, challenges, E-2 company registration programs, and E-2 training.\nTo determine the efforts that State and USCIS take to assess and address E-2 fraud, we reviewed relevant State and USCIS standard operating procedures and guidance. We interviewed headquarters officials from State and USCIS, such as State’s Office of Fraud Prevention Program and USCIS’s Fraud Detection and National Security Directorate, on how both agencies identify and address potential E-2 fraud and what, if any, coordination or information sharing occur between State and USCIS. During our 4 site visits abroad, we interviewed officials, such as fraud prevention managers and ARSO-Is, on anti-fraud efforts for E-2 visas at their posts, including potential fraud trends. Similarly, we interviewed immigration officers at USCIS’s California Service Center on their anti-fraud efforts for E-2 petitions. We obtained data from State and USCIS on fraud referrals—that is, cases sent to fraud experts for additional research and review—and the results of fraud site visits from fiscal year 2014 through 2018. To assess the reliability of these data, we interviewed State and USCIS officials that maintain the data and checked the data for missing information, outliers, and obvious errors, among other actions. On the basis of these steps, we determined that the data were sufficiently reliable for the purposes of our reporting objectives, including providing summary statistics on fraud referrals and the results of fraud site visits. Further, we assessed State’s and USCIS’s anti-fraud efforts against best practices found in A Framework for Managing Fraud Risks in Federal Programs.\nWe conducted this performance audit from July 2018 to July 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 Immigration and Nationality Act requires the existence of a qualifying treaty of commerce and navigation between the United States and a foreign state in order for E-2 visa classification to be accorded to nationals of that foreign state. According to Department of State guidance, such qualifying treaties may include treaties of friendship, commerce and navigation, and bilateral investment treaties. As of June 2019, nationals of the 82 countries listed in Table 7 may be accorded E-2 status pursuant to a qualifying treaty, or pursuant to legislation enacted to extend that same privilege.", "This appendix presents various statistics on adjudications by State for E-2 visas as well as those by U.S. Citizenship and Immigration Services (USCIS) for E-2 petitions for fiscal years 2014 through 2018. We present these data broken out by fiscal year, outcome (e.g., issued or refused), type (e.g., investor, manager, essential employee, dependent), country of nationality or birth, reason for refusal, and prior nonimmigrant status, if available. Further, we also provide statistics on some post-adjudication outcomes—that is, data on characteristics of those who obtained E-2 status. These outcomes include changes to another nonimmigrant status or lawful permanent residency, or the extent to which E-2 status holders remained in the United States beyond their authorized period of stay, known as overstaying.", "For the purposes of this appendix, there are four potential roles for foreign nationals seeking E-2 status. First, a foreign national who has committed funds to a U.S. enterprise and is in a position to develop and direct the operations of the enterprise in which he or she has invested substantial capital is known as an investor. Second, a foreign national employee in an executive or supervisory position is known as a manager. Third, a foreign national employee, in a lesser capacity than a manager, but having special qualifications essential to successful or efficient business operations, is known as an essential employee. Finally, the spouse or qualifying child of an investor, manager, or essential employee is known as a dependent. State consular officers will adjudicate the visa application as either issued or refused.\nA foreign national seeking E-2 status as an investor, manager, or essential employee is known as a principal, and a spouse or qualifying child of a principal is known as a dependent. Foreign nationals seeking E- 2 status through USCIS use different forms based on whether they are a principal or a dependent. USCIS immigration officers will generally adjudicate the petition as either approved or denied.", "Change of Status From E-2 to Another Nonimmigrant Category. From fiscal years 2014 through 2018, about 5,000 foreign nationals sought to change from E-2 status to another nonimmigrant status. As shown in figure 17 and table 16, most of these requests were to change to academic student status (F-1, 31 percent), temporary workers in specialty occupation status (H-1B, 10 percent), tourist status (B-2, 9 percent), and intracompany transferee executive or manager status (L-1A, 7 percent), as well as dependents of these statuses. Further, about 11 percent of these foreign nationals were requesting to change from one role within E- 2 status to another. As previously noted, this could include, for example, a spouse of an E-2 investor later seeking to work at the company as a manager.\nAdjusting from E-2 Status to Lawful Permanent Resident. From fiscal years 2014 through 2018, over 22,000 foreign nationals changed from E- 2 status to lawful permanent residents. The large majority of these (73.1 percent) were employment-based (i.e., sponsored by a U.S. employer), as shown in figure 18 and table 17.\nOverstays. According to DHS data, a relatively low percentage of foreign nationals with E-2 status—obtained either through an E-2 visa from State or an approval to change to, or extend, their E-2 status from USCIS— overstayed their authorized period of admission compared to other nonimmigrant statuses. From fiscal years 2016 through 2018, DHS reported that the total overstay rate decreased slightly from 1.5 percent to 1.2 percent. Similarly, the overstay rate for E-2 status for the same years decreased from 0.8 percent from 0.6 percent, as shown in table 18.\nAs we previously reported, U.S. Customs and Border Protection (CBP) implemented system changes in 2015 that allowed CBP to identify E-2 overstays, along with other nonimmigrant categories beginning in fiscal year 2016.\nDHS officials stated that the process to track E-2 visa overstays is the same as with other visa categories. They noted that specific visa categories are not prioritized; CBP and U.S. Immigration and Customs Enforcement focus on those overstays where the individual is identified as a national security or public safety risk.", "", "", "", "", "In addition to the individuals named above, Adam Hoffman (Assistant Director), Kim Frankena (Assistant Director), Erin O’Brien (Analyst-in- Charge), Juan Pablo Avila-Tournut, Kristen E. Farole, James Ashley, Caitlin Cusati, Eric Hauswirth, Amanda Miller, Sasan J. “Jon” Najmi, Adam Vogt, and K. Nicole Willems made significant contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 3, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h3_title", "", "h0_full", "h3_full", "h0_full h4_full", "", "", "h4_full h1_title", "", "h1_title", "h1_full", "", "", "h2_title", "h2_full", "h2_full", "h2_full", "h3_full", "", "h1_full", "h4_full", "h3_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What was the extent and results of the Department of State and USCIS’ processing of foreign nationals seeking E-2 status from 2014-2018?", "What was the distribution of State versus USCIS applications?", "What types of people are seeking E-2 statuses through State and USCIS?", "Why may a foreign national be reluctant to apply for E-2 status over a standard visa?", "What is the scope of the difficulty of applying for an E-2 visa?", "How are E-2 visas impacted by the projection of their businesses’ substantiality?", "What is a way in which the State department may help make the E-2 visa process better in the future?", "How do State and USCIS address E-2 fraud?", "How do State and USCIS differ in the ways they address E-2 fraud?", "What do State and USCIS have in common when it comes to addressing E-2 fraud?", "What is the most effective way for E-2 fraud to be addressed?", "What is an option for people from other countries to enter the United States without applying for citizenship?", "What is the E-2 nonimmigrant classification?", "How would a foreign national obtain E-2 status in the United States?", "What is the role of GAO In State and USCIS's E-2 processes?", "What does GAO's report overview?", "How did GAO go about analyzing State and USCIS's processes?", "How did GAO further their analysis?" ], "summary": [ "The Department of State (State) and U.S. Citizenship and Immigration Services (USCIS) annually adjudicated about 54,000 visa applications or petitions from fiscal years 2014 through 2018 for foreign nationals seeking E-2 nonimmigrant status, over 80 percent of which were approved.", "About eighty percent of E-2 adjudications were for State visa applications, and the remaining 20 percent were for USCIS petitions to extend or change to E-2 status.", "Generally, about half of the foreign nationals seeking E-2 status were investors, managers, or essential employees of an E-2 business, and the other half were their spouses or children.", "Consular officers noted that E-2 visa adjudications are complicated and resource-intensive, often requiring more documentation and time to complete than other visas.", "Consular officers noted that E-2 visa adjudications are complicated and resource-intensive, often requiring more documentation and time to complete than other visas. For example, the requirement that the investment in the business be substantial does not prescribe a minimum capital amount. Rather, the investment must be large enough to support the likely success of the business, among other criteria.", "Consular officers at 10 of 14 posts GAO interviewed indicated that determining the investment's substantiality is difficult for newly encountered business types.", "Providing additional E-2 training or related resources would help ensure that consular officers and locally employed staff have the necessary knowledge and abilities to carry out their responsibilities.", "State and USCIS have resources to address E-2 fraud, which includes submitting falsified documents or making false statements material to the adjudication; however, coordination on E-2 anti-fraud efforts is limited.", "State has anti-fraud efforts in place for all nonimmigrant visa types, but State officials stated that they consider E-2 visa fraud to be lower risk compared to other visas because the large amount of complex paperwork required for the E-2 visa discourages malicious actors. USCIS officials consider E-2 fraud to be a significant issue and have taken steps to identify fraud, such as using fraud assessment technology to determine if a business is financially viable and conducting site visits if fraud is suspected.", "Both State and USCIS collect information that could be useful to each other's anti-fraud efforts, but interagency coordination on E-2 fraud issues is ad hoc and relatively rare. For example, the main formal mechanism of coordination on E-2 visa issues—a quarterly teleconference—was cancelled 7 out of 8 times in fiscal years 2017 and 2018.", "Coordinating regularly on fraud issues, which is a best practice from GAO's Fraud Risk Framework, will help both entities to better identify emerging E-2 fraud trends and areas for potential resource sharing.", "Foreign nationals from 82 countries may obtain E-2 nonimmigrant investor status in the United States.", "The E-2 nonimmigrant classification allows an eligible foreign national to be temporarily admitted to the United States to direct the operations of a business in which they have invested a substantial amount of capital, or to work in an approved position (e.g., manager or essential employee).", "To obtain E-2 status, a foreign national can apply through State for an E-2 visa abroad, or if already in the United States, by petitioning USCIS to extend or change to E-2 status.", "GAO was asked to review State's and USCIS' E-2 adjudication process.", "This report addresses: (1) outcomes and characteristics of foreign nationals who sought or received E-2 status from fiscal years 2014 through 2018, (2) policies and procedures for ensuring that individuals meet E-2 eligibility requirements, and (3) efforts to assess and address potential E-2 fraud.", "GAO analyzed State and USCIS data on E-2 adjudications, generalizable samples of E-2 visa applications and petitions, and relevant documents.", "GAO interviewed officials at 14 State posts abroad, selected based on E-2 application volume and other factors, and observed E-2 adjudications at four of these posts and USCIS's California Service Center." ], "parent_pair_index": [ -1, -1, -1, -1, 0, -1, -1, -1, -1, 1, -1, -1, -1, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 4, 4, 4, 4, 6, 6, 6, 6, 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "Development of Current Tax Treatment of the Family", "Personal Exemptions and Child Credits", "Standard Deduction or Flat Exclusion and Itemized Deductions", "Rate Structure", "Earned Income Tax Credit", "Child or Dependent Care Credit", "Alternative Minimum Tax", "Other Provisions", "Equity and Distributional Issues", "Vertical Equity", "Horizontal Equity", "Theories of Equitable Taxation", "Family Arrangements as Personal Choices", "Ability-to-Pay Approaches", "Targeted Family Assistance", "Applying the Ability-to-Pay Horizontal Equity Standard to Current Law", "Marriage Penalties and Marriage Bonuses", "Conclusion" ], "paragraphs": [ "", "Recent years have been times of significant changes in the income tax treatment of the family. For lower-income families, the most important of these have been the expansion of the earned income credit (EIC) in 1990, 1993, and 2009. For middle-income families, the introduction of the child credit in 1997 and its expansion in 2001, along with the expansion of rate brackets and standard deductions to address the marriage penalty, have been important features. For higher-income families, the lowering of tax rates in 2001 are important changes. In December 2010, the 2001-2003 tax cuts, which were set to expire after 2010, were extended for an additional two years ( P.L. 111-312 ). The American Taxpayer Relief Act of 2012, P.L. 112-240 , made these provisions permanent for all except a tiny fraction of taxpayers.\nThe American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) contained temporary provisions that are aimed at middle-class and lower-income families. These provisions included a refundable payroll tax credit based on earnings limited to $800 for joint returns ($400 for singles) and phased out as income rises. It also includes an increase in the earned income tax credit, with a higher rate of 45% for families with three or more children and an increase in the phase-out level for joint returns, aimed at reducing the marriage penalty. It also included a provision increasing the refundability of the child credit by allowing some refundability for incomes over $3,000. A jobs bill passed in the House in December ( H.R. 2847 ) temporarily eliminated the $3,000 floor for 2010. These provisions expired after two years, although P.L. 111-312 extended the $3,000 child credit floor and earned income credit provisions for two additional years. These provisions were extended through 2017 by the American Taxpayer Relief Act of 2012 ( P.L. 112-1240 ) and made permanent at the end of 2015 by the Protecting Americans from Tax Hikes (PATH) Act ( P.L. 114-113 ). The child credit and the earned income credit have their largest relative impact on low-income taxpayers.\nAlthough an array of issues might be considered in discussing tax rules and their effects, this paper considers two questions in detail: (1) to what extent does the tax code provide an equitable treatment of families of different sizes, and (2) what are the effects of the tax code on marriage penalties and bonuses?\nThe first section summarizes the major features of the tax law affecting families and family choices, and how they developed over time, including the relatively recent introduction of large benefits for children at low and moderate income levels, a reversal of a trend in the past that tended to reduce these benefits through the erosion of the real value of the personal exemptions. It also summarizes the origin of the marriage penalty and marriage bonus.\nThe following two sections first discuss general equity issues, and then apply the ability-to-pay standard to examine how tax burdens vary by family size, across the income spectrum. The final section examines the marriage penalties and bonuses.", "Current federal income tax law differentiates among families by type and structure in several ways. This differentiation has changed considerably over the years and includes personal exemptions, standard deductions, rate schedules, and various other features such as child care credits, age exemptions, and earned income credits.\nA number of rules are differentiated by the type of tax return. Joint returns are filed by married couples, head-of-household returns by single heads with dependents, and single returns by singles without dependents.", "Personal exemptions allow a certain amount per person to be exempt from tax. Combined with standard deductions, which vary by family type, they exclude a minimum level of income from tax. In 1986, these combined amounts were roughly set at the poverty level. Personal exemptions can also play a part in marriage bonuses when only one spouse works: a single individual cannot claim an unmarried companion as a dependent, whereas a husband can claim a wife (and vice versa).\nThe tax laws have always allowed some relief for family size through exemptions, although the original 1913 act allowed deductions only for the individual taxpayer ($3,000) and spouse ($1,000). These amounts were very large relative to incomes, but the initial income tax was not intended to reach a broad group of individuals. Even when dependent exemptions were allowed in 1917, they were only $200, small relative to the basic exemptions. The practice of allowing an equal exemption for each family member began in the early 1940s.\nPersonal exemptions were reduced in the initial years of the tax, then increased, then reduced again; they were last reduced in the early 1940s. The real value of the exemptions was also affected by inflation. For example, the personal exemption remained constant at $600 from 1948 through 1969, while its real value was heavily eroded through inflation. It was gradually increased over the next 10 years to $1,000, where it again remained constant until 1985. From 1948 through 1984, the personal exemption lost 63% of its purchasing power. In large part due to diminution of the real value of personal exemptions, the tax burden had shifted over time to fall more heavily on larger families. In 1986, personal exemptions were increased and indexed, so that today the personal exemption of $4,050 has lost only about 21% of its purchasing power.\nThis shift of burden to families with children was changed dramatically by the adoption of the $500 child credits in the Taxpayer Relief Act of 1997 and by the increase in that credit to $1,000 in the Economic Growth and Tax Relief Reconciliation Act of 2001. The $500 increase in the credit (to $1,000) has been made permanent. In the cases where these credits apply (for children under 17), they cause the personal exemption plus the deduction equivalent of the $1,000 credit to be 110% larger than its 1948 value for families in the 15% rate bracket. The credit is not, however, indexed for inflation, and absent indexation its real value will diminish. The $500 increase in the credit has been made permanent.\nNot all taxpayers receive the credit. It is phased out for higher incomes at 5% of adjusted gross income (for 2016) over $110,000 for joint returns and $75,000 for head-of-household returns. The initial credit was not generally refundable, and therefore families with no tax liability or insufficient liability to use the full credit would not receive the full benefit. An exception was made for families with three or more children, where the credit could offset payroll tax in excess of the earned income tax credit. When the child credit was doubled under the temporary provisions of the 2001 tax, an additional refundability provision was allowed for all families for income in excess of $10,000 (beginning at 10% and rising to 15%), indexed for inflation. The additional child credit was phased in initially, but accelerated in legislation adopted in 2003 and 2004. The current rule, adopted initially in 2009 and made permanent in 2015, allows refundability for 15% of income over $3,000.\nThe personal exemption is also phased out for higher incomes, although that phaseout now applies only to very high income taxpayers. For 2016, the personal exemption is phased out between $311,300 and $433,800 for joint returns, between $285,350 and $407,850 for head-of-household returns, and between $259,400 and $381,900 for single returns.", "Standard deductions, which vary across the types of returns (single, joint, and head of household), also affect tax burdens across families. Standard deductions are beneficial when itemized deductions (such as taxes, mortgage interest, and charitable contributions) are smaller than the standard amount. Prior to the 2001 tax revision, the standard deductions for singles and heads of household were 60% and 80%, respectively, of the size of the deduction for joint returns. The standard deduction can contribute to a marriage penalty if it is larger than half the deduction for married couples: two singles who both work and marry will have a smaller combined deduction. It can also contribute to a marriage bonus, if there is only one earner in the couple, because the joint deduction is larger than the single deduction. In 2001, joint standard deductions were increased, so as to eliminate the marriage penalty relative to singles without children and reduce it relative to heads of household (where the deduction is 73% as large). These changes increased the marriage bonus. Current standard deductions (for 2016) are $12,600 for joint returns, $9,300 for head-of-household returns, and $6,300 for single returns.\nVirtually from its inception, the tax law allowed itemized deductions for taxes, interest, charitable contributions, and certain other personal expenses. In 1944, a standard deduction of 10% of adjusted gross income with a ceiling of $500 was allowed as a substitute for these itemized deductions. A major reason for this exemption was to reduce the number of itemizers and make tax filing less complex. In 1964, a minimum standard deduction of $200 plus $100 for each exemption with a $1,000 ceiling was added. Beginning in 1969, these standard deductions were increased substantially. The percentage standard deduction was gradually increased to 16% and the ceiling increased to $2,000. A low-income allowance of $1,100, to be reduced by $50 in each of the next two years, was substituted for the minimum standard deduction. (These reductions were included because of the rise in the personal exemption that was increasing total exempt amounts.) The low-income allowance was increased to $1,300 in 1972.\nIn 1975, the low-income allowance was once again differentiated, but based on family type (joint, head of household, single) rather than size. Joint returns received a $2,100 allowance by 1976. The ceiling on the percentage standard deduction was also differentiated by family type and was raised to $2,800 for joint returns by 1976. In 1977, the low-income allowance and the percentage standard deduction were consolidated into a single flat allowance called the zero-bracket amount, which was set at $3,200 in 1977 and at $3,400 in 1978. This zero-bracket amount was indexed in 1981, so that it would rise with inflation. The Tax Reform Act of 1986 raised the flat deduction amount, but continued to differentiate it with respect to family status (but not family size). The 2001 act increased the standard deduction for joint returns to twice that of single returns.\nIn comparing the relative benefits over time, it is important to consider the changes in all flat allowances as well, not just the personal exemption. For example, while the real value of the personal exemption has declined about 21% since 1948, the exempt amount for a family of four (joint return) was very close to the exempt amount had 1948 values been indexed for inflation (using the GDP deflator) prior to the 2001 tax changes. Current levels are about 27% larger than those that would have occurred had the exempt level in 1948 been indexed. Ignoring the child credit, most families have more generous exempt levels today, with smaller families having larger relative amounts. For example (again, ignoring the child credit), exempt allowances are larger in real terms today for singles (83% larger), for heads of households with one child or two children (53% and 26% larger, respectively), and for joint returns with one to four children (46%, 27%, 16%, and 9% larger, respectively). Real levels are larger for heads of household with four and five members (12% and 4%) and about the same for a six-person family.\nHeads of household and joint returns with children eligible for the child credit, however, have greater exempt levels, although the size depends on the imperfect refundability of the child credit and the phaseout. But the effects are large. For example, a married couple with an eligible child can have income of $24,450 (standard deduction plus three personal exemptions) plus another $10,000 to generate a $1,000 child credit at a 10% tax rate, for a total exempt level of $34,400, which is 104% larger in real terms than the 1948 value. This family will also receive an earned income credit and thus pay a negative tax rate.\nNote, however, that changes in benefits compared with past levels do not necessarily have implications for the appropriate treatment of different families. If past family differentiation was not due to a theory about equitable treatment of differing families, there is no economic reason that current tax treatment should conform to any past standards.\nMost taxpayers take the standard deduction but about a third itemize, largely at the higher-income levels. Itemized deductions tend to keep pace with income levels. They are technically subject to a phaseout but the effect of the phaseout is to increase marginal tax rates, since it is triggered by income and not deductions and since it is unlikely to exhaust deductions, which rise with income. The phaseout is 3% of income in excess of the same starting point as the phaseout of personal exemptions. The most significant itemized deductions in dollar terms are the deduction for state and local taxes, the mortgage interest deduction, and the deduction for charitable contributions.", "Two important aspects of the rate structure are the unit of taxation and the progressivity of the rate structure (i.e., how tax rates rise as increments of income increase). Current tax rates are imposed at 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. Under the provisions of the 2001 tax cut, the 39.6% rate had been eliminated, and the top rate was 35%; those provisions were originally scheduled to expire in 2010, with the 10% rate rising to 15% and the top four rates rising to 28%, 31%, 36%, and 39.6%. The American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) made the lower rates permanent except for the highest rate for joint returns with over $466,950 of taxable income in 2016 and single returns with over $415,050 of taxable income in 2016. Taxes are imposed on family units. Married couples cannot use the single rate schedules (although they can file separately with a rate structure that offers no advantage over joint filing). Most taxpayers have income that is not adequate to generate any tax (24% of returns) or taxes them at no more than 10% (18% of returns), no more than 15% (29% of returns), and no more than 25% (17% of returns).\nThe width of the brackets is greatest for joint returns and smallest for singles, although all types of returns reach the 35% rate at the same point. For single returns the 10% and 15% brackets are half the width of joint returns, the 25% bracket is 70% as large, and the next two brackets are about 124% as large (longer brackets at the top being necessary to get to the same income for the top bracket). For heads of household the 10% and 15% brackets are 72% and 66% as wide, the next two about the same length and the final bracket 111% as wide. There are also, as noted earlier, phaseouts of itemized deductions, personal exemptions, and child credits at higher-income levels. The higher rates and the phaseouts apply to only a small fraction of taxpayers. Less than 17% of taxpayers had adjusted gross income over $100,000 in 2014, and less than 6% had incomes over $200,000.\nIn the original 1913 tax law, a single rate structure was applied to all taxpayers as individuals. In 1948, joint returns were allowed that effectively permitted income splitting. This change had little to do with any theory regarding the tax treatment of the family. Rather, it occurred because married couples in community property states were successfully claiming the right to divide their income evenly for tax purposes. Under a graduated rate structure, this income-splitting reduces the total tax burden by reducing the amount of income subject to higher rates. Income-splitting was adopted to equalize treatment across the states and to forestall a major tax-induced disruption in state property laws. This move created the familiar joint and single returns. Both the community property treatment and the legislated income-splitting resulted in a tax subsidy for marriage. Individuals who married would experience lower tax liabilities due to the rate structure as long as their incomes were unequal. Shortly after, in 1951, a head-of-household schedule for unmarried taxpayers with dependents was introduced, which allowed half the benefits from income-splitting (i.e., wider tax brackets). This treatment could, in theory, create a marriage penalty for families with children, although this point received virtually no attention.\nCriticism from singles, arguing that their taxes were too high, led in 1969 to a singles rate schedule with wider brackets. This difference in rate schedules, however, also created a marriage penalty for certain types of families, including those without children. If both spouses worked, tax bills could increase with marriage. Many people were uncomfortable with a tax provision that encouraged couples to live together without benefit of matrimony. Coupled with increasing female labor force participation and a changing social structure, the marriage penalty created considerable concern. For this reason, a capped deduction for the secondary earner in a family was adopted in 1981. The provision allowed 10% of income to be deducted, subject to a cap of $3,000. This deduction was an imperfect device that partly alleviated the problem of the marriage penalty and, for individuals below the cap, reduced the marginal tax rate on the secondary worker. It was repealed in 1986, when the flatter rate structure caused the marriage penalty to be less severe. The marriage penalty was increased for very high-income individuals in 1993 with the addition of higher tax rates. These changes affected, however, only a very small fraction of the population.\nThe degree of progression in the rate structure interacts to affect the tax burden that applies to taxpayers in different circumstances. The rate structure has varied significantly over time, but a major revision in the 1986 act reduced the brackets to two (15% and 28%) as well as lowering the top bracket. Certain benefits were phased out. In 1990, the \"bubble\" due to these phaseouts was eliminated in exchange for adding a new tax rate of 31%. (Capital gains were held to a 28% rate.) However, personal exemptions were still phased out. Itemized deductions were also phased out, on a temporary basis, reduced by 3% of adjusted gross income (AGI) above a limit. Because itemized deductions tend to rise with income faster than the reductions due to the phaseout, this phaseout is the equivalent of increasing taxable income by 3%, and an additional percentage point or so in tax. (Each dollar of adjusted gross income taxed leads to a reduction in deductions of $0.03, and if the marginal tax rate is around a third, then the additional tax per dollar of income is around $0.01.) In 1993, two marginal tax rates were added at the upper income levels, 36% and 39.6%; this legislation made the itemized deduction and personal exemption phaseouts permanent.\nThe 2001 tax cut, in addition to lowering the top tax rates and introducing a new 10% rate, eliminated the marriage penalty for most taxpayers by increasing the standard deduction, new 10% rate bracket, and the 15% rate bracket to make these values twice as large as for singles, returning to the pre-1969 treatment for most taxpayers. That tax cut also prospectively eliminated the personal exemption phaseout (to begin in 2006 and be complete in 2010) and the itemized deduction phaseout (in 2010). Later legislation in early 2013 ( P.L. 112-240 ) eliminated these phaseouts for all but the highest-income taxpayers.", "The earned income tax credit (EIC) is a refundable credit (or negative tax) that provides a wage subsidy for low-income working individuals. The credit is a percentage of earned income, which reaches a maximum fixed amount that continues over a segment of income and then is eventually phased out. The permanent credit rates are currently 7.65% for families without children, 34% for families with one child, 40% for families with two children, and 45% for families with three or more children. The phase-out rate is 7.65% for families with no children, 15.98% for families with one child, and 21.06% for families with two or more children. The phase-out levels are higher for families with children than for those without children. In 2016, the year data were analyzed, the credit reached its maximum value of $506 for families with no children at an income of $6,610; the credit was phased out at incomes between $8,270 and $14,880 for singles and between $13,820 and $20,430 for joint returns. For families with one child, the maximum credit of $3,373 is reached at $9,920; the credit is phased out between $18,190 and $39,296 for single heads and between $23,740 and $44,846 for married couples. For families with two children, the maximum credit of $5,572 is reached at $13,930 and is phased out between $18,190 and $44,648 for single heads and between $23,740 and $50,198 for married couples. For families with three or more children, the maximum credit of $6,269 is reached at $13,930 and is phased out between $18,190 and $47,955 for single heads and between $23,740 and $53,505 for married couples. These values are indexed for inflation.\nUnlike some other provisions, there is no differentiation by family type except for the phase-out ranges; rather, the differences, like the child credit, depend on the number of children. The EIC plays a role in creating a marriage penalty for lower-income families. If individuals with low earnings marry, the couple's higher combined income may phase out more of the earned income tax credit. At the same time, marriage can reduce taxes if a single individual marries someone with children but with little or no income, because he or she becomes eligible for the larger credit for families with children. The EIC has also been found to encourage single parents to enter the workforce.\nThe EIC was first enacted in the Tax Reduction Act of 1975 ( P.L. 94-12 ). This provision provided a refundable tax credit for 10% of earned income, phased out at a rate of 10% of income over $4,000. Because the credit was refundable, individuals who paid no income tax were nevertheless eligible for a benefit. There were a variety of rationales for the EIC: to provide a work incentive, to offset the Social Security tax burden, and to provide relief for recent price increases in food and fuel. The credit was, however, only allowed to individuals who maintained a household for dependent children; thus, like the major welfare program of the time, AFDC (Aid to Families with Dependent Children), the EIC as originally enacted was not extended to singles and childless couples.\nThe EIC has been revised in various ways, and in 1990 was differentiated between families with one or with two or more children. In 1993, the credits were increased substantially and a small credit was added for families without children. The 2001 tax cut expanded the phase-out range for married couples, which slightly reduced the marriage penalty in the EIC.\nThe American Recovery and Reinvestment Act ( P.L. 111-5 ) made two temporary changes to the credit beginning in 2009: an increase in the credit rate to 45% for families with three or more children and an increase in the phase-out level for married couples. These provisions were extended on two occasions and were made permanent by the PATH Act ( P.L. 114-113 ). These provisions benefit large low-income families and reduce the marriage penalty.", "Another provision allows for credits for paid child care expenses for children under 13 and disabled dependents. A deduction for these costs was first allowed in 1954 and converted to a credit in 1976. The credit is 35% of eligible expenses but is phased down to 20% as income rises from $15,000 to $43,000. Eligible expenses are limited to $3,000 for one child and $6,000 for two or more children. The credit is available only to single parents or married couples where both parents work and is limited to the smaller earned income. It is not indexed for inflation.", "The alternative minimum tax (AMT) calculates a tax on a broader income base with a large flat exemption (in 2016, $83,800 for married couples and $53,900 for singles) and at rates of 26% and 28%. Exemptions are phased out by 25% of AMT taxable income greater than $159,700 for joint returns and $119,700 for other returns. The 28% rate applies at AMT taxable income greater than $186,000. If the AMT tax is higher than the regular tax, the difference in tax is added to the taxpayer's liability.\nCurrently, the AMT does not affect very many taxpayers. Because its effect grows over time unless legislative changes are made, including an increase in the exemption and indexing of the exemptions, numerous temporary \"patches\" have been enacted. The American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) made this patch, which indexes exemptions for inflation and prevents the spread of AMT coverage into lower incomes, permanent.\nThe AMT originated in 1969 as an add-on tax on tax preferences, and the most important preference was capital gains. At that time, there was an exclusion for a share of capital gains, and the excluded share was taxed under the add-on tax. The add-on tax was eventually paired with and then displaced by the AMT. In 1986 the capital gains preference was ended, and the number of individuals affected by the tax, already small, fell further. Over time, however, the coverage of the AMT began to grow as rates increased and because the exemption was not indexed, while exemptions in the regular tax were. The potential coverage was also increased with the 2001 tax cut, which cut regular rates but not AMT rates. The focus of preferences has also changed. The preference for capital gains enacted in 1997 and extended in 2003, and for dividends enacted in 2003, was not included in the AMT. The major preference items are personal exemptions and certain itemized deductions. (The child credit was allowed against the AMT after it became clear that failure to do so would push many families onto the tax.)", "In addition to these basic provisions—rate structures, personal exemptions, standard allowances, and credits—several other provisions related to family structure are summarized here, although the subsequent analysis focuses on these basic provisions. First, there are specific provisions that relate to family structure or characteristics. There are additional standard deductions for elderly and blind taxpayers (provisions that give little benefit to high-income individuals who tend to itemize deductions). In addition, there is a 15% tax credit for the elderly and disabled that is phased out; because the base for the credit is offset by Social Security, it tends to benefit elderly and disabled individuals who do not receive Social Security. Another explicit family tax provision, originally adopted in 1986, is the \"kiddie tax,\" which taxes unearned income of children under the age of 14 at the parents' tax rate; this provision expanded to apply to those under the age of 18 in 2006 and under the age of 19 in 2008.\nA taxpayer might have a variety of exclusions (some Social Security benefits, welfare payments, in-kind benefits, employer-provided fringe benefits such as health insurance or employer-provided child care) and deductions or credits (medical expenses, educational expenses), which benefit families of certain income levels and characteristics. Moreover, because the tax law does not apply to certain imputed income, families who prefer owner-occupied homes or in-home provision of goods and services, or the consumption of leisure over other goods, have greater tax benefits. These benefits are, in some cases, associated with family characteristics. For example, families with higher incomes and at certain ages are more likely to live in owner-occupied homes. One-earner married couples benefit from the services provided in the home by the nonworking spouse, which are not subject to tax.\nInvestment income may be treated favorably for a variety of reasons, not only because of the benefits of imputed rent on owner-occupied housing, but also because of various benefits such as tax-exempt retirement accounts and tax preferences such as accelerated depreciation. These provisions largely affect upper-middle and higher-income taxpayers. In the structural analysis that follows, all income is treated as subject to ordinary rates.\nFinally, the payroll tax can alter the relative net tax burden between different types of families, with consequences that could matter for concerns of equity and efficiency (such as work choice). The Social Security system may confer a marriage bonus that can increase the implicit tax on work effort for second earners. Spouses receive a benefit, without necessarily paying any payroll taxes of their own; a second-earner spouse pays additional Social Security taxes but his or her benefit is only the net of a benefit based on the individual earnings record and the benefit for spouses—and this amount may not be positive. That is, the spouse's benefit based on the partner's earning record may be better than the benefit a spouse receives on his or her own earnings record, and there is, therefore, no return to payroll taxes paid. Thus, the net tax on a second-earner spouse is effectively larger than it would be in the absence of a benefit for spouses, because little or no additional benefits occur as a result of those payments. There are also implicit taxes that affect behavior in the transfer system, where increases in income through work or marriage may cause a reduction in benefits, thereby discouraging these behaviors.", "Tax proposals can be evaluated on many grounds, but one issue is that of fairness. This issue of fairness can involve two elements: vertical equity, or the equity of changes in tax burdens as income rises for an otherwise identical family; and horizontal equity, or how taxes should be fairly differentiated between families of different sizes and structures. This analysis focuses primarily on the issue of horizontal equity, because this is an issue that can be addressed in a more analytical framework. First, however, the issue of vertical equity is briefly discussed.", "The individual income tax is progressive in rate structure and in actual outcomes: higher-income taxpayers pay larger shares of their income than do lower-income taxpayers, and at the lowest income levels taxpayers received overall subsidies through the EIC. Because the desired degree of redistribution cannot be easily established, issues of vertical equity involve value judgments to a considerable degree. By and large, overall effective tax rates are about the same for the top 20% of taxpayers compared to 1980, but rates for the remaining families have fallen. This reduction in effective tax rates for most taxpayers that began in the early 1990s probably reflects the changes in the earned income credit (which more than offset the growth in payroll taxes) and the child credit, as well as the introduction of a lower 10% tax rate bracket.\nHow different tax revisions affect the progressivity of the income tax depends on several factors.\nFirst, a significant fraction of taxpayers do not have income tax liability. Positive income taxes do not apply in most cases until individuals are above the poverty line. In the Tax Reform Act of 1986, the combination of standard deductions and personal exemptions was set to roughly approximate the poverty line—the income levels above which families of different sizes are not considered poor. The allowances for single individuals are below the poverty line and cause some poor single individuals to be taxed. The expansion of the earned income credit and the addition of the child credit mean that taxpayers with qualifying children well above the poverty line would not be subject to tax. These taxpayers would not be affected by a tax cut.\nAn exception is when tax cuts are refundable. An expansion of the EIC, which is a refundable credit (or negative tax), would affect low-income individuals. The child credit is also refundable in some circumstances.\nCertain types of revisions tend to benefit higher-income individuals, whereas others tend to provide little benefit to that group. For example, although lowering the top rates clearly benefited higher-income individuals in 2001, it is also clear that widening the 15% rate bracket for joint returns also benefited higher-income individuals. In 2000, prior to the tax cut, according to the Internal Revenue Service's statistical data, of 129 million returns, approximately 69 million returns paid tax at the 15% rate and another 25 million had no tax liability. Thus, the widening of the 15% bracket, which helped only those paying tax above that rate, benefited approximately the top 25% of taxpayers. Higher-income individuals are also more likely to itemize deductions, and changes that increase the standard deduction will tend to focus more benefits to moderate-income taxpayers than high-income taxpayers. Similarly, expansions of benefits that are phased out, such as the child credits, would not benefit high-income individuals. The 10% bracket also favored lower-income families.", "Horizontal equity has to do with equal treatment of equals and is an important focus of this analysis. For the income tax, this standard might mean that families of the same size with the same income should pay the same tax. But it could also be taken to mean that two individuals with the same income should pay the same tax. In a progressive tax system, these two standards can be incompatible, and indeed this incompatibility causes marriage penalties and bonuses in a system where the family is the tax unit. Thus, the basic challenge of assessing standards of horizontal equity is to determine how to treat different taxpayers equitably. First, the economic principles that could be used in that assessment are reviewed. Second, considered in further detail is the ability-to-pay concept, which seems most consistent with the equal-sacrifice principles of horizontal equity.\nAs the recent history of the tax law suggests and the following discussion reveals, tax policy has not generally been guided by a consistent theory of fairness or equity across different types of families. Indeed, it is clear that many of the structural changes in the treatment of the family were haphazard. Income splitting, perhaps one of the most important aspects of family tax differentials, was adopted in reaction to a legal situation. Other changes were contemporary reactions to a set of complaints or concerns about behavioral response (such as the singles rate schedule or attempts to fix the marriage penalty).", "For taxation purposes, there are two fundamental attributes of families: the type of head (a married couple or a single individual) and the size. Families can be composed of single persons, single parents with children, childless couples, and married couples with children. And, in turn, there are two important features of the tax system that relate to these differences. First, should the unit of taxation be the individual, or the family? The U.S. tax system imposes taxes on families and differentiates in its rate structure between singles, head of households (single parents with children), and married couples. However, an alternative would be to apply a single rate schedule to each individual on his or her own earnings. Although some preference for this view of individual taxation may have to do with philosophical matters, one argument for treating the individual rather than the family as a taxpaying unit has to do with marriage neutrality and efficiency, discussed subsequently. That is, if individuals could be taxed solely on their own earnings, there would be no tax consequences of being married, and the married state would not affect incentives to work via tax differentials.\nThe second issue is how one should adjust for family size, or, in the case of individual taxation, for the number of dependents. Despite the thrust of recent legislation that added substantial tax credits for children, some of the debate over differentiating by taxpayer characteristics has been over whether personal exemptions for dependents should be allowed at all. Under some theories of how the family should be taxed, no differentiation should be allowed for dependents; indeed, arguments are made that individuals should be taxed on their income without regard to their family arrangements. For that matter, individual taxation does not preclude allowances for number of dependents; rather, its focus is on treating working adults, even though married, as separate entities. (In practice, such a tax system must always deal with the possibility of income splitting of capital income by transfers of assets within the family, as well as the allocation of deductions.)\nClearly, the family involves a social and economic unit that differs from unrelated groupings. Although taxation of the family has received limited attention in the economics literature, various principles have been advanced about how to treat family characteristics. Three such approaches are outlined here: treating living arrangements and children as personal choices that should not be addressed by the tax law, equating post-tax standards of living for families with the same pretax standard of living, and family assistance.\nThis analysis does not consider another alternative principle of taxation, the benefit principle, which would set taxes to reflect the amount of government services received. It could be argued that large families, particularly families with children, are greater beneficiaries of public spending, such as education. Although some taxes are explicitly formulated as benefit taxes (e.g., the gasoline tax that is used to build roads), the individual income tax has generally been based on other principles, such as the ones described here.", "People are relatively free to choose whether to marry and have children, and an argument can be made that such choices should not lead to tax relief. From this perspective, if they choose to have children, they are not worse off, because the enjoyment they receive from their children outweighs any cost. Thus, one could think of children as part of the consumption of the parents. At a minimum, this approach suggests that no allowance be made for the additional cost of supporting children, treating the choice to have children as a consumption item, no different from the decision to consume food or clothing. Similarly, the choice of a spouse could be seen as a consumption or investment choice, which should not alter the tax paid by the individual or the combined tax of the two spouses. In this case, the individual should be the tax unit.\nAlthough the argument that children constitute consumption to their parents may be a defensible one, using this view as a guide to making tax policy is problematic. Even if the adults have made a choice, a troublesome aspect of this treatment of children as consumption is that it considers only the well-being of the parent or parents. Parents' tastes for children aside, the material level of consumption for children as well as for adults is affected by the number of others in the family.\nSome theories have suggested that children could be seen as an investment, perhaps for support in old age. There is some justification for this theory of parental motivation, although it must surely be less than universal because many parents leave bequests to their children, rather than being supported by them in old age. If investment were the objective of having children, then there would be some justification for tax relief, because the cost of such an investment should, in theory, be recovered; at the same time, returns (such as help in old age) should be taxed to the parents. Our tax system is not designed along these lines, and, in any case, the children-as-investment theory also suffers from a lack of focus on the well-being of the children.", "Another approach is simply that of ability to pay, which is the cornerstone of progressive taxation. Applying this ability-to-pay standard of taxation is straightforward in theory if one begins with the proposition that families with equal standards of living before tax should have equal standards of living after tax. If all family members were more or less identical in their needs and if all goods consumed were purely private in nature, this standard would suggest full income splitting of total family income among all members of the family. Merely, all family income could be divided evenly and then subject each share to an identical rate structure. In a progressive tax system, larger families would pay smaller taxes than smaller families with the same total income.\nOne difficulty with this straightforward prescription is the existence of \"club\" goods within the family. Some goods are more or less purely private goods, such as food. If one person consumes food, it is not available to anyone else. Other goods have elements of a club nature (one person can consume the good without interfering with another's consumption). Such club goods include housing and some furnishings, reading materials, and the family car. None of these goods are pure shared goods because individual preferences may not be identical and congestion may occur, but they do provide scale advantages in consumption within a family. These scale advantages in family consumption are recognized in construction of the poverty line, which varies with family size, yet does not increase in full proportion to it.\nAnother problem is that adults and children may differ in the amount of private goods they need or desire.\nIf correct scaling of ability to pay by family size and characteristics were known, design of the income tax would be theoretically straightforward. The method would be as follows. Choose a representative family (e.g., a family of two). Devise the tax rate schedule to achieve the desired degree of progression, setting the exempt level at the poverty level or whatever other level is desired. The solution to horizontal equity is then, simply, an averaging approach. For example, consider a larger family that needs 50% more income than the basic reference family. This means that a larger family that has $75,000 of income should have the same average tax rate as a smaller (reference) family with $50,000 of income. Simply apply the basic tax rate schedule to two-thirds of the larger family's income and multiply the resulting tax liability by 1.5. This approach will produce the same effective tax rate for the larger family as for the reference family. (The larger family, which has more income, will still pay more taxes, but the fraction paid will be the same as that of the smaller family.) The two families will have the same (although smaller) standard of living after tax just as they had the same standard of living before tax.\nWhen exempt levels of tax are set roughly at the poverty rate, as was the intent of the 1986 Tax Reform Act, families whose income falls within the first rate bracket (the 15% tax bracket at that point) tend to have equal effective tax rates, if the relative poverty measures across families are correct (ignoring the earned income tax credit). These effects will not hold, however, when higher-income families are considered or when other provisions, such as the child credit and the earned income credit, are considered, or with a new small bracket such as the 10% bracket introduced in 2001. Moreover, families with one earner are better off than families with two earners at the same income because of the expenses of working, including child care, and the benefits of home production of the nonworking spouse. Thus, credits for child care expenses or allowances for working spouses can move the system toward more equitable treatment, at least vis-a-vis one-earner couples.", "At the opposite end of the spectrum is the notion of targeted family assistance, especially for lower-income families, and often targeted toward children. To accomplish this targeting, allowances for family size differentials (e.g., personal allowances) are often made refundable, they take the form of a credit rather than an exemption, and benefits are often phased out as incomes rise. Several of these features, including the EIC and the child credit, have made their way into current law.\nThis view of family allowances differs from the philosophy that personal exemptions, along with other exclusions, should be used to exempt a minimum subsistence amount from the income base, the philosophy underlying the 1986 revisions, and one which is more in line with the ability-to-pay standard. Similarly, a benefit for child care would be more appropriately made through a deduction, if child care were viewed as one of the costs of working under an ability-to-pay approach.\nProposals that are driven by this philosophy are often simultaneously addressing differentiation across family types and a vertical distribution objective. This objective is not necessarily inconsistent with the ability-to-pay objective addressed previously, even though it often appears to be because of the mechanisms chosen, such as credits that are phased out. For a given family size, any degree of vertical equity can be obtained through either exemptions or credits or by arranging the tax rate schedule appropriately. But, the differentiation across families at the same income level (or ability-to-pay) can be achieved only by selecting the sizes of personal exemptions for different family members. An ability-to-pay approach would include differentiation of families of different sizes at either high or low income levels. When a vanishing exemption or credit is chosen in the interest of vertical equity, the actual result is to allow no differentiation for family size at higher-income levels.\nFinally, it is important to recognize that the income tax system exists side-by-side with a welfare system, and many conclude that targeted family assistance might be better addressed through the welfare system.", "The ability-to-pay approach seems the most consistent and, to many, appealing of the three approaches to dealing with tax differentiation based on family size. This method considers the welfare of all in society rather than focusing exclusively on adults or children. One study used this approach to estimate effective tax rates in 2005, and how various provisions of the tax law affected these rates, using an equivalency scale similar to the variations in poverty lines across family types. Because the tax system has been indexed, the findings of this study, published in 2006, remain largely applicable, although income levels refer to 2005 values (excluding temporary provisions but including the alternative minimum income tax patch). This 2006 analysis, however, does not include the temporary benefits from the earned income credit and child credit that were adopted in 2009 and are now permanent.\nThe remainder of this section updates the effective tax rate calculations to reflect 2016 income and tax law (including the changes in the earned income credit and child credit). In defining families that have the same ability to pay, an adjustment based on a research study used in the 2006 study and similar to that of adjusting for official poverty levels for different family sizes was used, which has a smaller adjustment for children than for adults. Under this standard, a single person requires about 62% of the income of a married couple; a couple with four kids requires about three times the income. Thus, for a married couple with no children with $20,000 of income, an equivalent single person would need slightly over $12,000, and a married couple with four children would need $60,000. Provisions included in the calculations are the rate structure, the most beneficial of standard deductions or itemized deductions (the latter are assumed to be 15% of income, with 5% of income reflecting state and local taxes included in the alternative minimum tax base), personal exemptions, the earned income credit, the child credit, and the alternative minimum tax.\nTable 1 reports the 2016 effective tax rates for low- and middle-income taxpayers at different levels of income, for family sizes of up to seven individuals, and for the three basic types of returns—single, joint, and head of household. Table 2 reports the tax rates for higher-income families. The column heading indicates the income level for married couples. Families in each column have the same estimated ability to pay, so that larger families have more income and singles and a head of household with one child have less. The rates across families should be compared by looking down the columns. For example, in Table 1 , a married couple with $25,000 in income pays 1.7% of income in taxes, but a married couple with one child with the same ability to pay receives a subsidy of 8.5%, whereas a single with an equivalent before-tax standard of living pays 3.3%.\nThese numbers assume that dependents are children eligible for the child credit and that the families are eligible for the earned income tax credit (a provision not allowed for those over the age of 65 or for those without children under the age of 25). These are illustrative calculations that do not account for any other tax preferences and are designed to show how the basic structural, family-related features of the tax law affect burdens. Tax rates for returns paying the AMT are bolded.\nThese tables suggest that the pattern of tax burden by family size varies across the income scale, as it reflects the complications of the earned income credit, the child credit, and graduated rates, including phase-out effects. Moreover, the variation across families that have the same ability to pay is substantial. At low incomes, families with children, whether headed by a married couple or a single parent, are favored because of the earned income tax credit and the child credit. The largest negative tax rates tend to accrue to returns with around three children, because the largest EICs are available for three or more children and the child credits increase with the number of children. The rate declines because larger families need more income, which may phase them out of the EIC.\nAs incomes rise, families with children are still favored, but it is the largest families that have the largest subsidies or the smallest tax rates, because the combination of the personal exemptions and the child credit lowers taxes so much for these families. Eventually, large families began to be penalized because the value of the child credit and personal exemptions relative to income declines and larger families that require more income are pushed up through the rate brackets. That effect is increased because more families with children are subjected to the AMT since the personal exemptions are not allowed under the AMT rules. At higher-income levels, credits and exemptions begin to be phased out. As incomes reach very high levels, however, the rates converge as the tax becomes a flat tax. Note that itemized deductions are assumed to be a constant fraction of income, and so is a proportional exclusion. The AMT does not apply at the highest income levels because eventually ordinary tax rates are higher than the AMT rates. Also, the AMT is more likely to raise taxes for head-of-household families because the exemptions are smaller and are not differentiated by family size.\nOverall, these calculations suggest, first, that singles are taxed more heavily than childless couples in the middle-income ranges but less heavily at very high and some low income levels, but these differences are small. The higher tax rates for joint returns at high income levels occur because the brackets above 15% are not relatively as wide, and the smaller amount of income needed by a single person places them in overall lower rate brackets. At lower-income levels—for example, at $15,000—joint returns are phased out of the earned income credit more quickly. Second, when the child credit and EIC are available, families with children tend to be favored over families without children at low and moderate income levels. Third, the number of children in a family sometimes causes more beneficial treatment and sometimes less depending on how the EIC and child credit are being phased out. Finally, the graduated rate structure causes large families at higher-income levels to be taxed at higher effective tax rates, an effect exacerbated by the AMT.\nThese effects result from the fundamental structural effects of phase-out provisions and rate brackets. Phase-out points and rate brackets should be based on family size if the ability to pay criterion is being used to determine the tax structure. The flat amount of the child credit and personal exemption also causes them to have little effect on relative tax liabilities at high income levels; phasing them out increases the over-taxation of large families relative to small ones at higher-income levels.\nAt low income levels, however, the family comparisons are affected by the earned income tax credit, and differences in tax burdens by family size can be striking. If there were no earned income credit or refundable child credit, effective tax rates would be relatively uniform at the lower-income levels, at zero or a small positive percentage amount. The EIC introduces disparities. First, the EIC rate is much lower for single taxpayers or two-member joint returns where there are no qualifying children than it is for families with children. Second, if one accepts the ability-to-pay standard, the EIC has an inappropriate adjustment for family size. There is no reason to vary the rate of the EIC by family size, but the base (or maximum creditable wage) and the phase-out levels should be varied according to the ability-to-pay standard. That is, both dollar amounts—the amount on which the EIC applies and the income at which the phaseout begins—should be tied to family size according to the ability-to-pay standard, whereas the EIC rate should be the same for all families.\nTo make the EIC neutral across families, using the ability-to-pay standard, would require, in addition to allowing it at a common rate for all families, changing the base levels and the phase-out levels for family size. Changing the rate, as was done in 1990 and retained when the EIC was expanded in 1993, does not accomplish equal treatment across families of different sizes, providing too much adjustment for some families and not enough for others.\nThe child credit also contributes to the favorable treatment of families with children, including in the middle and upper middle income levels where it is not phased out. The increased refundability of the credit enacted into recent law increases the relatively beneficial treatment of larger families at lower-income levels.\nThe 2005 study previously cited also considered the effects of other aspects of the tax system. One is the availability of the child care credit. The analysis in that paper indicated that including the child care credit (at the maximum) does not have very important effects. The dependent care credit is not effectively available to low-income families who do not have sufficient tax liability to use the credit, and is capped and unimportant in a relative sense for high-income taxpayers. In the middle-income levels, it lowers the tax rate for families with children.\nAnother issue has to do with the treatment of married couples where only one individual works outside the home. These families are better off because the spouse not employed outside the home can perform services at home that result in cost savings, perform household tasks that increase leisure time for the rest of the family, or enjoy leisure. The value of this time, which is not counted in the measured transactions of the economy, is referred to as \"imputed income.\" This imputed income is not taxed, and it would probably be impractical to tax it. Nevertheless, the tax burden as a percentage of cash plus imputed income is lower for such a family.\nImputed income is not easily valued, and this issue is explored in the 2005 study by limiting the imputed income to the value of child care using the cap for the expenses eligible for a child care credit and excluding this amount from income. For low-income families, this change actually increased taxes by reducing earned income credits. At moderate and middle incomes, it benefited married couples with children, who already tend to be favored.\nThe authors also considered some of the potential changes and whether those changes would increase horizontal equity or exacerbate it. In the interest of increased horizontal equity, the analysis would support an increase in the earned income credit for those without children; a reduction of the AMT; and an elimination of phaseouts for child credits, personal exemptions, and itemized deductions. Making the child credit fully refundable would increase disparities in tax rates at the lower-income levels.\nThese calculations should be considered with caution, as they depend on the precision of the family equivalency scales, which do not take into account the heterogeneity of the cost of rearing children, and are aimed at measuring cash needs to attain a given standard of living. Lower-income families with younger children who need child care may find their standard of living in material matters lower than other types of families, because of the higher cost of that care relative to their income. In that case, the lower rates due to child care credits or exclusion of imputed income may be appropriate. At higher-income levels, child care costs are probably much smaller relative to income, even if more is spent on care. The child care credit, however, has little effect on effective tax rates at these income levels.", "Concerns about the marriage penalty reflect a reluctance to penalize marriage in a society that upholds such traditions. As the tax law shifts to reduce the marriage penalty, as it did in 2001, it also expands marriage bonuses. These choices have consequences not only for incentives but for equitable treatment of singles and married couples. As shown above in Table 1 and Table 2 , in the middle-income brackets, where the marriage penalty was largely eliminated, singles with the same ability to pay are subject to higher taxes than married couples. Singles benefit at lower-income levels because their lower required incomes do not phase them out of the earned income credit. And at very high incomes married couples may pay a larger share of their income because of marriage penalties that remain in the AMT and the upper brackets of the rate structure.\nThis section explores the treatment of married couples and singles in an additional dimension by assuming that singles live together and share the same economies of scale that married couples do. These individuals could be roommates, but they could also be partners who differ from married couples only in that they are not legally married. Single individuals who live together in the same fashion as married couples have the same ability to pay with the same income. However, remaining single can alter their tax liability. Remaining single can cause tax liability either to rise or fall, depending on the split of income between the two spouses. If one individual earns most of the income, tax burdens will be higher for two individuals who are not married than for a married couple with the same total income, because the standard deductions are smaller and the rate brackets narrower. If income is evenly split between the two individuals, there can be a benefit from remaining single. Married individuals have to combine their income, and the rate brackets for joint returns at the higher-income brackets, whereas wider than those for single individuals, are not twice as wide. At all levels they are not wider than those for heads of household. In addition, the earned income credit contains marriage penalties and bonuses.\nThe marriage penalty or bonus might, in the context of the measures of household ability to pay, also be described as a singles bonus or penalty. In any case, in considering both the incentive and equity dimension to this issue, the tax rates of these families should be compared with the tax rates of other households.\nTable 3 and Table 4 show the effective tax rates for married couples and for unmarried couples with the same combined income, both where income is evenly split and where all income is received by one person. In one case there is no child and in the other a single child. These income splits represent the extremes of the marriage penalty and the marriage bonus. The same reference income classes and equivalency scales in Table 1 and Table 2 are used.\nNote that uneven income splits in the case of a family with a child can yield different results depending on whether the individual with the income can claim the child and therefore receive the benefits of the head-of-household rate structure, the higher earned income credit, the dependency exemption, and the child credit. If not, that individual files as a single.\nThe tables indicate that both marriage penalties and bonuses persist. In the case of families without children, however, penalties do not exist in the middle-income ranges, only bonuses. In this case, singles who live together and who have uneven incomes would see their tax rates fall if they got married. Both bonuses and penalties exist at the lower-income levels because of the earned income tax credit. If income is evenly split, the phase-out ranges are not reached as quickly for singles because each of the partners has only half the income. If all of the income is earned by one of the singles in the single partnership, phase out of the credit still occurs and the individual also has a smaller standard deduction, and thus pays a higher tax. The smaller deductions and narrower rate brackets also cause the higher tax rates through the middle-income brackets. At very high-income levels, marriage penalties can also occur. Some of the penalty is due to not doubling the rate brackets after the 15% bracket, but some is due to the marriage penalties in the AMT.\nThe provisions that increase the phase-out level for the earned income credit reduce tax burdens for low-income joint returns and further reduce marriage penalties and increase marriage bonuses.\nMatters are more complex for families with one child. At the lowest income level, and a 50/50 split, one of the singles files a single return with a very small negative rate because of the small earned income credit for those without children, while the other claims a child and has a much higher negative tax rate than a married couple because there is no phaseout of benefits. The combination also involves a smaller child credit because it is not completely refundable. The combined result is a lower benefit than that of a married couple, and thus there is a marriage bonus. This eventually becomes a marriage penalty because of the favorable head-of-household standard deduction and rate structure. The AMT contributes to this penalty at some point.\nWith one of the pair earning all of the income, the results depend on whether the partner with the income can claim the child. If that person cannot, the tax burden is higher throughout the income scale, reflecting the loss of benefits from the child and the rate structure. If the person with the income can claim the child, joint returns are still favored (except at the lowest income levels), but not by nearly as much.\nWhich of these last two assumptions seems more likely depends on the circumstances. When couples divorce, they typically move to different residences, and the most usual outcome is that the mother, who typically has lower earnings, would have the child. According to the Census Bureau, 83% of children who live with one parent live with their mother. In that case there would likely be a marriage bonus. If the couple divorce but live together, presumably the higher-income spouse would claim the child. However, if a couple never married and the child is only related to one parent, that person, more likely the mother and more likely to have low income, would claim the child. If such a couple married and had low incomes, they could obtain the earned income credit, and a study of low-income families indicates that this latter effect, the bonus, is the most common effect of the EIC.\nWhich circumstances are more characteristic of the economy? Note first that, although people refer to the marriage penalty for a particular family situation or the aggregate size of the marriage penalty, it is really not possible, in many cases, to determine the size of the penalty or bonus. The effect of assignment of a child is demonstrated in Table 3 and Table 4 , but other features matter. Only when a married couple has only earned income, no dependent children, and no itemized deductions or other special characteristics, and only if it is assumed that their behavior would not have been different if their marital status had been different, can one actually measure the size of the marriage penalty or bonus. There is no way to know who would have custody of the children and therefore which of the partners might be eligible for head-of-household status and for the accompanying personal exemptions and child credits.\nThere is reason to expect that unmarried individuals are penalized in the aggregate. Prior to the 2001 tax cut, which increased bonuses and reduced penalties, using an allocation that reflects typical behavior of married couples with respect to child custody, the Congressional Budget Office (CBO) estimated that 37% of married couples had penalties ($24 billion), 3% were unaffected, and 60% had bonuses ($73 billion). (Itemized deductions and earned income were assigned in proportion to earnings.) The net bonus was $49 billion. However, in most of its analysis, the CBO study relied on a measure of marriage penalties and bonuses that assumed child custody would be based on a tax-minimizing strategy. For example, if parents of two children had similar individual earnings, each would be assumed to have custody of one of the children so that both would be eligible for head-of-household status. Even using that standard, net bonuses occurred: 43% of married couples had penalties amounting to $32 billion, and 52% had bonuses of $43 billion, for a net bonus of $11 billion. Nevertheless, a significant proportion of married taxpayers—between 37% and 43%—paid marriage penalties.\nA study using Treasury data and other assumptions produced different measures of the marriage bonus or penalty. Using an assumption that divorced parents occupied the same residence, and thus only one could qualify for head-of-household status, the authors found that 48% had a penalty ($28.3 billion) and 41% had a bonus ($26.7 billion), for a net penalty of $1.6 billion. This study also provided several other ways of measuring penalties and bonuses, including estimating $30.2 billion in singles penalties because these individuals could not use joint return rate schedules. Some of the penalty applied to families with children because of the benefits of head-of-household status. Without head-of-household status, the Treasury found that 46% of couples had bonuses ($36.6 billion) while 43% had penalties ($20.8 billion), and the net effect was a bonus of $15.8 billion.\nTreasury researchers did a subsequent study using the standard assumption for the effects of the 2001 tax cut and for 2004 income levels. As before, they essentially found a penalty (of $3.7 billion) without the 2001 tax cut, but found a $30 billion bonus with 2004 tax law (which included explicit marriage relief provisions and other provisions such as rate reductions). About 60% of couples have bonuses, and 23% have penalties (while some have no effect). The study also warned that penalties will grow substantially if the AMT continues to grow as projected; however, the AMT has been continually patched so that these general results should still be largely correct.\nGiven the shift away from penalties and toward bonuses in 2001, it seems clear that the current situation is characterized by bonuses rather than penalties.\nAn alternative measurement is the bonuses and penalties of single individuals who are cohabitating, a much smaller group of people. In 2005, according to the Census Bureau, there were 58 million married households, but only 5 million unmarried couple households (with partners of the opposite sex). (There were 77 million households altogether.) Thus, assuming that these households were similar to married households, the \"single penalties and bonuses\" measured by looking at unmarried cohabitating households would be about 9% of the size of \"marriage bonuses and penalties\" measured by looking at married households.\nA study has been made of penalties and bonuses for existing cohabiting couples with children, which assign the children to the biological parent, or, if both partners are biological parents, to the higher earner. This study found that under 2003 law, 42% of these couples would experience a bonus averaging $1,893, whereas 50.7% would experience a penalty of $1,497. Under 2003 law, 48.5% receive an average bonus of $2,236, and 44.1% receive a penalty of $1,513. Bonuses are more prevalent in low-income households because marriage often increases the earned income credit. These bonuses should increase with the increase in the additional phase-out amounts for married couples enacted in 2009. However, a study using data on low-income families in urban areas with young children found that penalties were more common. That study also examined the effect of increasing the earned income credit for childless workers, as has been proposed by the President and some Members of Congress, and found small effects on marriage penalties. The study also contains references to mixed evidence of the effect of marriage penalties on marriage.\nThe marriage penalty cannot be easily addressed because the tax rules cannot simultaneously achieve three apparently desired income tax objectives: a progressive tax, a marriage neutral tax, and equal treatment of couples with the same total incomes, but with different income shares. Moreover, even if horizontal equity were chosen, the achievement of that system would require information on living arrangements of unmarried individuals that is not available to the tax authorities. The current system, however, appears to lean toward benefiting marriage overall.", "The analysis of equity across families suggests that, based on an ability-to-pay standard, families with children are paying lower rates of tax (or receiving larger negative tax rates) than single individuals and married couples at lower and middle incomes, while families with children are being taxed more heavily at higher-income levels. At the lowest income levels, the EIC plus child credits provide the largest tax subsidies to families with two to four children. The smallest subsidies go to childless couples or individuals. At middle-income levels, families with many children will have the most favorable treatment because of the effect of the child credit, which has a very large effect relative to tax liability. At higher-income levels, large families are penalized because the adjustments for children such as personal exemptions and child credits are too small or are phased out, while graduated rates cause larger families that need more income to maintain a given living standard to pay higher taxes. Tax rates are more variable at lower-income levels. At all but the lowest and highest income levels, singles pay higher taxes than married couples without children.\nAfter the 2001 tax cut, the vast majority of taxpayers without children receive a marriage bonus rather than a penalty, with penalties occurring only at the bottom and at the top—the latter due partly to the AMT. The comparison of families with children is less easily defined. Overall, marriage appears to be rewarded, but there is some conflict in the evidence for lower-income families.\nThere has been continuing interest in increasing the earned income credit for singles and childless couples, which would increase the equity of the current tax system measured by ability to pay, and apparently have small effects on marriage penalties." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 3, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h0_title", "", "", "", "h0_full", "", "", "", "", "", "", "", "", "", "", "h0_full h1_full", "h2_full", "h1_full" ] }

{ "question": [ "How has income tax in the United States changed over time?", "What caused these shifts?", "How have these changes to personal income tax been implemented?", "How has personal income tax been affected by recent legislation?", "How and when was the American Recovery and Reinvestment Act of 2009 made permanent?", "How is the amount of federal tax determined for families?", "What does this finding suggest about the equality across families of different sizes?", "How are lower income families taxed under EIC?", "How does the tax rate for lower income families differ from middle or higher-income families?", "How are middle-income families taxed under EIC?", "How does EIC treat higher-income families?", "How do single people compare in tax rates to married couples?", "How does the marriage penalty affect federal income taxing of families?", "What range of individuals are affected by marriage penalties?", "How does the current system favor married individuals over singles?" ], "summary": [ "Individual income tax provisions have shifted over time, first in increasing the burden on larger families, and then in decreasing it.", "These shifts were caused by changing tax code features: personal exemptions, standard and itemized deductions, rates, the earned income credit (EIC), the child credit, and other standard structural aspects of the tax.", "Some of these features reflect changes made by the 2001 Bush tax cuts, which were extended for an additional two years by P.L. 111-312 and largely made permanent by the American Taxpayer Relief Act (P.L. 112-240).", "The most recent legislative change was making the temporary provisions liberalizing the child credit and earned income credit enacted in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5), and subsequently extended, permanent.", "These provisions were made permanent at the end of 2015 by the Protecting Americans from Tax Hikes (PATH) Act (P.L. 114-113).", "While several standards may be considered in determining equitable treatment of families over family type and size, a standard approach is based on ability to pay, so that large families with the same income as small ones pay less tax.", "Based on this standard, the analysis of equity across families suggests that families with children are paying lower rates of tax (or receiving larger negative tax rates) than single individuals and married couples at lower and middle incomes. However, families with children are being taxed more heavily at higher-income levels.", "At the lowest income levels, the EIC provides the largest tax subsidies to families with three children. The smallest subsidies go to childless couples.", "Tax rates are more variable at lower-income levels.", "At middle-income levels, families with many children will have the most favorable treatment, due to the effect of the child credit, which has a very large effect relative to tax liability.", "At higher-income levels, large families are penalized because the adjustments for children, such as personal exemptions and child credits, are too small or are phased out, while graduated rates cause larger families that need more income to maintain a given living standard to pay higher taxes.", "At all but the lowest and highest income levels, singles pay higher taxes than married couples.", "The analysis of the marriage penalty indicates that marriage penalties have largely been eliminated for those without children throughout the middle-income range, but this change has inevitably expanded marriage bonuses.", "Marriage penalties remain at the high and low income levels and could also apply to those with children, where the penalty or bonus is not very well defined.", "But by and large, the current system is likely to encourage rather than discourage marriage and favors married couples over singles." ], "parent_pair_index": [ -1, 0, -1, -1, 3, -1, 0, -1, 2, -1, -1, -1, -1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 2, 2, 2, 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "Designating War Funding to Meet Spending Caps", "Congressional Action", "Administration Position", "Potential Implications", "Designating Base Budget Funds as OCO", "The Impact of Maintaining BCA Defense Caps", "Distinguishing War Funding and \"Enduring Presence\" Needs" ], "paragraphs": [ "", "In the current debate on the level of FY2016 defense spending, Congress is considering how to stay within the spending limits, or caps, set by the Budget Control Act (BCA) as amended ( P.L. 112-75 , P.L. 112-240 , P.L. 113-67 ). Under the BCA, all defense spending for the defense base budget—excluding amounts designated for \"Overseas Contingency Operations\" (OCO) or emergencies—is subject to annual BCA caps for FY2012-FY2021. If enacted appropriations exceed these limits, the President is required to levy a sequester or across-the-board spending reductions to achieve the savings and meet the limits. If appropriations meet the caps, a sequester is not necessary; for this reason, some refer to BCA caps as \"sequester\" caps.\nFor funds to be considered OCO funding and essentially exempt from BCA caps, Congress must first designate funds on an account-by-account basis in an appropriations bill and the President must subsequently do the same, typically in a letter to Congress after enactment. The OCO designation therefore requires a consensus between the legislative and executive branches on the status of the funds. Although the Office of Management and Budget (OMB) and the Department of Defense (DOD) have issued selection criteria and budget guidance about the types of expenses that would be considered appropriate war expenses, the dual designation of funds as OCO by Congress and the President determines whether such funds are exempt from budget caps, not the nature of the expenses (see below).\nThe President, some Members of Congress, and military leaders have voiced concerns that the FY2016 BCA defense spending caps—set at $2 billion above FY2015 spending caps in FY2016 and increasing by about $11 billion annually through FY2021—are insufficient to meet defense needs. Others argue that complying with current BCA caps is achievable by relying on a variety of savings.\nAs of the FY2016 budget, defense spending plans have largely adjusted to the amended BCA limits for FY2012-FY2021—meeting over three-quarters of the reductions originally required. With 4 of the 10 years of the BCA decade completed, defense spending in the current plan now needs to achieve an additional 5%, or $182 billion, in savings for the FY2016-FY2021 period compared to the projected 16%, or $1.0 trillion, gap at the time the BCA was enacted ( Table 1 ).", "The President's FY2016 national defense request of $561 billion for the base budget exceeds the BCA cap by $38 billion, providing defense with a 6.8% annual increase. The FY2016 request of $534 billion for DOD (which constitutes 95% of national defense) is also higher than its cap of $499 billion by about $36 billion, and the same percentage. To meet the BCA cap, Congress would need to cut the base budget defense request by 6.8% in FY2016. If BCA caps are retained, defense spending would essentially be frozen at the FY2013 level (without inflation adjustments) for the four years from FY2013 through FY2016, and frozen in real terms (with inflation adjustments) for the next five years from FY2017-FY2021 ( Table 1 ).\nAs part of this year's debate about defense spending, the FY2016 annual budget resolution ( S.Con.Res. 11 ) and the National Defense Authorization Act as passed by the House and Senate propose to transfer and designate funds totaling $38 billion from the defense base budget spending to Title IX where OCO funding is specified. Similarly, the FY2016 House-passed Defense Appropriations bill ( H.R. 2685 , H.Rept. 114-139 ), passed on June 11, 2015, and the Senate-reported bill ( S. 1558 , S.Rept. 114-63 ) both move $37.5 billion from the base request to OCO-designated accounts in Title IX. Since funds designated as OCO do not count against BCA caps, some refer to this transfer as a \"budget gimmick\" that would allow base budget spending to be increased but still stay within the caps. Others counter that the funds transferred were in categories where there were also OCO-designated funds.\nIn Statements of Administration Policy on both H.R. 2685 and S. 1558 , OMB Director Shaun Donovan states the President's senior advisors would recommend a veto of these bills because of the OCO redesignation as well as for other reasons, as well as recommending a veto of \"any other legislation that implements the current Republican budget framework, which blocks the investments needed for our economy to compete in the future.\"\nThis raised the possibility that all appropriations bills could face a veto prospect. The Senate was unable to bring up its DOD appropriations bill earlier in July, and discussion is ongoing about the need for a budget deal that would raise BCA caps with offsetting reductions elsewhere. If a deal is not reached, the prospect arises of a continuing resolution and possible government shutdown in October when the fiscal year begins.", "In letters to Congress, OMB Director Shaun Donovan has signaled that the President is likely to veto the NDAA or the DOD appropriations bills if these provisions are included in the conference version. The President believes that both defense and non-defense caps should be raised, and objects to the transfer, which he characterizes as a \"budget gimmick,\" which would raise defense spending but not non-defense spending above the BCA caps.", "If the President does not designate the transferred funds as OCO, those funds would count as part of the base budget, which would breach BCA spending levels and trigger a sequester. A defense sequester would entail largely across-the-board cuts to total defense resources, which include base budget, OCO-designated funds, and unobligated balances from previous years, and typically exclude military personnel accounts. Cuts could be about 6%, depending on the total amount of defense resources available.\nIf a defense appropriations bill is not enacted before the beginning of the new fiscal year on October 1, 2015, defense spending could be wrapped into a consolidated or a CR appropriations act. If that act sets defense spending at last year's level of $520 billion for national defense and $495 billion for DOD for the full fiscal year, funding would be $1 billion and $2 billion, respectively, below BCA caps eliminating the need for sequestration.\nOn the other hand, if a CR included defense spending levels that exceeded BCA caps and non-defense funding levels were set at BCA caps level—positions opposed by the Administration—then the President might not sign the CR. Speaker of the House John Boehner and Minority Leader Harry Reid have suggested that a government shutdown could occur because of a failure to agree on either defense and non-defense spending levels or raising BCA caps.\nAs an alternative, Congress could adopt a hybrid approach in which defense spending bills included some, but not all, of the savings necessary to comply with BCA caps and accepted a 1% to 2% sequester to achieve the last increment of savings. It is not unusual for Congress to include a general provision that levies such across-the-board cuts to reach budget limits. Congress has also cut DOD requests by 3% to 5% of the request roughly 40% of the time in the past 63 years between FY1950 and FY2012.", "DOD and other Administration officials have argued that designating base budget funds as OCO and transferring them to the OCO title could complicate defense budgeting by setting up a one-year spike in funding that might not be \"sustainable\" (i.e., not followed by higher levels in later years). Without predictable funding levels in the next several years, DOD claims it would face considerable uncertainty about how to structure its programs and activities to meet its long-term modernization and readiness goals. Secretary of Defense Ashton Carter testified that it\ndoesn't provide a stable, multiyear budget horizon, this one-year approach is managerially unsound and also unfairly dispiriting to our force. Our military personnel and their families deserve to know their future, more than just one year at a time. And not just them, our defense industry partners, too, needs stability and longer-term plans, not end-of-year crises or short-term fixes, if they're to be efficient and cutting edge as we need them to be. Last and fundamentally, as a nation, we need to base our defense budgeting on our long-term military strategy and that's not a one-year project.\nSecretary Carter continued that the Joint Chiefs agreed and that adding funds for defense but not non-defense\nreflects a narrow way of looking at our national security ... [that] ignores vital contributions made by State Department, Justice Department, Treasury Department, Homeland Security Department and disregards the enduring long-term connection between our nation's security and many other factors ... like scientific R&D to keep our technological edge, education of a future all-volunteer military force and the general economic strength of our country.\nSenator John S. McCain, Chair of the Senate Armed Services Committee, stated that his desire to provide more funds for defense was more important than the transfer of base budget funds to OCO, which he originally opposed.\nSo faced with the choice between OCO money and no money, I choose OCO, and multiple senior military leaders testified before the Armed Services Committee this year that they would make the same choice for one simple reason: This is $38 billion of real money that our military desperately needs, and without which our top military leaders have said they cannot succeed.\nThe President, some policymakers, and Members of Congress have called for raising BCA caps for both defense and non-defense, as was done in the Ryan-Murray compromise in the Bipartisan Budget Act of 2013 ( P.L. 113-67 ). That act raised BCA defense caps by $22 billion in FY2014 and $9 billion in FY2015, replacing the previous $20 billion decrease between the FY2013 level (post-sequester) and FY2014. While fiscal hawks have opposed raising the caps in order to preserve the discretionary budget savings enacted the Budget Control Act, defense hawks and others call for raising the caps to provide more defense spending in a \"complex and dangerous world.\"\nAs part of the ongoing debate on S. 1376 , the FY2016 National Defense Authorization Act, the Senate recently voted on an amendment offered by Senator Jack Reed ( S.Amdt. 1521 ) that would fence off or delay spending the $38 billion of base budget funds transferred to OCO until BCA caps were raised for both defense and non-defense. On June 9, 2015, the amendment failed by a vote of 46 to 51. Senator Bernie Sanders has proposed an amendment entitled \"Paying for War,\" which would require that all funds designated as OCO be offset with new revenue. Unlike other U.S. wars, the cost of the Afghanistan and Iraq wars has not been offset by higher revenues or spending reductions.\nFiscal hawks and other policymakers are concerned that using the OCO designation to increase defense spending would undermine the BCA caps. When Congress raised BCA caps in the past, increases were offset by reductions elsewhere over the 10-year period of the caps. Transferring funds to OCO has not been seen as requiring any offsetting cuts.\nReaching agreement on raising both defense and non-defense caps could be difficult because some Members support the limits on non-defense but not defense. Others take the opposite view. Finding offsets, either in mandatory programs or by raising taxes to offset increases above BCA caps, could be problematic. If there is an impasse over funding levels, Congress may turn to a CR or consolidated appropriations act, which, if vetoed, could create the prospect of a government shutdown.", "Underlying the debate about the transfer of defense base budget funds to OCO-designated accounts is the issue of whether current defense BCA caps reflect an acceptable level of defense spending. While some policymakers and observers argue that maintaining current BCA caps would be inadequate in light of ongoing conflicts and threats, others contend that defense spending levels would remain at historically high levels in real terms and that defense planning has largely accommodated BCA caps.\nIn response to a question from Senate Armed Services Committee Chair John McCain, the Joint Chiefs of Staff testified that maintaining the current BCA defense caps would jeopardize the ability of DOD to carry out the national military strategy. In a 2014 report to Congress, DOD outlined how it would meet \"sequester\" caps for the FY2015-FY2019 period. DOD's proposal concentrated cuts on weapon system modernization, primarily by delaying or stretching out procurement plans; shielding early-stage Research, Development, and Testing and Evaluation; and generally cutting service readiness programs more heavily than other non-readiness related Operation and Maintenance activities.\nA variety of other approaches have been proposed for meeting BCA limits, ranging from reducing force structure (the size of military forces) to trimming military compensation to achieving \"efficiencies\" in back-office administrative activities. The Administration is concerned that Congress has been unwilling to adopt some of its proposals for lower pay levels and changes in military health care benefits, a new round of base closures, and retiring some military systems, such as A-10 ground attack aircraft.\nSuch debate about the appropriate level of defense spending, and how a particular level can be reached, is not unusual. While the proposed transfer of base funds to OCO could avoid that decision, temporarily, some observers would argue that consensus on levels over the next several years of the BCA decade would help DOD make balanced decisions about matching resources with the pace of achieving modernization, readiness, and compensation goals, as well as re-evaluating the goals themselves.", "Over the past 14 years of war, decisions about what to consider war funding as opposed to normal day-to-day expenses have shifted. Both Congress and the Administration have adopted different definitions at different points in time. DOD broadened its definitions in 2006, which were then constrained by OMB in 2009.\nAs part of its tracking of war obligations, DOD excludes funds that have a tangential, if any, relationship to war expenses, including fuel price increases, higher basic housing allowance expenses, army reorganization, congressional increases for childcare centers, barracks improvements, medical programs, C-17 transport aircraft, and additional equipment for national guard and reserve forces. In recent years, Congress has also transferred funds from Operation and Maintenance activities in the base budget to OCO-designated accounts, while the Administration has characterized as OCO its new initiatives in the European Reassurance Initiative and the Counterterrorism Partnership Fund.\nThis year's proposed action would increase DOD's war request of $50.1 billion to $88.9 billion, a 75% increase. At the same time, U.S. deployed troop levels in Iraq and Afghanistan, the main factor in setting OCO funding levels, are slated to fall 15,700 in FY2015 to 10,000 in FY2016, and to an \"embassy presence\" of about 1,000 by January 1, 2017. The House-passed version of the FY2016 NDAA also includes language specifically exempting base budget funds transferred to OCO titles from criteria for war funding set by OMB and DOD regulations.\nBoth OMB criteria and DOD regulations require that OCO or war-related expenses reflect the incremental costs of conducting a war. For example, normal military pay costs are funded in DOD's base budget, but imminent danger pay provided to servicemembers deployed to war zones is funded in military personnel funds designated as OCO.\nConducting operations and setting up and maintaining bases for deployed forces are clearly war expenses. Paying for depot maintenance for equipment damaged in war operations would be considered a war expense, while periodic, scheduled maintenance would not. In times of war, however, routine maintenance may be required sooner because of higher wear and tear as a result of higher operating tempo and may be funded with OCO funds, thus relieving pressure on DOD's base budget.\nOver the past 14 years of war, the definition of war and non-war expenses has expanded and contracted depending on policy guidance. In 2006, DOD broadened its definition of incremental war expenses to include modernization and upgrades to equipment, including some already planned as part of its peacetime budget. In recent years, the Obama Administration narrowed war-related criteria to require that war procurement include only replacement of war losses, rather than upgrades, as well as calling for stricter criteria for other expenses.\nThe purpose of distinguishing war and non-war expenses is to identify those expenses that are related to conducting and supporting military operations as opposed to long-term, \"enduring\" requirements that would persist after U.S. troops are withdrawn. Congress has also provided DOD with some flexibility for war-related programs where requirements are uncertain, though some would argue costs could be better predicted after 14 years of war.\nIn recent years, DOD has suggested that it will grapple with the problem of which expenses initiated during wartime—such as the 60,000 military personnel now deployed in bases in Central Command outside of Iraq and Afghanistan—would fall and which expenses would persist even after war operations cease. Continued transfers of base budget activities to OCO-designated titles could reduce the likelihood of a review of this type by relieving the pressure to stay within BCA limits.\nDOD has also conducted reviews of programs and activities in order to comply with the BCA defense caps set in the law. In testimony before the Senate Appropriations Committee in February 2015, Secretary of Defense Carter testified that DOD has achieved three-quarters of a trillion dollars in savings since its FY2012 plan, which predates the BCA. Similar efforts to meet the remaining BCA caps could be less likely if Congress continues to rely on transfers of base budget funds to OCO to stay within BCA caps." ], "depth": [ 0, 1, 2, 2, 2, 1, 1, 1 ], "alignment": [ "h0_title h1_title", "h0_full h1_title", "h0_full", "", "h1_full", "h1_full", "h0_full", "" ] }

{ "question": [ "What concern has the President, some Members of Congress, and military leaders voiced about spending caps?", "What are some other suggestions?", "How does this compare to the President's budget request plan?", "How are the BCA caps slated to rise?", "What happens if the President does not designate the transfers as OCO?", "What would this entail?", "What have some policymakers called for in response?", "What would happen if no agreement is reached?" ], "summary": [ "The President, some Members of Congress, and military leaders have voiced concerns that the FY2016-FY2021 BCA defense spending caps—set at $2 billion above FY2015 spending caps in FY2016 and increasing by $11 billion annually after that—are insufficient to meet defense needs.", "Others have suggested that Department of Defense (DOD) planning has largely accommodated BCA caps.", "The President's budget request plan exceeds BCA caps by $182 billion, or 5%, for FY2016-FY2021 rather than the trillion dollars in savings originally needed.", "BCA caps are slated to rise from $523 billion in FY2016 to $590 billion in FY2021, setting defense spending at a real freeze (i.e., the same level adjusted for inflation) in later years.", "If the President does not designate the transfers as OCO, they would revert to base-budget status, BCA caps would be breached, and OMB would implement a sequester to ensure that BCA spending limits are met.", "This would entail largely across-the-board cuts in total defense resources.", "Some policymakers have called for increasing BCA caps, as was done by the Ryan-Murray compromise in the Bipartisan Budget Act of 2013 (P.L. 113-67).", "If no agreement is reached, a continuing resolution (CR) and government shutdown could be possible." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 6, 6, 6, 6 ] }

{ "title": [ "", "Introduction", "Intelligence Community Whistleblower Protection Act of 1998", "Presidential Policy Directive 19", "Title VI of the Intelligence Authorization Act for FY2014", "Protection from Adverse Personnel Actions", "Protection from Adverse Security Clearance and Information Access Determinations" ], "paragraphs": [ "", "Generally speaking, whistleblowers are those who expose misconduct (e.g., fraud, abuse, or illegal activity) within an organization. In the context of the Intelligence Community (IC), whistleblowers are generally employees or contractors of federal intelligence agencies who bring to light information on agency wrongdoings. Whistleblowers disclose this information through government channels (e.g., the congressional intelligence committees or agency inspectors general) or to the media. Such disclosures can aid oversight of, and thereby curb misconduct within, intelligence agencies. When an IC whistleblower discloses information on alleged agency wrongdoing, he could face retaliation from his employer by, for example, being fired, demoted, or having his security clearance revoked.\nThe threat of retaliation may deter potential whistleblowers from disclosing information on agency wrongdoing. There is seemingly tension between the desire to eliminate this deterrence, and thus encourage whistleblowers to bring agency misconduct to light, and the need to protect government secrets which, if disclosed publicly, could be harmful to the country's national security interests. Apparently seeking to strike balance within this tension, Congress and President Obama have taken action to limit retaliation against IC whistleblowers for certain types of protected disclosures, which do not include disclosures to media sources. That is, IC whistleblowers who disclose information to media sources generally are unprotected against potential retaliation or criminal sanction.\nThere are three sources of protections against retaliation for IC whistleblowers: the Intelligence Community Whistleblower Protection Act of 1998 (ICWPA), Presidential Policy Directive 19 (PPD-19), and Title VI of the Intelligence Authorization Act for Fiscal Year 2014 (Title VI). Before passing the ICWPA, which is the oldest of the three protections, Congress observed that intelligence whistleblowers apparently lacked protection against retaliation stemming from their disclosures of agency wrongdoings. Whistleblower protections for federal employees are largely governed by the Whistleblower Protection Act (WPA), which Congress initially passed in 1989, and its amendments. The WPA expressly excluded intelligence agency employees from its applicability, and thus initially left intelligence whistleblowers unprotected against retaliation. The ICWPA seemingly represented Congress's attempt at filling this gap by extending protections to intelligence whistleblowers.\nThough the ICWPA extended some protections to intelligence whistleblowers, it afforded such whistleblowers less protection than the WPA affords non-intelligence whistleblowers. However, protections for intelligence whistleblowers have strengthened over time. PPD-19, which President Obama issued in 2012, expanded upon the ICWPA's protections for some IC whistleblowers, and Title VI generally codified, and in some instances built upon, the protections of PPD-19. This report describes these three sources of IC whistleblower protection.", "The ICWPA is the oldest of the three intelligence whistleblower protections. In passing the ICWPA, Congress observed that the threat of adverse personnel action to IC employees deterred them from whistleblowing. This deterrence from whistleblowing, Congress found, may have been constricting the flow of information to congressional intelligence committees that the committees needed to properly perform their oversight responsibilities. The ICWPA therefore permits IC employees and contractors to bring a complaint or disclose specified information to Congress, and outlines the procedures for doing so. However, the ICWPA does not expressly prohibit retaliation against IC whistleblowers for permissibly bringing a complaint or information to Congress and contains no explicit mechanism for obtaining a remedy for this retaliation. Rather, the ICWPA merely allows an IC whistleblower who has faced such retaliation to then use the act's disclosure procedures to inform the intelligence committees that the retaliation has occurred.\nThe ICWPA applies to employees of the Central Intelligence Agency, Defense Intelligence Agency, National Imagery and Mapping Agency, National Reconnaissance Office, National Security Agency, Federal Bureau of Investigation, and any other agency that the President determines has the principal function of conducting foreign intelligence or counterintelligence activities. The ICWPA also applies to the employees of a contractor of any of the aforementioned agencies. An employee seeking to bring a complaint or disclose information to Congress under the ICWPA is subject to two limitations: (1) the complaint or information must be related to an \"urgent concern\" as defined in the act; and (2) the employee must first bring the complaint or disclose the information to the agency head through the proper agency channels.\nUnder the ICWPA, IC employees and contractors can disclose to Congress only complaints and information that are \"with respect to an urgent concern.\" Under the act, an \"urgent concern\" can be one of three things. First, it can be a \"serious or flagrant\" abuse, problem, violation of executive order or law, or deficiency in funding, agency administration, or agency operations involving classified information. Second, an urgent concern can be a false statement to, or willful withholding from, Congress on an issue of material fact relating to intelligence activity funding, administration, or operation. Third, an urgent concern can include adverse personnel action stemming from disclosure under the ICWPA. A complaint or information that is not regarding one of these three \"urgent concerns\" is not covered by the ICWPA.\nIC employees and contractors must first bring complaints or information regarding \"urgent concerns\" to the agency head through proper agency channels, as described in the ICWPA, before bringing them to Congress. This generally requires first bringing a complaint or information to the agency's Inspector General or the Inspector General of the IC (IGIC), who then has 14 calendar days to evaluate the credibility of the complaint or information. Upon finding the complaint or information credible, the Inspector General must send notice of its finding, along with the complaint or information, to the agency head within the 14-calendar-day period for evaluation. The agency head then has 7 calendar days from receipt of the Inspector General's notice to forward the notice, along with any of the agency head's comments, to the congressional intelligence committees.\nThe ICWPA allows employees to contact intelligence committees directly if the Inspector General either does not find the complaint or information credible, or sends the agency head an inaccurate complaint or inaccurate information. However, this ability to contact the intelligence committees directly is subject to two limitations. First, before making such contact, an employee or contractor must give the agency head a statement of the complaint or information through the Inspector General, along with notice of intent to contact the intelligence committees directly. Second, the employee or contractor must follow the agency head's direction, given through the Inspector General, on compliance with appropriate security practices when contacting the intelligence committees.\nThe ICWPA seemingly represents an attempt by Congress to fill a gap in federal whistleblower protections by extending such protections to IC whistleblowers where they were expressly excluded from the WPA and its amendments, which generally provide whistleblower protections to federal employees. However, the ICWPA appears to afford IC whistleblowers fewer protections than the WPA affords non-intelligence whistleblowers. The WPA provides an employee with an individual right of action for prohibited retaliation, through which he can bring a claim against this agency in the Merit Systems Protection Board (MSPB). The MSPB can then provide several remedies, including, but not limited to, returning the individual to the position he would have been in if retaliation had not occurred, awarding back pay, and awarding any reasonable and foreseeable consequential damages. If an employee's claim is unsuccessful before the MSPB, the employee can appeal the MSPB's decision to the U.S. Court of Appeals for the Federal Circuit.\nConversely, the ICWPA provides no explicit mechanism for remedying for retaliation stemming from disclosure of an urgent concern to Congress; it merely prescribes the process through which such disclosures can be made and allows employees and contractors to then use those disclosure procedures to inform Congress of any resulting improper retaliation. Further, the ICWPA expressly states that Inspector General and agency head action taken pursuant to the ICWPA is not subject to judicial review, unlike retaliation claims under the WPA. In comparing the ICWPA's protections against the WPA's, some commentators have questioned the ICWPA's effectiveness at protecting intelligence whistleblowers from improper retaliation.", "President Obama issued PPD-19 on October 10, 2012, to ensure that IC employees can effectively report instances of waste, fraud, and abuse. PPD-19 protects employees who engage in \"protected disclosures\" from certain types of adverse action by their employers. Thus, unlike the ICWPA, PPD-19's protections do not appear to extend to IC contractors. Under PPD-19, five types of disclosures fall under the umbrella of \"protected disclosures.\" First, protected disclosures include employee disclosures to the agency Inspector General, Director of National Intelligence, IGIC, or supervisors within the employee's direct chain-of-command. The employee must reasonably believe that disclosures to such persons evidence (1) a perceived violation of law, rule, or regulation; (2) gross mismanagement; (3) gross waste of funds; (4) abuse of authority; or (5) a specific and substantial threat to public health or safety. Second, PPD-19 protects disclosures to congressional committees made pursuant to the ICWPA, discussed above. Third, \"protected disclosures\" comprise any disclosure of a violation of PPD-19. Fourth, protected disclosures include those made pursuant to an investigation or proceeding involving a violation of PPD-19. Finally, the definition of \"protected disclosures\" generally includes disclosures to Inspectors General.\nUnder PPD-19, intelligence agency employees who make protected disclosures cannot consequently be subject to adverse personnel actions or have their access to classified information negatively affected by an officer or employee of the agency. PPD-19 required intelligence agencies to certify, within 270 days of its issuance, that they had internal procedures for reviewing allegations of wrongful personnel actions or impacts on access to classified information. These procedures must provide for the protection of classified information and intelligence sources and methods. PPD-19 requires that agency procedures permit agency Inspectors General to review employee allegations of adverse personnel action or improper restriction of access to classified information and recommend agency heads take corrective action if a violation of PPD-19 has occurred. Such corrective action can include (but is not limited to) reinstatement, back pay, and attorney's fees. Once an agency head receives an Inspector General's recommendation, PPD-19 requires he \"carefully consider\" the recommendation and findings and decide whether or not corrective action is appropriate.\nAfter employees exhaust the internal agency review process, PPD-19 allows them to request external review to the IGIC acting on behalf of the Director of National Intelligence. Once such a request is made, the IGIC can, within his or her discretion, convene an external review panel. Such a panel consists of the ICIG plus two Inspectors General that the ICIG chooses from the Departments of State, the Treasury, Defense, Justice, Energy, Homeland Security, or the CIA, exclusive of the Inspector General of the agency that internally reviewed the retaliation claim. The panel then has 180 days to determine whether improper retaliation occurred. If the panel concludes that such retaliation did happen, it can recommend that the agency head take corrective action, and the agency head must \"carefully consider\" this recommendation. The agency head then has 90 days to inform the panel and the Director of National Intelligence of what, if any, action it takes. The Director of National Intelligence must notify the President if the agency head does not tell the Director what action he takes within the allotted 90-day window. PPD-19 further requires the IGIC to report annually all panel determinations and recommendations, along with agency head responses, to the Director of National Intelligence and, \"as appropriate, to the relevant congressional committees.\"\nPPD-19 offers intelligence whistleblowers falling within its scope more protection against retaliation than the ICWPA. By allowing IC employees and contractors to disclose retaliation via adverse personnel action to congressional intelligence committees, the ICWPA purports to protect against only adverse personnel action; unlike PPD-19, it makes no mention of adverse security clearance determinations. Further, PPD-19, unlike the ICWPA, expressly prohibits retaliation against IC whistleblowers who make protected disclosures, whereas the ICWPA merely outlines the process through which such disclosures can be made.\nAlthough PPD-19 offers intelligence whistleblowers more protection against retaliation than the ICWPA, it is unclear how effective PPD-19 will be in curbing such retaliation. Under PPD-19, the initial review of an improper retaliation allegation occurs within the agency wherein the whistleblower allegedly faced retaliation. This could raise questions regarding the initial review's impartiality, and thus effectiveness at achieving accurate results. Further, though PPD-19 appears to attempt to counteract impartiality in reviewing retaliation claims by creating an external review panel to whom such claims can eventually go, this external review panel cannot mandate that agency heads take corrective action after finding that impermissible retaliation occurred. Rather, this external review panel can only recommend that agency heads take corrective action. The agency head is then free to disregard the board's recommendation. Finally, as with all presidential policy directives or executive orders, President Obama (or any future Presidents) can revoke or modify it at any time.", "On July 7, 2014, Congress enacted the Intelligence Authorization Act for FY2014, which included protections for IC whistleblowers at Title VI of the act. Title VI seemingly codifies some of PPD-19's protections and, under specified circumstances, expands upon them. Like PPD-19, Title VI's protections extend only to employees of \"covered intelligence community element[s],\" and therefore do not appear to apply to IC contractors. Title VI's protections are bifurcated: it protects whistleblowers from retaliation in the form of both adverse personnel actions and adverse security clearance or information access determinations resulting from their making protected disclosures. Whether or not a disclosure is protected under Title VI depends on what is being disclosed to whom, and protected disclosures and enforcement mechanisms under the act differ in the context of retaliation via adverse personnel actions and adverse security clearance or information access determinations.", "Under Title VI, disclosures for which an employee is protected against retaliation in the form of adverse personnel action include those made to (1) the Director of National Intelligence (or his or her designee); (2) the IGIC (or his or her designee); (3) the head of the employing agency (or his or her designee); (4) the employing agency's Inspector General; (5) congressional intelligence committees; or (6) a member of a congressional intelligence committee. For Title VI to protect an employee against adverse personnel action, the disclosure must be of information that the employee reasonably believes evidences a violation of federal laws or regulations, mismanagement, waste of funds, abuse of authority, or a substantial and specific danger to public health or safety. Title VI does not contain any mechanism to enforce its protection against retaliation by adverse personnel action; it merely prohibits agency employees from taking adverse personnel action against other employees who make protected disclosures. Enforcement is expressly left to the President. It is unclear whether the President will develop new enforcement procedures, or will utilize enforcement procedures that already exist (i.e., PPD-19's enforcement procedures).", "Under Title VI, an IC employee cannot take adverse security clearance action against another employee, or restrict the other employee's access to classified information, because the employee made a protected disclosure. The disclosures for which an employee cannot face adverse security clearance actions or access determinations differ from the disclosures for which an employee cannot face adverse personnel actions. In the context of adverse security clearance actions or access determinations, Title VI's umbrella of protected disclosures includes a number of lawful communications. First, it includes communications to the Director of National Intelligence, agency head, or agency Inspector General (or their respective designees) that the employee reasonably believes evidences a violation of federal laws or regulations, gross mismanagement, waste of funds, abuse of authority, or a substantial and specific danger to public health or safety. Second, it includes disclosures made in accordance with the procedures outlined in the ICWPA, discussed above. Finally, Title VI protects disclosures made while exercising a legal right of appeal or complaint (including testimony in connection with someone else exercising such a right) or cooperating with an Inspector General. However, disclosures within this third category fall within Title VI only if they do not result in the sharing of information that is classified under an executive order for national security reasons.\nTitle VI's protections against adverse security or information access determinations also differ from its protections against adverse personnel actions because it provides mechanisms for enforcing the former; whereas enforcement of the latter is left to the President's discretion as mentioned above. Title VI directed the President to select, within 180 days of the statute's enactment (July 7, 2014), an agency or department responsible for ensuring that intelligence agencies have adequate procedural protections that they must follow before taking action that adversely affects an employee's security clearance or information access. Within this time frame, the President must also select an agency or department responsible for developing procedures that agencies must follow for employee appeals of adverse security clearance or information access decisions to the ICIG or agency Inspector General. Title VI permits an employee 90 days from the adverse security clearance or information determination to use these appeal procedures.\nThe appeal procedures that must be established under Title VI must allow the ICIG or agency Inspector General to engage in a fact-finding investigation and report the investigation results to the agency head within 180 days of the employee's appeal. During the investigation, the employee must be allowed, \"to the fullest extent possible,\" to present relevant evidence. The ICIG or agency Inspector General cannot find that a prohibited security clearance or information access determination occurred if the agency demonstrates that the employee's disclosure was not a contributing factor in the determination. The agency can demonstrate such by establishing, by a preponderance of the evidence, that it would have taken the same action absent the employee's protected disclosures. Under the preponderance of the evidence standard, it appears as though the agency must show that it is more likely than unlikely that the agency would have taken the same action against the employee absent the employee's disclosures. In evaluating the agency's contributing factor evidence, Title VI requires the ICIG or agency Inspector General to afford the \"utmost deference\" to the agency's judgments regarding threats to national security. If the ICIG or agency Inspector General determines that a prohibited security clearance or information access determination occurred and reports its determination to the agency head, the agency head \"shall\" take corrective action.\nIf, however, the ICIG or agency Inspector General finds that no improper adverse security clearance or information access determination occurred, Title VI requires that the employee be given 60 days to externally appeal such a finding. Title VI does not contain substantive requirements for this external appeal. Rather, through the statute, Congress mandated that the Director of National Intelligence, in consultation with the Attorney General and the Secretary of Defense, develop and implement procedures for adjudicating external appeals. As of this writing, the Director of National Intelligence does not appear to have developed these appeal procedures. Though Title VI does not contain substantive requirements for appeal procedures, it does require the Director of National Intelligence to inform the congressional intelligence committees when he issues an appeal order under the procedures that he develops.\nTitle VI seemingly expands PPD-19's protections against retaliation in the form of adverse security clearance or information access determinations by introducing additional enforcement mechanisms. For example, Title VI requires adequate protections prior to adverse security clearance or information access determinations, where PPD-19 does not. However, Title VI does not appear to strengthen PPD-19's protections against retaliation in the form of adverse personnel action, as it leaves enforcement of such protections to the President." ], "depth": [ 0, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "h1_full", "h2_full", "h0_full h3_title", "h0_full h3_full", "h3_full" ] }

{ "question": [ "What are intelligence whistleblowers?", "How is this helpful?", "What are some drawbacks?", "What measures have Congress and President Obama taken to protect whistleblowers?", "What do these measures protect and not protect?", "What is the ICWPA and how does it differ from other protections?", "How does the ICWPA protect whistleblowers?", "What mechanism does the ICWPA have to obtain a remedy?", "What does the PPD-19 prohibit?", "What does it additionally require?", "What can the Inspectors General recommend, after finding that impermissible retaliation has occurred?", "What happens when an employee has exhausted the internal review procedures?", "What does Title VI do in relation to PPD-19?", "How does it differ?", "How are Title VI's disclosures in different contexts?" ], "summary": [ "Intelligence whistleblowers are generally Intelligence Community (IC) employees or contractors who bring to light allegations of agency wrongdoings by, for example, disclosing information on such wrongdoings to congressional intelligence committees.", "Such disclosures can aid oversight of, or help curb misconduct within, intelligence agencies.", "However, intelligence whistleblowers could face retaliation from their employers for their disclosures, and the fear of such retaliation may deter whistleblowing.", "Congress and President Obama have taken measures to protect certain intelligence whistleblowers from retaliation, and thereby seemingly encourage these whistleblowers to disclose information on agency wrongdoing. These measures are the Intelligence Community Whistleblower Protection Act of 1998 (ICWPA), Presidential Policy Directive 19 (PPD-19), and Title VI of the Intelligence Authorization Act of 2014 (Title VI).", "Each of these measures details what disclosures fall within the scope of its protections, which generally include certain disclosures through government channels (e.g., disclosures to agency inspectors general or congressional intelligence committees). None of these measures protect against retaliation or potential criminal liability arising from disclosures to media sources.", "The ICWPA is the oldest of the three intelligence whistleblower protections and, of the three, provides the least amount of protection to those falling within its scope.", "The ICWPA does not explicitly prohibit retaliation against IC whistleblowers. Rather, it outlines procedures through which whistleblowers can disclose to the congressional intelligence committees information on \"urgent concerns,\" such as violations of law or false statements to Congress.", "The ICWPA further contains no explicit mechanism for obtaining a remedy for retaliation stemming from disclosure of an urgent concern to Congress. It merely allows an IC whistleblower who has faced an adverse personnel action because he disclosed an urgent concern to the congressional intelligence committees to then use the ICWPA's disclosure procedures to inform the committees of the retaliation.", "PPD-19, unlike the ICWPA, expressly prohibits an IC employee from taking an adverse personnel action or security clearance determination against another employee because of a protected disclosure.", "It additionally requires intelligence agencies to develop procedures for internally investigating, through agency Inspectors General, allegations of impermissible retaliation.", "After finding that impermissible retaliation has occurred, Inspectors General can recommend that agency heads take corrective action.", "When an employee has exhausted the internal review procedures that must be established under PPD-19, he can appeal to the Director of National Intelligence, who then has the discretion to convene a review panel. If it finds that improper retaliation occurred, the review panel can recommend that the agency head take remedial action.", "Title VI seemingly codifies, and expands upon, some of the protections of PPD-19.", "Its protections, and modes of enforcement, differ depending on the type of retaliation alleged.", "More specifically, Title VI's protected disclosures and enforcement methods in the context of allegations of adverse personnel action are distinct from its protected disclosures and enforcement methods for allegations of adverse security clearance or information access determinations." ], "parent_pair_index": [ -1, 0, 0, -1, -1, -1, -1, 1, -1, -1, 1, -1, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "Introduction and Overview1", "Selected Federal Water Activities: Agencies, Authorities, and Congressional Committee Jurisdictions", "Report Organization", "Water Resources Development, Management, and Use", "", "Water Quality, Protection, and Restoration", "", "Water Rights and Allocation", "", "Research and Planning" ], "paragraphs": [ "", "Congress addresses numerous water issues annually. Issues range from responding to natural disasters, such as droughts and floods, to improving the nation's water resource and water quality infrastructure, and protecting fish, wildlife, and other aquatic resources. Many congressional committees address these issues and are involved in legislating, funding, and overseeing the water-related activities of numerous federal agencies. More than two centuries of such involvement have resulted in a complex web of federal activities related to water. As a result, Congress often faces challenges related to overlap and gaps in federal water resource activities and in coordination and consistency among federal programs. Further, many federal authorities are discretionary or funded by discretionary appropriations. Consequently, there can be a significant difference between what federal agencies are authorized to do and what they are doing, and no one committee in Congress oversees this dichotomy.\nThe responsibility for development, management, protection, and allocation of the nation's water resources is spread among federal, state, local, tribal, and private interests. Despite multiple calls for the coordination of federal water-related activities, observers seldom focus on the origins of laws and policies authorizing myriad federal activities. The purpose of this report is to provide insight into the congressional involvement in establishing, overseeing, and funding federal water-related activities. Thus, the report focuses on the complexity of federal activities related to water. It aims to serve as a guide to federal water-related activities, including the administering agency (or agencies), the primary or overarching authorities for such activities, and House and Senate committee jurisdictions. In most cases, the primary authorities listed are authorizing statutes and accompanying U.S. Code citations; in some instances, constitutional or other authorities are provided.\nThis analysis does not cover every aspect of federal water policy. Instead, the authors have attempted to address the major federal activities authorized by Congress that affect water resource development, management, protection, and use in the United States. Similarly, this analysis does not cover every aspect of House and Senate committee jurisdiction affecting water issues. For definitive evaluation of committee jurisdictions related to water, the views of the House and Senate Parliamentarian Offices are official. Lastly, programs known to have expired and for which reauthorization legislation is pending may be noted; however, given the breadth of the report and constant executive and legislative branch activity, it is not possible to provide comprehensive status reports for all entries.", "The federal government has been involved in water resources development since the earliest days of the nation's creation. Congress first directed water resource improvements to facilitate navigation, then to reduce flood damages and expand irrigation in the West. For much of the 20 th century, the federal government was called upon to assist and pay for a multitude of water resource development projects—large-scale dams such as Hoover and Grand Coulee, as well as navigation locks throughout the country's largest rivers. In recent decades, Congress has enacted legislation to regulate water quality; protect fish, wildlife, and threatened and endangered species; manage floodplain development; conduct research; and facilitate water supply augmentation via support for water reclamation and reuse facilities and desalination. Congress maintains an active role in overseeing implementation of this legislation, as well as enacting new laws and appropriating funding for water resources activities.\nSpecific federal water laws have been enacted for the diverse purposes noted above. Development and implementation of these laws have involved the action of numerous congressional committees and federal agencies. At the congressional level, this action has resulted in a set of diverse and sometimes overlapping committee jurisdictions dealing with various aspects of water policy and addressing the interests of differing constituencies. At the executive branch level, this has resulted in many agencies and organizations being involved in different and sometimes overlapping aspects of federal water policy. The activities identified in this report fall into the jurisdiction of numerous congressional standing committees (and generally exclude appropriations and other committees in the relevant chambers that deal with banking, taxes, and finance issues.) Similarly, the activities identified in this report are addressed in some form by many federal executive branch agencies.", "The following tables describe federal water-related activities and programs in the United States and identify the primary administering federal agency(ies), primary authorities, and examples of congressional committees of jurisdiction for each agency activity or program. The tables are arranged under broad areas, subtopics, and topic terms.\nThe four areas covered by the report are as follows:\nWater Resources Development, Management, and Use ; Water Quality, Protection, and Restoration ; Water Rights and Allocation ; and Research and Planning .\nEach thematic area begins with a brief introduction and is followed by a table(s) of relevant agencies, activities and programs, and House and Senate committees of jurisdiction. Each table covers more focused areas of water issues—subtopics—based on agency function and the historical development of federal water programs. In organizing these tables, a series of topic terms was developed under which both members of the general public and those more familiar with water policy might categorize federal water-related activities. These topic terms were determined by the CRS analysts and legislative attorneys involved in developing the report.\nThe \"Water Resources Development, Management, and Use\" theme includes subtopics that relate to supply and reservoir development, drought and flood management, hydropower, and navigation. The \"Water Quality, Protection, and Restoration\" theme addresses issues relating to water quality and aquatic resources protection and management, including selected regional aquatic ecosystem restoration authorities. The \"Water Rights and Allocation\" theme addresses water allocation and interstate compacts, river basin commissions, federal reserved water rights, and tribal water rights. The \"Research and Planning\" theme includes subtopics related to research and data collection, such as water cycle and climate change research, water-related technologies, and watershed planning.\nSignificant overlaps occur both within and among the different categories. This analysis generally excludes marine or ocean issues and international and boundary water issues, except for jointly managed dams at the U.S.-Mexican border and Environmental Protection Agency (EPA) programs along the U.S.-Mexican border. Additionally, Congress has established various economic development programs that include water supply and/or treatment projects among the categories of purposes eligible for federal assistance; however, this report does not include programs for which water-related activities are not the major focus. Also excluded are broad environmental remediation or waste management statutes, such as the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Solid Waste Disposal Act. Water activities affecting Indian tribes are also not uniformly addressed in the accompanying tables but instead are covered where they are known to interact with broader federal agency water-related programs and activities, such as water supply development and water quality infrastructure. Because federal environmental laws, such as the Endangered Species Act and the National Environmental Policy Act, apply to all federal agencies, federal agency activities under those laws are not identified in this report.\nAppendix A discusses considerations in determining House and Senate committee jurisdictions and provides an example of the complexity in water topics and jurisdictional coverage. Appendix B and Appendix C present the official language from House Rule X and Senate Rule XXV, respectively, as indicators of congressional jurisdiction over water resources. Both the House and the Senate tables also address subcommittee jurisdiction, and the Senate table provides information on executive branch nominations handled by Senate committees. Appendix D provides a glossary of abbreviations for federal agencies and House and Senate committees. Program abbreviations generally are spelled out where they first occur in each table.\nIn sum, the nine tables that make up the body of the report define water based on the topic terms determined by CRS. These tables underscore the intricacy of the federal programs affecting water resource development, management, protection, and use in the United States. As apparent throughout the tables, numerous standing committees in the House and Senate have jurisdiction over various components of federal water policy; moreover, committees listed here generally exclude the extensive responsibilities of the appropriations committees in both chambers, as well as the direct and indirect activities of other committees in the relevant chambers that deal with banking, taxes, and finance issues.", "Historically, the federal government played a large role in development of the nation's water resources—in particular constructing large water resource infrastructure projects (e.g., canals, locks, levees, and dams)—for navigation, flood damage reduction, and irrigation water supply in the West. The largest federal dams typically serve multiple purposes, including those noted above, as well as producing hydropower and providing water supplies for municipal and industrial uses. More recently, Congress has authorized activities and programs to augment water supplies via water conservation programs, including groundwater recharge (aquifer storage and recovery), and water reclamation and reuse programs, including desalination.\nThis section focuses on federal activities related to water resource development, management, and use and includes three tables:\nTable 1 lists activities related to water supply and reservoir development and includes topic areas such as dams and dam safety; general water supply development; groundwater supply; irrigation assistance; rural water supply; water conservation; and water reclamation, reuse and desalination.\nTable 2 lists activities related to drought and flood management and includes topic areas such as drought planning, mitigation, and response; emergency flood response; flood damage reduction; and flood mitigation.\nTable 3 lists activities related to hydropower and navigation and includes topic areas such as federal hydropower development; nonfederal hydropower development; and navigation.", "", "Federal efforts to protect and improve water quality and water resources range from technical and financial assistance programs to help communities build sewage treatment and drinking water treatment works, to regulatory programs for preventing or controlling water pollution. Most federal programs focus on surface water quality, while states have a dominant role in matters related to groundwater protection. One exception is where Congress has authorized EPA to regulate the underground injection of fluids to protect underground sources of drinking water.\nIn addition to protecting and improving water quality, Congress has enacted numerous bills to manage, protect, and restore aquatic ecosystems—including estuaries, and wetlands. Over the last 30 years, the United States has provided billions of dollars toward restoring some specific large aquatic ecosystems such as the Chesapeake Bay, the California Bay-Delta, the Everglades, and the Great Lakes. These ecosystems cover large areas and affect millions of people. Ecosystem restoration in a policy context has gone beyond just restoring the natural environment, and now encompasses other objectives such as improving water supply and conveyance, improving navigation, managing natural resources, and implementing watershed management plans. Ecosystem restoration legislation can be intricate and involve several agencies, and therefore involve multiple committees. Fisheries management and oversight of aquaculture also involve many committees.\nGenerally, Congress has acted where interstate issues arose (e.g., pollution of rivers), where significant gaps in protection existed among the states (drinking water quality), where funding needs were related to federal mandates (various water infrastructure funding programs), or where other national interests were perceived (e.g., conservation of agricultural lands and fisheries, and preservation of wild and scenic rivers).\nThis section focuses on federal activities related to water quality in general, and regional aquatic resource protection and restoration efforts. The section includes two tables:\nTable 4 lists activities related to surface water quality, drinking water quality, groundwater quality, source water protection, nonpoint source pollution, and wastewater and drinking water quality infrastructure.\nTable 5 lists activities related to aquaculture, aquatic ecosystem protection and restoration, coastal zones and estuaries, fisheries, invasive species, wetlands, and wild and scenic rivers.", "", "Although water rights and allocation traditionally are issues that are regulated by states, the federal government retains significant authority related to federal water resources management and federal water rights. Congress has broad authority under the Commerce Clause of the U.S. Constitution to regulate interstate waterways and promote navigation throughout the nation's waterways. Accordingly, though rarely exercised, Congress may allocate interstate waters directly. Alternatively, Congress may defer to states to reach an agreement (i.e., interstate compact) on the allocation of water in an interstate dispute, but Congress generally must provide its consent to such a compact before it may take effect. Congress also has provided for the establishment of river basin commissions, which typically include representatives from basin states and any relevant federal agencies.\nIn 1908, the U.S. Supreme Court recognized the creation of federal reserved water rights. The Court explained that when Congress creates an Indian reservation, it also implicitly reserves the water necessary to fulfill the purposes for which the reservation was established. These rights, sometimes referred to as tribal water rights, are often senior to other water users' rights but typically are not quantified, which may lead to extensive litigation between tribes and other water users or settlement agreements that must be approved by Congress. The Court later held that the principle of reserved rights extended not only to reservations for tribal land but also to reservations for other federal purposes, including national forests, wildlife refuges, national parks, wild and scenic rivers, etc. Thus, congressional proposals to make additions to these systems implicate federal authority related to water resources.\nMany federal laws also indirectly affect water allocation and use. For example, the development of dam and diversion facilities over time has favored certain purposes or uses over others. Such development has sometimes resulted in unintended consequences, including in some cases, over allocation of water supplies. Implementation of laws aimed at addressing water quality and threatened and endangered species (e.g., the federal Clean Water Act and Endangered Species Act ) may indirectly or directly affect water allocation. However, because such laws—like many other federal laws—are primarily related to federal project operations, they are not included in this section.\nTable 6 lists activities related to water allocation and includes such topic areas as water allocation generally and river basin commissions.\nTable 7 lists activities related to water rights and includes such topic areas as federal reserved water rights and tribal water rights.", "", "Federal water research and planning authorities are spread across numerous federal agencies, and the congressional committees with oversight roles and responsibilities are also numerous. This division derives in part from the distinct roles that water plays in relation to each of these agencies' missions and the committees' jurisdictions. The evolution of federal water research authorities and planning activities generally mirrors the development of the water-related agencies and authorities discussed in earlier sections of this report.\nFederal water research and planning began largely to support the development of navigation, flood control, and storage of water for irrigation. The 1960s saw federal research and planning expand to include reducing pollution problems. Efforts to coordinate water research and planning in the 1960s and 1970s were undertaken as part of broader efforts to coordinate federal water activities. Administrations of the 1980's and 1990's asserted a more limited federal role in water research and planning. Federal water planning was scaled back primarily to support federal projects and activities. Federal research funds were focused on topics closely connected to helping federal agencies meet their missions and to address problems beyond the scope of the states and private sector. One result has been that federal research in recent decades has principally supported regulatory activities (e.g., water quality research and monitoring of aquatic ecosystem and species), while federal research promoting economic growth through water development has decreased. In the last two decades, new technologies and data (e.g., water-related satellite and radar data) and concerns (e.g., climate trends, species decline, ecosystem health) have prompted both the involvement of new agencies and programs in federal water research and the expansion of authorities and topics covered by traditional water agencies.\nThis section focuses on federal authorities related to water research and planning and includes two tables:\nTable 8 lists authorities related to general water research; research on use, supply augmentation, efficiency, and engineering works; monitoring, data, and mapping; water resource assessments; water cycle, drought, and climate change; and water quality and treatment.\nTable 9 lists authorities related to planning for water development projects, watersheds, and water quality.\nWhile these two tables are not exhaustive, they represent the cross-section of federal research and planning authorities.\nAppendix A. Committee Jurisdiction\nDetermining Committee Jurisdiction\nCommittee jurisdiction is determined by a variety of factors. Paramount are House Rule X and Senate Rule XXV, which designate the subject matter within the purview of each standing committee. House Rule X and Senate Rule XXV, however, are both broadly written and the product of an era in which governmental activity was not as extensive, and relations among policies not as common or intertwined as now. Due to topic omissions and a lack of clarity, as well as overlaps among committees in areas of jurisdiction, the formal provision of the rules is supplemented by an intricate series of precedents and informal agreements governing the referral of legislation. In general, once a measure has been referred to a given committee, it remains the responsibility of that committee; if the measure is enacted into law, amendments to the law are presumed to be within the originating committee's responsibility. Relatedly, bills which are more comprehensive than the measure they amend or supersede are presumed to be within the jurisdiction of the committee reporting the more comprehensive measure. The resultant accretions of subject responsibility greatly broaden the range or shift the scope of jurisdictional subjects assigned to each committee. Several other factors also should be considered in determining committee jurisdiction, although these are not formal or even acknowledged in rules or precedents. These factors may include the expertise of a measure's sponsor, the timing of a bill, or the appropriations subcommittee that considers appropriations requests for the program authorized. Subcommittees are not officially authorized in either the rules of the House or the Senate. Subcommittees are creatures of the full committee that established them. Accordingly, determining official subcommittee jurisdictions is imprecise. Therefore, although some information regarding subcommittee jurisdiction is included in Appendix B and Appendix C , information on subcommittee jurisdiction is not uniformly provided in this report. The subcommittees listed in Appendix B and Appendix C reflect the framework established for the 115 th Congress.\nHouse Referral\nIn 1974, with the adoption of the Committee Reform Amendments, the House authorized the Speaker to refer measures to more than one committee, in a joint, split, or sequential manner. In 1995, with the rules changes adopted in the 104 th Congress, the Speaker could no longer refer measures jointly; he was authorized instead to designate a primary committee. Split and sequential referrals were still allowed. Further, the Speaker could impose time limitations on any committee receiving a referral. In 2003, with the rules changes adopted in the 108 th Congress, the Speaker was authorized to refer measures to more than one committee without designation of a primary committee under \"exceptional circumstances.\"\nSenate Referral\nA measure introduced in the Senate, or passed by the House and sent to the Senate, will likely be referred to a Senate committee. Measures are referred to Senate committees in accordance with their official jurisdictions in Senate Rule XXV, and precedents established by prior referrals. A series of formal agreements among committees over time also can supplement Rule XXV, and generally are regarded as setting precedent for future referrals. Ad hoc agreements may be made to govern the consideration of particular measures, but these are not binding on future referrals.\nReferral of measures is formally the responsibility of the presiding officer of the Senate, but in practice the Senate parliamentarian advises on bill referrals. Under Senate Rule XVII, in general each measure is referred to a single committee based on \"the subject matter which predominates\" in the legislation. Predominance usually is determined by the extent to which a measure deals with a subject. However, there appear to be exceptions; most notably, a measure containing revenue provisions is likely to be referred to the Committee on Finance, even where the subject does not appear to predominate.\nIndividual Jurisdictional Issues\nThis section briefly discusses an example of water issues that are either within the jurisdiction of more than one committee or contested among committees. If the issue is clearly within the purview of one panel, it is not addressed in this section.\nJurisdiction over Dams and Land Necessary for their Development\nHouse Rule X identifies several committees to which bills authorizing federal dam construction might be referred. The Natural Resources Committee has jurisdiction over \"irrigation and reclamation, including water supply for reclamation projects, and easements of public lands for irrigation projects, and acquisition of private lands when necessary to complete irrigation projects.\" As such, it has jurisdiction over most activities of the Bureau of Reclamation (Department of the Interior). The Committee on Transportation and Infrastructure is responsible for \"flood control and improvement of rivers and harbors ... public works for the benefit of navigation, including bridges and dams (other than international bridges and dams) ... water power.\" Consequently, most activities of the Army Corps of Engineers fall under the jurisdiction of the House Transportation and Infrastructure Committee. The Committee on Agriculture has jurisdiction over \"water conservation related to activities of the Department of Agriculture.\"\nSenate Rule XXV also identifies several committees for which bills authorizing federal dam construction might be referred. The Energy and Natural Resources Committee has jurisdiction over \"hydroelectric power, irrigation, and reclamation projects,\" and, hence, most activities of the Bureau of Reclamation; whereas, the Environment and Public Works Committee (EPW) has jurisdiction over \"public works, bridges, and dams\" and \"flood control.\" Consequently, EPW has jurisdiction over most activities of the Army Corps of Engineers. Additionally, the Agriculture, Nutrition and Forestry Committee has jurisdiction over \"soil conservation ... food from fresh waters ... rural development, rural electrification, and watersheds.\"\nAs is shown in Table 1 , multiple committees in each chamber are principally involved in jurisdiction over dams, which is not readily apparent from perusal of the rules language alone. Private dams must be licensed by the Federal Energy Regulatory Commission, which is under the jurisdiction of the House Energy and Commerce and the Senate Energy and Natural Resources committees. Further, several different executive branch departments and agencies are responsible for implementing the laws under the jurisdiction of these committees. This arrangement complicates management of river systems and resources comprising large watershed areas where multiple federal dams are present, such as the Columbia and Colorado River Basins, and the Sacramento and San Joaquin Rivers' delta confluence with San Francisco Bay, and even smaller systems, especially where anadromous fisheries (fish that live in both freshwater and marine environments) are found.\nAppendix B. House Rule X Language\nTable B-1 includes official excerpts from House Rule X.\nAppendix C. Senate Rule XXV Language\nTable C-1 includes official excerpts from Senate Rule XXV.\nAppendix D. Glossary of Abbreviations" ], "depth": [ 0, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_title h1_full", "h0_full", "h3_full h2_full h1_full", "", "", "", "", "", "", "h2_full" ] }

{ "question": [ "How has Congress's address on water resources issues affected related federal laws?", "What agencies are involved by these congressional committees?", "What do the activities respond to?", "What kind of federal activities does this report focus on?", "What kind of topics and subtopics does the report cover?", "How is the report conducted?", "How does this report compare to the House and Senate Parliamentarian Offices' views?", "What four themes does the report cover?", "What has CRS identified for each subtopic?", "What do the appendixes address?", "What other things are included in the report?", "What do the nine tables that make up the body of his report underscore?", "What do the tables show?", "What does the wide range of federal executive responsibilities for water resources reflect?" ], "summary": [ "Congress addresses numerous issues related to the nation's water resources annually, and over time it has enacted hundreds of water-related federal laws. These laws—many of which are independent statutes—have been enacted at different points in the nation's history and during various economic climates.", "Such committees are involved in legislating, funding, and overseeing the water-related activities of numerous federal agencies.", "These activities include responding to natural disasters such as droughts and floods, conducting oversight over federal water supply management, improving water resource and water quality infrastructure, and protecting fish and wildlife.", "Although the responsibility for development, management, protection, and allocation of the nation's water resources is spread among federal, state, local, tribal, and private interests, this report focuses on federal activities related to water and the congressional committees that authorize and oversee these activities.", "The report covers multiple topics and individual water-related subtopics ranging from water supply and water quality infrastructure to fisheries management and water rights.", "The report is not exhaustive; instead, the authors have attempted to cover the major federal activities authorized by Congress that affect water resource development, management, protection, and use in the United States. Similarly, the analysis does not cover every aspect of House and Senate committee jurisdiction affecting water issues.", "For definitive evaluation of committee jurisdictions related to water, the views of the House and Senate Parliamentarian Offices are official.", "The report covers four general areas, or themes: (1) \"Water Resources Development, Management, and Use\"; (2) \"Water Quality, Protection, and Restoration\"; (3) \"Water Rights and Allocation\"; and (4) \"Research and Planning.\"", "For each subtopic, CRS has identified selected federal agencies and activities related to the subtopic, authorities for such activities, and relevant House and Senate committee jurisdictions, as specified in House and Senate rules.", "Appendixes address considerations in determining House and Senate committee jurisdictions and present the official language from House Rule X and Senate Rule XXV, respectively, which are indicators of congressional jurisdiction over water resources.", "The report also includes a glossary of abbreviations for federal agencies and House and Senate committees.", "The nine tables that make up the body of this report underscore the complexity of federal activities affecting water resource development, management, protection, and use in the United States.", "As apparent throughout these tables, numerous standing committees in the House and the Senate have jurisdiction over various components of federal water policy.", "The wide range of federal executive responsibilities for water resources reflects comparably complex congressional legislative responsibilities and directives." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 2, -1, -1, -1, -1, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "Background", "VA Changed Estimates Supporting the Request, but Factors That Account for Most of the Changes Were Not Transparent", "Request Increased $165 Million, Reflecting an Increase in Initiatives and a Decrease in Both Ongoing Services and Available Resources", "Past Issues in VA’s Estimates for NRM and Operational Improvements Remain", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Department of Veterans Affairs", "Appendix II: GAO Contacts and Staff Acknowledgments", "Contacts", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "VA provides health care services to various veteran populations— including an aging veteran population and a growing number of younger veterans returning from the military operations in Afghanistan and Iraq. VA operates approximately 150 hospitals, 130 nursing homes, 800 outpatient clinics, as well as other facilities to provide care to veterans. In general, veterans must enroll in VA health care to receive VA’s medical benefits package—a set of services that includes a full range of hospital and outpatient services, prescription drugs, and long-term care services provided in veterans’ own homes and in other locations in the community. VA also provides some services that are not part of its medical benefits package, such as long-term care provided in nursing homes.\nVA develops a health care budget estimate each year of the resources needed to provide these services for 2 fiscal years. Typically, VA’s Veterans Health Administration (VHA), which administers VA’s health care program, starts to develop a health care budget estimate approximately 10 months before the President submits the budget request to Congress the following February. The budget estimate includes the total cost of providing health care services, including direct patient costs as well as costs associated with management, administration, and maintenance of facilities. VA develops most of its budget estimate for health care services using the Enrollee Health Care Projection Model (EHCPM). VA uses other methods to develop the remaining parts of its budget estimate, that is, the costs of long-term care and other health care programs.\nVA’s annual budget estimate for a fiscal year includes estimates of anticipated funding from several sources. These sources include new appropriations, which refer to the appropriations to be provided during the current annual appropriations process for the upcoming fiscal year, and with respect to advance appropriations, the next fiscal year. For example, VA estimated it needed $52.7 billion in new appropriations for fiscal year 2013 and $54.5 billion for fiscal year 2014. In addition to new appropriations, sources of funding include resources expected to be available from unobligated balances and collections and reimbursements that VA anticipates it will receive in the fiscal year.include third-party payments from veterans’ private health care insurance for the treatment of nonservice-connected conditions and veterans’ copayments for outpatient medications. VA’s reimbursements include amounts VA receives for services provided under service agreements with the Department of Defense (DOD).\nVA’s health care budget estimate informs the President’s annual request for appropriations for VA health care services, which includes an advance appropriations request for these services. The budget estimate can change during each budget formulation cycle, due to the availability of updated data and the successively higher levels of review in VA and OMB before the President’s budget request is submitted to Congress. The Secretary of VA considers the health care budget estimate developed by VHA when assessing resource requirements among competing interests within VA, and OMB considers overall resource needs and competing priorities of other agencies when deciding the level of funding requested for VA’s health care services. VA prepares a budget justification that provides information supporting the policy and funding decisions in the President’s budget request. In its budget justification, VA includes estimates related to the following:\nOngoing health care services, which include acute care, rehabilitative care, mental health, long-term care, and other health care programs.\nInitiatives, which are proposals by the Secretary of VA or by the President to provide, expand, or create new health care services.\nSome of the proposed initiatives can be implemented within VA’s existing authority, while other initiatives would require a change in law.\nOperational improvements, which are changes in the way VA manages its health care system to lower costs, such as changes to its purchasing and contracting strategies.\nCollections and reimbursements, which are resources VA expects to collect from health insurers of veterans who receive VA care for nonservice-connected conditions and other sources, such as veterans’ copayments, and to receive as reimbursement of services provided to other government agencies or private or nonprofit entities.", "", "The President’s fiscal year 2013 budget request for VA health care services was $165 million more than the advance appropriations request for the same year. This increase came about as a result of changes in the estimates supporting the two requests. Specifically, the President’s fiscal year 2013 request reflected an estimate of funding needed for initiatives that increased by $2 billion and an estimate for ongoing health care services that decreased by $2.1 billion, for a net decrease of $110 million. In addition, VA’s estimate of anticipated resources from collections and reimbursements decreased by $275 million. This decline in anticipated resources was partially offset by the $110 million decrease in expected obligations, which resulted in the net increase in the President’s request of $165 million. (See table 1.)\nThree factors accounted for most of the changes in the estimates that supported the President’s fiscal year 2013 budget request when compared to the earlier, advance appropriations request; however, VA, in its budget justification, was not transparent about two of the factors. The three factors that accounted for the $2 billion increase in the initiatives estimate and the $2.1 billion decrease in the ongoing health care services estimate were: (1) a new approach in reporting the estimate for initiatives, (2) updated assumptions and data to estimate ongoing health care services, and (3) additional funding needed for initiatives. The first factor—VA’s new reporting approach—accounted for $1.2 billion of the increase in VA’s initiatives estimate and a corresponding decrease in VA’s ongoing health care services estimate. The second factor accounted for a $900 million decrease in VA’s ongoing health care services estimate. This decrease was largely offset by the third key factor—an almost $800 million increase in additional funding for initiatives. (See table 2.)\nA new approach in reporting the estimate for initiatives. VA used a new reporting approach for initiatives that combined both funding for initiatives and funding for certain ongoing health care services in its initiatives estimate, which increased VA’s initiatives estimate and decreased VA’s ongoing services estimate. In prior budget justifications, VA’s estimated funding for initiatives only included funding identified for initiatives during that year while funding needs for all ongoing services were included in VA’s estimate for ongoing health care services. However, VA, in its budget justification, did not disclose that it had used a new reporting approach for initiatives. OMB staff and VA officials told us that the reason for this change in reporting was to be more transparent about the total amount of funding needed to support VA’s initiatives. Nevertheless, by not stating in its budget justification that it made this change, VA has not made it transparent that the estimate for initiatives is greater and the estimate for ongoing services is less than they would have been using VA’s past reporting approach.\nUpdated data and assumptions to estimate ongoing health care services. As reported in its budget justification, VA used updated assumptions and data, which reduced VA’s estimate for ongoing health care services. Specifically, the amount of funding needed to support health care services estimated by the EHCPM decreased because VA updated some of the assumptions used in the EHCPM. For example, VA updated the EHCPM’s assumption accounting for the pay freeze for civilian employees in fiscal years 2011 and 2012, which reduced the base salary of VA employees in future years. VA also used updated data to adjust the estimates produced by the EHCPM and the estimates for long-term care and other health care programs. Updated data for long-term care and other health care programs generally indicated that costs for these services would grow at a slower rate than the data used to support the President’s fiscal year 2013 advance appropriations request indicated.\nAdditional funding for initiatives. According to VA’s budget justification, as a result of the reduced estimate for ongoing health care services, VA increased the estimate of funding needed for its initiatives. This estimate of funding included funding for all initiatives for which funding was not requested in the fiscal year 2013 advance appropriations request and increased funding for some initiatives for which funding had been identified in the earlier request. However, in its fiscal year 2013 budget justification, VA did not make it clear that part of the additional increase in its initiatives estimate occurred because VA’s earlier estimate in support of the advance appropriations request did not include funding for all the initiatives the agency intended to continue. According to OMB staff, the purpose of the advance appropriations request is to provide assurance for the continuation of ongoing health care services and select initiatives that represent direct care to veterans. As a result, rather than including estimates of funding needed to support all initiatives in advance appropriations requests—including the fiscal year 2013 advance appropriations request and the fiscal year 2014 advance appropriations request—the funding needs for all initiatives are taken into account during the following budget formulation cycle. At that time, once updated data are available to produce revised estimates for ongoing health care services, VA and OMB assess the amount of likely resources available to fund initiatives in the context of overall budget constraints. However, VA did not state that some initiatives for which estimates were included in the fiscal years 2013 and 2014 advance appropriations requests would require additional funding if the initiatives were to be continued. (Table 3 indicates the difference in the fiscal year 2013 initiative estimates attributable to VA’s new reporting approach versus additional funding.)\nVA’s budget justification is used to provide Congress with relevant information for making decisions. The lack of transparency regarding the factors that changed VA’s estimates for ongoing health care services and initiatives results in unclear information for congressional deliberation.", "Our analysis of the estimates supporting the President’s fiscal year 2013 budget request found that VA’s supporting estimates (1) do not address historical discrepancies between estimated and actual NRM spending and (2) lack analytical support for expected savings from some operational improvements.\nRegarding NRM, VA’s fiscal year 2013 estimate does not appear to correct for the long-standing pattern of VA’s NRM spending exceeding its estimates and was based on a policy decision. In June 2011, we reported VA’s spending on NRM exceeded the estimates reported in VA’s budget justifications from fiscal years 2006 to 2010. More recently, we found that in fiscal year 2011 VA spent about $2 billion for NRM, which was $867 million more than estimated (see fig. 1). According to VA officials, NRM spending has exceeded estimates of needed funding in recent years because VA medical facilities have spent more funds on NRM projects that were originally expected to be spent on other activities— such as utilities, grounds maintenance, and janitorial services. This spending is consistent with VA’s authority to increase or decrease the amounts VA allocates from the Medical Facilities account for NRM and with congressional committee report language. When we asked VA officials if the fiscal year 2013 estimate addressed the historical discrepancies between amounts estimated and actual spending, VA officials said that all information was considered in developing the estimate. However, VA officials noted that the amount requested was a policy decision and did not specifically say whether these discrepancies were addressed. This explanation suggests that VA has not changed the way in which it determines the final NRM estimate; as we previously reported VA lowered its fiscal year 2012 estimate due to a policy decision to fund other initiatives. Because the fiscal year 2013 estimate of $710 million is significantly lower than past spending and lower than the estimate provided last year, it does not appear that medical facilities’ spending was addressed. Furthermore, VA estimates that the NRM backlog for health care facilities—which reflects the total amount needed to address facility deficiencies—will remain over $9 billion in fiscal year 2013. As such, the NRM information provided in VA’s budget justification may not be a reliable estimate of future spending for NRM.\nRegarding operational improvements, VA estimated savings for fiscal year 2013 using the same methodologies it used in the past, some of which we recently reported lacked analytical support or were flawed. The President’s budget request for fiscal year 2013 reflected VA’s estimate that it would save about $1.3 billion from the implementation of six operational improvements:\nChanging rates. Estimated savings from purchasing dialysis treatments and other care from civilian providers at Medicare rates instead of current community rates.\nAcquisitions. Estimated cost savings from changes to VA’s purchasing and contracting strategies.\nFee Care. Estimated saving from purchasing care from non-VA providers at lower rates.\nRealigning clinical staff and resources. Estimated savings by using less costly health care providers, such as licensed practical nurses instead of certain types of registered nurses.\nMedical and administrative support. Estimated savings from employing resources more efficiently.\nVA real property. Estimated saving from initiatives including repurposing vacant or underutilized buildings, decreasing energy costs, and changing procurement practices for building maintenance.\nIn a February 2012 report, we highlighted issues regarding VA’s methodology for estimating savings from some operational improvements, including changes to VA real property, medical and administrative support activities, and the realignment of clinical staff and resources. We also recommended that VA develop a sound methodology for estimating savings from its operational improvements. In response, VA concurred with the recommendation except for two real property initiatives where VA maintained that the savings estimates were not flawed. However, since our February report was issued after the release of the President’s budget request for fiscal year 2013, VA has not yet implemented our recommendations. VA officials told us during the course of our current review that the agency is taking steps to address deficiencies in the methodology used for estimating savings for some of its operational improvements. Without a sound methodology, VA runs the risk of falling short of its estimated savings, which may ultimately require VA to make difficult trade-offs to provide health care services with the available resources. We determined that the estimates for some of the operational improvements provided in VA’s budget justification may not be reliable estimates of future savings and therefore are of limited use for decision makers.", "VA’s budget justification is intended to provide Congress with estimates of resource needs and what the agency plans to achieve with requested appropriations. Our work shows that changes in the way that VA estimates and reports its required resources are responsible for the increase in the President’s fiscal year 2013 budget request for VA health care, when compared to last year’s advance appropriations request for the same year. However, VA was not transparent in its budget justification about two of the factors that accounted for the change in VA’s initiatives and ongoing health care services estimates. By neither disclosing that it used a new reporting approach for initiatives nor indicating that its advance appropriations requests did not include funding for continuing initiatives, VA did not provide Congress with information relevant to understanding these estimates.\nIn addition, VA may not have provided Congress reliable information with which to make decisions regarding VA’s appropriations in regards to NRM and some operational improvements. VA’s most recent NRM estimates do not appear to correct for the long-standing pattern where VA’s NRM spending exceeds VA’s NRM estimates. VA’s estimates have not consistently accounted for additional spending by VA medical facilities. As a result, the NRM estimates may be unreliable, as they may continue to underestimate VA’s future spending for NRM. Also, VA continued to use flawed methodologies we identified in our prior work to develop savings estimates for operational improvements. We continue to believe that VA should improve its methodology as we previously recommended. Until these issues are addressed, VA’s estimates of NRM and operational improvements are of limited use for decision makers.", "To improve the transparency and reliability of information presented in VA’s congressional budget justifications that support the President’s budget request for VA health care, we recommend the Secretary of VA take the following three actions:\nState in future budget justifications whether the estimates for initiatives include funding for ongoing health care services.\nState in future budget justifications whether the estimates for initiatives in support of the advance appropriations request reflect all the funding that may be required if all initiatives are to be continued.\nReflect in future budget justifications estimates of annual resource needs for NRM that fully account for resources that VA medical facilities have consistently spent for this purpose.", "We provided a draft of this report to the Secretary of VA and the Acting Director of OMB for comment. In its written comments signed by the Chief of Staff and reprinted in appendix I, VA concurred with two of our three recommendations, but did not concur with our recommendation related to the estimates for initiatives that support VA’s advance appropriations requests. In addition, VA stated in its comments that one aspect of our report is not accurate, that it disagrees with a second, and that it had concerns about a third. OMB staff provided a technical comment, which we incorporated.\nVA concurred with our first recommendation regarding funding for ongoing health care services. VA noted that to implement this recommendation it will include in future budget justifications a narrative description stating whether the estimates for initiatives include funding for ongoing health care services. VA also concurred with our third recommendation regarding its estimates for NRM. VA noted that in order to implement this recommendation, VA will reflect in future budget justifications annual estimates of resources needed for NRM that are consistent with policy decisions and account for past spending on NRM.\nVA did not concur with our second recommendation related to the estimates for initiatives that support VA’s advance appropriations requests. VA stated that it did not concur because the recommendation is not consistent with its multiyear approach to budgeting for advance appropriations, in which VA estimates what the agency calls essential initial funding for the advance appropriations year. VA then estimates full funding for initiatives in the next year based on updated information. However, we do not address VA’s approach to budgeting in this report and our recommendation is that VA state in future budget justifications whether the estimates for initiatives in support of the advance appropriations request reflect all the funding that may be required if all initiatives are continued. VA’s comments indicate that all funding for these initiatives is not included in the advance appropriations estimates. VA could implement our recommendation by making a statement to this effect in its budget justification.\nIn addition to its comments on our recommendations, VA had comments on three sections of our report. VA questioned the accuracy of our assertion that VA did not disclose the new reporting approach for its initiatives, which included estimates for certain ongoing health care services. VA stated that a table footnote in its budget justification explained that the estimates for initiatives for fiscal years 2012, 2013, and 2014 represented total funding. We do not believe that a table footnote in a document, which consists of nearly 400 pages, provides adequate transparency in explaining a change of more than $1 billion that resulted from a new reporting approach. Moreover, because the footnote does not explain that this approach is new or that the estimate for ongoing services was also affected, we continue to believe that the transparency of VA’s reporting could be improved. We support VA’s plans to include an expanded narrative regarding its approach to reporting estimates for initiatives in future budget justifications and believe this will enhance transparency.\nVA also indicated that it disagreed with what VA characterized as our assertion that Congress cannot use VA’s estimates of costs for ongoing health care services or initiatives due to a lack of transparency. As evidence, VA pointed to the detailed information presented in the budget justification and described how the estimates are determined, including a description of the actuarial model it uses. However, we did not state that Congress cannot use VA’s estimates for the cost of ongoing health care services and initiatives. Instead, what we identified was that the lack of transparency regarding the factors that changed VA’s estimate for ongoing health care services and initiatives resulted in unclear information for congressional deliberation. VA’s concurrence with two of our recommendations and its implementation of them would address the concerns we raised and improve the transparency of the information that VA provides to Congress in its annual budget justifications.\nVA also expressed concern that our conclusions cast doubt on its strong commitment to stewardship of resources. VA noted that the agency and its resources need to be flexible and responsive to changes in veterans’ medical care needs, which may occur after its budget estimates are formulated. VA has the authority to respond to such changes. We have pointed out, for example, that VA’s NRM spending is consistent with its authority to increase and decrease the amounts VA allocates from the Medical Facilities account for NRM. However, in regard to NRM, the long- standing pattern in which NRM spending has significantly exceeded VA’s estimates needs to be better accounted for in VA’s budget estimates. Doing so will not decrease VA’s flexibility to be responsive to veterans’ needs. Moreover, we believe that VA’s plans to address our recommendation will provide Congress with more reliable estimates with which to make decisions about VA appropriations.\nWe are sending copies of this report to the Secretary of Veterans Affairs and the Acting Director of the Office of Management and Budget, and appropriate congressional committees. In addition, the report will be available at no charge on the GAO website http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact Randall B. Williamson at (202) 512-7114 or [email protected], or Melissa Emrey-Arras at (617) 788-0534 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs are on the last page of this report. GAO staff who made major contributions to this report are listed in appendix II.", "", "", "", "In addition to the contacts named above, James C. Musselwhite and Melissa Wolf, Assistant Directors; Kye Briesath, Deirdre Brown, Krister Friday, Lauren Grossman, Aaron Holling, Wati Kadzai, and Lisa Motley made key contributions to this report.", "VA Health Care: Estimates of Available Budget Resources Compared with Actual Amounts. GAO-12-383R. Washington, D.C.: March 30, 2012.\nVA Health Care: Methodology for Estimating and Process for Tracking Savings Need Improvement. GAO-12-305. Washington, D.C.: February 27, 2012.\nDepartment of Veterans Affairs: Issues Related to Real Property Realignment and Future Health Care Costs. GAO-11-877T. Washington, D.C.: July 27, 2011.\nVeterans’ Health Care Budget Estimate: Changes Were Made in Developing the President’s Budget Request for Fiscal Years 2012 and 2013. GAO-11-622. Washington, D.C.: June 14, 2011.\nVeterans’ Health Care: VA Uses a Projection Model to Develop Most of Its Health Care Budget Estimate to Inform the President’s Budget Request. GAO-11-205. Washington, D.C.: January 31, 2011.\nVA Health Care: Spending for and Provision of Prosthetic Items. GAO-10-935. Washington, D.C.: September 30, 2010.\nVA Health Care: Reporting of Spending and Workload for Mental Health Services Could Be Improved. GAO-10-570. Washington, D.C.: May 28, 2010.\nContinuing Resolutions: Uncertainty Limited Management Options and Increased Workload in Selected Agencies. GAO-09-879. Washington, D.C.: September 24, 2009.\nVA Health Care: Challenges in Budget Formulation and Issues Surrounding the Proposal for Advance Appropriations. GAO-09-664T. Washington, D.C.: April 29, 2009.\nVA Health Care: Challenges in Budget Formulation and Execution. GAO-09-459T. Washington, D.C.: March 12, 2009.\nVA Health Care: Long-Term Care Strategic Planning and Budgeting Need Improvement. GAO-09-145. Washington, D.C.: January 23, 2009.\nFederal Real Property: Progress Made in Reducing Unneeded Property, but VA Needs Better Information to Make Further Reductions. GAO-08-939. Washington, D.C.: September 10, 2008.\nVA Health Care: Budget Formulation and Reporting on Budget Execution Need Improvement. GAO-06-958. Washington, D.C.: September 20, 2006." ], "depth": [ 1, 1, 2, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "", "h0_title", "h0_full", "h3_full h1_full", "h2_full h1_full", "h3_full", "h2_full", "", "", "", "", "h3_full h2_full" ] }

{ "question": [ "How did the President's fiscal year 2013 budget request for the Department of VA compare with the year prior?", "What did this request reflect?", "What was the first factor that accounted for these changes?", "What was the effect of this new reporting approach?", "Why was the new approach adopted?", "What was the second factor?", "How did the lack of transparency affect ongoing health care services?", "How are the issues GAO previously identified related to NRM now?", "How does the actual spending compare with VA's NRM estimates?", "Why has the pattern occurred?", "What did VA officials say when asked about the estimate?", "What are some operational improvements that can be made?", "How reliable is the VA's estimates of NRM going to be?", "What does this report examine?", "What information did GAO review?", "What does GAO recommend to state in VA's budget justification?", "What does GAO recommend regarding the long-standing pattern of medical facilities?", "Why did VA concur?" ], "summary": [ "The President’s fiscal year 2013 budget request for the Department of Veterans Affairs’ (VA) health care services was $165 million more than the earlier advance appropriations request for the same year.", "This request reflected a $2 billion increase for initiatives and a $2.1 billion decrease for ongoing health care services, for a net decrease of $110 million in expected obligations. This decrease partially offset a decline in anticipated resources available to VA of $275 million, resulting in the net increase in the President’s request of $165 million.", "First, VA used a new reporting approach for initiatives that combined both funding for initiatives and for certain ongoing health care services in its initiatives estimate.", "Previously, VA had reported only funding it identified for initiatives during that year. This new reporting approach resulted in an increase in VA’s initiatives estimate and a commensurate decrease in VA’s ongoing services estimate.", "VA officials told GAO that this change was made to be more transparent about the total funding needed for initiatives. However, because VA did not disclose this change in its budget justification, VA has not made it transparent that its initiatives estimate is greater and its ongoing health care services estimate is lower than they would have been using VA’s past approach.", "Second, VA included additional funding in its initiatives estimate, in part, to fund initiatives that were not identified in the fiscal year 2013 advance appropriations request.", "The lack of transparency regarding VA’s estimates for initiatives and ongoing health care services results in unclear information for congressional deliberation.", "The issues GAO previously identified related to NRM (non-recurring maintenance), such as renovations and other improvements of VA medical facilities, and operational improvements remain.", "VA’s fiscal year 2013 estimate for NRM—$710 million—does not appear to correct for the long-standing pattern where VA’s NRM spending exceeds VA’s NRM estimates. For example, in fiscal year 2011 VA spent about $2 billion for NRM, which was $867 million more than estimated.", "According to VA officials, this pattern has occurred because VA medical facilities have spent more funds on NRM projects that were originally expected to be spent on other activities—such as utilities, grounds maintenance, and janitorial services—which is consistent with VA’s authority to allocate its appropriations.", "When GAO asked if the fiscal year 2013 estimate addressed the historical discrepancies between estimated and actual NRM spending, VA officials said that all information was considered in developing the estimate. However, they noted that the final estimate was a policy decision and did not say specifically whether these discrepancies were addressed.", "Regarding operational improvements, VA estimated savings for fiscal year 2013 using the same methodologies it used in the past, some of which GAO previously found lacked analytical support or were flawed.", "Until these issues are addressed, VA’s estimates of NRM and operational improvements may not be reliable and are of limited use for decision makers.", "Building on GAO’s past work and the President’s most recent request for VA health care, this report examines (1) key changes to the fiscal year 2013 budget request compared to the 2013 advance appropriations request, and certain aspects of the fiscal year 2014 advance appropriation request and supporting estimates; and (2) whether the issues GAO identified regarding NRM and operational improvements continue in the estimates for the most recent request.", "GAO reviewed the President’s budget request, VA’s budget justification, and VA data. GAO interviewed VA officials and staff from the Office of Management and Budget.", "GAO recommends that VA state in its budget justification whether the estimates for initiatives include funding for ongoing services and whether its advance appropriations request reflects funding that may be required if initiatives are continued.", "GAO also recommends that VA’s NRM estimates fully account for the long-standing pattern of medical facilities spending more on NRM than originally expected.", "VA concurred except for the recommendation on advance appropriations, which GAO believes is needed to improve transparency." ], "parent_pair_index": [ -1, -1, -1, 2, 2, -1, 5, -1, -1, 1, -1, -1, -1, -1, -1, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 1, 1, 4, 4, 4 ] }

{ "title": [ "Background", "Agencies’ Efforts to Identify Firefighting Aircraft Needs Have Been Hampered by Limited Information and Collaboration", "Agency Efforts to Identify Firefighting Aircraft Needs Did Not Include Information on Performance and Effectiveness of Firefighting Aircraft", "Agencies Have Not Consistently Collaborated with One Another or with Other Stakeholders to Identify Firefighting Aircraft Needs", "The Forest Service’s Approach to Modernizing the Large Airtanker Fleet Faces Challenges, Resulting in Uncertainty over Continued Large Airtanker Availability", "The Forest Service’s Near-term Approach Includes Using “Legacy” and Supplemental Airtankers but Concerns Exists Regarding Aircraft Availability, Performance, or Cost", "The Forest Service’s Medium-term Approach Includes Contracting for Newer Aircraft, but Implementation Has Been Delayed", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: 2013 Forest Service and Interior Firefighting Aircraft Availability and Rates", "Appendix III: Summary of Agency Efforts Since 1995 to Identify Number and Type of Firefighting Aircraft They Need", "Appendix IV: Comments from the Department of Agriculture", "Appendix V: Comments from the Department of the Interior", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "For decades, the federal government has relied on firefighting aircraft to assist in wildland fire suppression activities. These aircraft perform various firefighting activities, including gathering intelligence by detecting fires and conducting assessments of ongoing fires; delivering supplies such as water, food, and ground-based firefighting equipment; transporting firefighters; providing coordination and direction to aerial and ground-based firefighters; and delivering retardant or water to extinguish or slow the growth of fires. The federal government uses different types of firefighting aircraft, including large airtankers, very large airtankers, single-engine airtankers, amphibious fixed-wing water scoopers, helicopters, and fixed-wing surveillance and smokejumper aircraft to perform these aerial fire suppression activities. Table 1 describes these firefighting aircraft and their functions. In general, multiple types of aircraft operate simultaneously to suppress fires. For example, airtankers that drop retardant or water often work in tandem with surveillance aircraft— lead planes—that coordinate the firefighting operation and guide the airtankers in dropping the retardant or water in the correct location. The 2013 Interagency Standards for Fire and Fire Aviation Operations defines several types of federal firefighting aircraft—including large and very large airtankers, large and medium helicopters, and surveillance and smokejumper aircraft—as national resources that can be deployed anywhere in the country and support fire suppression operations in any jurisdiction, including federal lands and nonfederal lands in accordance with relevant intergovernmental agreements.\nIn most instances, firefighting aircraft that drop retardant or water do not extinguish wildland fires but instead slow the spread of fires or reduce their intensity as firefighters on the ground work to contain or suppress fires. Firefighting aircraft that deliver retardant or water support ground- based firefighters by performing two main functions: (1) dropping retardant around wildland fires to slow fire growth to provide ground- based firefighters additional time to build or reinforce fireline and (2) reducing the intensity of fires by dropping water directly on them. In general, airtankers deliver retardant around fires to slow their spread, water scoopers drop water directly on fires to reduce their intensity, and helicopters can perform either function. Currently, all large and very large airtankers in the federal fleet are aircraft initially designed for other purposes—such as maritime patrol or civilian passenger transport—that have been retrofitted for the aerial fire suppression mission through the incorporation of retardant delivery systems—tanks affixed to aircraft that hold and release retardant. Conversely, single-engine airtankers and water scoopers are built to drop retardant and water, respectively, to fight wildland fires. Traditionally, airtankers have used retardant delivery systems that rely on gravity to evacuate retardant via doors that open in the bottom of the aircraft. However, some systems have been developed that use compressed air to force retardant out of the aircraft through nozzles rather than doors.\nFire suppression activities can generally be categorized as initial attack, extended attack, or large fire support. Initial attack activities include those conducted during the first “operational period” after the fire is reported, generally within 24 hours. When fires are not controlled through initial attack, extended attack activities occur that generally involve the use of additional firefighting resources; when such fires grow large and complex, these activities may be referred to as large fire support. Federal and state wildland fire responders rely on a tiered interagency dispatch process for requesting and coordinating the use of firefighting resources, including aircraft, to respond to wildland fires. For example, when a wildland fire is reported, a local dispatch center identifies and dispatches, if available, fire response resources such as firefighters, aircraft, and equipment to perform initial attack activities. If sufficient resources are not available, local dispatch centers can request additional resources from the appropriate geographic area coordination center. In the event that sufficient resources are not available within a geographic area, its geographic area coordination center can request additional resources from the National Interagency Coordination Center, which serves as the focal point for coordinating the mobilization of resources for wildland fire and other incidents throughout the United States.\nA number of interagency organizations develop interagency firefighting standards, including those pertaining to the development and use of firefighting aircraft, and coordinate federal firefighting efforts. To coordinate the overall firefighting efforts of the Forest Service and other federal land management agencies, the interagency National Wildfire Coordinating Group was established in 1974. This interagency group develops and maintains standards, guidelines, and training and certification requirements for interagency wildland fire operations. Within this group, the National Interagency Aviation Committee is an interagency body of federal and state aviation operations managers responsible for providing common policy and direction for aviation resources involved in wildland firefighting.\nThis committee was established to serve as a body of aviation experts, assisting the National Wildfire Coordinating Group with recognizing opportunities to enhance safety, effectiveness, and efficiency in aviation-related operations, procedures, programs, and coordination. In turn, the National Interagency Aviation Committee chartered the Interagency Airtanker Board to review and approve retardant and water delivery systems based on established performance criteria. The approval process—which includes an assessment of system design, testing of the systems’ performance, and a physical inspection of the aircraft with system installed—ensures that the systems meet basic standards for delivery of retardant or water. Interagency Airtanker Board approval serves as a guide to participating federal and state agencies for identifying acceptable aircraft and retardant or water delivery systems that may compete for agency contracts.\nThe federal firefighting aircraft fleet includes some aircraft that are government owned, but most are obtained through contracts with private industry vendors. For example, the federal government owns some surveillance and smokejumper aircraft and contracts for the remainder, along with helicopters and aircraft that deliver retardant or water, from private industry vendors that own, operate, and maintain them. Currently, the Forest Service issues contracts for large and very large airtankers, as well as large and medium helicopters, and Interior issues contracts for single-engine airtankers and water scoopers. The agencies use two types of contracts for obtaining firefighting aircraft from vendors: exclusive-use and call-when-needed. Exclusive-use contracts require a vendor to provide an aircraft for service on any day covered by the “mandatory availability period” stipulated in the contract. The agencies pay vendors a daily rate regardless of whether the aircraft is used and also pay a fee for each hour flown if the aircraft is used. Conversely, call- when-needed contracts do not guarantee vendors any fee unless the aircraft is called upon to provide aerial fire support. This type of contract allows the government the flexibility to pay for firefighting aircraft only when they are used. However, the daily availability and flight hour rates for call-when-needed contracts are generally higher than those for exclusive-use contracts. In contrast to large airtankers, other types of firefighting aircraft are generally more available for federal contracting. For example, the agencies plan to have over 100 helicopters available in 2013 for fire suppression activities through exclusive-use contracts with hundreds more available through call-when-needed contracts. See appendix II for the number and types of aircraft in the federal firefighting aircraft fleet in 2013 and their associated cost rates.\nThe Forest Service and Interior have also established agreements with other governments (i.e., cooperator governments), as well as the military, to augment the national firefighting aircraft fleet during periods of heavy fire activity. The United States and Canada have established a mutual aid agreement whereby the National Interagency Coordination Center and the Canadian Interagency Forest Fire Centre can request firefighting resources, including aircraft, from each other during periods of heavy fire activity. Similarly, some U.S. states and Canadian provinces have established regional intergovernmental agreements to facilitate the sharing of firefighting resources: the Northwest Fire Protection Agreement, the Great Lakes Forest Fire Compact, and the Northeastern Forest Fire Protection Compact. Through these agreements, firefighting resources, including aircraft, can be dispatched from their contracted agency, state, or province to assist on fires on other lands covered by the agreement. The Forest Service can also obtain aerial firefighting support through the Modular Airborne Firefighting System (MAFFS) program under an agreement with DOD. Under this program, DOD provides Lockheed Martin C-130 Hercules aircraft as additional capacity for aerial firefighting when requested by the Forest Service. Each of the aircraft is equipped with a MAFFS unit—a portable, pressurized retardant delivery system that can be inserted into military C- 130 aircraft to convert them into large airtankers when needed. The Forest Service owns the MAFFS units (eight in total) and provides the retardant, and DOD provides the C-130 aircraft, pilots, and maintenance and support personnel to fly the missions. A new generation of MAFFS units became operational in February 2009, and the fleet has since transitioned to use this system exclusively.", "Since 1995, the Forest Service and Interior have cumulatively produced nine major studies and strategy documents related to their firefighting aviation needs, but the agencies’ efforts to identify the number and type of firefighting aircraft needed have been hampered by limited information and collaboration. In particular, these efforts did not include information on the performance and effectiveness of firefighting aircraft and involved limited collaboration between agencies and with stakeholders in the fire aviation community.", "Forest Service and Interior efforts to identify the number and type of firefighting aircraft they need have largely consisted of developing major studies and strategy documents—nine since 1995. Based on reviews of academic and government studies and interviews with officials and representatives from across the fire aviation community, we identified the following key elements as important for understanding firefighting aircraft needs:\nAircraft types – aircraft manufacturer, model, and size classification;\nBasing options – potential locations for aircraft bases;\nAcquisition models – options for obtaining aircraft, including purchasing aircraft or using vendor-owned aircraft;\nAircraft capabilities – required capabilities of aircraft, such as retardant capacity and speed;\nSuppression methods – how to use aircraft to suppress fire, including initial attack and extended attack; and\nAircraft performance and effectiveness – the results of using aircraft to support fire suppression activities.\nWhile the Forest Service and Interior studies and strategy documents contained various key elements, none included information on performance and effectiveness of aircraft in helping to suppress wildland fires because agencies have not collected such information. Figure 2 identifies which key elements were included in each of the major studies and strategy documents we analyzed. (See app. III for additional information on each of these efforts.)\nThe agencies generally used cost- and efficiency-based metrics in these efforts, such as the potential cost of damage from wildland fires or the frequency with which requests for firefighting aircraft are unmet, to identify their firefighting aircraft needs. For example, the three-part National Study of Airtankers to Support Initial Attack and Large Fire Suppression, conducted from 1995 to 2005, estimated the number of large airtankers needed by comparing the cost of using large airtankers to help suppress wildland fires with the projected cost of the damage that could result from not suppressing the fires. In addition, the Forest Service’s 2013 Firefighting Aircraft Study focused on efficiency and identified the number of large airtankers needed by analyzing the annual number of requests for these aircraft that the Forest Service was unable to meet. However, agency efforts to identify their firefighting aircraft needs have not included information on the performance and effectiveness of using aircraft to suppress wildfires primarily because neither the Forest Service nor Interior has collected data on these aspects of firefighting aircraft. Specifically, the agencies have not established data collection mechanisms to track the specific tactical uses of firefighting aircraft—for example, where retardant or water is dropped in relation to a fire as well as the objective of a drop, such as protecting a structure or preventing a fire from moving in a specific direction—or measure their performance and effectiveness in those uses. Moreover, a 2012 study by the Forest Service’s Rocky Mountain Research Station found that the Forest Service did not collect information about the locations where airtankers drop retardant or the actual performance and effectiveness of these aircraft.\nIn May 2012, we reported on the importance of performance information in another context and found that such information can inform key management decisions, such as allocating resources, or it can help determine progress in meeting the goals of programs or operations.\nGeneral agreement exists among wildland firefighters that, based on their experience, using aircraft can be beneficial to suppressing fires, but little empirical data exist to measure the performance and effectiveness of such aircraft use. For example, a 2007 study cited anecdotal evidence that firefighting aircraft saved homes, and a 2012 study that surveyed fire management officials found that these officials believed aircraft were effective in reducing the amount of time required to contain wildfires, particularly in the most difficult fire suppression conditions. such views are not based on empirical data on aircraft performance and effectiveness, and other studies—including the Forest Service’s 2013 Firefighting Aircraft Study—found that no accurate information on the effectiveness of aerial fire suppression exists and noted that the factors contributing to the success of wildfire suppression efforts are poorly understood.difficult to assess the relative value of delivering retardant or water through helicopters, large airtankers, and single-engine airtankers and called for analytic tools focusing on this area to be developed. In addition, the 1998 National Study of Tactical Aerial Resource Management identified the need for better information on the intended use of surveillance aircraft—such as support for initial attack or large fire suppression activities—to determine the specific types of aircraft that will meet federal needs for aerial surveillance during firefighting.\nSee M. Plucinski, J. Gould, G. McCarthy, and J. Hollis, “The Effectiveness and Efficiency of Aerial Firefighting in Australia, Part 1,” Bushfire Cooperative Research Centre, Technical Report A0701 (June 2007), and M. Plucinski, J. McCarthy, J. Hollis, and J. Gould, “The Effect of Aerial Suppression on the Containment Time of Australian Wildfires Estimated by Fire Management Personnel,” International Journal of Wildland Fire 21 (December 2011): 219-229.\nThis limited availability of information on the performance and effectiveness of firefighting aircraft is an area of long-standing concern; since the 1960s, multiple reviews of federal fire aviation programs have called for the Forest Service and Interior to collect information on the performance of firefighting aircraft but neither agency has taken action until recently. Specifically, in May 2012, the Forest Service recognized the need for an approach to evaluate the effective and efficient use of firefighting aircraft and began a project on aerial firefighting use and effectiveness to develop technology, evaluation criteria, and performance measures to quantify and assess the effective use of large airtankers, helicopters, and water scoopers in delivering retardant, water, and fire- suppressing chemicals. According to Forest Service documents, the agency plans to collect information including whether an aircraft was used for initial attack or extended attack; the aircraft’s objective, such as building a line of retardant, directly suppressing fire, or protecting a specific structure; whether the fire is in grass, shrub, or timber; general weather conditions; and characteristics of the actual drop of retardant, such as the time, aircraft speed, retardant amount, and outcome. The agency collected some of this information during 2012, but it has not developed incremental goals for assessing progress or timelines for completing the project.\nThe Forest Service faces several challenges in carrying out its project on aerial firefighting use and effectiveness. For example, during 2012, the agency collected information on the performance and effectiveness of one type of aircraft—large airtankers—from about 25 fires but needs information on several hundred fires to perform useful analysis on large airtanker performance, according to Forest Service officials managing the data collection effort. These officials said that it will likely take several years for the agency to collect the information needed to analyze and understand the effectiveness of the three types of firefighting aircraft— large airtankers, helicopters, and water scoopers—included in the project. Forest Service officials also told us that aerial firefighters have been reluctant to collect information on the results of using firefighting aircraft for several reasons, including safety concerns regarding adding to the workload of aerial firefighters while they are flying over fires, firefighters’ concerns that Forest Service will use the information to criticize their performance, a firefighting culture that values experience and history over data and scientific analysis, and the challenges in finding time to complete data collection while fighting wildfires. Interior officials said that the department is assisting the Forest Service in this data collection project but does not currently have plans to collect performance information on the firefighting aircraft it manages.\nLarge airtankers have been the focus of the Forest Service’s current data collection effort as well as the agencies’ prior studies and strategy documents, but few efforts have focused on other types of firefighting aircraft. Specifically, eight of the agencies’ nine studies and strategy documents attempted to identify the appropriate number of large airtankers for the federal fleet. However, only three of the efforts—the 1998 National Study of Tactical Aerial Resource Management, the 2009 Interagency Aviation Strategy, and the 2012 Air Attack Against Wildfires: Understanding U.S. Forest Service Requirements for Large Aircraft— identified the number of other types of aircraft needed, despite the fact that each type of firefighting aircraft provides unique capabilities to support fire suppression operations. For example, water scoopers can deliver large quantities of water when a fire ignites near a water source, smokejumper aircraft can quickly transport firefighters and supplies to fires in remote areas, and helicopters have the versatility to transport firefighters, supplies, or small quantities of water or retardant. As a result, performance and effectiveness information on all types of firefighting aircraft helps agencies identify the number and type of firefighting aircraft they need, including assessing any potential new firefighting aircraft platforms or technologies that vendors may propose; understand the strengths and limitations of each type of aircraft in different situations; and understand how firefighting aircraft could help achieve their wildfire suppression goals. Obtaining information about aircraft performance and effectiveness could better inform agency estimates of firefighting aircraft needs to include in their strategies for obtaining aircraft, thus helping agencies better ensure the adequacy of the federal firefighting aircraft fleet.\nIn contrast to U.S. federal agencies, some foreign and U.S. state governments that operate aerial firefighting programs have employed various methods to collect and use performance and effectiveness information on their firefighting aircraft. For example, in Canada, the British Columbia Forest Service requires aerial firefighters to complete an airtanker data report immediately after each airtanker flight. Officials then compile information gathered through these reports with information from their dispatch system to evaluate airtanker performance using a set of key performance indicators, such as the amount of time from the initial report of a fire to the time that an airtanker request is entered into the dispatch system, the distance between available airtankers and the actual fire, and the change in the size of the fire from the time an aircraft arrives at the fire to the time the fire is contained. According to British Columbia Forest Service officials, the performance information and indicators have been integral to improving British Columbia’s aerial firefighting program. For example, officials found that available aircraft were often over 100 miles from the wildfires where they dropped retardant. Based on this analysis, the province made significant changes to its methods for pre-positioning firefighting aircraft and as a result, available aircraft are generally within 60 miles of a wildfire. In addition, the Minnesota Department of Natural Resources requires officials to complete debriefing reports after each use of firefighting aircraft. The report includes information on the specific aircraft that were sent to the fire and gathers the firefighters’ views on whether areas such as dispatch information, aircraft briefings, target descriptions, and communications were adequate or need improvement. According to Minnesota Department of Natural Resources officials, information from these reports may help determine the best methods for suppressing fires when a specific set of aircraft is available.", "In efforts to identify the number and type of firefighting aircraft they need, agencies have engaged in limited collaboration with one another or with other stakeholders in the fire aviation community. For example, the Forest Service developed its 2012 Large Airtanker Modernization Strategy without obtaining input from representatives of state fire aviation programs or the large airtanker industry and did not coordinate with Interior until after the development of an initial draft. According to several agency officials we spoke with, the Forest Service did not invite Interior officials to provide their input on the strategy until after the agency sent the draft version to the Office of Management and Budget (OMB) for review and approval. Similarly, regarding Interior, senior Interior officials told us that Interior generally does not involve other agencies or stakeholders in developing annual estimates of the number of each type of aircraft to obtain through contracts. Rather, Interior develops these estimates by asking relevant Interior bureaus to provide the number of each type of aircraft it needs, compiling these estimates, and adjusting them based on available funding.\nThe importance of collaboration with stakeholders and agencies has been noted in several government reports. For example, the interagency 2009 Quadrennial Fire Review identified the need to engage agency leaders, partners, and industry in a strategic dialogue about the demands for firefighting resources, such as aircraft, and noted the importance of Additionally, a innovative and efficient ways to meet those demands.2009 Department of Agriculture Inspector General’s report recommended that the Forest Service collaborate with stakeholders in the fire aviation community to develop goals and performance measures for the agency’s aviation strategic plan. Regarding collaboration with stakeholders, in April 2013, we reported that when agencies carry out activities in a fragmented and uncoordinated way, the resulting patchwork of programs can waste scarce funds, confuse and frustrate program customers, and limit the overall effectiveness of the federal effort. In addition, we reported in October 2011 that successful organizations involve stakeholders in developing their mission, goals, and strategies to help ensure that they target the highest priorities. In that report, we also stated that stakeholders can influence success or failure of agencies’ programs.\nMany Forest Service and Interior officials, as well as other stakeholders, we spoke with expressed concerns about limited collaboration, and many cited shortcomings with the formal mechanism for interagency collaboration—the National Interagency Aviation Committee, which includes representatives from the Forest Service, Interior and its bureaus, and the National Association of State Foresters. Some stakeholders told us the committee has not always considered the needs of all agencies involved in firefighting efforts. For example, in 2008 committee members collaboratively developed a national firefighting aviation strategy, the Interagency Aviation Strategy. A year later, however, the Forest Service developed an appendix to the strategy that outlined the Forest Service’s plans for replacing its large airtanker fleet, and the committee published an amended strategy—including that appendix—without providing member agencies the opportunity to review or contribute to it, according to agency officials. As a result, the large airtanker appendix does not reflect the opinions of all committee members, and consequently does not reflect the needs of the fire aviation community stakeholders that will require the use of large airtankers. In addition, Forest Service and Interior officials told us that agency staff who serve on the committee are generally firefighting operations staff and do not represent senior agency management. As a result, the collaboration that occurs through the committee is often limited to day-to-day operations activities rather than broader strategic efforts.\nThe committee has implemented some leading practices that we previously reported can help enhance and sustain collaboration. Specifically, the committee’s members have defined and articulated a common purpose and have agreed on agency roles and responsibilities. For example, the committee’s charter identifies its purpose as serving as a body of aviation experts focused on identifying opportunities to enhance safety, effectiveness, and efficiency in aviation related operations, procedures, programs, and coordination. In addition, the committee’s 2009 Interagency Aviation Strategy defines the general aerial firefighting roles and responsibilities of federal and state agencies as well as aircraft contracting responsibilities of the Forest Service and Interior. However, we previously found that agencies often face a range of barriers, including concerns about controlling jurisdiction over missions and resources, when they attempt to collaborate with other agencies. Interior officials told us that the division of firefighting aircraft contracting responsibilities among the Forest Service and Interior—under which Forest Service issues contracts for large and very large airtankers and large and medium helicopters, while Interior issues contracts for single-engine airtankers and water scoopers—may not foster a culture of collaboration since each agency is focused on its own aircraft of responsibility. Although the committee has implemented some leading practices for collaboration, it has not taken additional steps to reinforce agency accountability for collaboration, such as developing mechanisms to monitor, evaluate, and report the results of collaborative efforts. We have reported that by creating the means to monitor, evaluate, and report the results of their collaborative efforts, federal agencies can better identify areas for improvement, although the specific ways in which this practice is implemented may differ based on the specific collaboration challenges agencies face. For example, mechanisms for monitoring the results of collaborative efforts may range from occasional meetings among agency officials to more formal periodic reviews where officials from each agency report on progress toward achieving the goals of interagency collaborative efforts. As we reported in August 2012, absent effective collaboration, interagency efforts could result in limited information being communicated and opportunities for incorporating stakeholder input being missed.\nSenior management in both the Forest Service and Interior told us they have begun discussions regarding how to improve their interagency collaboration. However, they said that these discussions have focused on obtaining firefighting aircraft for the 2013 fire season and have not yet addressed collaboration on strategic planning issues. Further, both Forest Service and Interior officials told us the Interagency Aviation Strategy is outdated and should be updated to more accurately reflect current firefighting aircraft needs. Engaging in effective collaboration to incorporate input from all fire aviation community stakeholders could better position the agencies in developing strategic planning documents— including any updates to the Interagency Aviation Strategy—that represent the national need for firefighting aircraft.", "The Forest Service plans to modernize the large airtanker fleet by obtaining large airtankers from various sources over the near, medium, and long terms, but each component of this approach faces challenges that make the continued availability of such aircraft to meet national fire suppression needs uncertain. The components of the agency’s approach include: (1) in the near term, continuing to contract with private vendors for “legacy” large airtankers—generally aging aircraft with limited future service life spans—on exclusive-use contracts and very large airtankers on call-when-needed contracts, as well as relying on agreements with cooperator governments and the military; (2) in the medium term, contracting with vendors for airtankers that are more modern and capable than those generally in use currently; and (3) in the long term, acquiring new federally-owned aircraft with expected service life spans of up to 30 years. Additionally, some federal and state agencies are considering alternative plans to obtaining aerial fire suppression support to reduce reliance on large airtankers.", "For the near-term, the Forest Service plans to primarily rely on exclusive- use “legacy” contracts to obtain large airtankers. However, during periods of heavy fire activity, the agency plans to obtain supplemental airtankers through call-when-needed contracts for very large airtankers, agreements with cooperator governments, and military aircraft equipped with MAFFS. However, agency officials and vendor representatives told us about limitations and challenges—including availability, performance, and cost—regarding these resources.\nOver the next 5 years—including the 2013 fire season—the Forest Service plans to rely on aircraft obtained through its “legacy” exclusive- use contracts, which has been the agency’s traditional acquisition model for obtaining large airtankers. The agency in 2013 announced contract awards for nine aircraft: seven P-2V Neptunes—Korean War-era piston- engine maritime patrol aircraft—and two British Aerospace BAe-146s— converted versions of modern commercial jets. However, the availability of the P-2V Neptunes in the short term is uncertain, and the Interagency Airtanker Board has documented concerns regarding performance of the retardant delivery systems on these BAe-146s.\nLockheed P-2V Neptune. The age of the seven P-2V Neptunes—they average more than 50 years old—makes their availability throughout the entire 5-year contract period uncertain. Specifically, vendors told us they might need to retire some aircraft prior to the end of the current contract period because of the cost of maintaining the aging aircraft. In particular, they told us that the limited availability of replacement parts—and the difficulty of manufacturing new ones if no others exist—coupled with the requirements of increased maintenance and inspection standards make the P-2V Neptune difficult to operate in a cost-effective manner. Further, physical stresses on the aircraft could cause cracking of critical components during fire missions. For example, representatives from Neptune Aviation Services told us that the vendor retired one of its P-2V Neptunes after the 2012 fire season due to structural problems discovered during routine maintenance. They also said that the vendor probably could continue to operate approximately five P-2V Neptunes for the next 10 years but that the current heavy use of their fleet could shorten this timeframe. Ultimately, Neptune Aviation Services plans to retire its P-2V Neptune fleet and transition to operating modern aircraft exclusively.\nNeptune Aviation Services’ British Aerospace BAe-146s. Concerns regarding the performance of the retardant delivery system on Neptune Aviation Services’ BAe-146s have been documented during agency evaluations of the aircraft and were voiced by several agency officials we interviewed. During initial assessment of the system in 2011, the Interagency Airtanker Board determined that the retardant delivery system did not meet established performance criteria and identified problems regarding the system’s design and performance.However, in September 2012, the board approved, on an interim basis, the use of the retardant delivery system through the 2012 fire season so that information on its operational effectiveness could be collected and design deficiencies addressed. During the 2012 fire season, the BAe-146s collectively made approximately 300 retardant drops, which the board considered sufficient to collect data needed to assess their operational effectiveness.\nIn December 2012, the Interagency Airtanker Board declined to extend the interim approval of Neptune Aviation Services’ BAe-146 system, citing the problematic retardant delivery system design and deficient performance during the 2012 fire season. In February 2013, however, the National Interagency Aviation Committee determined that the need for aircraft to deliver retardant for the 2013 fire season was sufficiently important to override the board’s decision. As a result, the board, at the direction of the committee, granted an extension of its interim approval of the retardant delivery system through December 15, 2013. Representatives of Neptune Aviation Services acknowledged that the system has limitations, but they stated that the company is developing a revised retardant delivery system and plans to retrofit all of its BAe-146 aircraft with the updated design by the beginning of the 2014 fire season. However, the Interagency Airtanker Board has noted that the deficiencies may persist due to the inherent design of the system, and fire management officials from the Forest Service, Interior, and several states that are familiar with this aircraft told us they have reservations about the retardant delivery system’s performance.\nThe Forest Service announced call-when-needed contracts for two very large airtankers—converted versions of Boeing 747 and McDonnell Douglas DC-10 commercial jets—to provide extended attack and large fire support beginning in 2013 with durations of up to 3 years. However, some agency officials cited concerns about the aircrafts’ role, suitability for operating over rugged terrain, limited compatibility with current airtanker base infrastructure, and high costs (see fig. 3 for an example of a very large airtanker).\nThe Forest Service previously contracted for very large airtankers, but according to Forest Service and Interior officials, firefighters were initially reluctant to request the very large airtankers for several reasons. For example, because of the size of these aircraft, some federal officials were uncertain whether they could safely operate in rugged terrain. Some officials also told us that firefighters did not request very large airtankers because they were uncertain how best to use this new tool. For example, the Forest Service identifies the primary mission of large airtankers as initial attack, whereas the solicitation for the very large airtanker call- when-needed contract stated that they will be used to provide support for extended attack on large fires—leading to uncertainty about the best tactics for employing them. Despite early reluctance to use very large airtankers, officials noted increased reliance on these aircraft; nevertheless, some agency officials continue to disagree about the most effective role—initial attack or large fire support—for these aircraft as well as whether or not they are suited to operating above rugged terrain. Additionally, very large airtankers can operate out of a limited number of established airtanker bases because their weight and size are too great for some existing base infrastructure such as runways or aircraft parking areas. Specifically, about half of the large airtanker bases nationwide—35 of 67—are currently or potentially capable of supporting DC-10 operations, according to a Forest Service official;with bases is even more limited in that it can operate from approximately 12 locations, not all of which are airtanker bases. However, some agency officials told us that the speed of these aircraft can compensate for their limited compatibility with existing airtanker bases and associated increased distances that the aircraft might need to fly to respond to fires. Some officials also noted concerns about the high costs of using the aircraft. (See app. II for the current contract rates of firefighting aircraft.) the 747’s compatibility The Forest Service plans to request large airtankers from two cooperator governments—Canada and the State of Alaska—during periods of high fire activity but these aircraft may not always be available. Under an agreement originally established in 1982, the Forest Service plans to rely on five Convair CV-580 large airtankers—converted commercial aircraft with retardant capacities of 2,100 gallons—provided by Canadian provinces as additional resources when additional large airtankers are needed. Additionally, Forest Service officials told us that, under a separate agreement, the agency can also request use of three CV-580s contracted by the State of Alaska. However, the use of these airtankers to supplement the federal large airtanker fleet is contingent upon the cooperator governments making them available. For example, such airtankers might already be committed to suppressing fires, which could prevent them from being released to assist other governments.\nModular Airborne Firefighting System (MAFFS)\nAs it has periodically done since the program’s inception in the early 1970s, the Forest Service plans to rely on the military to provide surge aerial firefighting capacity through the deployment of up to eight MAFFS- equipped C-130 aircraft (see fig. 4 for an example of a MAFFS-equipped C-130). However, a number of officials from the Forest Service, Interior, and state fire agencies stated that MAFFS performance can be inadequate in some circumstances. For example, while a Forest Service official noted that the MAFFS system has been approved by the Interagency Airtanker Board, some federal and state fire aviation officials told us that the retardant line dispersed by the MAFFS system is generally narrower than firefighters prefer, which can either allow a fire to jump across the retardant line or necessitate an additional drop to widen the line, if another aircraft is available. Additionally, some officials said the system is unable to penetrate dense forest canopies, thereby preventing the retardant from being effective when used in heavy timber. However, some federal and state officials told us that MAFFS can be used effectively on rangeland where grasses are the predominant fuel type.\nFurther, some fire officials expressed concern regarding the limited experience that MAFFS crews may have in the fire aviation mission because they are not full-time aerial firefighters. A DOD accident investigation report conducted in response to a 2012 fatal crash of a MAFFS-equipped C-130H found that the limited total firefighting experience of the crew—in particular, the number of drops accomplished prior to the accident—was a contributing factor to the accident. report also stated that the crew’s training did not include essential components—including training on local terrain conditions and congested airtanker base operations—necessary to conduct MAFFS operations in the region where the crash occurred. A Forest Service official involved in managing MAFFS training told us that the agency has updated the training to better incorporate such components.\nUnited States Air Force Accident Investigation Board Report C-130H3, T/N 93-1458 (Oct. 27, 2012).", "For nearly 2 years, the Forest Service has attempted to award “next- generation” contracts with durations of 5 to 10 years to modernize the fleet with faster and more up-to-date large airtankers. However, these efforts have been delayed by bid protests, and it is uncertain when some vendors will complete federal approval and certification processes for their aircraft, which are necessary prior to use as airtankers on federal contracts. As a result, it is uncertain when the “next-generation” large airtankers will be available to support fire suppression activities. Additionally, private vendors that are developing the “next-generation” large airtankers told us that concerns regarding the consistency of the Forest Service’s approach to fleet modernization have increased the difficulty of making business decisions and could affect the number of aircraft they will be able to provide to the government.", "Recognizing the importance of aircraft to help fight wildland fires, the Forest Service and Interior have undertaken efforts to identify the number and type of firefighting aircraft they need over the years but have met with limited success. None of the agencies’ studies and strategy documents contained information on aircraft performance and effectiveness in supporting firefighting operations, which limits the agencies’ understanding of the strengths and limitations of each type of firefighting aircraft and their abilities to identify the number and type of aircraft they need. The Forest Service has started to collect some aircraft performance information, but it is limited and focused on large airtankers. Interior has no current plans to collect performance information on the aircraft it manages. Agencies have also engaged in limited collaboration with each other and with other stakeholders in the fire aviation community— including the private aircraft vendors on whom the Forest Service has traditionally relied to provide large airtankers. Incorporating input from all fire aviation community stakeholders in their strategic planning documents could better position the Forest Service and Interior in developing estimates of aircraft needs to include in their strategies that represent the national need for firefighting aircraft. This concern is illustrated by the variety of federal and state agencies taking steps to compensate for the decline in large airtankers, which highlights the number of parties affected by firefighting aircraft decisions and reinforces the need for collaboration. Overall, better knowledge about aircraft effectiveness—and more complete input from all involved parties—could inform Forest Service and Interior decisions and help them ensure the adequacy of the nation’s firefighting aircraft fleet. The challenges faced by the Forest Service in each phase of its large airtanker approach, which includes the potential acquisition of aircraft the federal government would own and operate for decades, underscore the need for a complete and collective understanding of the nation’s firefighting aircraft needs.", "To help the agencies enhance their abilities to identify their firefighting aircraft needs and better ensure they obtain aircraft that meet those needs, we recommend that the Secretaries of Agriculture and the Interior direct the Chief of the Forest Service and the Deputy Assistant Secretary for Public Safety, Resource Protection, and Emergency Services, respectively, to take the following three actions:\nExpand efforts to collect information on aircraft performance and effectiveness to include all types of firefighting aircraft in the federal fleet;\nEnhance collaboration between the agencies and with stakeholders in the fire aviation community to help ensure that agency efforts to identify the number and type of firefighting aircraft they need reflect the input of all stakeholders in the fire aviation community; and\nSubsequent to the completion of the first two recommendations, update the agencies’ strategy documents for providing a national firefighting aircraft fleet to include analysis based on information on aircraft performance and effectiveness and to reflect input from stakeholders throughout the fire aviation community.", "We provided the Departments of Agriculture, Defense, and the Interior with a draft of this report for their review and comment.\nThe Forest Service (responding on behalf of the Department of Agriculture) and Interior generally agreed with our findings and recommendations, and their written comments are reproduced in appendixes IV and V respectively. The Forest Service and Interior also provided technical comments which we incorporated as appropriate. The Department of Defense did not provide comments.\nWhile the Forest Service generally agreed with our findings and recommendations and stated that it is committed to improving its collaboration efforts, it also reiterated its interest in obtaining C-27Js to augment its aerial firefighting capabilities, citing the benefit of low initial investment for aircraft that could potentially function in multiple roles. As stated in our report, we acknowledge the Forest Service’s incentive to obtain the C-27Js free of acquisition cost and their potential use in multiple roles. We also note, however, that the agency may face challenges regarding the retardant capacity and operating costs associated with the airtankers.\nWe are sending copies of this report to the Secretaries of Agriculture, Defense, and the Interior; the Chief of the Forest Service; the Directors of the Bureau of Indian Affairs, Bureau of Land Management, Fish and Wildlife Service, and National Park Service; appropriate congressional committees; and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Office 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 VI.", "This report examines (1) Forest Service and Department of the Interior efforts undertaken to identify the number and type of firefighting aircraft they need and (2) the Forest Service’s approach to modernizing the large airtanker fleet and the challenges it faces in doing so.\nTo examine Forest Service and Interior efforts to identify their firefighting aircraft needs, we reviewed major agency studies and strategy documents and interviewed agency officials responsible for managing fire aviation programs. We focused on those efforts conducted since 1995, when the Forest Service and Interior jointly conducted the first major study of their large airtanker needs. We reviewed the purpose, methodology, and results of each of these studies and strategy documents. We also reviewed seven academic and government studies on aerial firefighting and conducted interviews with agency officials, as well as officials representing stakeholders in the fire aviation community, including military, state, and international firefighting organizations, and companies that own and operate firefighting aircraft, to identify key elements that are important for understanding firefighting aircraft needs. (Information on the stakeholders included in our review is discussed in more detail later in this appendix.) Through these document reviews and interviews, and in consultation with internal GAO stakeholders including methodological specialists and staff knowledgeable about aviation contracting, we identified the following key elements: aircraft types, basing options, acquisition models, aircraft capabilities, suppression methods, and aircraft performance and effectiveness. We then reviewed the agency efforts to determine the extent to which each effort included analysis of these key elements.\nWe also interviewed agency officials about the extent of collaboration involved in agency efforts to identify the number and type of firefighting aircraft they need. In light of the information collected, we reviewed our prior work on interagency collaboration and key practices that can help enhance and sustain collaborative efforts, and compared the practices of the formal body for coordination among aerial firefighting agencies—the National Interagency Aviation Committee—with key collaboration practices to determine the extent to which the committee’s practices were consistent with key practices we previously identified. The key practices we evaluated were: defining and articulating a common outcome; establishing mutually reinforcing or joint strategies to achieve the outcome; identifying and addressing needs by leveraging resources; agreeing upon agency roles and responsibilities; establishing compatible policies, procedures, and other means to operate across agency boundaries; developing mechanisms to monitor, evaluate, and report the results of collaborative efforts; and reinforcing agency accountability for collaborative efforts through agency plans and reports. GAO has also identified reinforcing individual accountability for collaborative efforts through agency performance management systems as a best practice for coordination, but we did not consider this practice in our assessment because performance management systems fell outside the scope of this review.\nTo examine the Forest Service’s approach to modernizing the large airtanker fleet and the challenges it faces in doing so, we reviewed agency documents related to large airtanker acquisition, management, and operations and interviewed agency officials to identify the agency’s approach to obtaining these aircraft. We reviewed agency planning and acquisition documents, such as the National Interagency Aviation Committee’s 2009 Interagency Aviation Strategy, the Forest Service’s 2012 Large Airtanker Modernization Strategy, and Forest Service airtanker contract solicitations, which lay out the Forest Service’s approach to obtaining large airtankers in the short, medium, and long terms. that represents firefighting aircraft vendors and one that represents pilots—which we identified based on conversations with agency officials and vendor representatives. We also conducted site visits to the National Interagency Fire Center in Boise, Idaho; the facilities of the only two private vendors with current Forest Service “legacy” large airtanker contracts, located in Minden, Nevada, and Missoula, Montana; the manufacturing facility of a company that produces single-engine airtankers in Olney, Texas; and the headquarters of California’s fire aviation program —part of the California Department of Forestry and Fire Protection (CAL FIRE) in Sacramento—which manages more airtankers than the Forest Service. The results of our interviews and site visits are not generalizable.\nWe conducted this performance audit from August 2012 to August 2013 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 Forest Service and Interior contract for, and to a lesser extent own, a variety of aircraft used to help suppress wildland fires. Table 2 provides information, as reported by Forest Service and Interior contracting officials, on the federal firefighting aircraft fleet for the 2013 fire season, including aircraft type, number available, and cost rates.", "Since 1995, the Forest Service and Interior have conducted or contracted for nine major studies and strategy documents that identify firefighting aircraft needs. Table 3 provides information on major efforts conducted by, or on behalf of, the Forest Service and Interior to identify the number and type of firefighting aircraft they need.", "", "", "", "", "In addition to the individual named above, Steve Gaty, Assistant Director; Kristin Hughes; Richard P. Johnson; and Matthew Tabbert made significant contributions to this report. Cheryl Arvidson, Steven Putansu, and Kiki Theodoropoulos provided technical assistance." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full h2_full", "h0_full h2_title h1_title", "h0_full h2_full", "h0_full h1_full", "h1_full", "h1_full", "h1_full", "h0_full", "h0_full", "", "h3_full", "h2_full", "", "", "", "", "", "" ] }

{ "question": [ "What efforts did the Department of Agriculture's Forest Service and the Department of Interior have undertaken to identify information regarding firefighting aircraft?", "Why didn't the documents incorporate information on the performance of these aircrafts?", "Why didn't the study have enough data?", "What is the reason that caused this data shortage?", "How has the committee tried to help with the situation?", "Why is collaboration between the agencies and stakeholders necessary?", "What does the Forest Service plan to do?", "What does the agency plan to rely on in the near term?", "What does the agency plan to do in the medium term?", "What does the agency plan to do in the long term?", "What were some concerns that the agency have?", "What does the Forest Service and Interior do?", "How do their jobs differ?", "How did a decrease in the number of large airtankers affect the agencies' ability to provide support?", "What was GAO asked to review?", "What does this report examine?", "What did GAO review?" ], "summary": [ "The Department of Agriculture's Forest Service and the Department of the Interior have undertaken nine major efforts since 1995 to identify the number and type of firefighting aircraft they need, but those efforts--consisting of major studies and strategy documents--have been hampered by limited information and collaboration.", "Specifically, the studies and strategy documents did not incorporate information on the performance and effectiveness of firefighting aircraft, primarily because neither agency collected such data.", "While government reports have long called for the Forest Service and Interior to collect aircraft performance information, neither agency did so until 2012 when the Forest Service began a data collection effort. However, the Forest Service has collected limited data on large airtankers and no other aircraft, and Interior has not initiated a data collection effort.", "In addition, although firefighting aircraft are often shared by federal agencies and can be deployed to support firefighting operations on federal and nonfederal lands, the agencies have not consistently collaborated with one another and other stakeholders to identify the firefighting aircraft they need.", "The committee has implemented some leading practices for collaboration such as defining and articulating a common purpose, but it has not taken additional steps to monitor and evaluate its collaborative activities, another leading practice.", "Collectively, additional information on aircraft performance and effectiveness and collaboration across agencies and with stakeholders could enhance agency estimates of their firefighting aircraft needs to more accurately represent national needs for such aircraft, and as a result, better position the agencies to develop strategic planning documents that represent those needs.", "The Forest Service plans to modernize the large airtanker fleet by obtaining large airtankers from various sources over the near, medium, and long term, but each component of this approach faces challenges that make the continued availability of such aircraft to meet national fire suppression needs uncertain.", "In the near term, the agency plans to rely on a mix of contracted \"legacy\" airtankers as well as supplemental aircraft available through additional contracts and agreements with other governments and the military.", "In the medium term, the Forest Service has awarded contracts for \"next-generation\" large airtankers that are faster and more up-to-date than most \"legacy\" aircraft, but it is uncertain when all of these aircraft will begin supporting fire suppression activities.", "In the long term, the Forest Service's plan includes purchasing certain large airtankers and obtaining others through intergovernmental transfer at no initial cost if they are declared surplus by the military--a shift from its long-standing practice of contracting for rather than owning aircraft.", "However, the Forest Service was unable to justify its previous plans for purchasing large airtankers to the Office of Management and Budget, and concerns exist regarding the retardant capacity and operating cost of the other airtankers it would obtain through intergovernmental transfer.", "The Forest Service and Interior contract for aircraft to perform various firefighting functions, including airtankers that drop retardant.", "The Forest Service contracts for large airtankers and certain other aircraft, while Interior contracts for smaller airtankers and water scoopers.", "However, a decrease in the number of large airtankers, from 44 in 2002 to 8 in early 2013--due to aging planes and several fatal crashes--has led to concerns about the agencies' ability to provide aerial firefighting support.", "GAO was asked to review agency efforts to ensure the adequacy of the firefighting aircraft fleet.", "This report examines (1) Forest Service and Interior efforts to identify the number and type of firefighting aircraft they need and (2) the Forest Service's approach to modernizing the large airtanker fleet and the challenges it faces in doing so.", "GAO reviewed agency studies and strategies, assessing the extent to which they included key elements important for understanding fire aviation needs; reviewed large airtanker planning and acquisition documents; and interviewed agency officials and representatives of the fire aviation community selected to represent state agencies, aircraft vendors, and others." ], "parent_pair_index": [ -1, 0, -1, 2, -1, -1, -1, 0, 0, 0, -1, -1, -1, -1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "Enforcement of Tax Laws and GAO’s High-Risk List", "Underreporting by Individual Taxpayers Accounts for the Largest Portion of the Tax Gap", "Individual Income Tax Underreporting", "Employment Tax Underreporting", "Corporation Income Tax Underreporting", "Net Tax Gap", "IRS Has Confidence in Most Aspects of the Tax Gap Estimate and Is Taking Steps to Improve It", "IRS Has Broad Compliance Goals but Lacks Specific Quantitative Goals for Increasing Voluntary Compliance", "IRS Lacks Specific Quantitative Goals to Improve Voluntary Compliance", "IRS Uses National Research Program Data to Guide Compliance Efforts but Has Not Documented a Long- Term Strategy", "Conclusions", "Recommendations", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Additional Analyses of National Research Program Individual Data", "Appendix III: Detection Correction Factor’s Effect on Tax Gap Estimation", "Appendix IV: Additional Information on IRS’s Tax Gap Methodology Changes", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact:", "Staff Acknowledgments:" ], "paragraphs": [ "We have consistently stressed the importance of IRS conducting tax compliance research. Likewise, analyzing compliance data can help IRS identify ways to enhance taxpayer compliance. Without such data, it is more difficult for IRS to decide whether its efforts to address specific areas of noncompliance should focus on non-enforcement activities, such as improved forms or publications, or enforcement activities. Analyzing the data can also help identify changes that could be made to tax laws and regulations that may improve compliance.\nIn April 2016, IRS released its most recent tax gap estimate. IRS estimated that taxpayers should have paid an average of about $2.5 trillion dollars per year in federal taxes for tax years 2008 to 2010. IRS also estimated that taxpayers paid approximately $2.04 trillion voluntarily and on time for those years, on average, leaving $458 billion in unpaid taxes per year. However, IRS estimates that through late payments and enforcement actions it eventually will collect an additional $52 billion on average for those years, leaving the average net tax gap at $406 billion for 2008 to 2010, as shown in figure 1.\nThe tax gap estimate is an aggregate estimate of the five types of taxes that IRS administers—individual income, corporation income, employment, estate, and excise taxes. For each tax type, IRS attempts to estimate the tax gap based on three types of noncompliance: (1) underreporting of tax liabilities on timely filed tax returns; (2) underpayment of taxes due from timely filed returns; and (3) nonfiling, when a taxpayer fails to file a required tax return altogether or on time.\nIRS has not developed specific estimates for the tax gap related to income earned from illegal activities (e.g., prostitution) or certain forms of fraud. However, if IRS discovers these types of income over the course of an audit, it could be included in the tax gap estimates. In general, refund fraud related to identity theft would not be included in the tax gap estimate because it does not involve evading a tax liability. The tax gap includes unintentional errors as well as intentional evasion, such as intentionally underreporting income, intentionally overreporting expenses, and engaging in abusive tax shelters or frivolous tax schemes.\nThere is no single approach to estimating all of the components of the tax gap. IRS uses NRP examinations of a stratified, random sample of tax returns along with statistical modeling to produce estimates of noncompliance for the population of individual income tax return filers. Other areas of the tax gap are estimated using payment data or other statistical models. Each approach IRS uses is subject to non-sampling error and the areas of the estimate that are samples are subject to additional sampling errors. The uncertainty of the estimates is not readily captured by standard errors that typically accompany estimates based on sample data. For that reason, IRS does not report standard errors, confidence intervals, and statistical comparisons across years.\nPrior to the 2008–2010 estimate, IRS had released two other tax gap estimates that used data from NRP examinations: (1) a tax year 2001 tax gap estimate that was released in February 2007 and (2) a tax year 2006 tax gap estimate that was released in December 2011. As shown in figure 2, the gross tax gap estimate has increased, in nominal terms, from $345 billion for 2001 to $458 billion, on average, for 2008–2010, an increase of $113 billion or about 33 percent. However, when we adjusted for inflation (using fiscal year 2016 dollars), the gross tax gap estimates amount to $460 billion in 2001, $530 billion in 2006, and $509 billion in 2008–2010. The inflation-adjusted gross tax gap increased by about 11 percent from 2001 to 2008–2010; however, the 2008–2010 estimate is slightly lower, by about 4 percent, than the 2006 estimate.\nOver the three estimates, the voluntary compliance rate (VCR)—the percentage of owed tax for a given year that is paid voluntarily and timely—has decreased slightly from 83.1 percent for 2006 to 81.7, on average, for 2008–2010. IRS also estimated the VCR and distribution of tax liability for each component of the tax gap. Generally, employment taxes have the highest estimated compliance rates while individual income and estate taxes have the lowest estimated compliance rates. There was a decrease in the VCR for individual income tax from 79 percent for tax year 2001 to 74 percent in the recent 2008–2010 estimate. According to IRS, this decline, along with the individual income tax’s increase in the share of liability, contributes to the slight decline in the overall VCR.\nThe amount of the tax gap that IRS estimated it would collect through enforcement efforts and late payments varied across the three estimates. In 2001, IRS estimated it would collect $55 billion and that figure would increase by $10 billion, to $65 billion in 2006. However, for the 2008– 2010 tax gap estimate, the enforced collections or late payments decreased by $13 billion per year, on average, from the 2006 estimate, to $52 billion. According to IRS, the methodology used to calculate prior estimates may have been too optimistic, resulting in an overstatement of as much as 25 percent. Additionally, IRS stated that the economic downturn in 2008 reduced the total tax liability from which IRS could collect revenue over this period.\nHowever, differences in the tax gap estimates across years may not all be attributed to changes in taxpayer behavior (voluntary compliance) or IRS enforcement activities. According to IRS, the tax gap estimates have increased in part because IRS included some new tax gap components and updated some methods, which it believes increased the comprehensiveness and accuracy of the estimates. IRS reported that changes in economic activity and changes in tax law and administration also contribute to differences in tax gap estimates over time.", "In our 2017 High-Risk Report we continued to include Enforcement of Tax Laws as a high-risk area. Key components of this high-risk area include both addressing the tax gap and improving tax compliance. IRS enforcement of the tax laws helps fund the U.S. government by collecting revenue from noncompliant taxpayers and, perhaps more importantly, promoting voluntary compliance by giving taxpayers confidence that others are paying their fair share. However, IRS still faces challenges to its capacity for implementing new initiatives and carrying out ongoing enforcement and taxpayer service programs under an uncertain budgetary environment.\nGiven the estimated size of the tax gap, even modest reductions would yield significant financial benefits for the country. We have made numerous recommendations over time to help IRS, the Department of the Treasury (Treasury), and Congress address tax noncompliance. Nonetheless, as we have reported in the past, closing the entire gap is not feasible since it could entail more burdensome record keeping or reporting than the public is willing to accept or more resources than IRS is able to commit. For example, third-party information reporting has shown to improve accuracy of income reporting by individual taxpayers; however, it requires increased record keeping and reporting by the third party and requires IRS resources to properly match the third-party information to individual tax returns.", "Underreporting of tax liabilities accounted for most of the tax gap estimate for tax years 2008–2010, making up 84 percent of the entire estimated gross tax gap, as shown in figure 3. Individual income taxes made up the largest portion of underreporting, followed by employment taxes and corporation income taxes.", "Underreporting of business income accounted for nearly half of the individual income tax underreporting gap. This includes income from sole proprietors, which accounted for the largest share of individual income tax underreporting, as shown in table 1. Most business related income tax return items also had high net misreporting percentages, which is the sum of the net misreported amount divided by the sum of the absolute values of the amounts that should have been reported, as a percentage. To show additional detail on aspects of the tax gap, we conducted some additional analysis on selected line items of the individual NRP data, which is presented in appendix II.\nAs we have previously reported, the extent to which individual income tax taxpayers accurately report their income is closely aligned to the amount of income that is reported to them and to IRS by third parties. For example, according to 2008–2010 IRS data, taxpayers misreported over half of the types of income for which there is little or no third-party information reporting, such as business income. In contrast, when employers withhold taxes and report the wages and salaries to employees and IRS through Form W-2, Wage and Tax Statement (W-2), there is better compliance. As shown in figure 4, 1 percent of these types of income were misreported while nearly 99 percent were accurately reported on individual income tax returns. Similarly, taxpayers misreported less than 10 percent of income for which banks and other financial institutions provided information returns (Forms 1099) to account holders and IRS that show taxpayers’ annual income from some types of investments.\nGenerally, new requirements on third parties to submit information returns would require statutory changes. We have previously identified additional information reporting opportunities as well as improvements that IRS could make on its own to existing forms and how it uses them. For example, we suggested in August 2008 that Congress may wish to make all taxpayers with rental real estate activity subject to the same information reporting requirements as other taxpayers operating a trade or business; however, no legislative action has been taken on this suggestion. We recommended in August 2010 that IRS require mortgage-secured property addresses to be reported on other forms (Forms 982 and 1099-C) to help IRS detect taxpayers who fail to pay taxes on certain forgiven mortgage debts. Legislative and executive actions have been taken consistent with our recommendation. However, IRS has not revised two forms to collect specific information from taxpayers and lenders concerning the amount of forgiven debt attributable to a principle residence and the locations of a taxpayer’s principle residence.\nFor items subject to substantial third-party information reporting, IRS is able to use automated processes to address noncompliance. The automated underreporter program, through which IRS matches amounts reported on returns with amounts reported on information returns submitted by third parties, is one such process. This computer matching program allows IRS to identify discrepancies between tax returns and information returns and propose automatic changes to taxpayers.\nFor items with little to no third-party information reporting, IRS has to rely on more resource-intensive methods, such as correspondence or face-to- face examinations, to address noncompliance. While these examinations may be started by reviewing specific line items, they may also be expanded to cover other areas of the tax returns if there are indications of misreporting in areas of the return not previously identified. However, it is harder for IRS to detect noncompliance in areas with little third-party information reporting.", "The second largest part of the underreporting tax gap is made up of employment taxes, which are comprised of three main components: self- employment tax, Federal Insurance Contribution Act (FICA) Social Security and Medicare withholding, and Federal Unemployment Tax Act (FUTA) taxes, as shown in table 2. The self-employment component is estimated from IRS’s NRP individual income tax data. However, IRS lacks NRP data for other components of employment tax. Therefore, it estimates both FICA and FUTA by applying the estimated compliance rates from a 1993 employment tax gap report, which used tax year 1984 employment tax return data, to the current reported taxes.\nIRS recently completed an NRP study of employment tax returns that reviewed federal income tax withholding and FICA, the first such study IRS had conducted in over 30 years. We reported that although the examinations for the study were completed, IRS had not developed formal plans to analyze the results to (1) identify areas of noncompliance, (2) address such noncompliance, or (3) update its employment tax gap estimate. According to IRS officials, they had not developed formal plans due to competing research priorities and limited resources and because the NRP results had not yet been finalized. We recommended that IRS develop plans to analyze the NRP results in 2017 to address areas of noncompliance identified and update its employment tax gap estimates. IRS agreed with our recommendations and stated that it will be determining how to use the data from this new study to update the employment tax gap estimate.", "As shown in table 3, IRS developed corporation income tax underreporting estimates for two types of corporations: small corporations (those without a balance sheet or with assets less than $10 million) and large corporations (those with assets of $10 million or more). IRS estimated the voluntary compliance rate for all corporations to be 83 percent for tax years 2008–2010. The estimates are based on adjusted data from operational examinations, which focus on the tax returns most likely to have substantive noncompliance rather than examinations of a statistically representative sample of corporation tax returns. IRS does not have a program comparable to NRP for corporation income tax because of the difficulty of constructing a representative sample for a small group of highly diverse large corporations, among other reasons.\nThe limited scope and selection criteria for non-NRP examinations introduce statistical bias, meaning that the examination issues and results from examinations of corporation tax returns are not necessarily representative of the overall corporation population. However, IRS has developed some methods to project the results of the examinations to the larger population of corporations, and, despite these limitations, IRS considers the corporation estimates to provide a rough gauge of corporation income tax noncompliance.\nIRS’s divisions responsible for large and small corporation examinations each have management systems in place to track issues identified from corporation examinations. While this information is not derived from the tax gap estimates, IRS has identified several common examination issues for both large and small corporations, as shown in table 4.", "For the 2008–2010 tax gap estimate, IRS for the first time estimated the net tax gap by each type of tax, as shown in table 5. Unlike most of the tax gap, IRS can tabulate late payments. Since enforcement and other late payments often happen many years after a given tax year has ended, IRS must project into the future to estimate how much tax it will eventually collect for that tax year. IRS expects to recoup the smallest percentage of taxes from the gross individual income tax estimate.", "IRS officials stated IRS believes the tax gap estimates are sufficiently reliable for the intended purpose of providing a snapshot of tax compliance as a whole. The tax gap estimate is actually many estimates used together to develop one overall picture of tax compliance. IRS has more certainty in some areas of the estimate than others. Generally, IRS officials consider those components of the tax gap estimate that are based on the most current data (2008–2010 data) to be more robust. However, as shown in table 6, IRS recognizes that some component estimates of the tax gap estimate are more uncertain than others, in part because some component estimates rely on older data and it is inherently difficult to estimate some types of noncompliance. IRS has no estimates for some areas of the tax gap.\nAccording to IRS officials, IRS has higher amounts of confidence in all of the underpayment components, because they are based on data from systems that can distinguish enforcement and late payments from other payments (IRS has the most confidence in these components); the individual income nonfiling component, because it is based on a new methodology combining two methods that incorporate improvements to the methods used in prior estimates; the individual income underreporting component, because it is primarily based on adjusted NPR examination data, which is a statistically representative sample of individual tax returns; and the corporation underreporting component, because it is based on operational examination data, adjusted for selection bias.\nIRS has a lesser amount of confidence in the estate nonfiling and underreporting data, because they are forecasts updating estimates based on assumptions made in studies completed in 2000; and the withholding taxes (FICA and FUCA) part of the employment underreporting data, because the data are partially a forecast based on data from an older compliance study.\nThe methodologies used to develop the component estimates differ by component, resulting in a mix of statistical sample and operational-based data being used, as well as forecasts from earlier estimates. IRS is therefore unable to calculate confidence intervals for any of the tax gap estimates. IRS officials stated that that they continue to try to identify a value for those components without estimates, such as corporation income, excise tax nonfiling, and excise tax underreporting, but have not yet found a sufficiently reliable data source nor method upon which to base estimates.\nTo increase its confidence in the estimates of underreported individual income, IRS uses an econometric technique called detection controlled estimation (DCE). This regression-based model controls for variables that could affect the amount of underreporting IRS examiners detected. IRS uses this adjustment because it knows its examiners do not detect all underreported income during examinations, and therefore it adjusts the NRP data to account for such undetected income when estimating the tax gap. The statistical technique estimates the noncompliance detected by a hypothetical “best practices” examiner—an ideal that is unattainable—and then statistically estimates the noncompliance detected by the hypothetical examiner to adjust upward the findings from research examinations conducted by actual examiners.\nThe DCE adjustment accounts for more than half (about $150 billion) of the total individual income tax underreporting estimate. IRS also used the DCE adjustment for the self-employment tax estimates used in the employment tax underreporting estimate. Appendix III provides more information on the extent to which DCE adjustments contributed to the 2008–2010 tax gap estimate.\nIRS has taken steps to improve the tax gap estimate. For example, IRS used an updated methodology to calculate the estimated nonfiling amount for the 2008–2010 estimate that combined two prior methodologies. Specifically, IRS expanded how it matches information between the U.S. Census Bureau’s annual Current Population Survey and IRS data to estimate the amount of taxes that were not filed. IRS believes this updated methodology allows it to create a better matched dataset and identify nonfilers more accurately. See appendix IV for details on changes to IRS’s tax gap methodology.\nIRS plans to release its next tax gap estimate in 2019 to cover tax years 2011 to 2013. IRS is also undertaking several additional studies that may offer data IRS can use to improve the tax gap estimate, including these examples:\nTaxpayers’ tipping behavior: IRS is surveying taxpayers to help estimate total tip income and tipping rates by industry/occupation and by major method of payment (e.g., credit card, debit card, and cash).\nLimited studies on C corporations and other midsize corporations: IRS studied compliance of C corporations with assets less than $250,000 and with a balance sheet, and corporations with assets of $10 to $50 million for tax year 2010. These studies plan to identify potential areas of noncompliance.\nPartnership misreporting pilot: In 2016, IRS initiated this study to measure reporting compliance for certain partnerships, as well as to estimate tax misreported at the taxable partner level as a result of partnership misreporting. This study was initiated in response to a recommendation from a prior report.\nNRP employment tax estimates: As previously mentioned, IRS is determining how it will use the NRP employment tax study it concluded in 2017 to improve the tax gap estimates.", "IRS’s current strategic plan (2014–2017) discusses general approaches to make voluntary compliance easier for taxpayers and to ensure taxes owed are paid. However, in some areas, the plan does not include specific tactics for improving compliance strategies. Rather, it addresses the elements of voluntary compliance and enforcement actions through two of its goals:\nDelivering high-quality and timely service to reduce taxpayer burden and encourage voluntary compliance.\nEffectively enforcing the law to ensure compliance with tax responsibilities and combat fraud.\nIRS officials stated the strategic plan goals are a component of IRS’s Future State—which is a vision for agency-wide operations that aims to improve services across different taxpayer interactions such as individual account assistance, exams, and collections—and are directly reflected in three of its six themes: facilitate voluntary compliance by empowering taxpayers with secure innovative services, tools, and support; understand noncompliant taxpayer behavior, and develop approaches to deter and change it; and select highest value work using data analytics and a robust feedback loop.\nAccording to IRS officials, the remaining themes support these goals indirectly by seeking to improve IRS’s effectiveness. IRS officials noted the IRS Future State vision has outlined two measures that will support the overall goal of increased compliance. The first will be the percentage of compliance issues resolved within 1 year of filing. The second is the percentage of taxpayers with recurring compliance issues. However, IRS has not yet determined the target levels for these goals. According to officials, the levels for these goals will be published with the next IRS strategic plan (2018–2022), which IRS is scheduled to release in mid- 2018.", "IRS previously set or acknowledged quantitative goals to improve voluntary compliance. However, IRS has since moved away from that approach. In 2005, we recommended that IRS establish a long-term quantitative voluntary compliance goal for individual income tax underreporting and for tax underpayment, as well as for other areas of noncompliance. IRS agreed with the concept of our recommendation and, in response, established a voluntary compliance rate goal of 85 percent by 2009, which was published in IRS’s fiscal year 2007 budget request.\nIn 2006, Treasury issued its Comprehensive Strategy for Reducing the Tax Gap, with a seven-component strategy for reducing the tax gap: (1) reduce opportunities for evasion, (2) make a multiyear commitment to research, (3) continue improvements in information technology, (4) improve compliance activities, (5) enhance taxpayer service, (6) reform and simplify the tax law, and (7) coordinate with partners and stakeholders. In 2007, IRS developed a more detailed report that emphasized the same seven components outlined in the Treasury report and also outlined projects, initiatives, legislative proposals, and other actions designed to combat the sources of noncompliance.\nIn the 2007 report, IRS acknowledged the goal set by the then Chairman of the Senate Finance Committee for IRS to meet a 90 percent voluntary compliance rate by tax year 2017 and the goal set by the IRS Oversight Board of 86 percent by tax year 2009. In 2009, IRS published another report that followed up on the efforts discussed in the 2006 and 2007 Treasury and IRS reports. However, IRS has not published any reports since that time that focus on goals for reducing the tax gap.\nIn 2012, Treasury, along with IRS, set an agency priority goal to increase voluntary tax compliance from 83.1 to 86 percent by September 30, 2013. However, Treasury and IRS decided not to renew the agency priority goal because they said the measure did not satisfy the criteria of having indicators and quarterly milestones against which to track process or being able to determine whether the goal has been achieved by the end of a 2-year period, as established by the Office of Management and Budget. Since the tax gap estimates are only updated every few years, Treasury and IRS officials said there was no way for Treasury or IRS to show improvements or declines in meeting the goal on a quarterly basis or over the 2-year goal term. More recently, IRS officials told us that while they want to achieve a high level of voluntary compliance, neither IRS nor Treasury has set a recent high level department- or agency-wide quantitative goal aimed at reducing the tax gap or increasing voluntary compliance.\nEstablishing clear compliance goals and measuring progress toward them benefit both IRS and external stakeholders and are consistent with the results-oriented performance management principles set forth in the Government Performance and Results Act of 1993 and the GPRA Modernization Act of 2010. As we have previously reported, setting long-term strategic goals is essential for results-oriented management, because such goals explain in greater specificity the results an agency is intending to achieve. The goals form a basis for an organization to identify potential strategies for fulfilling its mission and for improving its operations to support achievement of that mission. Directly aligning strategic goals and strategies for achieving those goals is important for assessing an agency’s ability to achieve those goals. Further, when program results could be influenced by external factors, agencies can use intermediate goals and measure to identify the program’s discrete contribution to a specific result.\nIRS has moved away from specific numeric goals to improve compliance because it now believes there are limited benefits to them. According to IRS officials, IRS actions alone do not determine the level of taxpayer compliance and there are also several challenges associated with establishing meaningful and useful compliance goals. IRS officials reported that many of these challenges are due to the tax gap only being estimated every few years. As a result, fluctuations in the estimate over time may not be generally attributed to changes in compliance behavior but the fluctuations might instead result from the imprecision of the estimates or updated methodologies.\nAccording to IRS, changes in the economy may also have an effect on tax compliance rates. For example, a downturn in the economy would likely result in less tax needing to be paid, but it might also cause some taxpayers to comply less than they otherwise would. Further, separating those two effects would be difficult, particularly given the unobserved nature of most noncompliance. Finally, IRS officials stated other factors, such as IRS services, enforcement efforts, evolving social norms, or changes in legislation, may affect the overall compliance rate.\nAlthough IRS may not have full control over all of the factors that affect voluntary compliance, it does have an impact on taxpayer’s compliance through its service and enforcement programs. Furthermore, IRS is not alone in not having full control over the results it seeks to achieve. A number of methods can be used to map or model the causal relationships among the inputs, processes, and outputs produced by various strategies and the forces that influence achievement of outcomes, such as results mapping and logic modeling. Recognizing that outside influences may present risks or challenges to achieving outcomes, OMB Circular Number A-11 states that while agencies cannot mitigate all risks related to achieving strategic objectives and performance goals, they should identify, measure, and assess challenges related to mission delivery, to the extent possible.\nWe have previously reported that setting long-term quantitative goals for IRS offers several benefits. First, compliance goals coupled with periodic measurements of compliance levels would provide IRS with a better basis for determining to what extent its various service and enforcement efforts contribute to compliance. Second, long-term, quantitative goals would help IRS consider new strategies to improve compliance, especially since these strategies could take several years to implement. Third, focusing on intended results can promote strategic and disciplined management decisions that are more likely to be effective because managers who use fact-based performance analysis are better able to target areas most in need of improvement and to select appropriate interventions. Fourth, agency accountability can be enhanced when both agency management and external stakeholders—such as Congress—can assess an agency’s progress toward meeting its goals.\nLikewise, a survey of the Organization for Economic Cooperation and Development countries and other advanced economies found that some governments are paying increased attention to estimating tax gaps for their major types of taxes. Several countries shared their quantitative goals for reducing the tax gap or increasing their tax revenue with the survey. For example, Denmark set a target to ensure that the tax gap does not exceed 2 percent of estimated total tax liability.\nWithout long-term, quantitative voluntary compliance goals and related performance measures, it will be more difficult for IRS to determine the success of its strategies, adjust its approach when necessary, and remain focused on results, especially since factors that affect compliance change over time. Having compliance goals as IRS has had in the past, coupled with data, would provide a solid base upon which IRS could develop a more strategic, results-oriented approach to improving compliance.", "IRS officials told us tax gap data are used as a high-level overview of tax compliance. IRS officials also stated they use the underlying tax gap data (i.e., NRP data and other data) in several ways to update compliance efforts. However, IRS has not documented a comprehensive strategy that shows, for example, how it intends to analyze and use the tax gap data, particularly from the NRP, to develop or improve compliance programs.\nIRS officials told us they use the NRP data to study specific compliance behaviors. For example, IRS has studied taxpayer behavior in claiming the Earned Income Tax Credit (EITC), the child tax credit, and the additional child tax credit. Sometimes these studies are used to develop legislative proposals that are included as part of the annual budget process and outlined in Treasury’s annual revenue proposals. Officials stated the legislative proposals are based on the knowledge of compliance derived from analysis of NRP data and they are organized into themes, such as reducing the tax gap, improving voluntary compliance, or improving tax administration. However, these revenue proposals are requests for changes to the tax laws and, ultimately, it is at Congress’s discretion whether to enact them. IRS officials reported that other times NRP data are used to compute the annual improper payment rate for the EITC. According to officials, IRS also uses these data to annually categorize the root causes of EITC noncompliance.\nIRS uses the NRP data to update compliance plans by updating the Discriminate Function (DIF) formulas. DIF formulas are designed to score returns for the likelihood that the tax reported on the return is significantly underreported. DIF scores help IRS ensure that noncompliant taxpayers are more likely to be selected for examination and compliant taxpayers are less likely to be unnecessarily examined. IRS determines DIF scores for individual income, small corporation income, partnership, and S corporation returns.\nIRS officials described high-level concepts of how the various NRP and other studies contribute to compliance and enforcement strategies.\nOfficials from IRS’s Office of Research, Applied Analytics, and Statistics (RAAS) said they think the various uses of the NRP are widely known from general documentation about the NRP and its study design. RAAS officials also noted the fiscal year 2009 budget justification that led to special funding for the NRP still reflects IRS’s current strategy for undertaking various NRP studies. Further, IRS officials pointed us to documentation from the 2000s that discussed a need for a multiyear research commitment and IRS’s goal to move NRP studies beyond the individual income tax to include other taxes. We previously recognized IRS’s commitment to multiyear research and have noted the gains it has made in regularly estimating compliance. Our analysis of the decade-old documents found evidence of a commitment to research that generally seemed sufficient for that period.\nHowever, IRS officials did not provide us more recent documents that describe its current efforts to study compliance or show how it plans to use NRP data to update compliance strategies. IRS officials also provided us with business plans for some of their other business units and divisions. The plans we reviewed noted, at a high level, that data and analysis will be used to improve workload selection but did not discuss how specific research efforts or the results of those efforts would be integrated into the missions.\nThe Internal Revenue Manual section on the NRP states that IRS needs to measure taxpayer compliance with federal income tax laws along with contributing factors so that customer-focused programs and services can be enhanced or developed and so that compliance information and tools can be improved. A 2001 NRP prospectus states the NRP will help to increase public confidence in the fairness of our tax system by helping IRS identify where compliance problems occur and focus its resources accordingly. Further, it states that for strategic planning and budget purposes, IRS requires regular estimates of compliance. The NRP research efforts support this critical need. According to IRS, the NRP will also improve IRS’s ability to detect noncompliance; reduce the burden of unnecessary IRS contacts on compliant taxpayers; and support the strategic goals, program development, and resource allocation of IRS operating divisions.\nUsing quality information, such as NRP data, to achieve the agency’s objectives is one of the 17 principles for internal controls. Further, the standards for internal controls also recognize documentation is a necessary part of an effective system, but the level and nature of documentation vary based on the size of an entity and the complexity of the operational process. Documentation is required to demonstrate the design, implementation, and operating effectiveness of a system. Considering the size and relative importance of the tax gap, documenting a strategy for how IRS plans to use NRP data to reduce the tax gap would be consistent with internal controls. However, without a strategy that provides an overall picture of how NRP data are used, it may be difficult for Congress and other decision makers to understand the merits of what they are being asked to fund. Further, without developing and documenting a strategy for incorporating the results of NRP data, IRS risks not fully leveraging the compliance data it collects or not allocating enforcement resources in the most cost-effective manner.\nWe have a long-standing history of reporting on the need for IRS to develop a comprehensive compliance strategy: In 1994, we concluded that until IRS produces a comprehensive compliance strategy, existing data could be used as part of an interim compliance strategy that directs resources at the most noncompliant taxpayers. We found that using such a starting point, IRS could focus more of its efforts on highly noncompliant areas, such as small corporation income and sole proprietorship income that made up almost a third of the tax gap.\nIn 2005, we concluded that reducing the tax gap will be a challenging task given persistent levels of noncompliance and will not likely be achieved through a single solution. Rather, the tax gap must be attacked on multiple fronts and with multiple strategies over a sustained period, thus building a foundation to help taxpayers voluntarily comply.\nBetween 2005 and 2007, we testified six times on the need for IRS to develop a strategy to attack the tax gap on multiple fronts with multiple approaches.\nIn 2007, we reported on the need for IRS to develop a strategy to address noncompliant sole proprietor income, which accounts for a significant share of the tax gap.\nFurther, documenting a strategy for using NRP data to guide compliance efforts would be consistent with two key criteria for removal from the High-Risk List:\nAction plan: A corrective action plan exists that defines the root cause and solutions and that provides for substantially completing corrective measures, including steps necessary to implement solutions we recommended.\nDemonstrated progress: Ability to demonstrate progress in implementing corrective measures and resolving the high-risk area.", "The nation’s long-term fiscal projections show that the federal government is on an unsustainable fiscal path. One way to help improve the nation’s fiscal position would be to reduce the tax gap. Reducing the tax gap will be a challenging task given persistent levels of taxpayer noncompliance. However, even modest reductions would yield significant financial benefits and help improve the government’s fiscal position.\nIRS has shown a continued commitment to study sources of noncompliance and has made strides in improving NRP and other tax gap data. However, additional efforts could further assist IRS in addressing the tax gap. A long-term, quantitative goal for improving voluntary compliance may provide IRS with a concrete target the agency can use in fulfilling its mission. Without a quantitative goal, it will be more difficult for IRS to determine the success of its strategies, adjust its approach when necessary, and remain focused on results, especially since factors that affect compliance change over time. Likewise, a strategy that outlines how IRS plans to use NRP data to update compliance strategies would help IRS determine resource tradeoffs and more fully leverage the investment it makes in compliance research, while providing Congress with a better understanding of the merits of the research it is being asked to fund.", "We are making the following two recommendations to IRS: The Commissioner of Internal Revenue should re-establish long-term, quantitative goals for improving voluntary compliance. (Recommendation 1)\nThe Commissioner of Internal Revenue should instruct the appropriate officials to develop and document a strategy that outlines how IRS will use National Research Program data to update compliance strategies that could help address the tax gap. (Recommendation 2)", "We provided a draft of this report to the Commissioner of Internal Revenue. IRS provided written comments, which are summarized below and reprinted in appendix V. IRS also provided technical comments, which we incorporated where appropriate.\nIRS disagreed with our recommendation that it re-establish long-term, quantitative goals for improving voluntary compliance. In its letter, IRS stated that the voluntary compliance rate is ill-suited as a strategic or performance metric for IRS for various reasons. For example, IRS stated that improving voluntary compliance, determining the success of its strategies, and adjusting its approach could be accomplished in the absence of a quantitative goal. However, as we note in the report, setting long-term strategic goals is essential for results-oriented management, because such goals explain in greater specificity the results an agency is intending to achieve. Further, focusing on intended results can promote strategic and disciplined management decisions that are more likely to be effective because managers who use fact-based performance analysis are better able to target areas most in need of improvement and to select appropriate interventions.\nIRS also stated that its actions alone do not determine the level of voluntary compliance, which is determined by the interaction of many factors, such as taxpayer behavior, tax law complexity, and IRS resources. We agree that IRS may not control all factors that affect voluntary compliance. However, IRS does influence taxpayer compliance through its service and enforcement programs. Furthermore, as we point out in the report, while agencies cannot mitigate all outside influences that may present risks or challenges to achieving outcomes, they should identify, measure, and assess such challenges to the extent possible. Given the benefits of setting long-term quantitative goals—as discussed in this report—we continue to believe it is prudent for IRS to establish such goals.\nIRS agreed with our recommendation that it develop and document a strategy that outlines how IRS will use National Research Program data to update compliance strategies that could help address the tax gap.\nAs 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 Chairmen and Ranking Members of other Senate and House committees and subcommittees that have appropriation, authorization, and oversight responsibilities for IRS. We will also send copies of the report to the Commissioner of Internal Revenue and other interested parties. In addition, this report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff has any questions about this report, please contact me at (202) 512-9110 or [email protected]. Contact points for our offices of Congressional Relations and Public Affairs are on the last page of this report. GAO staff members who made major contributions to this report are listed in appendix VI.", "Our objectives were to determine (1) the main drivers of the tax gap; (2) the Internal Revenue Service’s (IRS) confidence in the tax gap estimates; (3) IRS goals, if any, for reducing the tax gap; and (4) the extent to which IRS uses tax gap estimates and underlying data to develop strategies and actions to reduce the tax gap.\nTo determine the main drivers of the tax gap and IRS’s confidence in the estimates, we reviewed IRS’s tax gap estimates and underlying data; IRS technical papers and reports; third-party reviews of the data; and past GAO and Treasury Inspector General for Tax Administration reports on the 2001, 2006, and 2008–2010 tax gap estimates. We also interviewed officials from IRS’s Office of Research, Applied Analytics, and Statistics (RAAS) who are responsible for estimating the tax gap. We determined that IRS’s tax gap and compliance estimates were sufficiently reliable for the purposes of this report, particularly since IRS already has publicly released its tax gap estimates and disclosed their limitations. These purposes include discussing the major tax gap components, the orders of magnitude for various components, and IRS’s opinions about the certainty of its estimates.\nTo determine IRS’s goals for increasing voluntary compliance, we reviewed IRS’s and the Department of the Treasury’s (Treasury) strategic plans and Treasury’s General Explanations of the Administrations Fiscal Year Revenue Proposals (commonly referred to as the Green Book) from 2011 to 2017. We also reviewed other IRS and Treasury documentation, such as the strategies for improving voluntary compliance that were developed in the mid-2000s. Additionally, we reviewed Treasury’s agency priority goals, including the goal it set in 2012 to increase voluntary compliance. We also reviewed the statutory requirements for agency performance goals under GPRAMA. We interviewed Treasury officials in the Office of Tax Analysis and the Office of Strategic Planning and Performance Improvement about prior goals that were set and the goal- setting process. We interviewed IRS officials responsible for developing strategies and establishing goals to reduce the tax gap, specifically officials in the Deputy Commissioner’s Office for Service and Enforcement and the Small Business/Self-Employed, Large Business and International, and Wage and Investment divisions.\nTo determine the extent to which IRS uses the tax gap and other underlying data to update compliance efforts, we requested documentation on any plans or strategies that show how the various tax gap and other compliance studies work together toward a larger compliance strategy. We found that the agency had not developed these documents. We interviewed staff from the Deputy Commissioner’s Office for Service and Enforcement and RAAS about the agency’s plans to use tax gap data and other compliance studies when developing compliance strategies.\nTo show additional detail on aspects of compliance using the same data upon which the individual income tax underreporting tax gap estimates are based, we examined IRS’s tax gap estimates for tax years 2008– 2010 and the underlying data from its National Research Program (NRP) study of individual income tax returns. This information is presented in appendix II. Unlike other IRS examinations, NRP examinations can be used to estimate taxpayer reporting compliance because they are drawn from a stratified, statistically representative sample of the population of individual income tax returns. We interviewed IRS officials from RAAS about their research and analysis of the NRP data, and we gathered related documentation where available. IRS officials described the quality review and data reliability processes they used to collect data from the NRP examinations.\nBecause the NRP sample was based on random selections, the sample was only one of a large number of samples that IRS could have drawn. Since each sample could have provided different estimates, we express our confidence in the precision of our estimates based on the sample as a 95 percent confidence interval plus or minus a margin of error. This is the interval that would contain the actual population value for 95 percent of the samples that could have been drawn. The estimates presented in appendix II have margins of error of less than 10 percent or 10 percentage points. In analyzing the NRP data, we conducted several reliability tests to ensure the data we used were sufficiently complete. For example, we electronically tested the data for obvious errors. We concluded that the data were sufficiently reliable for the purposes of this report based on these steps and on our previous reviews of tax gap estimates and NRP data.\nWe conducted this performance audit from July 2016 to October 2017 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 analyzed the raw National Research Program (NRP) data for individual income tax returns, including itemized deductions, for tax years 2008–2010. These data do not account for the undetected income that the Internal Revenue Service (IRS) adjusts for when developing tax gap estimates. Therefore these data are not comparable to the tax gap data presented elsewhere in this report, but they allow additional analysis of areas of misreporting.\nTable 7 provides greater details on certain line items from the individual income tax return that align with various third-party information reporting levels determined by IRS. Line items with substantial or some information reporting tended to have lower overall misreporting percentages. Line items that had the largest percentage of taxpayers with misreported income were those for sole proprietor and farming income, both of which are subject to little to no information reporting.\nBased on the analysis of these data, we also estimate that line items with the largest mean amounts of underreporting are business sale and supplemental income or loss; the business sale line item also has the largest mean amount of overreporting, averaging $21,000 per return; and sole proprietor income and farm income have very similar misreporting data; over 75 percent of the income is misreported and, of that, over 80 percent is under reported while under 20 percent is overreported.\nWe also analyzed selected credits and deductions to determine the average noncompliance rates of these line items, as shown in table 8. Because credits and deductions offset taxpayers’ income or tax owed, taxpayers who underreported a credit or deduction overreport their tax liability or tax owed; taxpayers who overreport a credit or deduction underreport their tax liability or tax owed. However, we did not determine the extent to which misreporting was because of issues specific to how taxpayers claimed the credits and deductions or because taxpayers misreported their income, which could affect eligibility for certain credits and deductions. For example, the 2016 income limit to claim the Earned Income Tax Credit (EITC) is $39,296 for single, surviving spouse, or head of household taxpayers with one qualifying child. If IRS determined that such taxpayers who claimed the EITC and reported less than $39,296 in income on their tax returns had underreported their income in order to stay under the threshold, those taxpayers would no longer be eligible for the credit and would have overreported the credit.\nBased on the analysis of these data, we estimate that of the selected credits, EITC is the most claimed credit and about half of the time it is misreported; thirty-five percent of the time the child tax credit was misreported with about two- thirds of that being underreported, which is inconsistent with filing patterns for most of the other credits and deductions; of the selected deductions, the deduction for real estate taxes is most often claimed and about a quarter of the time it is misreported; the medical expenses line item has the highest percentage of misreporting; 80 percent of the time the deduction is overreported; and the mortgage interest deduction has the highest average overreported amount, over $4,000 per return.", "In estimating the individual income tax gap, the Internal Revenue Service (IRS) applies an econometric technique called detection controlled estimation (DCE), which is a regression-based model that controls for variables that could affect the amount of underreporting detected. The statistical technique first produces a hypothetical ‘‘best practices’’ examiner—an ideal which is unattainable—based on who conducted the examinations and the observed examination results. It then statistically estimates the noncompliance detected by the hypothetical examiner to adjust upward the findings from research examinations conducted by actual examiners. The technique estimates total undetected underreporting by imputing the average underreporting undetected by IRS’s National Research Program (NRP) examination to the detected underreporting, controlling for certain return line item characteristics. According to IRS officials, this approach is reasonable and the best currently available to attempt to estimate the full amount of underreported individual income. As shown in table 9, more than half of the underreporting component of the tax gap consists of income that IRS did not detect during examinations. DCE is not applicable to the underpayment and nonfiling components of the tax gap.", "In efforts to improve the tax gap estimates, the Internal Revenue Service (IRS) updated two areas of the 2008–2010 tax gap estimate by developing updated methodologies.\nNonfiling individual income tax: IRS summed together the total of taxpayers who do not file tax returns and those who filed late. The 2008–2010 estimate of taxpayers not filing a return was made by combining the two methods used to estimate the 2006 and 2001 tax gap estimates. In 2006, IRS used a sample of individuals not appearing on filed tax returns. In 2001, IRS conducted an “exact match” between the Census Bureau’s annual Current Population Survey and IRS data. The 2008–2010 estimate of late filers was based on the total balance due from late filed tax returns, adjusted for income reported to IRS on information returns. IRS believes its current methodology is an improvement over the 2006 estimate as it uses the population data rather than a sample, avoiding disadvantages resulting from sampling. IRS reported improvements in the Census and IRS information associated with nonfilers allowed them to create a better matched dataset and identify nonfilers more accurately.\nNonfiling self-employment data: The methodology IRS used to calculate self-employment tax nonfiling is the same that it used for individual income tax. However, for the 2008–2010 estimate, IRS changed where it reports self-employment tax nonfiling within the tax gap estimate. For the 2008–2010 estimate, this tax is now reported in the employment tax category, whereas for the 2001 and 2006 estimates it was reported in the individual income tax category. IRS officials stated that for the 2006-2010 estimate IRS decided to break self-employment out separately and report it with the employment tax because they believe it allows a more comprehensive view of employment taxes.\nIRS also updated how the underlying data supporting the tax gap are organized in two ways:\nChanges in net tax gap estimates: As previously mentioned, IRS published net tax gap estimates by each tax type (individual income, corporation income, employment, and estate tax) for the first time in the 2008–2010 estimate. IRS officials stated that they made progress by providing this data. However, IRS is unable to break out the net tax gap further by tax component because during examinations, adjustments are not categorized by component (i.e., underreporting, underpayment, and nonfiling).\nChanges in individual income underreporting: Starting in 2008– 2010, IRS modified the categories it uses to break down the individual income underreporting component. These changes affect how IRS calculates the net misreporting percentage (NMP) for individual income tax, but not how it calculates the tax gap. IRS uses the NMP to show the relationship between third-party information reporting and individual income tax reporting compliance. IRS reported the changes reflect an improvement in methodology. IRS cautions that any comparison of the 2008–2010 NMP to the 2006 NMP estimates should consider those improvements. The prior calculation method involved adding offsets to income, such as deductions, exemptions, and adjustments, which distorted the comparison across categories. IRS determined a better approach was to combine income items into categories and to report offsets to income as a separate category. (See figure 5.)", "", "", "In addition to the contact named above, Jeff Arkin (Assistant Director), James Ashley, Jehan Chase, Charles Fox, John Hussey, Donna Miller, John Mingus, Edward Nannenhorn, Cynthia Saunders, Robyn Trotter, and Elwood White made significant contributions to this report." ], "depth": [ 1, 2, 1, 2, 2, 2, 2, 1, 1, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full h2_full", "", "", "", "", "", "", "", "h0_title", "h0_full", "h2_full h1_full", "h1_full", "", "", "h3_full", "", "", "", "", "", "" ] }

{ "question": [ "How did IRS previously improve voluntary compliance?", "What does IRS now do?", "How does IRS impact on taxpayers' compliance?", "Why does the IRS need to measure taxpayer compliance?", "How does the IRS study compliance behaviors?", "Why is it important for IRS to develop a strategy for the use of NRP data?", "How is the tax gap defined?", "How is the tax gap estimate calculated?", "How does IRS estimate the tax gap for each tax type?", "Why did GAO conduct this review?", "What information is provided in this review?", "How did GAO collect information for this review?" ], "summary": [ "IRS previously set or acknowledged goals to improve voluntary compliance.", "However, IRS has since moved away from that approach. IRS officials now believe there are limited benefits to establishing goals because IRS cannot control all aspects of compliance and updated methodologies may cause fluctuations in the estimates.", "IRS does, however, have an impact on taxpayers' compliance through its service and enforcement programs. Without long-term, quantitative goals for improving voluntary compliance, it will be difficult for IRS to determine the success of its compliance efforts and adjust its approaches.", "The Internal Revenue Manual states IRS needs to measure taxpayer compliance and other factors so compliance information and tools can be improved.", "IRS uses tax gap data to study compliance behaviors and update computer formulas designed to identify tax returns with a high likelihood of noncompliance.", "Yet IRS has not documented a comprehensive strategy that shows how it intends to use NRP data to update compliance strategies. Officials said the uses of NRP are widely known from general documentation about NRP. Without developing and documenting a strategy for using the NRP data to update compliance strategies, IRS may not fully leverage the compliance data or allocate enforcement resources in the most cost-effective manner, and it may be difficult for Congress and others to understand the merits of what they are being asked to fund.", "The tax gap—the difference between tax amounts that taxpayers should have paid and what they actually paid—has been a persistent problem for decades.", "The tax gap estimate is an aggregate estimate of the five types of taxes that IRS administers—individual income, corporation income, employment, estate, and excise taxes.", "For each tax type, IRS attempts to estimate the tax gap based on three types of noncompliance: (1) underreporting of tax liabilities on timely filed tax returns; (2) underpayment of taxes due from timely filed returns; and (3) nonfiling, when a taxpayer fails to file a required tax return altogether or on time.", "GAO was asked to review IRS's tax gap estimate for tax years 2008 to 2010.", "This report provides information on (1) the main drivers of the tax gap; (2) IRS's confidence in the tax gap estimates; (3) IRS's goals, if any, for reducing the tax gap; and (4) the extent to which IRS uses tax gap estimates and underlying data to develop strategies to reduce the tax gap.", "GAO reviewed IRS tax gap data and reports and interviewed IRS officials." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 0, -1, 0, 1, -1, 0, 0 ], "summary_paragraph_index": [ 4, 4, 4, 5, 5, 5, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Global Trends", "U.S. Policy Background", "Agency Roles and Responsibilities", "The State Department's Office to Monitor and Combat Trafficking in Persons", "The President's Interagency Task Force", "Other U.S. Agencies", "United Nations Role", "State Department Reporting Requirements", "2016 TIP Interim Assessment", "2016 TIP Report", "Tier 1 Countries", "Tier 2 Countries", "Tier 2 Watch List Countries", "Tier 3 Countries", "Annual List of Countries Involved in Recruiting and Using Child Soldiers", "Report Methodology and Credibility", "Early Reactions to the 2016 TIP Report", "Funding and Assistance Issues", "Appendix. International Human Trafficking Legislation in the 114th Congress" ], "paragraphs": [ "", "Trafficking in persons, or human trafficking, refers to the subjection of men, women, and children to compelled service for the purposes of exploitation. Examples of human trafficking include trafficking for commercial sexual exploitation, including child sexual exploitation; forced labor, including bonded labor, involuntary domestic servitude, and forced child labor; and the unlawful recruitment and use of child soldiers. Reports suggest that human trafficking is a global phenomenon, victimizing millions of people and contributing to a multi-billion dollar criminal industry. It is a centuries-old problem that, despite international efforts, continues to occur in virtually every country in the world.\nOn June 30, 2016, the State Department released its latest edition of the flagship annual U.S. publication on international human trafficking, the Trafficking in Persons (TIP) Report , discussed further in the \" State Department Reporting Requirements \" section below. Briefly, the TIP Report categorized 185 countries, including the United States, into four tiers, based on their respective governments' level of effort to address human trafficking: Tier 1 (best), Tier 2, Tier 2 Watch List, and Tier 3 (worst). An additional three countries were designated as \"Special Cases\" without a tier ranking because of political instability and the inability to obtain relevant government information.\nOnly Tier 1 countries, approximately 19.5% of the countries assessed, were fully compliant with U.S.-established minimum standards to eliminate severe forms of human trafficking; the rest were considered noncompliant and varied in terms of their level of effort to improve. Among the least compliant were the 27 countries identified as Tier 3 in the 2016 TIP Report , including 8 that had previously been Tier 2 Watch List: Burma, Djibouti, Haiti, Papua New Guinea, Sudan, Suriname, Turkmenistan, and Uzbekistan. As required by law, Tier 3 countries are subjected to selected foreign assistance restrictions, unless the President determines that continuing to provide aid is in the U.S. national interest.\nThe nongovernmental organization Walk Free Foundation also provided a global evaluation of human trafficking trends in its 2016 Global Slavery Index report. The 2016 Global Slavery Index report estimated that some 45.8 million (up from 35.8 million estimated in 2014) individuals worldwide were exploited through human trafficking, forced labor, debt bondage, forced or servile marriage, or commercial sexual exploitation. In contrast to the TIP Report , which categorizes countries solely on the basis of government efforts, the Global Slavery Index also seeks to provide country-by-country estimates of people experiencing conditions tantamount to modern slavery. For example, the 2016 Global Slavery Index reported the following:\nCountries with the greatest prevalence of their population subjected to \"modern slavery\" included North Korea (for comparison, the State Department listed North Korea as Tier 3 in the 2016 TIP Report ), Uzbekistan (Tier 3), Cambodia (Tier 2), India (Tier 2), and Qatar (Tier 2 Watch List). Countries with the highest absolute numbers of people subjected to modern slavery, according to the 2016 Global Slavery Index , included India (Tier 2 in the 2016 TIP Report ), China (Tier 2 Watch List), Pakistan (Tier 2 Watch List), Bangladesh (Tier 2), and Uzbekistan (Tier 3). Countries taking the least action to address human trafficking included North Korea (Tier 3 in the 2016 TIP Report ), Iran (Tier 3), Eritrea (Tier 3), Equatorial Guinea (Tier 3), Papua New Guinea (Tier 3), Guinea (Tier 2 Watch List), the Democratic Republic of the Congo (DRC, Tier 2 Watch List), and South Sudan (Tier 3).\nSeveral other older, but nevertheless widely referenced global reports on human trafficking include a 2014 report prepared by the United Nations Office on Drugs and Crime (UNODC) and two reports prepared by the International Labor Organization (ILO). Surveying U.N. member countries, UNODC reported in 2014 that, between 2010 and 2012, 124 countries had identified trafficking victims representing 152 nationalities. The UNODC report cautioned that its estimates were minimum figures, as it is generally recognized that the actual scope and prevalence of human trafficking is far higher than officially reported. The UNODC report also revealed that trafficking operations were seemingly as diverse as they were widespread, ranging from individuals exploiting their partners or employees to highly sophisticated transnational criminal syndicates involving a large number of victims.\nIn 2012, the ILO estimated that some 20.9 million men, women, and children were subjected to forced labor, including trafficking, debt bondage, and slavery-like conditions. In 2014, the ILO followed up with an analysis of the financial value of forced labor and related trafficking on the international economy, estimating that it generated $150 billion in illegal profits annually. According to the ILO, two-thirds of this total amount stemmed from commercial sexual exploitation, while the rest resulted from forced labor. Key forced labor sectors included the construction, manufacturing, and utilities industries (generating some $34 billion in annual illicit income), followed by agriculture ($9 billion) and domestic work ($8 billion).", "The U.S. government, including Congress, has played a leading role in international efforts to combat human trafficking, particularly through the enactment of the Trafficking Victims Protection Act of 2000 (TVPA, Division A of P.L. 106-386 ) and its subsequent amendments and reauthorizations (TVPRAs of 2003, 2005, 2008, and 2013). Other related legislation has included the Child Soldiers Prevention Act of 2008 (CSPA of 2008, Title IV of P.L. 110-457 ) and Title XVII of the National Defense Authorization Act, Fiscal Year 2013 (\"End Trafficking in Government Contracting,\" P.L. 112-239 ).\nIn the 114 th Congress, trade and customs legislation addressed human trafficking, including the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (Title I of P.L. 114-26 ) and the Trade Facilitation and Trade Enforcement Act of 2015 ( P.L. 114-125 ). Other legislation on international aspects of human trafficking have also been enacted, including appropriations, the International Megan's Law to Prevent Child Exploitation and Other Sexual Crimes Through Advanced Notification of Traveling Sex Offenders ( P.L. 114-119 ); and other country-specific statutes. See Appendix for further review of legislation in the 114 th Congress.\nIn addition, recent Administrations have taken several steps to enhance U.S. responses to international human trafficking. Prior to enactment of the TVPA, in 1999, President Bill Clinton issued Executive Order 13126 on the \"Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor.\" In 2002, President George W. Bush issued National Security Presidential Directive 22 on \"Combating Trafficking in Persons.\" In 2012, President Barack Obama issued Executive Order 13627 on \"Strengthening Protections Against Trafficking in Persons in Federal Contracts.\" In remarks at the Clinton Global Initiative in September 2012, President Obama described the fight against human trafficking as \"one of the great human rights causes of our time\" and emphasized the importance of the U.S. government in leading such efforts.", "The U.S. Department of State leads federal efforts to combat human trafficking. The Secretary of State chairs the President's Interagency Task Force (PITF) on Trafficking in Persons, and the Director of the State Department's Office to Monitor and Combat Trafficking in Persons (J/TIP) chairs the Senior Policy Operating Group (SPOG), a working-level interagency entity that coordinates the U.S. government's response to human trafficking. J/TIP also administers an international anti-trafficking grants program and annually prepares, with department-wide input, the congressionally mandated TIP Report .", "The State Department's J/TIP Office is one of seven organizational units with functional policy responsibilities that report to the Under Secretary of State for Civilian Security, Democracy, and Human Rights. Congress mandated the establishment of the J/TIP Office in the TVPA of 2000 and it is currently headed by Susan Coppedge, confirmed by the Senate in October 2015. Pursuant to the TVPA, the J/TIP director is responsible for advising the Secretary of State on human trafficking matters, coordinating foreign assistance programs across the State Department and U.S. Agency for International Development (USAID), and serving as chair of the SPOG.\nIn addition, the J/TIP director oversees the annual publication of the TIP Report , required by the TVPA, as well as the administration of an international grants program for projects seeking to combat human trafficking. For FY2015, J/TIP awarded more than $18 million in grants and cooperative agreements to nongovernmental and international organizations under this program. Moreover, J/TIP supports the Secretary of State in his role as chair of the PITF, liaises with the legislative branch on human trafficking matters, and addresses human trafficking priorities in multilateral fora.", "In early January 2016, Secretary of State John Kerry convened the statutorily mandated PITF, where senior officials representing 17 federal departments, agencies, and offices provided status updates on their organization's anti-trafficking activities. Secretary Kerry committed to raising human trafficking issues at every bilateral meeting and personally calling all foreign ministers whose countries were at risk of a downgrade in the 2016 TIP Report . Other key international human trafficking issues addressed at this meeting included ongoing efforts to address supply chain transparency and implement requirements to prevent human trafficking in U.S. federal procurement supply chains. The Director of National Intelligence James Clapper reported that human trafficking has been among the intelligence community's national intelligence collection priorities since 2012 and that the National Intelligence Council intends on issuing its first-ever national intelligence estimate on human trafficking during the summer of 2016.\nIn addition to the regional bureaus, other offices within the State Department address issues related to human trafficking: the Bureau of Democracy, Human Rights and Labor Affairs (DRL); the Bureau of Population, Refugees and Migration Affairs (PRM); the Bureau of International Narcotics and Law Enforcement Affairs (INL); and the Office of Global Women's Issues. DRL, for example, leads the State Department's efforts to address child soldiers and, more generally, human rights issues, including through its annual publication Country Reports on Human Rights Practices . PRM addresses trafficking issues in the context of protecting vulnerable refugee and migrant populations from exploitation. INL supports justice sector and law enforcement capacity building, including human trafficking-related training.", "Other U.S. agencies involved in international efforts to combat human trafficking include USAID and the U.S. Departments of Labor (DOL), Justice (DOJ), Defense (DOD), and the Treasury (described below). The U.S. Government Accountability Office (GAO) and various agency inspectors general offices have also issued evaluations over the years on human trafficking-related international programming.\nUSAID: Led by USAID's Bureau for Democracy, Conflict, and Humanitarian Assistance, USAID administers foreign assistance for regional and bilateral anti-trafficking projects. In 2012, USAID released a Counter-Trafficking in Persons Policy and followed up in 2013 with a Counter-Trafficking in Persons Field Guide . DOL: DOL supports international projects to address exploitative child labor, which includes child trafficking, and sponsors research on forced labor. In December 2014, DOL released an updated list of products produced by forced or indentured child labor, pursuant to Executive Order 13126, as well as an updated list of goods produced by child labor or forced labor in 74 countries, pursuant to the TVPRA of 2005. In September 2015, DOL issued its most recent annual report on Findings on the Worst Forms of Child Labor . DOJ: With funding from the State Department and USAID, DOJ's Office of Overseas Prosecutorial Development, Assistance and Training and International Criminal Investigative Assistance Program teams provide international technical assistance and training on human trafficking-related themes, among other topics. The Attorney General is mandated to report to Congress on U.S. government activities to combat trafficking in persons for each fiscal year; the most recent report covers FY2015. DOD: Following allegations in the media regarding exploitative labor conditions in U.S. overseas contingency operations, DOD has enhanced efforts to raise awareness about human trafficking among its cadre of direct hires and contractors. DOD workforce awareness of slavery and human trafficking issues has reportedly increased from 72% in 2008 to nearly 90% in 2015. Treasury: The Treasury Department's Office of Foreign Assets Control administers country-specific sanctions programs that authorize the freezing and blocking of assets of specially designated individuals associated with the recruitment and use of child soldiers, among other concerns, in Burundi, Central African Republic, the Democratic Republic of Congo, and Somalia.", "Internationally, the U.S. government is party to multiple treaties related to human trafficking that variously require participating countries to criminalize all forms of human trafficking, support international efforts to protect victims, prosecute traffickers, and prevent opportunities for traffickers to exploit. In 2000, the United Nations (U.N.) adopted the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children (hereinafter U.N. Trafficking Protocol), a supplement to the U.N. Convention Against Transnational Organized Crime. Since the U.N. Trafficking Protocol entered into force in 2003, the international community has seen an uptick in the number of countries enacting laws that prohibit and criminally punish human trafficking. The State Department reported that 30 countries passed new or amended legislation in 2015 to combat human trafficking.\nIn September 2015, U.N. member states agreed on an updated set of Sustainable Development Goals (SDGs) that included goals to combat trafficking of women and children and to end modern slavery, forced labor, and all other forms of human trafficking. In December 2015, the U.N. Security Council held an unprecedented debate on human trafficking in armed conflict. The debate addressed sexual exploitation in the context of U.N. peacekeeping missions, possible risks in the U.N. procurement and supply chain that may contribute to TIP, and the enslavement of women by the terrorist group known as the Islamic State, ISIS, ISIL, or Daesh. Human trafficking victim identification and support was also featured in the context of the current international refugee crisis at the May 2016 World Humanitarian Summit.", "Pursuant to the TVPA, as amended, the State Department has annually reported on government responses to human trafficking in its TIP Report since 2001. As briefly outlined in the introduction, countries covered in the TIP Report , including the United Sates, receive one of four possible ranking designations: Tier 1 (best), Tier 2, Tier 2 Watch List, and Tier 3 (worst). Only Tier 1 countries are fully compliant with the TVPA's minimum standards (see Text Box below), while the rest are noncompliant and vary in terms of the level of effort their governments have exhibited to improve. Also published in conjunction with the annual TIP Report is a list of countries involved in recruiting and using child soldiers. Countries designated as Tier 3 or identified as recruiting or using child soldiers may, in turn, be subject to restrictions on certain types of U.S. foreign assistance. The annual T IP Report is due each year to Congress on June 1. To assess anti-trafficking progress among a subset of higher risk countries, known as the special watch list, the TVPA requires the State Department to issue each February an Interim Assessment . A discussion of the 2016 Interim Assessment and TIP Report follows.", "On March 2, the Department of State submitted to Congress the 2016 TIP Interim Assessment report. The report is required to be prepared by the Secretary of State no later than February 1 each year. It is to include \"an assessment of the progress that each country on the special watch list... has made since the last annual report.\" The TIP Interim Assessment describes each country's recent efforts to combat human trafficking, with roughly equal amount of discussion of the country's accomplishments and remaining challenges. Based only on the descriptions in the Interim Assessment reports, it would be difficult to predict what tier ranking the countries would receive in the subsequent annual TIP Report .", "On June 30, the Department of State released its 2016 TIP Report . It reviewed 185 countries, and an additional three \"special cases\" (i.e., Libya, Somalia, and Yemen) based on their respective governments' level of effort to address human trafficking.", "The 36 countries identified as Tier 1 represent the only countries in the world deemed to be fully compliant with U.S.-established minimum standards to eliminate severe forms of human trafficking; the rest are noncompliant and vary in terms of their level of effort to improve (see Table 1 ). Ranked in the TIP Report since the 2010 edition, the United States is among the Tier 1 countries. New or returned to the Tier 1 list in the 2016 TIP Report are Colombia, Cyprus, Georgia, Lithuania, Philippines, Slovenia, and St. Maarten.", "Seventy-eight countries, or some 42.2% of all countries listed in the 2016 TIP Report , are ranked as Tier 2 (see Table 2 )—a category that includes countries that are not fully compliant with the minimum standards but are \"making significant efforts to bring themselves into compliance.\" Thirteen countries are new to the Tier 2 list in 2016, while two—Luxembourg and Macedonia—were downgraded from Tier 1 in 2015 to Tier 2 in this year's report.", "The Tier 2 Watch List countries comprise those not in compliance with the minimum standards for the elimination of human trafficking—and those at risk of sliding down to Tier 3, the worst category (see Table 3 ). Countries on the Tier 2 Watch List include those that have failed to provide evidence of increasing efforts to combat human trafficking compared to the previous year, or those in which evidence of significant efforts to combat human trafficking is based on the country's commitments to take additional steps in the coming year. In 2015, two countries were upgraded from Tier 3 to Tier 2 Watch List (Kuwait and Thailand). The majority of countries on Tier 2 Watch List (25 of 44) are not new to the list in 2016.\nAs required in law (22 U.S.C. 7107), countries are to be demoted to Tier 3 after two years on the Tier 2 Watch List. The President may waive the automatic downgrade to Tier 3 for up to two more years if the country has a written plan to achieve Tier 2 status, including allocation of sufficient resources to implement such a plan. After four consecutive years on the Tier 2 Watch List, however, the State Department must determine whether an upgrade to Tier 2 is warranted or whether a downgrade to Tier 3 is required. Seven countries in the 2016 TIP Report have reached the maximum of four consecutive years on Tier 2 Watch List: Guinea, Mali, Solomon Islands, Sri Lanka, Tanzania, Tunisia, and Ukraine.", "Countries deemed to be the least compliant with the minimum standards for the elimination of human trafficking—those that do not comply with such standards and are not making significant efforts to bring themselves into compliance—are designated in the TIP Report as Tier 3. In 2016, 27 such countries were so identified (see Table 4 ), including 8 that had previously been Tier 2 Watch List (Burma, Djibouti, Haiti, Papua New Guinea, Sudan, Suriname, Turkmenistan, and Uzbekistan). As required by law, Tier 3 countries are subjected to selected foreign assistance restrictions, unless the President determines that continuing to provide such aid is in the U.S. national interest. For FY2016, based on last year's report, the President in October 2015 fully waived these restrictions to 13 countries and partially waived them to 8 countries; aid to 2 countries was restricted pursuant to U.S. anti-trafficking requirements. Presidential determinations for FY2017 are expected to be announced in the fall of 2016.", "Pursuant to the Child Soldiers Prevention Act of 2008 (CSPA of 2008, Title IV of P.L. 110-457 ), the State Department has since 2010 annually published in the TIP Report a list of countries that recruit or use child soldiers in their armed forces, or that harbor nongovernment armed forces that recruit or use child soldiers. The State Department identified 10 such countries in 2016, up from 8 in 2015: Burma (Tier 3 in the 2016 TIP Report ), the Democratic Republic of Congo (DRC, Tier 2 Watch List), Iraq (Tier 2 and one of the two new countries on the list), Nigeria (Tier 2), Rwanda (Tier 2 Watch List and also new to the list), Somalia (unranked), South Sudan (Tier 3), Sudan (Tier 3), Syria (Tier 3), and Yemen (unranked). As required by law, listed countries are subjected to selected security assistance restrictions, unless the President determines that continuing to provide such aid is in the U.S. national interest. For FY2016, based on last year's report, the President in September 2015 fully waived these restrictions to three countries (DRC, Nigeria, and Somalia) and partially waived them to one (South Sudan). Presidential determinations for FY2017 are expected to be announced in the fall of 2016.", "The 2016 TIP Report covers actions taken by governments from April 1, 2015, to March 31, 2016. According to the State Department, information used to prepare the report is based on various sources. Tier ranking designations are not based on a concrete formula, but rather country-specific considerations that leave State Department officials with considerable discretion.\nThe report is produced by the State Department's J/TIP Office. According to a 2012 report on J/TIP by the State Department Inspectors General (OIG), the TIP Report is unusual for the central role that Washington plays in the drafting of the report. As described by the State Department's OIG, the typical report drafting cycle is as follows: J/TIP sends a request to all U.S. overseas posts each December for information to use in the TIP Report . At the same time, J/TIP staff contact nongovernmental organizations (NGOs) to request similar information. Between mid-February and the end of March, J/TIP drafts the country summaries and proposed tier rankings for the TIP Report . A draft of the report is cleared by the Office of the Legal Adviser and J/TIP's Director in early to mid-April and is shared with regional bureaus and offices. Disagreements over facts and tier rankings occasionally arise and require resolution before the TIP Report is published; ultimately, resolution may be made by the Secretary of State. According to the 2012 OIG report, \"the number of tier-ranking disputes between regional bureaus and J/TIP declined from 46 percent of all countries ranked in 2006 to 22 percent of those ranked in 2011.\"\nOn August 3, 2015, a Reuters news article reported that tier-ranking disputes for the 2015 Trafficking in Persons Report involved 17 countries and that the J/TIP Office \"won only three of those disputes, the worst ratio in the 15-year history of the unit.\" The article indicated that countries whose rankings were disputed included Malaysia, Cuba, China, India, Uzbekistan, and Mexico—all of which reportedly received better rankings than the J/TIP Office had recommended. In recent testimony to the Senate Foreign Relations Committee, J/TIP Director Coppedge acknowledged that some tier rankings were also disputed for the 2016 TIP Report , but she would not divulge publicly which countries were the subject of such disputes and whether the J/TIP Office's ranking recommendations had prevailed.", "Although many observers view the annual TIP Report as a credible reflection of global efforts to combat human trafficking, some have criticized the methodology used to evaluate foreign country efforts and assign tier rankings. As is often the case with the annual release of the T IP Report , several countries whose rankings declined were critical of the State Department's ranking decisions and methodology. Among those critical, dismissive, or disappointed this year were Belarus, Burma, Hong Kong, Macau, North Korea, and Rwanda. In contrast, those governments that received improved ratings were more likely to point toward the report as a credible indicator of international commitments to combat human trafficking. Others noted that the TIP Report ranking methodology, dependent on accurate and fulsome data on combating human trafficking, contains an inherent bias toward wealthier countries that can afford such investments.\nIn 2015, the debate focused in particular over Malaysia's tier ranking. After four consecutive years on the Tier 2 Watch List from 2010 through 2013, it was downgraded, as required by law, to Tier 3 for lack of significant progress to combat human trafficking. In 2015 and 2016, however, the State Department ranked Malaysia as a Tier 2 Watch List country. The timing of the State Department's upgrade in 2015 was criticized by outside advocacy groups and many Members of Congress as politically motivated, despite Administration denials, to the Trans-Pacific Partnership (TPP) trade deal negotiations. Pursuant to the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (Title I of P.L. 114-26 ), the authorities for fast-tracking the deal would not be applicable to Tier 3 countries. Following the June 30 release of the 2016 TIP Report , several Members of Congress continued to express incredulity over Malaysia's ranking, which remained on the Tier 2 Watch List for a second consecutive year. Others cited Malaysia's ranking to claim that the State Department's rankings remained swayed by political considerations.\nOn the whole, however, many observers recognized the State Department's attempts to mend its reputation, following last year's groundswell of criticism over Malaysia's rating in the TIP Report . The State Department was widely praised by observers for what they viewed as an accurate portrayal of human trafficking problems in Burma and Uzbekistan, both rated Tier 3 in the 2016 TIP Report . In congressional testimony on the 2016 TIP Report , a civil society organization witness additionally praised the State Department for keeping Qatar on the Tier 2 Watch List.\nThe State Department nevertheless received criticism for other rankings, including of Thailand, which some suggested should have been rated Tier 3 instead of Tier 2 Watch List. In the case of Thailand, many acknowledged the military regime's efforts to prioritize anti-human trafficking in the past year; however, others viewed the upgrade as premature. Some also raised suspicions that Thailand's Tier 2 Watch List rating could help the Obama Administration achieve other political objectives, including support from Southeast Asia on disputes with China over its territorial claims in the South China Sea as well as prospects for potentially joining the TPP. Some noted the possibility that the State Department's decision to upgrade Thailand could also affect the European Union's ongoing review of Thailand's illegal fishing and labor practices as well as improve Thai fish exports. In the case of other countries, such as Cuba, China, and India, some have challenged the State Department's assessments and called for reform of the ranking system.\nSome observers also criticized the State Department for the absence of Afghanistan on its list of countries using child soldiers, a category also published in the TIP Report . Although the list grew in 2016 to include two additions (Iraq and Rwanda) to the 10-country list, Afghanistan was not among them. Although the State Department acknowledged reports that the Afghanistan Local Police (ALP) is a government security force and that media outlets reported on their recruiting and sexually abusing children under the age of 18, the TIP Report noted that the ALP \"falls outside of the armed forces of the country as defined by the CSPA [Child Soldiers Prevention Act of 2008].\"", "As Congress continues to evaluate U.S. efforts to address human trafficking internationally, foreign assistance funding will remain a central focus. As required by the TVPA, as amended, countries that receive a Tier 3 ranking in the TIP Report are ineligible to receive nonhumanitarian, nontrade-related aid in the following fiscal year. In addition, pursuant to the CSPA, countries identified in the TIP Report as having recruited or used child soldiers are additionally restricted from receiving certain U.S. security assistance in the following fiscal year. Both provisions authorize the President to waive restrictions on aid in cases where the continuation of aid would promote U.S. national interests that supersede anti-trafficking policy goals. For FY2017, the President is expected to decide in the fall which restrictions will be made.\nFY2016 funding to address human trafficking internationally is governed by the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), in which Congress provided for not less than $72 million in State Department and foreign assistance efforts to combat human trafficking internationally. This amount included $12 million to support J/TIP personnel and administrative costs out of the Diplomatic and Consular Programs (D&CP) account. It also allocated $60 million in foreign assistance funding to address human trafficking out of the Development Assistance (DA) account ($9.8 million), the Economic Support Fund (ESF) account ($11.2 million), and the International Narcotics Control and Law Enforcement (INCLE) account ($39 million).\nAmong the anti-human trafficking programs funded with U.S. foreign assistance is a J/TIP-administered international grant program, through which J/TIP awarded more than $18 million in grants and cooperative agreements in FY2015 to NGO and international organizations. In addition, the J/TIP Office manages efforts to establish Child Protection Compact (CPC) Partnerships, the first of which was agreed to with the government of Ghana in June 2015; in October 2015, the J/TIP Office announced grants totaling $5 million in support of the CPC Partnership with Ghana.\nAs part of the FY2016 appropriations, P.L. 114-113 also specifically committed funding to address human trafficking in Guatemala ($5 million) and child trafficking through child protection compacts ($5 million in INCLE funds). The act further specified that not less than $4 million (in INCLE funds) may be appropriated for DNA forensic technology programs to combat human trafficking in Central America. If the End Modern Slavery Initiative Act of 2015 ( S. 553 , as reported to the Senate) is enacted, P.L. 114-113 would provide, in addition to the $60 million appropriated in foreign assistance for anti-trafficking purposes, $25 million, made available out of the DA and INCLE accounts. This additional funding would support grants to reduce the prevalence of modern slavery globally. The grants would be administered by S. 553 's newly envisioned independent, nonprofit corporation to be known as the End Modern Slavery Initiative Foundation.\nP.L. 114-113 included several additional provisions related to international human trafficking, including reporting requirements on the obligation and expenditure of counter-trafficking funds and a prohibition in Burma on the use of funds for military training and operations involving child soldiers. In addition, the act required that training of foreign security forces and justice-sector officials address issues related to the prevention of response to gender-based violence and human trafficking. It also limited the obligation of some funds for Central America until the Secretary of State certifies and reports that the governments of El Salvador, Guatemala, and Honduras are taking effective steps to combat human smuggling and trafficking.\nIn February 2016, the State Department released its congressional budget justification for State, Foreign Operations, and Related Programs in FY2017, requesting $7.4 million to fund J/TIP out of the D&CP account and an additional $48.7 million in foreign operations programming.", "The following list provides an overview of bills in the 114 th Congress that pertain, at least in part, to international dimensions of trafficking in persons.\nEnacted Legislation\nH.R. 515 . International Megan's Law to Prevent Child Exploitation and Other Sexual Crimes Through Advanced Notification of Traveling Sex Offenders—became P.L. 114-119 .\nH.R. 644 . Trade Facilitation and Trade Enforcement Act of 2015—became P.L. 114-125 . See in particular provisions amending the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 and the Tariff Act of 1930 and the Conference report ( H.Rept. 114-376 ).\nH.R. 757 . North Korea Sanctions and Policy Enhancement Act of 2016—became P.L. 114-122 . See in particular provisions on forced labor and trafficking of North Korean citizens and House Foreign Affairs Committee report ( H.Rept. 114-392 ).\nH.R. 2029 . Consolidated Appropriations Act, 2016—became P.L. 114-113 . See Division K, the Department of State, Foreign Operations, and Related Appropriations Act, 2016; see also S. 1725 and H.R. 2772 , both entitled Department of State, Foreign Operations, and Related Programs Appropriations Act, 2016, and respectively reported out of committee ( S.Rept. 114-79 and H.Rept. 114-154 ).\nH.R. 2146 . Defending Public Safety Employees' Retirement Act—became P.L. 114-26 . See Title I, the Bipartisan Congressional Trade Priorities and Accountability Act of 2015; see also S. 995 , the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, which was reported out of the Senate Committee on Finance ( S.Rept. 114-42 ).\nPassed Either the House or Senate\nH.R. 350 . Human Trafficking Prevention, Intervention, and Recovery Act of 2015—passed the House; pertaining to the activities of the President's Interagency Task Force to Monitor and Combat Trafficking as they relate to child trafficking in the United States.\nH.R. 357 . Human Trafficking Prevention Act—passed the House; pertaining to federal government training on human trafficking.\nH.R. 400 . Trafficking Prevention in Foreign Affairs Contracting Act—passed the House; pertaining to anti-human trafficking requirements for federal contractors.\nH.R. 514 . Human Trafficking Prioritization Act—passed the House; pertaining to the bureaucratic status of the J/TIP Office within the State Department.\nH.R. 3694 . Strategy to Oppose Predatory Organ Trafficking Act—passed the House; pertaining to U.S. policy responses to the trafficking in human organs.\nS. 1635 . Department of State Operations Authorization and Embassy Security Act, Fiscal Year 2016—passed the Senate; pertaining to State Department responsibilities to combat human trafficking.\nS. 2943 . National Defense Authorization Act for Fiscal Year 2017—passed the Senate; pertaining to, among other provisions, authority for the Secretary of State to award grants seeking to reduce the prevalence of human trafficking in foreign countries.\nOther Pending Bills\nH.R. 57 . Equal Rights and Access for the Women of South Sudan Act—pertaining to the scope of foreign assistance provided to South Sudan, including trafficking prevention and trafficker prosecution.\nH.R. 191 . Repeal Executive Amnesty Act of 2015—pertaining to, among other issues, unaccompanied alien children (with bearing on the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008).\nH.R. 500 . Survivors of Human Trafficking Empowerment Act—pertaining to the establishment of a U.S. Advisory Council on Human Trafficking.\nH.R. 611 . Sex Trafficking Demand Reduction Act—pertaining to the minimum standards for the elimination of severe forms of trafficking in persons and government policies on the purchase of commercial sex.\nH.R. 1149 . Protection of Children Act of 2015—pertaining to unaccompanied alien children that has bearing on the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008.\nH.R. 1340 . International Violence Against Women Act of 2015—pertaining generally to foreign policy on violence against women, which has bearing on human trafficking policy.\nH.R. 1782 . Cuba Human Rights Act of 2015—pertaining to U.S. policy with respect to Cuba, including as related to combating human trafficking.\nH.R. 2140 . Vietnam Human Rights Act of 2015—pertaining to conditions, including some related to human trafficking, on foreign assistance to Vietnam.\nH.R. 2621 . China Human Rights Protection Act of 2015—pertaining to, among other issues, human trafficking in China.\nH.R. 2772 . Department of State, Foreign Operations, and Related Programs Appropriations Act, 2016—pertaining to State Department foreign assistance provisions to combat human trafficking.\nH.R. 2798 . Strengthening Refugee Resettlement Act—pertaining generally to refugee policies that has bearing on some trafficking victims with T-visas.\nH.R. 3226 . Business Supply Chain Transparency on Trafficking and Slavery Act of 2015—pertaining to the disclosure of company efforts to prevent trafficking in their global supply chains.\nH.R. 4720 . Expedited Family Reunification Act of 2016—pertaining to unaccompanied alien children (with bearing on the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008).\nH.R. 5332 . Women, Peace, and Security Act of 2016—pertaining to, among other issues, State Department training requirements on human trafficking.\nH.R. 5912 . Department of State, Foreign Operations, and Related Programs Appropriations Act, 2017—pertaining to State Department foreign assistance provisions to combat human trafficking.\nS. 224 . Women, Peace and Security Act of 2015—pertaining to, among other issues, State Department training requirements on human trafficking.\nS. 553 . End Modern Slavery Initiative Act of 2015—pertaining to the establishment of an End Modern Slavery Initiative Foundation to support international efforts to address human trafficking.\nS. 713 . International Violence Against Women Act of 2015—pertaining generally to foreign policy on violence against women, which has bearing on human trafficking policy.\nS. 1627 . Human Rights Accountability Act of 2015—pertaining to State Department reporting requirement responsibilities on human rights, including human trafficking.\nS. 1876 . A bill to rename the Office to Monitor and Combat Trafficking of the Department of State the Bureau to Monitor and Combat Trafficking in Persons and to provide for an Assistant Secretary to head such Bureau, and for other purposes—pertaining to the bureaucratic status of the J/TIP Office within the State Department.\nS. 1968 . Business Supply Chain Transparency on Trafficking and Slavery Act of 2015—pertaining to the disclosure of company efforts to prevent trafficking in their global supply chains.\nS. 2144 . North Korea Sanctions and Policy Enhancement Act of 2015—pertaining to U.S. policy with respect to North Korea, including as related to forced labor and trafficking of North Korean citizens.\nS. 2632 . Vietnam Human Rights Act of 2016—pertaining to conditions, including some related to human trafficking, on foreign assistance to Vietnam.\nS. 2937 . Department of State Authorization Act, Fiscal Year 2017—pertaining to State Department responsibilities to combat human trafficking." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 3, 3, 3, 3, 1, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full h1_full", "h3_full h2_full", "h3_full", "", "", "", "h3_full", "h3_title", "", "h3_title", "", "", "", "h3_full", "", "", "", "h2_full", "" ] }

{ "question": [ "How is human trafficking defined?", "What is the global impact of human trafficking?", "How is human trafficking carried out?", "What is the scale of human trafficking?", "How is human trafficking manifested in the modern day?", "Why is the demand higher for human trafficking in certain industries?", "How does human trafficking affect the world?", "How has the U.S. government historically addressed human trafficking?", "Why is the Trafficking Victims Protection Act especially important?", "How has Congress dealt with human trafficking issues since enacting the TVPA?", "How does Congress use oversight hearings to address human trafficking?", "Why are there questions regarding whether sufficient progress has been made on the issue of human trafficking?", "What is the goal of this report?", "How does the appendix contribute to the report?" ], "summary": [ "Trafficking in persons, or human trafficking, refers to the subjection of men, women, and children to exploitative conditions that may be tantamount to slavery.", "Reports suggest that human trafficking is a global phenomenon, victimizing millions of people each year and contributing to a multi-billion dollar criminal industry.", "Common forms of human trafficking include trafficking for commercial sexual exploitation, forced labor, and debt bondage. Other forms of human trafficking include trafficking for domestic servitude and the use of children in armed conflict (e.g., child soldiers).", "Human trafficking is a centuries-old problem that, despite international and U.S. efforts to eliminate it, continues to occur in virtually every country in the world.", "The modern manifestation of the human trafficking problem is driven by gaps in the enforcement of anti-trafficking laws and regulations and the willingness of some labor and service providers to violate such laws in order to fulfill international demand.", "Such demand is particularly concentrated among industries and economic sectors that are low-skill and labor-intensive.", "Human trafficking is an international and cross-cutting policy problem that affects a range of major national security, human rights, criminal justice, social, economic, migration, gender, public health, and labor issues.", "The U.S. government and successive Congresses have long played a leading role in international efforts to combat human trafficking.", "The Trafficking Victims Protection Act (TVPA, Division A of P.L. 106-386, as amended) and its reauthorizations are the cornerstone legislative vehicles for current U.S. policy to combat international human trafficking.", "Since enactment of the TVPA in 2000, Congress has remained active on international human trafficking issues, particularly with appropriations identified for anti-trafficking assistance purposes, proposed legislation related to the TVPA, and other anti-trafficking initiatives.", "Periodic oversight hearings have focused in particular on the State Department's annual Trafficking in Persons (TIP) Report, a detailed country-by-country ranking and analysis of government efforts to achieve congressionally established minimum standards for the elimination of human trafficking.", "Although there is widespread support among policy makers for U.S. anti-trafficking goals, ongoing reports of continued trafficking worldwide raise questions regarding whether sufficient progress has been made to deter and ultimately eliminate the problem.", "This report provides an overview of recent global trends and U.S. foreign policy responses to address human trafficking. The report focuses in particular on efforts conducted by the State Department's Office to Monitor and Combat Trafficking in Persons (J/TIP) and the President's Interagency Task Force (PITF) on human trafficking, as well as discussion of the 2016 TIP Report.", "An Appendix includes the status of legislation introduced in the 114th Congress on international dimensions of human trafficking." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 1, 0, -1, 0, 1, -1, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "Background", "SSBCI Participants Have Used Funds at Varying Rates and a Number of Challenges Have Been Addressed", "SSBCI Fund Usage Has Increased but Continues to Vary Widely across Participants", "Treasury and Stakeholders Undertake Various Outreach Activities to Promote Use of SSBCI", "Treasury Collaborates with Stakeholders to Promote Use of SSBCI", "SSBCI Stakeholders Also Conduct Outreach Activities", "Treasury and Stakeholders Identified Challenges to Promoting SSBCI, as Well as Promising Practices for Conducting Outreach", "Treasury’s Efforts to Measure and Evaluate Performance Could Be Enhanced", "Treasury Uses Performance Measures to Manage SSBCI but Has Not Set Targets for All Measures", "Treasury Recently Released SSBCI Performance Information", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: SSBCI Participants’ Allocation Amount and Fund Usage, as of June 30, 2013", "Appendix III: Comments from the Department of the Treasury", "Appendix IV: GAO Contacts and Staff Acknowledgements", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "SSBCI provides direct support to participants for use in programs designed to increase access to credit for small businesses. Using a formula contained in the Small Business Jobs Act of 2010, Treasury calculated the amount of SSBCI funding for which each of the 50 states, as well as the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, and the United States Virgin Islands, were eligible to apply. This formula takes into account a state’s job losses in proportion to the aggregate job losses of all states. In addition to states, the act granted permission to municipalities to apply directly for funding under SSBCI in the event that their state did not apply for funding. Municipalities in Alaska, North Dakota, and Wyoming used this option. Participants are expected to use their SSBCI funds to leverage private financing and investment that is at least 10 times the amount of their SSBCI allocation (a leverage ratio of 10-to-1) by December 31, 2016. Forty-seven states; the District of Columbia; the Commonwealth of Puerto Rico; the Commonwealth of the Northern Mariana Islands; Guam; American Samoa; the United States Virgin Islands; Anchorage, Alaska; Carrington, North Dakota; Mandan, North Dakota; and Laramie, Wyoming, currently participate in the program.\nThe act allowed Treasury to provide SSBCI funding for two program categories: capital access programs (CAP) and other credit support programs (OCSP). For both CAPs and OCSPs, the act requires that lenders have a meaningful amount of their own capital at risk. Loan terms, such as interest and collateral, are typically negotiated between the lender and the borrower, although in some cases loan terms are subject to SSBCI participant approval and, in many cases, the SSBCI participant and lender will discuss and negotiate loan terms and guarantee options prior to reaching agreement to approve the loan and issue a guarantee.\nA CAP is a loan portfolio insurance program wherein the borrower and lender, such as a small business owner and a bank, contribute to a reserve fund held by the lender. Under a CAP, when a participating lender originates a loan, the lender and borrower combine to contribute an amount equal to a percentage of the loan to a loan reserve fund, which is held by the lender. Under SSBCI, the contribution must be from 2 percent to 7 percent of the amount borrowed. Typically, the contribution ranges from 3 percent to 4 percent. The SSBCI participant then matches the combined contribution and sends that amount to the lender, which deposits the funds into the lender-held reserve fund. Under SSBCI, approved CAPs are eligible to receive federal contributions to the reserve funds held by each participating financial institution in an amount equal to the total amount of the contributions paid by the borrower and the lender on a loan-by-loan basis.\nIn addition, the following OCSPs are examples of types of programs eligible to receive funding under the act:\nCollateral support programs. A collateral support program is designed to enable financing that might otherwise be unavailable due to a collateral shortfall. It provides pledged cash collateral to lenders to enhance the collateral coverage of individual loans. The SSBCI participant and lender negotiate the amount of cash collateral to be pledged by the participant.\nLoan participation programs. SSBCI participants may structure a loan participation program in two ways: (1) through purchase transactions, also known as purchase participations, in which the SSBCI participant purchases a portion of a loan originated by a lender, or (2) by participating in a loan as a co-lender, where a lender originates a senior loan and the SSBCI participant originates a second loan to the same borrower that is usually subordinate to the lender’s senior loan should a default occur. SSBCI loan participation programs encourage lending to small businesses because the lender is able to reduce its potential loss by sharing its exposure to loan losses with the SSBCI participant.\nLoan guarantee programs. These programs enable small businesses to obtain a term loan or line of credit by providing the lender with the necessary security in the form of a partial guarantee. In most cases, the SSBCI participant sets aside funds in a dedicated reserve or account to collateralize the guarantee of a specified percentage of each approved loan. The guarantee percentage is determined by the participants and lenders but, under SSBCI, may not exceed 80 percent of loan losses.\nVenture capital programs. These programs provide investment capital to create and grow start-ups and early-stage businesses, often in one of two forms: (1) a SSBCI participant-run venture capital fund (which may include other private investors) that invests directly in businesses, or (2) a fund of funds, which is a fund that invests in other venture capital funds that in turn invest in individual businesses.\nDirect loan programs. Although Treasury does not consider these programs to be a separate SSBCI program type, it acknowledges that some participants may identify programs that they plan to support with SSBCI funds as direct loan programs. The programs that some SSBCI participants label as direct loan programs are viewed by Treasury as co-lending programs categorized as loan participation programs, which have lending structures that are allowable under the statute.\nOCSPs approved to receive SSBCI funds are required to target small businesses with an average size of 500 or fewer employees and to target support towards loans with an average principal amount of $5 million or less. In addition, these programs cannot lend to borrowers with more than 750 employees or make any loans in excess of $20 million.\nAfter their applications were approved, SSBCI participants entered into Allocation Agreements with Treasury before they received their funds. SSBCI Allocation Agreements are signed by Treasury and participants, and they outline how participants are to comply with program requirements. The act requires that each participant receive its SSBCI funds in three disbursements or tranches of approximately one-third of its approved allocation. As part of its request to receive the second and third disbursements, a participant must certify that it has expended, transferred, or obligated 80 percent or more of the previous disbursement. When participants request subsequent disbursements, Treasury reviews the request and certification for completeness. Treasury may also review a sample of the participant’s transactions for compliance with SSBCI requirements. All SSBCI Allocation Agreements will expire on March 31, 2017. Treasury may terminate any portion of a participant’s allocation that Treasury has not yet transferred to the participant within 2 years of the date on which its SSBCI Allocation Agreement was signed. Treasury may also reduce or terminate a participant’s allocation at any time during the term of the Allocation Agreement upon an event of default under the agreement. Under the act, participants are required to submit quarterly and annual reports on their use of SSBCI funds.\nChanges to participants’ Allocation Agreements generally must be approved by Treasury through a program modification. For example, participants must submit a program modification to Treasury for approval in order to use SSBCI funds for a new program that was not originally approved by Treasury, to materially change the scope or purpose of an approved program, or to reapportion and transfer allocated SSBCI funds among approved programs when the cumulative amounts transferred exceed 10 percent of the participant’s total SSBCI allocation. Treasury has procedures for participants to apply for modifications and for its processing of modification approval requests. In general, the procedures require participants to submit, among other things, justification of the need for the modification and the impact of the change on program performance, including the 10-to-1 private leverage expectation. As of June 30, 2013, Treasury had approved 32 modifications of SSBCI participants’ programs.\nThe act requires Treasury’s OIG to conduct audits of participants’ use of their SSBCI allocations. As of November 8, 2013, Treasury’s OIG has conducted 12 audits of SSBCI participants’ use of SSBCI funds.", "Between June 30, 2012, and June 30, 2013, SSBCI participants nearly quadrupled their overall use of SSBCI funds, but individual participants continue to use their funds at varying rates and for different types of programs. SSBCI participants faced challenges using their SSBCI funds in the early stages of the program. For example, because Treasury initially implemented the program without issuing final policies and procedures, some SSBCI participants experienced delays in receiving subsequent disbursements of funds. While initial challenges have mostly been addressed, participants continue to face ongoing challenges with using SSBCI funds, including reluctance from large banks to participate in the program.", "As of June 30, 2013, SSBCI participants had used a total of about $549 million in SSBCI funds, which represents about 38 percent of the $1.5 billion allocated for the program. As shown in figure 1, usage of SSBCI funds by participants has nearly quadrupled since June 30, 2012, when participants had used about $150 million.\nIn 2012, we found that participants had used their SSBCI funds at different rates. As of June 30, 2013, SSBCI participants were continuing to use their SSBCI allocations at varying rates, as shown in figure 2. Fifty- five of the 57 participants had used some portion of their allocation as of June 30, 2013. Idaho had used the highest percentage of its allocated funds, approximately 94 percent of the $13 million it was allocated. Two territories—American Samoa and Northern Mariana Islands—had not used any of their allocation, which, according to Treasury officials, is because both territories have limited small business credit and investment markets. As of June 30, 2013, 18 participants had used more than 50 percent of their allocations, 14 participants had used more than 25 to 50 percent of their allocation, 19 participants had used more than 10 to 25 percent of their allocation, and 6 participants had used 10 percent or less of their allocation. As previously discussed, participants can request subsequent SSBCI disbursements when they have used at least 80 percent of their current tranche of SSBCI funds. As of June 30, 2013, Treasury had disbursed almost $811 million in SSBCI funding to participants. Eight participants had received their third and final disbursement of funds, 19 participants had received their second disbursement, and 30 participants were still working to use their first disbursement of SSBCI funding.\nSSBCI participants have used their allocations to fund a variety of different program types. SSBCI allows participants to use their allocations to support program types that best meet their individual circumstances and demands. This flexibility has resulted in participants implementing numerous types of programs to use their SSBCI allocations (see fig. 3). Similar to what we reported in 2012, loan participation and venture capital programs had used the most funds, as of June 30, 2013.between June 30, 2012, and June 30, 2013, venture capital programs surpassed loan participation programs to become the program type with the highest percentage of funds used. As of June 30, 2013, venture capital programs accounted for approximately 37 percent of SSBCI funds used. Loan participation programs accounted for the next highest percentage of funds used (36 percent), followed by loan guarantee programs and collateral support programs (each about 13 percent). The remaining program type—CAP—represented only approximately 1 percent of the funds used. Figure 3 also shows that venture capital programs and loan participation programs were the most common program types implemented, representing more than half of all SSBCI programs. Three of the six participants with whom we spoke during this review said that demand for their venture capital programs was higher than their lending programs. Further, figure 3 demonstrates that while CAPs accounted for 17 percent of the programs implemented, their fund usage represented only 1 percent of the funds used by SSBCI participants. Multiple participants we interviewed during our 2012 and 2013 reviews noted that the demand for their CAPs was low, which resulted in them reallocating funds to SSBCI programs with higher demand.", "Treasury, SSBCI participants, federal banking regulators, and trade associations all conduct numerous outreach activities to promote the use of SSBCI. These activities include presenting information on SSBCI at conferences and lender roundtables, conducting face-to-face meetings with lenders and investors, and distributing information through brochures and websites. Challenges with promoting SSBCI have been identified by Treasury and SSBCI stakeholders, including the variation among SSBCI participants’ programs and the amount of time and resources involved in conducting outreach. To address these challenges, Treasury is working with SSBCI participants to identify best practices for marketing SSBCI.", "Treasury conducts numerous outreach activities to promote the use of SSBCI, many of which are conducted in conjunction with program stakeholders, including federal banking regulators, trade associations, and SSBCI participants. Outreach conducted in collaboration with external stakeholders is consistent with federal internal control standards, which state that adequate means of communicating with, and obtaining information from, external stakeholders that may have a significant impact on the agency achieving its goals should exist. To help promote use of the participants’ SSBCI lending programs, Treasury officials stated that they work with federal banking regulators on a regular basis. For example, Treasury officials have participated in lender roundtables sponsored by federal banking regulators and written articles for their newsletters that describe SSBCI and, in some cases, contain case study examples of some SSBCI participants’ programs. Treasury officials also said that they have developed a national awareness campaign in which they work with relevant trade associations—representing both the lending and venture capital communities—to promote use of SSBCI. Treasury officials explained that this outreach consists of presenting information on SSBCI at trade associations’ conferences and writing articles for their member newsletters. Treasury officials also participate in SSBCI participants’ outreach activities. For example, representatives from Montana’s SSBCI program told us that the Treasury SSBCI program director participated in meetings with CDFIs that they held when the program was first started. Finally, Treasury maintains a webpage dedicated to SSBCI. The site contains program policy and procedure documents, guidance materials on specific program types, and links to each participant’s SSBCI program website, among other items.\nIn 2012, Treasury piloted a program in which it hired consultants to assist three SSBCI participants—Mississippi, Ohio, and South Carolina—with program outreach. The goal of the pilot was to increase financial institutions’ awareness and use of the states’ SSBCI lending programs. In each state, consultants developed action plans detailing the assistance they would provide to the state to help promote the use of SSBCI by lenders. The consultants also conducted in-person meetings or telephone calls directly to lending institutions to discuss SSBCI, designed program marketing materials, and reviewed the states’ websites, among other things. In addition, in South Carolina, the consultant assisted in the development of a webinar presentation, which was offered to all South Carolina banks and was later posted to the state’s website. Treasury officials said that while the consultants’ work could provide a useful outside perspective and help to identify improvements needed in participants’ programs, the process of finding and contracting with an appropriate consultant is time consuming and its effectiveness depends on whether participants are able to take advantage of the consultants’ recommendations. Treasury officials explained that they would like to continue to provide consultant assistance to participants and have requested additional funds for their 2014 budget to do so. They explained that, with congressional approval for additional funding, they would expand the amount of time the consultants work with the states. For example, the outreach consultant pilot program provided for 100 hours of consultant assistance to each state, and officials said they would like to expand this type of assistance to selected participants for 6 to12 months.\nTreasury officials explained that it is difficult to quantify the success of their outreach efforts and that they mostly rely on the feedback they receive from SSBCI participants to gauge the success of their outreach efforts. Treasury officials also explained that they conduct satisfaction surveys after each conference to ask what attendees thought of the conference. Our review of Treasury’s analysis of the conference survey results showed that the majority of those that responded to the surveys found the conferences very good or excellent. Treasury officials said that they also track some indicators in addition to conference survey results. For example, they track the number of attendees at the SSBCI conferences, the number of participants that join webinars or conference calls, and, when feasible, the number of hits received by articles posted on the SSBCI webpage.\nTreasury plans to continue to provide assistance to SSBCI participants on program outreach in order to increase the effectiveness and rate of deployment of SSBCI funds. Treasury’s 2014 SSBCI Congressional Justification for its budget notes that Treasury will expand individualized technical assistance to participants by training and supporting SSBCI participants on outreach to financial institutions. Treasury officials explained that they plan to do this in several ways, including conducting state-specific outreach to state banking associations and state banking regulators. They also plan to conduct roundtables consisting of local bankers, some of whom have used SSBCI and can share their experiences with bankers who have not used the program. As described previously, they would also like to provide longer-term consultant assistance to states. Finally, Treasury officials would like to develop a “tool box” of SSBCI marketing materials, such as templates for websites, presentations, work plans, and forums. The 2014 Congressional Justification also noted that Treasury is planning to add additional relationship managers to support state outreach to the lending industry. SSBCI relationship managers are responsible for working with an assigned group of participants to help them successfully allocate funds to lenders and subsequently borrowers. Treasury officials explained that SSBCI currently has three relationship managers, each of whom handles a portfolio of between 15 and 20 participants, which officials view as a heavy workload. Treasury officials noted that all outreach efforts discussed in Treasury’s 2014 Congressional Justification, including its ability to expand assistance to participants on program outreach and to hire additional relationship managers, are contingent upon congressional approval of Treasury’s proposed budget for the agency.", "In addition to Treasury’s outreach efforts, SSBCI participants, federal banking regulators, and a number of trade associations also independently conduct outreach to promote the use of the program. Treasury’s program guidance states that one of the roles of SSBCI participants is to conduct program outreach. The guidance varies depending on the type of program. For example, guidance on venture capital programs is general and states only that SSBCI participants are responsible for marketing the program in their region or community.\nGuidance on loan guarantee programs is more explicit and instructs that participants are responsible for conducting outreach to inform lenders and trade associations of the program, including activities such as distributing press releases and speaking at industry or small business conferences.\nAll of the SSBCI participants with whom we spoke conduct outreach on an ongoing basis to promote use of their programs. Many of the outreach activities they conduct are similar to those used by Treasury.\nCollaboration with other organizations. Eight of the nine SSBCI participants with whom we spoke told us that they collaborate with other organizations to help them promote SSBCI. Many work with state banking associations, local economic development groups, small business development centers, and local or regional Chambers of Commerce to reach potentially interested parties. For example, officials from Virginia’s SSBCI program explained that they collaborate with the Virginia Bankers Association, Virginia Association of Community Banks, small business development centers, regional Chambers of Commerce, and Virginia Economic Development Partnership by educating these groups about SSBCI and soliciting their assistance in promoting the program to their members.\nPresentations on SSBCI. SSBCI participants also told us that they hold lender roundtables; present information on SSBCI to groups of potentially interested parties, including CDFIs, economic developers, and manufacturing associations; and hold conference calls and webinars for potential program users.\nFace-to-face meetings. Five of the nine participants with whom we spoke discussed having face-to-face meetings with lenders or economic developers to promote use of the program. In fact, some participants stated that they found this type of outreach, although time consuming, to be the most effective in encouraging use of the program.\nDistribution of information. SSBCI participants also distribute marketing materials, such as program brochures and electronic newsfeeds; issue press releases; publish print advertisements and testimonials on the experiences of program users; send emails with program information; and use social media to promote SSBCI.\nWebsite. Each SSBCI participant also maintains a website where SSBCI program information can be found. Our review of all SSBCI participants’ websites found that the majority included detailed descriptions of their SSBCI programs, links to related materials, information on how to apply for the program, and contacts for additional information. In addition, some websites included other useful promotional information, such as a list of participating financial institutions and testimonials on the program’s benefits.\nIn addition to Treasury and SSBCI participants, federal banking regulators also conduct outreach activities to promote the use of SSBCI. Outreach conducted by the federal banking regulators has been done on both a national and regional basis. However, regulators’ regional offices focus more specifically on states in their regions and tend to be in a better position to focus on the differences between SSBCI participants’ programs. Specific outreach activities they have conducted include participating in or sponsoring lender roundtables, conferences, and forums in which SSBCI is discussed. These events are often held in conjunction with the promotion of other small business credit programs and include representatives from each of the federal banking regulators, as well as state economic development agencies. For example, an official from OCC’s Southern District office stated that her office held a series of outreach events throughout the district. Each event included a regulatory panel of officials from OCC, FDIC, and the Federal Reserve Bank of Atlanta in which they discussed SSBCI with lenders and CDFIs. In addition, some federal banking regulators have used their newsletters to provide information about SSBCI. For example, regulators have written articles about how states are using SSBCI to increase the amount of credit available for small businesses, and they have also published articles that Treasury has written on SSBCI. Further, as discussed previously, both FDIC and OCC published a list of Frequently Asked Questions to address their regulated entities’ concerns regarding the regulatory implications of participating in SSBCI.\nFinally, trade associations for lenders, CDFIs, and venture capitalists have also helped to promote the use of SSBCI to their members. Similar to the types of outreach activities conducted by Treasury, SSBCI participants, and federal banking regulators, trade associations have provided information on SSBCI at their conferences and, as noted earlier, included articles in member newsletters and magazines. In addition, some trade associations, including the American Bankers Association, Opportunity Finance Network, and Council of Development Finance Agencies, hosted conference calls and webinars for their members to promote the use of SSBCI. Representatives from the Opportunity Finance Network—a national network of CDFIs—explained that because some CDFIs were not familiar with SSBCI and some agencies that implement SSBCI at the state level were not familiar with the function of CDFIs, they used conference calls and webinars to connect their members with the appropriate SSBCI stakeholders.", "Treasury and other stakeholders have identified various challenges with promoting SSBCI, including variation among SSBCI participants’ programs, limited time and resources, and limited experience with marketing small business programs.\nVariation among SSBCI participants’ programs. Treasury, Federal Reserve, and OCC officials, as well as representatives from the National Association of Federal Credit Unions (NAFCU), all said that the variation among SSBCI participants’ programs creates marketing challenges because different program types have different users. For example, if a SSBCI participant operates only a venture capital program, lenders, such as credit unions in that state or territory, would not be eligible to participate in SSBCI. Treasury officials added that the variation makes it hard for them to build awareness of SSBCI at a national level, and representatives from NAFCU stated that the variation in participants’ programs made it difficult to educate their member credit unions about how they could promote SSBCI to their customers.\nTime and resources. Five of the nine SSBCI participants with whom we spoke stated that reaching out to and educating interested parties on SSBCI has been a challenge because of the time commitment and a lack of resources. For example, officials from the municipality of Carrington, North Dakota—whose SSBCI program consists of a consortium of 36 municipalities—explained that outreach is challenging because of the amount of time involved in developing relationships, setting up meetings, and educating lenders and CDFIs about their program. As noted earlier, some participants who implemented new programs did not have established networks of lenders and said that establishing such networks was time consuming. Further, the Carrington, North Dakota, officials noted that small community banks and rural economic development groups can have high turnover rates, which requires them to conduct continual outreach to re-educate staff on the program. Officials from both Carrington and Montana also added that the large geographic footprint covered by their SSBCI programs makes it difficult to reach all lenders in the communities. Montana officials added that this is why they collaborated with other organizations in the state, such as CDFIs, to help promote SSBCI.\nSSBCI participants’ experience. SSBCI participants’ experience with marketing small business programs may also vary, resulting in challenges in promoting use of the program. At its October 2012 national SSBCI conference, Treasury identified participants’ lack of experience in program marketing as a challenge for participants’ deploying funds in SSBCI lending programs.\nOther challenges that participants mentioned with conducting outreach for SSBCI include that it can be difficult to distinguish SSBCI from other federal and state programs that assist small businesses and, as noted earlier, that some lenders have concerns about being subject to additional regulatory scrutiny for using SSBCI programs to underwrite loans.\nTreasury has stated that promoting best practices in marketing is one of SSBCI’s priorities. To achieve this goal and to help address some of the challenges mentioned above, Treasury developed working groups consisting of officials from participating states, territories, and municipalities for the different SSBCI program types. These groups have been working to identify best practices for how to operate each program type, including best practices on marketing the program. As of September 2013, working groups for loan guarantee programs, loan participation programs, and collateral support programs had issued best practice guidance for these program types. Best practices identified in the guidance for all three program types include using consistent marketing; developing and maintaining websites that are current, easy to find, and contain all pertinent information; identifying and reaching out to the small group of key small business lenders; publishing testimonials from lenders that have successfully used SSBCI; and asking the state banking regulators for the opportunity to brief the state examiners so that the examiners can inform lenders about SSBCI. The guidance also includes additional best practices unique to each program type. Treasury officials said that they are working with the group for venture capital programs as well to develop similar best practice guidance for SSBCI participants who operate that type of program. The federal banking regulators also offered some examples of best practices they have identified to promote their programs. One of these was using technology and mobile resources to conduct outreach, such as using webinars to reach a larger audience. OCC officials stated that they have found that collaborating with state banking associations to help design the outreach efforts is effective, as is having lenders that participate in the program share their experiences with other lenders. Similarly, FDIC officials noted that it is important to leverage relationships with the appropriate networks of organizations and to conduct follow-up on activities in which relationships are established.\nPrior to the development of the loan participation, collateral support, and loan guarantee programs best practice guidance, Treasury had not provided SSBCI participants with any specific written guidance on program outreach. Instead, Treasury officials told us they mostly relied on peer-to-peer learning among SSBCI participants. Treasury officials explained that its SSBCI conferences provide a good forum for participants to exchange ideas on how to market their programs. In addition, each of Treasury’s three SSBCI conferences has included a session on different aspects of conducting program outreach. The March 2012 SSBCI conference included a session on how to market SSBCI to underserved communities, the October 2012 conference session focused on how to market SSBCI to lenders, and the June 2013 conference session was on how to market SSBCI with partner organizations.", "Treasury uses performance measures to manage SSBCI in a number of ways, such as to allocate program resources and to identify participants that might need additional assistance. However, Treasury has not developed targets for all of its performance measures. Federal internal control standards and leading performance management practices identified in prior GAO work state that, where appropriate, management should set performance targets and measure results against these targets, and this practice can help management to identify performance gaps. In addition, Treasury has started to determine how it will evaluate the performance of SSBCI at the end of the program in 2017. Our guidance on designing program evaluations suggests that gathering input from external stakeholders during the design of an evaluation can help better ensure that the evaluation is useful for decision makers and other interested parties.", "In 2012 we reported that Treasury had established performance measures for both the timeliness of program administration and the monitoring of program performance, which are listed in table 1.\nTreasury officials explained that they have used these performance measures in a variety of ways to manage SSBCI. First, Treasury officials stated that they use the measure on the amount of SSBCI funds participants have used to adjust staff allocations, which has helped them to improve efficiency in program operations. For example, by tracking quarterly report data on participants’ use of SSBCI funds, officials realized that a large number of participants would be submitting requests for subsequent disbursements of funds. To manage this increase in disbursements, Treasury increased the number of compliance team staff from two to four in order to better handle the processing of the requests.\nSecond, Treasury officials also stated that they use information on participants’ fund usage to identify participants that have been slow to request subsequent disbursements of funds, and that they contact these participants to see if they need additional technical assistance from Treasury. Treasury officials explained that the relationship managers monitor participants’ fund usage each quarter and develop action plans for participants with the lowest fund usage to help them address challenges they are facing in using SSBCI funds. Third, Treasury officials told us that they use performance measures on the timeliness of program administration to help manage staff performance. They explained that they compare the amount of time it takes Treasury staff to respond to program modifications and disbursement requests to the goals they have set. They maintain a spreadsheet to track the status of pending modifications and disbursements and distribute it during weekly staff meetings for staff to see if they are on track to meet the performance goals. Officials added that they have started to use these measures in staff performance reviews to hold staff accountable.\nAs shown in table 1, Treasury has created targets for its measures related to the timeliness of program administration but not for its measures used to monitor the performance of SSBCI. In our 2012 review of SSBCI, as well as in this review, Treasury officials said that they have not developed targets for their measures that monitor program performance and that SSBCI’s performance cannot be summarized using a single number or performance indicator because SSBCI now consists of 150 different programs. Further, they explained that specific numeric indicators, such as the number of loans resulting from participants’ programs, may or may not indicate the performance of SSBCI. They added that outcomes can also be highly dependent on factors outside of the program’s control, such as the demand for credit in a given locality and the quality of the small business borrowers’ requests for such funds. In addition, because many participants did not receive their first SSBCI allocation until late 2011, they did not submit annual reports—which contain data on SSBCI funds used to support small business loans or investments—for that year. As a result, Treasury had little data to assess program performance and set baselines for the targets for program performance measures. In early 2013, Treasury received participants’ 2012 annual reports, which represent the first complete set of annual reports Treasury has received since the inception of the program.\nFederal internal control standards state that management should review performance reports and measure results against targets. Leading practices in federal agency performance management previously identified by GAO also state that, where appropriate, performance measures should have quantifiable, numerical targets, and that agencies can use baselines to set realistic but challenging targets. Numerical targets facilitate future assessments of whether overall goals and objectives were achieved because comparisons can be easily made between projected performance and actual results. In addition, numerical targets can also create motivation for improving program performance. Further, Treasury has established targets for performance measures for other programs, including its CDFI Fund programs—programs similar to SSBCI that are administered by locally based organizations and help to promote access to capital and local economic growth. Our previous work has recognized the challenges and provided strategies for agencies in measuring performance and setting performance targets when factors outside of an agency’s control impact the results of a program. For example, one strategy is to set goals at the lowest, most disaggregated level for distinct target populations for which the agency has different expectations. In the case of SSBCI, this could mean setting different performance targets for different program types. Despite these challenges, developing targets for selected SSBCI measures that monitor program performance could help Treasury identify performance gaps and highlight program areas that need additional attention.", "Treasury officials stated that they share the performance information they collect on SSBCI with Treasury management, other agencies, and SSBCI participants. For example, officials told us that they share SSBCI performance information regularly with SSBCI program management, including the director and deputy director, and with Treasury departmental management to provide information on the progress of the program. In addition, Treasury shares SSBCI performance information with other agencies working on the Entrepreneurship and Small Business Cross- Agency Priority goal. This Cross-Agency Priority goal seeks to increase federal services, including promoting access to capital, to entrepreneurs and small businesses. Within the Cross-Agency Priority goal, a working group consisting of Treasury, U.S. Export-Import Bank (Ex-Im), Small Business Administration (SBA), and U.S. Department of Agriculture (USDA) was developed specifically for the goal’s objective related to increasing access to capital for entrepreneurs and small businesses. SSBCI is one of the programs that will help to contribute to this objective. The fiscal year 2013 third-quarter status update for this Cross-Agency Priority goal included information on the amount of new private sector lending or investment that SSBCI supported and the percentage of participants who had used SSBCI funds to support loans or investments.\nTreasury has also shared some performance information with SSBCI participants and recently released summary performance information from participants’ 2012 annual reports to the public. Officials from Treasury and some participants with whom we spoke told us that Treasury has also been sharing some SSBCI performance information with participants at its SSBCI national conferences. For example, at its June 2013 conference, Treasury shared preliminary performance information from the 2012 annual reports on the number of loans and investments made with SSBCI funds and the amount of SSBCI funds loaned or invested. In 2012 we recommended that in order to provide information on the progress of SSBCI to Congress and the SSBCI participants, Treasury should make information publicly available on its performance indicators for SSBCI.September 2013, Treasury released a summary report of performance In information collected in participants’ 2012 annual reports.contains information on each of Treasury’s program performance measures, as of December 31, 2012 (see table 2). The report also summarizes participants’ data in numerous ways, such as by program type, distribution of loans or investments by size and industry, loans or investments made in low- and moderate-income communities, and lender and investor participation by size of lender. Treasury officials added that they expect to continue to release quarterly report data and issue annual reports to the public going forward.\nAs previously discussed, because of the variety of SSBCI programs implemented by participants, as well as the influence of factors beyond Treasury’s control, Treasury officials said that SSBCI’s performance cannot be evaluated using a single number or performance indicator. Further, performance measures may not always give a complete understanding of a program’s effectiveness. To address these issues, Treasury has started to determine how it will evaluate the performance of SSBCI at the end of the program in 2017. As part of Treasury’s SSBCI oversight and performance strategy, all Allocation Agreements require participants to conduct a final assessment on their programs’ performance at the end of the program in 2017. Treasury officials explained that they are in the early stages of thinking about how they will use this information to help them evaluate SSBCI’s performance and to determine if the program model for SSBCI was successful. Officials explained that they are planning on convening a working group of program participants to help Treasury design the format for participants’ final assessments. They added that they are planning on inviting experts in program measurement to the meeting to help determine the design of the evaluation. Officials added that they have reviewed evaluations of other Treasury programs, as well as evaluations conducted by other agencies and SSBCI participants, to help them in their planning process. Treasury officials explained that they expect to convene the working group of participants by the end of 2013, but that they expect that the design of the evaluation will not be finalized until late in 2014.\nThe Small Business Jobs Act of 2010 was signed by the President on September 27, 2010. As described in this report, as well as our 2011 and 2012 reports, Treasury has spent the last few years starting up the SSBCI program office; developing policies, procedures, and guidance; assisting participants with the implementation of their programs; and developing measures to monitor program administration and performance. Also as previously discussed, 2013 is the first year in which Treasury had a complete set of participants’ annual reports. As a result, Treasury now has more complete information to analyze the program. As Treasury begins to design its evaluation, it should consider requirements in the act, including the Secretary of the Treasury consulting with SBA and the appropriate federal banking agencies on the administration of the program. In addition, because the SSBCI program is included as one of the programs that will help to meet a Cross-Agency Priority goal, obtaining input from the agencies involved in the working group on increasing access to capital for entrepreneurs and small businesses (Ex- Im, SBA, and USDA) could help to ensure that the evaluation is useful in measuring progress toward that goal. Further, our guidance on designing program evaluations encourages agencies to obtain input from external stakeholders, such as Congress, that are expected to be interested in the evaluation results. By seeking input from Congress on the types of information in which it is interested, Treasury can help ensure that it designs an evaluation that is useful for decision makers.", "In SSBCI’s third year, participants’ fund usage has started to accelerate, with participants nearly quadrupling the amount of funds they used between June 30, 2012, and June 30, 2013. Treasury implemented measures in 2012 to help monitor the administration and performance of SSBCI. However, while it developed targets for the measures related to administration, it did not develop targets for the measures related to program performance. Treasury officials stated that it did not develop these targets because, among other things, factors outside of the program’s control can have a significant impact on SSBCI’s outcomes. Federal internal control standards and leading performance management practices state that agencies should set performance targets, where appropriate. Targets for selected performance measures could help Treasury better manage SSBCI by identifying performance gaps and highlighting program areas that may need additional attention. While we recognize that it could be challenging to set performance targets when the program is influenced by external factors, SSBCI is not the only federal program facing this challenge, and our previous work has identified strategies for setting targets in similar situations. Moreover, Treasury has set targets for performance measures of other programs that, like SSBCI, include multiple programs that are administered locally and help to promote access to capital. In addition, now that Treasury has received participants’ 2012 annual reports, it has baseline data to analyze and use to help set targets for selected measures on program performance.\nTreasury has also begun to consider how it will evaluate the effectiveness of the program at the program’s conclusion in 2017. Our guidance on designing performance evaluations encourages agencies to obtain input from external stakeholders, including Congress, who are expected to be interested in the evaluation results. In addition, the Small Business Jobs Act of 2010 requires the Secretary of the Treasury to consult with SBA and the appropriate federal banking agencies on the administration of SSBCI. Because Treasury’s SSBCI evaluation could be useful in informing future policymakers about programs that are intended to increase capital to small businesses in distressed credit markets, gathering input from external stakeholders on what information would be most valuable to them is essential.", "We recommend that the Secretary of the Treasury take the following actions: To enhance the use of performance measures to manage SSBCI and assess progress, Treasury should establish targets for selected performance measures related to monitoring program performance.\nTo better ensure that Treasury’s SSBCI program evaluation provides information useful for future decision making and effective management and oversight, Treasury should seek input from program stakeholders— including other agencies involved in promoting small businesses and Congress—as it designs its SSBCI program evaluation.", "We provided a draft of this report to Treasury, FDIC, Federal Reserve, and OCC for their review and comment. Treasury provided written comments, which are reprinted in appendix III. FDIC, Federal Reserve, and OCC did not provide written comments on the draft report. In its written comments, Treasury agreed with our recommendations and stated that it has begun to take steps to implement both of them. Specifically, Treasury said it has begun establishing targets for program performance measures and gathering input from program stakeholders in designing SSBCI’s program evaluation. Treasury noted that the report reflected the progress SSBCI participants have made in using their SSBCI funds and that program stakeholders have undertaken numerous outreach activities to promote SSBCI. Treasury also stated that it is confident that as SSBCI progresses it will continue to promote access to credit for small businesses, allowing them to expand and create new jobs. Treasury also provided a technical comment on the draft report, which we’ve incorporated in the final report.\nWe are sending copies of this report to appropriate congressional committees and Treasury, FDIC, Federal Reserve, and OCC. In addition, the report is also available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8678 or [email protected]. 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 IV.", "Our objectives were to examine the extent to which (1) State Small Business Credit Initiative (SSBCI) participants have used their SSBCI allocations and faced challenges in using the funds, (2) the Department of the Treasury (Treasury) and program stakeholders have used outreach activities to promote use of the program and assessed the success of these efforts, and (3) Treasury has used performance measures and program evaluation to manage SSBCI.\nTo assess the extent to which SSBCI participants have used their SSBCI allocations, we analyzed Treasury program data on participants’ allocation amounts, disbursement requests, and program types, and whether participants developed new programs to participate in SSBCI or expanded existing programs with SSBCI funds. In addition, we analyzed participants’ June 30, 2013, SSBCI quarterly report data—the most recent quarter available—on the total amount of funds used and fund usage by program type. To show the trend in participants’ total fund usage from June 30, 2012, to June 30, 2013, we also analyzed data from participants’ June 30, 2012, and March 31, 2013, quarterly reports. To assess the reliability of SSBCI data on participants’ fund usage, allocation amount, and program type, and whether participants developed new programs or expanded existing ones, we performed electronic testing for obvious errors in accuracy and completeness and compared Treasury’s data on program type to participants’ quarterly data. Where there were questions or discrepancies we identified related to the data, we clarified them through discussions with Treasury officials. We also interviewed knowledgeable Treasury officials on how they assess the reliability of participants’ quarterly data and the information they maintain on SSBCI. We determined that the data were sufficiently reliable for the purposes of describing these factors.\nTo examine the extent to which SSBCI participants faced challenges in using SSBCI funds, we reviewed reports from Treasury’s Office of the Inspector General (OIG) on participants’ usage of SSBCI funds; our 2011 and 2012 reports on SSBCI; and Treasury’s policies and procedures, including its policies on disbursing subsequent tranches of SSBCI funds and terminating the availability of participants’ SSBCI allocations.addition, we interviewed officials from Treasury and nine SSBCI In participants: Arizona; Iowa; Maryland; Missouri; Montana; New York; City of Carrington, North Dakota; Vermont; and Virginia. We selected these nine participants from the total of 57 participants—which included 47 states; Washington, D.C.; four municipalities; and five U.S. territories— using participants’ March 31, 2013, quarterly report data. We based our selection on the following criteria: (1) the percentage of SSBCI funds participants had used as of March 31, 2013; (2) the amount of SSBCI funds allocated to participants; (3) the number of programs participants implemented and whether the programs were new or existing; and (4) geographic dispersion. We selected this nonrandom sample of participants because we assumed that the types of challenges related to using SSBCI funds would vary for participants characterized by a mix of fund usage histories, allocation amounts, and numbers of new and existing programs across all regions. To reduce administrative burden, we excluded from our selection (1) the seven participants that the OIG told us it was in the process of auditing or was planning to audit at the time we selected the participants, and (2) the nine participants we interviewed in our 2012 SSBCI review. When we selected participants to interview, the March 31, 2013, quarterly data were the most recent available. Because Treasury had not completed its review of the data at that time, we used preliminary quarterly report data for our selection. We also reviewed testimonial evidence we obtained during our 2011 and 2012 SSBCI reports related to challenges SSBCI participants faced in using SSBCI funds. Finally, we interviewed representatives from a number of trade associations representing the lending and venture capital communities: the Conference of State Bank Supervisors, Community Development Venture Capital Alliance, Council of Development Finance Agencies, Independent Community Bankers Association, National Association of Federal Credit Unions, Opportunity Finance Network, and State Science & Technology Institute. We selected these trade associations based on information from Treasury officials on the organizations with whom they had worked.\nTo examine the extent to which Treasury and program stakeholders, including SSBCI participants, federal banking regulators, and trade associations, have used outreach activities to promote use of the program and assessed the success of these efforts, we interviewed Treasury officials and representatives of stakeholder groups and reviewed materials pertinent to SSBCI outreach. Specifically, we interviewed Treasury officials, representatives from the nine SSBCI participants and seven trade associations identified above, and officials from the federal banking regulators—Board of Governors of the Federal Reserve System (Federal Reserve), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC)—to learn about outreach activities they have conducted for SSBCI and to obtain relevant materials and documentation. We reviewed Treasury guidance on SSBCI outreach, including marketing best practices for SSBCI loan participation, loan guarantee, and collateral support programs, as well as Treasury budget documents. We also reviewed materials related to Treasury’s pilot program to hire outreach consultants for the SSBCI programs in Mississippi, Ohio, and South Carolina. These materials included the solicitation for subject-matter experts for lender outreach support, technical assistance plans, and final reports developed by the consultants for the three states. We reviewed outreach materials SSBCI participants, federal banking regulators, and trade associations had developed related to SSBCI. We also reviewed all 57 SSBCI participants’ websites to understand how SSBCI participants are providing information about SSBCI to interested parties.they contained detailed program descriptions; information on the amount of SSBCI funds allocated to the participants; links to additional, related materials; information or materials on how to apply for the program; and contact information for additional information, among other things. We interviewed officials from Treasury, the federal banking regulators, and the nine SSBCI participants identified above on the methods they used to assess the success of their outreach efforts. We also reviewed Treasury’s conference summary memorandums, which include conference attendees’ responses to the satisfaction surveys that Treasury administers after each conference, as well as other general observations on the conferences.\nWe examined the websites to determine if To assess the extent to which Treasury has used performance measures and program evaluation to manage SSBCI, we reviewed performance measures and targets Treasury has set for SSBCI. We also reviewed a tool Treasury uses to track its progress on some performance measures and interviewed officials on actions they have taken to manage the program by using performance measures. We identified relevant criteria on setting targets for performance measures in the federal internal control standards and leading practices for federal agencies’ performance management. In addition, we reviewed performance information Treasury has shared with SSBCI participants at its conferences and a summary report of performance information that Treasury developed in September 2013, and we interviewed officials on their plans to publicly release SSBCI performance information. We also reviewed the second and third quarter fiscal year 2013 status update documents developed for the Cross-Agency Priority goal on Entrepreneurship and Small Business to identify SSBCI performance data Treasury has shared with other federal agencies. Finally, we reviewed the Small Business Jobs Act of 2010 to identify requirements for Treasury to evaluate SSBCI. We also interviewed Treasury officials on their plans to evaluate SSBCI, including how they intend to use participants’ 2017 assessments of their programs, as required by their Allocation Agreements. We used criteria from our guidance on designing program evaluations to evaluate Treasury’s plans for its evaluation of SSBCI.\nWe conducted this performance audit from May 2013 to December 2013 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 reviewed Treasury’s program data and SSBCI participants’ quarterly report data as of June 30, 2013, and found that SSBCI participants had used their SSBCI allocations at varying rates.", "", "", "Daniel Garcia-Diaz, (202)-512-8678, [email protected].", "In addition to the individual named above, Kay Kuhlman (Assistant Director), Bethany Benitez, Anna Chung, Elizabeth Curda, Pamela Davidson, Christine Houle, Beverly Ross, Jennifer Schwartz, and Jena Sinkfield made key contributions to this report." ], "depth": [ 1, 1, 2, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "h0_full", "h0_full", "h0_title", "", "", "h0_full", "h2_title h1_full", "h2_full h1_full", "h2_full h1_full", "h1_full", "", "", "h2_full", "h0_full", "", "", "", "" ] }

{ "question": [ "How has the amount of money allocated to SSBCI participants changed since 2012?", "What challenges do SSBCI participants face with funds?", "What challenges will SSBCI participants continue to face?", "How is SSBCI managed?", "How does Treasury use performance measures?", "What has Treasury not yet done with performance measures?", "How could setting targets be beneficial to Treasury?", "How could seeking input from external stakeholders early in the design process be beneficial to Treasury?", "How was the SSBCI created?", "What does SSBCI do?", "What have GAO's reports about SSBCI said?", "How did GAO get information for these reports?" ], "summary": [ "As of June 30, 2013, State Small Business Credit Initiative (SSBCI) participants--states, territories, and municipalities--had used $549 million of the $1.5 billion the Department of the Treasury (Treasury) allocated to them, nearly four times the amount used as of June 30, 2012.", "Participants' challenges with using funds at the start of the program resulted from some program policies not being finalized and low demand for some program types, among other things.", "For example, some large lenders have been reluctant to partner with SSBCI participants because the variation in participants' programs makes it difficult for lenders to implement the program on a national basis, which has limited the program's reach into the small business lending market.", "Treasury uses performance measures to manage SSBCI.", "For example, Treasury uses performance measures to adjust staff allocations and to identify participants that may need additional assistance.", "Although Treasury has set targets for program administration measures (for example, how long it takes the agency to approve participants' requests to modify their programs), it has not set targets for performance (for example, the amount of funds used over time).", "Targets could help Treasury identify program areas needing improvement.", "By seeking input from external stakeholders early in the design phase, Treasury can help ensure that it designs an evaluation that is useful for decision makers and other agencies working to promote small business credit access.", "The Small Business Jobs Act of 2010 created SSBCI within Treasury.", "The program provides direct funding to participants for programs that expand access to capital for small businesses.", "GAO's first two reports examined Treasury's implementation of SSBCI and its processes for monitoring compliance and procedures for evaluating and communicating program outcomes. This third report examines, among other things, the extent to which (1) participants have used their SSBCI allocations and faced challenges in using the funds, and (2) Treasury has used performance measures and program evaluation to manage SSBCI.", "GAO reviewed Treasury's SSBCI policies and procedures and participants' data on fund usage and interviewed officials from Treasury, eight states, and one municipality. GAO selected the states and municipality based on usage of SSBCI funds, the number of programs they implemented, and geographic dispersion, among other things." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, -1, -1, -1, 0, -1, 2 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2, 2, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction: U.S. Tsunami Warning Centers", "Detecting Tsunamis and Issuing Warnings", "The DART Buoy Network", "The National Tsunami Hazard Mitigation Program", "Issues for Congress", "Reauthorization of the National Tsunami Hazard Mitigation Program: Legislation in the 114th Congress", "Section 1: Short Title", "Section 2: Definitions", "Section 3: Purposes", "Section 4: Tsunami Forecasting and Warning Program", "Section 5: National Tsunami Hazard Mitigation Program", "Section 6: Tsunami Research Program", "Section 7: Global Tsunami Warning and Mitigation Network", "Section 8: Tsunami Science and Technology Advisory Panel", "Section 9: Report on Implementation of Tsunami Warning and Education Act", "Section 10: Authorization of Appropriations", "Section 11: Outreach Responsibilities", "Funding for the Tsunami Program" ], "paragraphs": [ "", "The United States has two centers that monitor, detect, and issue warnings for tsunamis. The National Oceanic and Atmospheric Administration's (NOAA's) National Weather Service (NWS) manages both centers. The NWS operates the Pacific Tsunami Warning Center (PTWC) at Ford Island, Hawaii, and the National Tsunami Warning Center (NTWC) at Palmer, Alaska. (Before October 1, 2013, the NTWC was known as the West Coast and Alaska Tsunami Warning Center, or WC/ATWC).\nThe PTWC monitors for tsunamis and issues warnings for the Hawaiian Islands, the U.S. Pacific territories, and other U.S. and international interests in the Pacific basin outside the NTWC area of responsibility. Following the 2004 Indian Ocean tsunami, the PTWC took on responsibility for monitoring the Indian Ocean, South China Sea, Caribbean Sea, and, temporarily, the U.S. Virgin Islands and Puerto Rico (until June 2007, when responsibility was passed to what was then known as the WC/ATWC). The PTWC was established in 1949 after a strong earthquake and massive landslides off the coast of Southwest Alaska caused a disastrous tsunami that hit the Hawaiian Islands only hours later. The PTWC issued tsunami warnings to Alaska until 1967, when the WC/ATWC was established.\nThe WC/ATWC (now the NTWC) was established in the aftermath of the magnitude 9.2 Good Friday earthquake that struck Anchorage, Alaska, in 1964 and caused major earthquake and localized tsunami damage. The NTWC is responsible for issuing tsunami warnings to emergency management officials in Alaska, British Columbia (Canada), Washington State, Oregon, and California. In 2005, the NTWC expanded its scope to include the U.S. Atlantic and Gulf of Mexico coasts, as well as the Atlantic coast of Canada. In 2007, the NTWC added Puerto Rico and the U.S. and British Virgin Islands to its scope. Figure 1 shows the areas of responsibility for the PTWC and the NTWC.", "The tsunami warning centers monitor and evaluate data from seismic networks and determine if a tsunami is likely based on the location, magnitude, and depth of an earthquake. If a center determines that a tsunami is likely, it transmits a warning message to NOAA's weather forecasting offices and state emergency management centers, as well as to other recipients. The centers monitor coastal water-level data, typically with tide-level gauges, and data from NOAA's network of Deep-Ocean Assessment and Reporting of Tsunamis (DART) detection buoys to confirm that a tsunami has been generated or, if one has not been generated, to cancel any warnings. Figure 2 shows a generalized decision tree network for the earthquake-detection-through-warning process.", "NOAA first completed a six-buoy DART array in 2001 in the Pacific Ocean. After the 2004 Indian Ocean earthquake and tsunami that killed more than 200,000 people, Congress passed P.L. 109-424 , the Tsunami Warning and Education Act, to enhance and modernize the existing Pacific Tsunami Warning System and broaden coverage, reduce false alarms, and increase the accuracy of forecasts and warnings, among other purposes. In part, the 2004 tsunami provided the impetus to expand and upgrade the DART system and to improve the U.S. capability to detect and issue warnings for tsunamis generally. As a result, the DART array was expanded to a total of 39 U.S. DART buoys in March 2008. (See Figure 3 .) In addition, 8 other countries operate 21 additional DART buoys positioned near faults in the seafloor beneath the Indian and Pacific Oceans, bringing the global total to 60 buoys.\nP.L. 109-424 requires that NWS ensure that maintaining operations of tsunami detection equipment is the highest priority within the tsunami forecasting and warning program at NOAA. Further, P.L. 109-424 requires the NOAA administrator to notify Congress within 30 days of (1) impaired regional forecasting capabilities due to equipment or system failures and (2) significant contractor failures or delays in completing work associated with the tsunami forecasting and warning system. As of November 18, 2015, 4 of the 39 U.S. buoys (10%) were not operational. This represents an improvement over the course of the year; in March 2015, 9 of the buoys were not operational (23%).\nThe inoperable stations likely would not prevent the issuance of tsunami warnings, which are primarily a function of seismic data from an earthquake or landslide, combined with location information about the event. However, lacking stations could mean the warnings encompass a larger area than would be the case if all stations were operating, and it could lengthen the time a warning remains in effect.", "According to NOAA, the National Tsunami Hazard Mitigation Program (NTHMP) was formed in response to the recognition of a tsunami threat to Oregon, Washington State, and Northern California from a large earthquake on the Cascadia subduction zone, which lies off the northwest coast of the United States and is capable of generating earthquakes as large as magnitude 9 or greater.\nAmong other activities, the NTHMP assists states in emergency planning and in developing maps of potential coastal inundation for a tsunami of a given intensity. The NTHMP also operates tsunami disaster outreach and education programs in support of NOAA's TsunamiReady program. NOAA's primary goals for the NTHMP are as follows:\n1. raise awareness of the affected population; 2. develop integrated tsunami maps and recognize models that can be used to develop improved warning guidance and evacuation maps; 3. improve tsunami warning systems; and 4. incorporate tsunami planning into state and federal multi-hazard programs.\nThe Tsunami Warning and Education Act, P.L. 109-424 , further focused the NTHMP and charged NOAA with addressing the nation's priorities in tsunami detection, warning, and mitigation. As authorized by P.L. 109-424 , the NTHMP assumed responsibility for planning and executing NOAA's tsunami activities, namely detection, warning, forecasts, communication, outreach and education, and research. The program coordinates activities among NOAA organizational entities and outside partners.", "Maintenance and availability of the DART buoy network have been key issues for Congress. In its report accompanying the FY2015 Commerce, Justice, Science, and Related Agencies appropriations bill, the House Appropriations Committee admonished NOAA for failing to maintain its network to its own 80% availability standard, despite receiving full funding in FY2014. In P.L. 109-424 , Congress stated that \"maintaining operational tsunami detection equipment is the highest priority within the program carried out under this Act.\" This requirement also was included in a Senate bill ( S. 2181 ) that would have reauthorized the tsunami program in the 113 th Congress.\nIn the 114 th Congress, bills introduced in the House ( H.R. 34 ) and Senate ( S. 533 ) address DART buoy maintenance and availability as well as other issues regarding the NTHMP. The House passed H.R. 34 , the Tsunami Warning, Education, and Research Act of 2015, on January 7, 2015, by unanimous consent. The Senate passed its version of the legislation, as an amendment in the nature of a substitute for H.R. 34 , on October 6, 2015, by unanimous consent. The following section provides a brief comparison of the bills.", "Both versions of the legislation would amend the Tsunami Warning and Education Act and authorize appropriations for the NTHMP through FY2017 ( H.R. 34 ) or through FY2021 ( S. 533 ). Authorization for the program's appropriations in P.L. 109-424 expired in FY2012. Both bills apparently would not make fundamental changes to the NTHMP but would broaden the program to include an additional focus on tsunami research and outreach, among other alterations.\nThe following summarizes the changes the House- and Senate-passed bills would make to P.L. 109-424 on a section-by-section basis and notes significant differences between the two versions. Except where noted, the discussion refers to specific sections of the proposed legislation and not to sections of current law.", "Both bills would add the term research to the title of the act.", "P.L. 109-424 defined NOAA and the NOAA administrator . Both bills would omit the section on definitions.", "Both bills would streamline and update the language in several subsections and add a new subsection (4) that focuses on research as part of the program: \"to improve research efforts related to improving tsunami detection, forecasting, warnings, notification, mitigation, resiliency, response, outreach, and recovery.\"", "Both bills are broadly similar throughout Section 4, with some important distinctions. Both bills would streamline and update the language in several subsections. In subsection (b), the Senate-passed version would require that 80% of the DART buoys be maintained at operational capacity. It also would include a requirement for a cooperative effort among NOAA, the U.S. Geological Survey, and the National Science Foundation under which the agencies' directors would \"provide rapid and reliable seismic information ... from international and domestic seismic networks.\" The House-passed bill does not include those provisions.\nBoth bills would rename subsection (c) the Tsunami Warning System (previously System Areas). This subsection would require the system to be capable of forecasting tsunamis in the Pacific, Arctic, and Atlantic Oceans, including the Caribbean Sea and Gulf of Mexico. Subsection (c) also would require a system that supports other international forecasting and warning efforts.\nSubsection 4(d) in both bills explicitly names the NTWC (formerly the WC/ATWC), and includes a requirement that, to the extent practicable, the tsunami warning centers use a range of models to predict tsunami arrival times and flooding estimates. The House-passed bill would add four new subsections, 4(d)(3) through 4(d)(6), that would require a fail-safe warning capability, meaning the two tsunami centers would perform back-up duties for each other. The subsections also would require the tsunami warning centers to coordinate with the NWS; the NTHMP to develop uniform operational procedures for both centers; and NOAA to ensure that resources, including supercomputing resources, are made available to fulfill the obligations of the legislation.\nThe Senate-passed bill adds language focusing on using data to calculate new inundation estimates, including estimates for ports and harbors at risk of tsunami inundation, as well as ensuring coordination and data sharing with the Coast Guard.\nBoth bills would require coordination with the NWS. The House-passed bill, however, would direct the NWS to coordinate with the tsunami warning centers, whereas the Senate-passed bill would require that the NOAA administrator coordinate with the NWS, as well as any other program office considered appropriate. It is unclear whether the different emphasis on who is required to coordinate with whom would affect the degree of coordination that would ensue. Further, the Senate-passed bill calls for the increased coordination effort to ensure that regional and local forecast offices would implement mass communication tools, both those in effect and tools yet to be developed, so that tsunami warnings would be delivered in a timely and effective fashion.\nBoth bills in subsection (e) would omit requirements in P.L. 109-424 for a report to Congress regarding integration of the tsunami warning system with other U.S. observational systems and for a report to Congress on how technology developed under the tsunami research program is being transferred to operations.\nThe House-passed bill further would omit subsections 4(g) through 4(k) in Section 4 of P.L. 109-424 . The Senate-passed bill would omit subsection 4(g), and subsections 4(i) through 4(k) of P.L. 109-424 , but it would retain subsection 4(h), which requires congressional notification in case of impaired forecasting capabilities due to equipment or system failures. Under subsection 4(h), the Senate-passed bill also would require congressional notification within 90 days of a significant tsunami warning, including brief information and analysis of the accuracy of the tsunami model used, the monitoring equipment that detected the tsunami, and the effectiveness of the warnings issued. The House-passed version does not include this congressional reporting requirement.", "Both bills are broadly similar in Section 5. In subsection (a), they both would require consultation with the Federal Emergency Management Administration and other agencies that NOAA deems relevant in conducting a community-based tsunami hazard mitigation program to improve tsunami preparedness and resilience in at-risk areas of the nation. Current law does not specify that NOAA consult with any particular agency.\nThe bills would omit subsection (b) of current law, which established a coordinating committee for the NTHMP, and would include expanded and modified requirements for program components as the new subsection (b). For example, the new subsection 5(b)(1) would require the NTHMP to provide technical and financial assistance to coastal states, territories, tribes, and local governments to develop and implement activities under Section 5. Both bills would require similar activities, under 5(b)(4), to support the development of regional tsunami hazard and risk assessments. The Senate-passed bill also would require evaluations and technical assistance for \"vertical evacuation structure planning for communities where models indicate limited or no ability for timely evacuation.\" In other words, where members of the community would not have time to move inland before the tsunami struck, they could occupy the \"vertical evacuation structures\" to climb above the tsunami wave crest as the wave passed below.\nSection 5 of both bills would add a new subsection (c) of authorized activities that the program may include, such as multidisciplinary vulnerability research, education, and training; risk management training for local officials and community organizations; development of applications for existing or emerging technologies; risk management, risk assessment, resilience data and information services; and risk notification systems.\nSection 5 also would include a new subsection 5(d) in the House-passed bill (5(e) in the Senate-passed version) that would allow states to designate at-risk areas based on knowledge of local conditions in addition to those designated by the federal program.\nIn addition, Section 5 in both bills would require a report on accreditation of the TsunamiReady program within 180 days of enactment. The report would indicate which authorities and activities would be needed to have the TsunamiReady program accredited by the Emergency Management Accreditation Program.", "Both bills would modify the research program authorized under P.L. 109-424 in several ways. It would task NOAA with supporting and maintaining the research program in consultation with other federal agencies, state and territorial governments, academic institutions, the coordinating committee (established in Section 11 of the House-passed bill and Section 5 of the Senate-passed bill), and the scientific advisory committee established in Section 8 (see \" Section 8: Tsunami Science and Technology Advisory Panel \").\nSection 6 also would broaden the responsibilities of the research program. For example, the section specifies that the program shall consider other research to mitigate the impacts of a tsunami, including the improvement of near-field tsunami detection and forecasting abilities, which may include use of the Deep-Ocean Assessment and Reporting of Tsunamis (DART) buoys and NOAA supercomputers. In addition, Section 6 would add a new subsection to require development of the technical basis for validation of tsunami maps, numerical tsunami models, digital elevation models, and forecasts.\nIn the House-passed bill, Section 6 also would allow NOAA to launch a pilot project to examine a specific area, the Cascadia region along the northwest coast of the United States, and develop near-field tsunami forecasting capability for that region. The Senate-passed bill does not contain a similar provision. The Cascadia subduction zone lies offshore of Washington State, Oregon, and Northern California, and it has the potential to generate major earthquakes of similar magnitudes to the magnitude 9 Great Sendai Earthquake that struck Japan on March 11, 2011, and generated a devastating tsunami that killed thousands of Japanese citizens. Forensic evidence has shown that one of the world's largest earthquakes occurred along the Cascadia subduction zone in the year 1700, generated a large tsunami that struck the northwest coast of the United States, and traveled across the Pacific and damaged coastal villages in Japan.", "Both bills would update the language of this section and require that NOAA coordinate with the U.S. State Department to provide technical assistance and training to the Intergovernmental Oceanographic Commission of the United Nations Educational, Scientific, and Cultural Organization and other international entities.", "Both bills would establish a new advisory panel in Section 8 by requiring the NOAA administrator to \"designate an existing working group within the Science Advisory Board of the Administration to serve as the Tsunami Science and Technology Advisory Panel.\" The panel would advise NOAA on tsunami science, technology, and regional preparedness. The panel would meet at least once every four years to review the tsunami-related activities of the federal government and would submit its review findings to NOAA, along with any recommendations. The NOAA administrator, in turn, would submit the panel's report to the Senate Committee on Commerce, Science, and Transportation and the House Committee on Science, Space, and Technology.", "Both bills would require that NOAA submit to Congress a report on progress in implementing the Tsunami Warning and Education Act with a detailed description of progress in implementing three sections of the proposed legislation:\nSection 4(d)(6), available resources—requirement that NOAA ensure that resources are available to fulfill the obligations in the House-passed bill; Section 5(b)(6), dissemination of guidelines and standards for community planning; education; and training products, programs, and tools, including standards for mapping products, inundation models, and effective emergency exercises; and Section 6(b)(4), development of the technical basis for validation of tsunami maps, numerical tsunami models, and forecasts.\nSection 9 also would require that the report to Congress include a description of the ways in which tsunami warnings and warning products issued by the program can be standardized and streamlined with warnings for other natural hazards, specifically hurricanes, coastal storms, and other coastal flooding events.\nThe Senate-passed bill also would require an additional report on national efforts that \"support and facilitate rapid emergency response following a domestic near-shore tsunami event to better understand domestic effects of earthquake derived tsunami on people, infrastructure, and communities in the United States.\" The House-passed version does not contain a similar provision.", "The House-passed bill would authorize appropriations for the tsunami activities for three years—FY2015 through FY2017—in the amount of $27 million each year. As in current law, the bill specifies that no less than 27% of the amount appropriated would be for the NTHMP under Section 5 of the bill and that no less than 8% of the appropriated amount should be for the Tsunami Research Program under Section 6 of current law. The Senate-passed bill contains the same formula for allocation of the appropriations but would authorize the program for six years, from FY2016 to FY2021.", "Both bills would require NOAA to coordinate with state and local emergency managers to develop and carry out formal outreach activities with the goals of improving tsunami education and awareness and fostering the development of resilient communities.\nSection 11 in the House-passed bill would reauthorize the NOAA administrator to convene a coordinating committee, originally established under Section 5(b) of P.L. 109-424 , that would assist with the administration of the NTHMP. Section 11 would require the committee to have representatives from each of the states at risk from tsunamis in addition to other representatives that the NOAA administrator deems appropriate. The coordinating committee would contribute to the program as follows:\nprovide feedback on how funds should be prioritized to carry out the NTHMP as established by Section 5 of P.L. 109-424 and modified by the House-passed bill; ensure that the areas encompassed by the tsunami warning system in the Pacific Ocean, Arctic Ocean, and Atlantic Ocean, Caribbean Sea, and Gulf of Mexico have the opportunity to participate in the program; provide recommendations to the NOAA administrator on how to improve and advance the TsunamiReady program; and ensure that all components of the NTHMP are integrated with state-based hazard warning, risk management, and resilience activities.", "For FY2015, the Senate Appropriations Committee instructed NOAA to maintain funding at the FY2014 level for the NTHMP. The committee report rejected a proposal from NOAA to terminate funding for tsunami preparedness within the program. The House Appropriations Committee instructed NOAA to allocate $27 million for the NOAA Tsunami Program. The House report noted that the funding amount fully supports planned maintenance for the DART buoy network (discussed above) and that the committee expects NOAA to maintain availability at no fewer than 80% of the stations. (Currently, about 90% of the stations are operational, as noted above.) In addition, the House report included instructions to include $6 million above NOAA's request for FY2015 to restore Administration-proposed reductions to NTHMP grant funds.\nDuring FY2015, NOAA reorganized portions of its budget and aligned costs for the tsunami activities into two accounts: DART buoys are funded out of Observations Programs, Projects, and Activities (PPA), and all other tsunami activities are funded out of Analyze, Forecast, and Support PPA. For tsunami activities in FY2015, NOAA allocated $12.2 million under Observations PPA and $19.2 million under Analyze, Forecast, and Support PPA, for a total of $31.4 million. The FY2016 budget request was $6 million less than the FY2015 enacted amount (representing a $6 million reduction in the NTHMP grant funds, similar to the Administration's FY2015 request).\nFunding for the NOAA tsunami program historically has supported three main categories of activities: (1) warning , such as the activities of the tsunami warning centers and DART network; (2) mitigation , such as the activities of the NTHMP; and (3) research , including activities conducted by the Pacific Marine Environmental Laboratory and the National Buoy Data Center. In the NOAA budget, these activities have been cross-cutting among different activities under the NWS line item. The Government Accountability Office (GAO), which analyzed funding data for the three general categories in 2010, noted that total funding for all these activities ranged from $5 million to $10 million annually between FY1997 and FY2004 but increased after the 2004 Indian Ocean tsunami from approximately $27 million in FY2005 to $42 million in FY2009. According to GAO, the proportion of funding allocated to warning activities increased from about 40% of the total in FY2004 to approximately 70% of the funding in FY2009. The proportion allocated to mitigation decreased from approximately 50% of the total in FY2004 to about 30% in FY2009, whereas the proportion for research remained steady between about 6% and 10%." ], "depth": [ 0, 1, 2, 2, 1, 1, 2, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h1_title", "", "h1_full", "h1_full", "h0_full h3_full", "h0_full", "", "", "", "", "", "", "", "", "", "h0_full", "", "h2_full" ] }

{ "question": [ "What is the Tsunami Warning, Education, and Research Act of 2015?", "What did Senate introduce in relation to this act?", "What was the outcome of Senate's introduction of its own bill?", "What effects would the Senate and House bills have on NTHMP?", "What does NTHMP do?", "What is the goal of NTHMP?", "Why did the NTHMP form?", "How does the NTHMP support NOAA programs?", "What did NOAA do in FY2015?", "What portions of the budget did NOAA reorganize?", "How does the FY2016 budget request compare to the FY2015 enacted amount?", "What are issues for Congress regarding the US Tsunami Program?", "What does P.L 109-424 state?", "What is the issue with this regarding House and Senate passed versions of the bill?" ], "summary": [ "The bill would amend the Tsunami Warning and Education Act (P.L. 109-424) and authorize appropriations for the National Tsunami Hazard Mitigation Program (NTHMP) through FY2017.", "On February 23, 2015, the Senate introduced its version of the bill, S. 533, which would authorize appropriations for six years through FY2021.", "On October 6, 2015, the Senate passed its legislation as an amendment in the nature of a substitute for H.R. 34 by unanimous consent.", "Neither bill would make fundamental changes to the NTHMP, but both would broaden the program to include an increased focus on tsunami research and outreach, among other alterations.", "The NTHMP assists states in emergency planning and in developing maps of potential coastal inundation for a tsunami of a given intensity.", "A goal of the program is to ensure adequate advance warning of tsunamis along all U.S. coastal areas and appropriate community response to a tsunami event.", "The NTHMP formed in 1995 in response to the recognition of a tsunami threat to Oregon, Washington, and Northern California from a large earthquake on the Cascadia subduction zone, which lies off the northwest coast of the United States and is capable of generating earthquakes as large as magnitude 9 or greater.", "The NTHMP also operates tsunami disaster outreach and education programs that support NOAA's TsunamiReady program.", "During FY2015, NOAA reorganized portions of its budget and aligned costs for tsunami activities into two accounts.", "For FY2015, $12.2 million was allocated under Observations Programs, Projects, and Activities (PPA), and $19.2 million was allocated under Analyze, Forecast, and Support PPA, for a total of $31.4 million.", "The FY2016 budget request is $6 million less than the FY2015 enacted amount.", "Key issues for Congress include maintenance and availability of the DART buoy network.", "P.L. 109-424 states that \"maintaining operational tsunami detection equipment is the highest priority within the program carried out under this Act.\"", "The House-passed bill would require that \"the Administration's operational tsunami detection equipment is properly maintained,\" but the Senate-passed version would be more specific and require, \"to the degree practicable, [the maintenance of] not less than 80 percent of the [DART] buoy array at operational capacity.\"" ], "parent_pair_index": [ -1, 0, 1, -1, -1, 0, 0, 0, -1, 0, -1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 5, 5, 5 ] }

{ "title": [ "Background", "LMP Supports AMC’s Industrial Operations, but Additional Development Is Needed to Meet Certain Critical Requirements", "AMC Is Using LMP to Support Its Industrial Operations", "Additional LMP Development Needed to Meet Certain Critical Army Requirements", "LMP Has Provided Some Benefits to the Army, but the Extent of Financial Benefits to Date Is Unknown", "LMP Has Provided Some Benefits to the Army", "Extent of Financial Benefits to Date from Deploying LMP Is Unknown", "Conclusions", "Recommendation for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Comments from the Department of the Army", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "The Army initiated LMP in 1999 to replace two aging materiel management systems—the Commodity Command Standard System and the Standard Depot System. In replacing these systems, which had been used for more than 30 years to manage inventory, depot maintenance, and arsenal manufacturing operations, the Army expected LMP to help transform its logistics operations. A modified commercial off-the-shelf system, LMP was intended to support AMC industrial operations and improve business processes and practices in areas such as operations at depots and arsenals and inventory management. By providing a single source of data and integrated decision-making tools, LMP was expected to increase efficiencies in AMC operations—such as buying and managing spare and repair parts and conducting depot level maintenance. For example, in the area of planning future maintenance capacity, the Army expected improvements to AMC budget forecasts and adjustments through reduced repair cycle time, better resource allocation, increased production throughput, reduced production cost, and more accurate production schedules. With LMP’s deployment, the Army expected to achieve benefits that included reduced equipment repair times, improved inventory forecasting, and cost savings. Additionally, LMP is part of the Army’s broader strategy to implement enterprise resource planning systems in other areas and, as such, is expected to integrate with other Army systems, to include the General Fund Enterprise Business System and the Global Combat Support System- Army.\nThe deployment of LMP Increment 1 across AMC occurred in three phases between 2003 and 2010. The first phase of LMP deployment occurred at the Communications-Electronics Command and Tobyhanna Army Depot in July 2003. LMP was originally expected to be fully deployed across AMC by June 2004, but problems experienced during the first phase of deployment caused the Army to delay further deployment until these problems were resolved. The second phase of LMP deployment occurred at the Aviation and Missile Command and Corpus Christi and Letterkenny Army Depots in May 2009. The third and final deployment phase occurred in October 2010 at depots, arsenals, and other sites within the Army Sustainment Command, the Joint Munitions and Lethality Command, and the Tank-automotive and Armaments Command.\nThe Army has plans to expand the capabilities of LMP. On December 27, 2011, the Under Secretary of Defense for Acquisition, Technology and Logistics signed an Acquisition Decision Memorandum that categorized the deployed components of LMP as Increment 1 and considered all new LMP acquisition activities after December 28, 2011, to be Increment 2. The memorandum directed the Army, in preparing for the next acquisition milestone review of Increment 2, to submit an updated business case along with other specified documents. The Army prepared and submitted documents in response to the memorandum, including an updated business case and an accompanying economic analysis, for an acquisition milestone review that was held on June 25, 2013. As a result of this review, the Army received approval for Increment 2 to move into the engineering development phase of its acquisition. The Army intends to deploy Increment 2 in three waves, beginning in December 2013, and is planning for the deployment to be completed by September 30, 2016. Figure 1 shows a timeline for LMP development and deployment, including both Increment 1 and Increment 2.\nAs of May 2013, the Army had increased its projections for the system’s total life cycle costs from $2.6 billion (fiscal years 2000 through 2021) to more than $4 billion (fiscal years 2000 through 2026). This estimate includes the fielded components of LMP—Increment 1—as well as the expansion of LMP capabilities under Increment 2 (see table 1).", "AMC is using LMP to support its industrial operations, but additional development of LMP is necessary, according to the Army, because the current system does not support certain critical requirements that have emerged since the initial development of LMP and because the current system will not enable the Army to generate auditable financial statements. Officials at the 14 AMC sites we visited stated that LMP provided the core functionality they needed to support their operations. They stated that over time they are improving in their ability to use LMP, and some sites have locally developed tools to augment its capabilities. Army officials stated that although LMP is functional, the current system does not support certain critical requirements, such as requirements related to automatically tracking repair and manufacturing operations on the shop floor of depots and arsenals. In addition, according to Army officials, the current system will not enable the Army to generate financial statements validated as ready for audit by 2017, the statutory deadline for this goal. Increment 2 is intended to address these shortcomings.", "AMC is using LMP to support operations at its industrial sites. Officials at all 14 of the sites we visited between October 2012 and March 2013 told us that LMP provided the core functionality they needed to conduct their operations. Specifically, officials from each of the five Army depots stated that they were able to perform their maintenance, repair, and overhaul responsibilities using LMP; Rock Island Arsenal officials stated that they could perform their manufacturing operations using LMP; and officials at the Army ammunition sites we visited told us they used LMP to manage their inventory. Similarly, officials at the life cycle management commands stated that they were able to carry out their operations, which include the management of spare parts inventory. Additionally, periodic status reports submitted to AMC headquarters show that industrial sites where LMP has been deployed have been able to conduct their repair and manufacturing operations. These reports—which include data on the workload planned and completed for the current fiscal year—are submitted and discussed during regularly-held meetings to provide AMC headquarters with an update on the status of operations. Furthermore, the Army’s fiscal year 2013 and 2014 working capital fund budget documents state that LMP is functional at each of AMC’s life cycle management commands.\nWe reported in November 2010 that the Army Sustainment Command, the Joint Munitions and Lethality Command, and arsenals under the Tank-automotive and Armaments Command—all of which had been in the final deployment phase of LMP in October 2010—required additional system functionality to perform their unique operations and that this functionality had not yet been delivered. We followed up on each of these previously reported issues for our current review.\nThe Army Sustainment Command needed (1) an interface between LMP and the Army War Reserve Deployment System, a separate system used to track inventory and transfer accountability of pre- positioned stocks to units and (2) software functionality to conduct mass uploads—the automated movement of thousands of items of inventory between the Army Sustainment Command and the warfighter. During our current review, we found that the Army Sustainment Command had established an interface between LMP and the Army War Reserve Deployment System, and officials stated that LMP now has the capability to perform a mass upload.\nThe Joint Munitions and Lethality Command required specific functionality to ship, receive, inventory, and perform stock movements for ammunition. To accomplish these tasks, the Joint Munitions and Lethality Command required the development of an interface between LMP and a system commonly referred to as SmartChain. We found during our current review that the interface between LMP and SmartChain has been established, and officials stated that LMP and SmartChain provide the capability needed to perform these tasks.\nThe Tank-automotive and Armaments Command required specific functionality at its arsenals to automatically report data for items it manufactures. When Rock Island Arsenal and Watervliet Arsenal switched from their legacy system to LMP, they lost this capability because LMP does not include a manufacturing and execution system that provides this capability. We found during our current review that Rock Island Arsenal has since developed its own software tools and manual processes to provide similar functionality. Specifically, Rock Island Arsenal uses three legacy systems, which together cost approximately $300,000 per year to operate. Arsenal officials told us that they developed an additional system to report manufacturing data and track the status of items being manufactured—at a cost of about $400,000. They hired additional personnel to manage these systems, which includes manually entering data into LMP. According to documents provided by Rock Island officials, annual costs for these systems and personnel will average $3.6 million from fiscal years 2013 through 2016. Arsenal and AMC officials stated that they expect Increment 2 to replace systems they are currently using to manage their shop floor operations. (We did not visit Watervliet Arsenal for this review).\nOfficials at AMC sites we visited stated that over time they are improving in their ability to use LMP, and some locations have developed tools and processes to better extract and analyze LMP data, or to fill in gaps in existing LMP functionality. In addition to the manufacturing tracking tools and processes developed at Rock Island Arsenal, as discussed above, we found the following examples:\nRed River Army Depot officials created a tool that enables users to generate customizable reports based on data extracted from LMP. Officials said they use these reports to brief depot leadership on areas such as schedule performance and inventory. Tobyhanna Army Depot created a tool using Microsoft Excel that extracts data from LMP and develops visual reports—in graphs and charts—to analyze depot workload and perform capacity planning. According to Tobyhanna officials, these reports allow them to manage depot operations by, for example, determining whether workload schedules need to be adjusted or personnel reassigned to higher priority tasks.\nCorpus Christi Army Depot, using a combination of legacy systems, manual processes, and a locally-developed software tool, gained, among other things, the ability to automatically track the progress of work on the shop floor and record employee’s labor charges. Depot officials stated that the use of this tool, in conjunction with LMP, has provided them with detailed data that helps them to better manage their operations and achieve efficiencies by improving depot processes, such as decreasing the cost to repair UH-60 helicopters (from $7.58 million per helicopter in fiscal year 2011 to $6.82 million per helicopter in fiscal year 2012) while increasing the quantity of UH- 60 helicopters they can repair (from 48 in fiscal year 2011 to 51 in fiscal year 2012).", "The Army is continuing development of LMP because, as currently deployed, it does not provide all of the functionality the Army needs to meet certain critical requirements, according to Army officials. According to the Army’s business case for Increment 2, the new functionality the Army is developing as part of Increment 2 is intended to address critical requirements that have emerged since the initial development of LMP and that are not addressed by Increment 1. The business case stated that the current system does not support certain critical AMC requirements pertaining to shop floor automation, Army business transformation goals (for example, maintaining data on the maintenance status of equipment), and requirements outlined in DOD guidance (for example, requirements related to item unique identification). Requirements for Increment 2 can be categorized into six components: (1) further integration with other Army and Defense Logistics Agency enterprise resource planning systems, (2) controlling and maintaining visibility over material managed by non-Army sources of supply, (3) additional capability to manage Army prepositioned stocks, (4) managing repair operations at Army installations, (5) expanded ammunition management capability, and (6) tracking repair and manufacturing operations on the shop floor. Table 2 summarizes the six components and the time line for their deployment.\nIn addition to the critical requirements identified in the Army’s business case for Increment 2, the Army has stated that additional development is necessary because LMP, as currently deployed, will not enable the Army to generate auditable financial statements. The National Defense Authorization Act for Fiscal Year 2010 required the development of a plan to ensure that the financial statements of DOD are validated as ready for audit not later than the end of fiscal year 2017. LMP product office and AMC officials told us that the Army cannot meet this requirement with the functionality currently provided by Increment 1, and the Army’s fiscal year 2013 and 2014 working capital fund budget documents state that although LMP is functional at AMC’s life cycle management commands, it requires the enhancements and upgrades of Increment 2 to generate auditable financial statements. In general, DOD considers the successful implementation of enterprise resource planning systems—which include LMP—critical to addressing long-standing weaknesses in financial and supply chain management, and DOD officials have stated that these systems are critical to ensuring that the department meets its requirement to have auditable consolidated financial statements.\nAccording to Army officials, a key LMP improvement in Increment 2 that supports audit readiness is the addition of the shop floor automation tool (part of the Enhanced Industrial Base component listed in table 2). The tool provides a standardized approach for managing shop floor operations across AMC’s depots and arsenals. This tool, according to Army officials, will provide the capability to track the labor and material expenses to specific work tasks and customers, which is a more detailed reporting capability than what is currently provided by Increment 1. Army officials acknowledged that some locations such as Corpus Christi Army Depot have developed local tools to manage shop floor operations but asserted that such tools cannot support the Army’s achievement of audit readiness. They stated that a significant investment of funds would be needed to make locally developed tools auditable, and that doing so would not be economically feasible.\nIn addition, according to Army officials, it would not be possible to gain all of the capabilities to be delivered with Increment 2 simply by upgrading legacy systems and modifying processes. For example, the Army is currently continuing to use one of the legacy systems that LMP was intended to replace—the Commodity Command Standard System—to control and maintain visibility over material managed by non-Army sources of supply. According to officials from the LMP product office and AMC, this legacy system cannot currently support the Army’s need for auditable financial statements by fiscal year 2017 and thus needs to be replaced. By implementing this component of Increment 2, the Army expects to fully eliminate its need for the Commodity Command Standard System. Another example is related to item unique identification. According to DOD, financial management information necessary for the management of the department’s mission critical assets is also required to support future financial statement audits. This financial management information includes item unique identification, which cannot be accomplished using existing systems or through a completely manual process because, according to Army officials, some unique item identifiers are not human-readable. Instead, Army officials stated that AMC requires an electronic scanner that is planned to be included in the deployment of Increment 2. As a further justification for expanding LMP, the Army estimates that Increment 2 will cost $730 million through fiscal year 2026 but achieve approximately $1.4 billion in financial benefits. Table 3 shows the financial benefits that the Army has projected for Increment 2.\nThe financial benefits shown in table 3 include both anticipated cost savings and cost avoidance. The Army is anticipating cost savings totaling approximately $1.1 billion from reduced contractor support, overtime, legacy information technology, legacy operations, and AMC industrial operations personnel. According to officials from the LMP product office and AMC, cost savings will be realized as reductions to the Army’s planned budgets starting in fiscal year 2017. Officials cited an AMC memo which states that approximately $30 million of the cost savings from reduced contractor support, overtime, and AMC industrial operations personnel should be realized in fiscal year 2017; $60 million should be realized in fiscal year 2018; and $90 million should be realized in fiscal year 2019 and annually thereafter for the life of LMP. According to the officials, the memo is referring to reductions in planned Army budgets in the specified fiscal years. The approximately $250 million in remaining financial benefits expected from Increment 2 includes cost avoidances from implementing the National Maintenance Program component of Increment 2, providing automatic item unique identification recording capability that will eliminate the need to manually perform those tasks, and reducing excess non-Army managed item inventory.", "The use of LMP has provided the Army some benefits, but whether the system has delivered the expected financial benefits to date is unknown because AMC does not have a process to track these benefits. Since its deployment, LMP has provided some benefits to the Army. For example, because LMP relies on accurate data to perform effectively and efficiently, the Army has made data accuracy a priority. The Army has made progress in improving the accuracy of its data by conducting data assessments, correcting data problems, and placing management emphasis on data accuracy. Additionally, the use of LMP has improved accountability for inventory stored at AMC depots and has increased visibility over Army assets. However, the full extent of the financial benefits realized from LMP—which the Army projected would be over $750 million by the end of fiscal year 2012—is unknown because the Army has not tracked the benefits. Federal guidelines and standards outline the need for assessing whether expected benefits from an investment are achieved. To support the development of Increment 2, the Army is developing a performance baseline for sites that will initially deploy Increment 2. Without a process in place to identify and document financial benefits linked to LMP-driven performance improvements, the Army will be unable to track whether it is achieving the expected financial benefits from its sizeable investment.", "Since its deployment, LMP has provided the Army some benefits. During our prior reviews of LMP before the final deployment phase had occurred, we reported that sites using LMP stated it was an improvement over legacy systems, because it increased visibility over assets and provided a single source of data for decision making. During our visits to AMC headquarters and the 14 AMC sites for the current review, officials provided examples of various benefits resulting from using LMP, such as increased visibility over inventory and maintenance operations.\nWe also found that, since our prior reviews, AMC has made progress in improving the accuracy of LMP data that it uses to support industrial operations by conducting data assessments, correcting data problems, and placing management emphasis on data accuracy. Data accuracy is necessary in order for enterprise resource planning systems such as LMP to perform effectively and efficiently. For example, to support repairs of vehicles, LMP contains data that identify the number of vehicles scheduled for repair at a depot, the number of parts needed to support these repairs, and the capacity of the depot to perform the repairs. Based on these data, LMP will recommend to item managers that they purchase a specific quantity of spare parts by a certain date in order to support the scheduled repairs. In order for these recommendations to be correct, the data they are based on must be accurate. If the data on which they are based are not accurate, item managers may purchase either too many or too few spare parts, or the purchases may not be made in time to support the scheduled repair—which could lead to repairs not being completed according to the planned schedule. According to the AMC Data Integrity Strategy, a data accuracy rate of 95 percent or greater—depending on the type of data—is consistent with the industry standard.\nThe Army has instituted several processes to enhance data accuracy. A key effort involves periodic assessments at AMC sites to evaluate the accuracy of LMP data. AMC has determined that these assessments, which are conducted by its Logistics Support Activity, should focus on 29 critical data objects—groupings of data based on function—such as bills of material, purchase orders, or a sequence of repair activities. Between August 2010 and November 2012, the Logistics Support Activity performed 361 assessments across AMC that covered 18 of the 29 critical data objects. The results of these assessments are documented in reports, and the root causes of any problems are identified for correction. Logistics Support Activity officials stated that their goal is to focus attention on these root causes so that data problems do not continue to occur. They will then perform a follow-up assessment, if it is deemed necessary, to assess whether data accuracy has improved. For example, in August 2011, the Logistics Support Activity conducted a review of bills of material at various sites across AMC and assessed the accuracy of AMC’s bills of material at 51 percent—well below their 95-percent standard. In a follow-up review conducted in May 2012, the Logistics Support Activity assessed the overall accuracy of AMC’s bills of material at 92 percent. Furthermore, officials from the Logistics Support Activity stated that follow-up assessments at individual AMC sites have revealed improvements in data accuracy. For example, an initial assessment of work center data at the Letterkenny Munitions Center showed data accuracy to be 27 percent, while the follow-up assessment showed data accuracy to be 100 percent. Officials estimated that sites meet the 95- percent standard during initial data assessments only half of the time, but in follow-up assessments they meet the standard about 90 percent of the time.\nAMC sites we visited are also performing their own internal reviews of LMP data accuracy. For example, Letterkenny Army Depot has a data quality team that has conducted a number of internal assessments. One of these assessments, conducted in October 2012 on the bill of material for a TOW missile, found that multiple materials were listed on the bill of material as required but had no or very limited consumption. Depot officials told us that, based on these types of assessments, the depot intends to make changes to its data to more accurately reflect usage of materials during repairs. Similarly, in order to assess and improve the data in LMP, officials at Anniston Army Depot mapped out the entire end- to-end repair process for the M9 Armored Combat Earthmover, which enabled them to identify data errors in LMP that they corrected. Officials at Red River Army Depot told us that they prepare weekly reports for depot management, and that data accuracy is discussed during meetings held by the depot commander. Officials also stated that they are emphasizing the importance of maintaining accurate LMP data and are holding users accountable for their management of LMP data. For example, officials at all five Army depots stated that LMP users and their supervisors are expected to ensure that the data they manage are accurate.\nThe use of LMP has also increased visibility over inventory. AMC officials stated that LMP provides the capability to automatically calculate the parts needed to conduct a repair at a depot. If the depot does not have these parts, LMP recommends that the needed parts be purchased from some other source of supply. In order for this process to work effectively, all inventory at the depot should be recorded in LMP so the system does not recommend ordering parts the depot already has. Officials at AMC sites we visited told us that prior to LMP, parts might be purchased by the Army and stored at the depot but not necessarily recorded in the legacy systems. Accordingly, item managers could make unnecessary purchases of inventory items that were available but not visible within the legacy systems. AMC stated that, due to the inventory reviews following the deployment of LMP and corrections made to inventory records, it entered more than $200 million worth of inventory into LMP that had already been purchased by the Army and was physically located at the depots but was not recorded in the legacy systems. Accordingly, AMC officials expect that officially tracking inventory that had already been purchased could result in a cost avoidance in the future. Similarly, Aviation and Missile Command officials stated that the better visibility of inventory in LMP enabled them to identify excess inventory that was on hand, which resulted in a cost avoidance of $1.2 million due to reduced inventory storage costs.\nThe use of a single source of data provided by LMP, according to AMC officials, has resulted in other efficiencies. For example, officials at the AMC War Reserve Division stated that they are now able to provide near real-time updates to address questions on the status of war reserves to Army headquarters. These officials stated that, prior to LMP, the process to answer questions from Army headquarters would require 3 weeks to collect and analyze data from the life cycle commands; now, the process can be completed by extracting a report from LMP in minutes. Additionally, AMC officials stated that the single source of data has reduced the number of meetings that need to be held. For example, AMC officials who manage secondary inventory items stated that they are able to track the status of obligations across each of the life cycle management commands by extracting a consolidated report directly from LMP. The officials stated that, prior to LMP, they would hold bi-weekly meetings with the life cycle commands to capture the same information. Additionally, officials at Red River Army Depot stated that LMP provides visibility of inventory at all AMC locations, which has enhanced their ability to redistribute parts to support production needs. These officials stated that, prior to LMP, they had to call other depots to see if additional parts were available; with LMP, they are able to quickly identify which locations have the additional parts.\nFinally, AMC officials stated that LMP has enabled them to develop and begin to implement a set of standardized, enterprise-wide performance measures to better assess the business operations of AMC sites. They told us that the measures previously used to assess AMC performance were inadequate, in part because they were not standardized. For example, officials stated that there was no standard measure for the rate of inventory turnover—which measures the number of times an inventory item is used and replaced during a given period—but that AMC was working on developing such a measure. At the time of our review, the standardized performance measures that AMC had developed included one for inventory turnover, as well as others for depot schedule performance, depot cost performance, forecast accuracy, supplier delivery performance, and direct versus indirect labor hours. According to documents provided by AMC, these measures were being used during regularly-held meetings with AMC headquarters beginning in June 2013.", "The extent to which expected financial benefits have been realized to date from deploying LMP is unknown, because AMC does not yet have a process to track these benefits. Without a process in place to track financial benefits associated with LMP, the Army does not have a way to determine whether LMP’s projected financial benefits are materializing. The Army expected significant financial benefits from the deployment of LMP Increment 1 across AMC, which was completed in October 2010. According to a 2009 study prepared by the Army to support the fiscal year 2010 Investment Review Board certification of LMP, the system was expected to lead to over $750 million in financial benefits by fiscal year 2012 and eventually achieve more than two dollars in benefits for every dollar spent. In its fiscal year 2014 budget documents, the Army projected that LMP would provide an estimated net financial benefit of nearly $1.3 billion through 2020. The Army expected these financial benefits to be achieved largely by LMP-driven improvements to the performance of AMC operations through, for example, reducing inventory, improving productivity, and reducing costs for legacy systems.\nFederal guidelines and standards outline the need for assessing whether expected benefits from an investment are achieved. According to the Office of Management and Budget’s Circular A-94, which provides general guidance for benefit-cost analysis of federal programs, an element of benefit-cost analysis is verification of expected benefits. The circular states that retrospective studies to determine whether anticipated benefits and costs have been realized are potentially valuable. Such studies can be used to determine necessary corrections in existing programs and to improve future estimates of benefits and costs in these programs or related ones. Agencies should have a plan for periodic, results-oriented evaluation of program effectiveness. They should also discuss the results of relevant evaluation studies when proposing reauthorizations or increased program funding. The Office of Management and Budget’s Capital Programming Guide also states that a post-implementation review of an information technology project should evaluate an investment’s efficiency and effectiveness to determine how well the investment achieved the planned functionality and anticipated benefits. Additionally, GAO’s Information Technology Investment Management framework states that a critical process for building a foundation for information technology investment success is providing investment oversight. The purpose of this critical process is to ensure that the relevant organization provides effective oversight for its information technology projects throughout all phases of their life cycles. Such oversight should include observing the project’s progress toward expected cost, schedule, and benefits. Furthermore, federal internal control standards state that managers should compare actual performance to planned or expected results throughout the organization and analyze significant differences.\nHowever, the extent to which the Army has realized the expected financial benefits from LMP is unknown because AMC does not yet have a process to identify and document financial benefits realized as a result of performance improvements gained through the use of LMP. We asked AMC headquarters officials for information on the total financial benefits achieved from using LMP, but they were unable to provide such information because they could not quantify the impact LMP had on inventory value or provide measurements of improved productivity. Officials did not provide an explanation for why they did not have a process to track financial benefits, but they stated that the inability to quantify financial benefits from LMP-driven performance improvements was due in part to the fluctuations in AMC workload resulting from operations in Iraq and Afghanistan. Additionally, most AMC sites we visited reported that LMP had not led to financial benefits that they could quantify. Specifically, officials at 12 of the 14 sites we visited stated that LMP either had not resulted in any quantifiable financial benefits or that they could not provide us with any documentation that quantified the financial benefits.\nThe LMP product office and two AMC sites reported financial benefits from LMP. According to the LMP product office, an estimated $114 million of financial benefits were attributed to legacy system costs that were avoided through fiscal year 2012 as a result of LMP deployment. Additionally, in March 2013, the Aviation and Missile Command reported a $1.2 million cost avoidance due to reduced storage costs from the disposal of excess inventory. Finally, as noted earlier in this report, Corpus Christi Army Depot reported that use of LMP, in conjunction with a locally-developed software tool and manual processes, enabled it to improve depot processes and decrease the costs to repair UH-60 helicopters by approximately $760,000 per helicopter. Because 51 UH-60 helicopters were repaired in fiscal year 2012, AMC officials estimated a total cost savings of approximately $39 million.\nLMP product office and AMC officials told us that there was not an accurate process currently in place to track financial benefits associated with LMP-driven performance improvements. Further, the officials stated that retroactively producing an accurate assessment of benefits realized to date from LMP would be difficult, because the Army had not established a baseline for performance prior to the implementation of LMP against which LMP-driven improvements could then be measured. The officials added that the Army has learned this lesson and has incorporated operational performance metrics in its plans for Increment 2. (These operational metrics are separate from the enterprise-wide performance measures discussed earlier in this report that AMC began to use in June 2013.) Specifically, the Army is in the process of developing an initial operational performance baseline for sites that will pilot Increment 2. According to documents provided by the LMP product office, these operational metrics include assessing the time needed to repair a weapon system or component; the direct labor charges needed to support production at industrial activities; program support overtime (i.e., the amount of overtime for indirect labor—such as schedulers, planners, and resource managers); data entry lag time; tracking the labor and materials expended for rework operations; and inventory visibility managed outside of LMP. Officials from the LMP product office and AMC stated that the process to baseline performance against these metrics is ongoing and primarily focused on the Increment 2 pilot sites, with the intention of assessing performance across all of AMC before the next milestone decision for Increment 2 in May 2015. Because the baseline is still under development, the degree to which these operational metrics will enable the Army to demonstrate financial benefits from deploying Increment 2 is unknown.", "Over the last decade, the Army has made progress using LMP to support its industrial operations, has improved data accuracy in LMP, and has realized benefits. However, because the Army has not established a process for tracking LMP’s financial benefits, it is not in a position to determine whether it is realizing a return on its sizeable investment in LMP. The Army plans to spend another $1.7 billion on operating the deployed components of LMP Increment 1 over the course of the system’s life cycle, in addition to spending another $730 million on Increment 2. Given the magnitude of the investment already committed and planned to be committed to LMP, oversight by decision makers in DOD and the Congress would likely improve with a better understanding of what financial benefits have been realized from deploying LMP to determine whether the Army’s goals for the system are being met and resources are being used effectively.", "To determine whether the Army is achieving its estimated financial benefits in LMP, we recommend that the Secretary of Defense direct the Secretary of the Army to develop and implement a process to track the extent of financial benefits realized from the use of LMP during the remaining course of its life cycle. This process should be linked with the LMP performance baseline now being developed by the Army for use at AMC industrial sites.", "We provided a draft of this report to DOD for comment. The Army provided written comments, which are reproduced in appendix II. The Army concurred with our recommendation and stated that it will develop a process to track the extent of financial benefits recognized within LMP, which will be linked to the LMP performance baseline. The Army also stated that it is initiating a series of workshops to establish an enduring process to capture the financial benefits realized from the use of LMP. These actions, when implemented, will meet the intent of the recommendation. In addition, the Army provided technical comments, which we have incorporated as appropriate.\nWe are sending copies of this report to appropriate congressional committees, the Secretary of Defense, and the Secretary of the Army. In addition, this report will be made available at no charge on the GAO website at http://www.gao.gov.\nShould you or your staff have any questions concerning this report, please contact me at (202) 512-5257 or [email protected]. 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.", "To assess the extent to which LMP supports AMC’s industrial operations, we met with officials at AMC headquarters responsible for overseeing LMP to discuss the system’s deployment and usage. We reviewed our prior work related to the deployment of LMP and followed up on issues that we had previously identified. We also obtained and reviewed pertinent documents, including reports submitted to AMC headquarters by the life cycle management commands and subordinate sites on the status of their industrial operations. We met with officials at 14 AMC sites— including all five AMC life cycle management commands and all five AMC maintenance depots—where LMP is deployed. Specifically, we visited the following individual sites:\nArmy Sustainment Command, Rock Island, Illinois\nAviation and Missile Command, Huntsville, Alabama\nCommunications-Electronics Command, Aberdeen, Maryland\nJoint Munitions and Lethality Command, Rock Island, Illinois\nTank-automotive and Armaments Command, Warren, Michigan\nAnniston Army Depot, Anniston, Alabama\nCorpus Christi Army Depot, Corpus Christi, Texas\nLetterkenny Army Depot, Chambersburg, Pennsylvania\nRed River Army Depot, Texarkana, Texas\nTobyhanna Army Depot, Tobyhanna, Pennsylvania\nRock Island Arsenal (Joint Manufacturing and Technology Center),\nAnniston Defense Munitions Center, Anniston, Alabama\nLetterkenny Munitions Center, Chambersburg, Pennsylvania\nMcAlester Army Ammunition Plant, McAlester, Oklahoma We judgmentally selected Rock Island Arsenal to visit based on its proximity to the headquarters of Army Sustainment Command and the Joint Munitions and Lethality Command, McAlester Army Ammunition Plant based on the scope of its manufacturing and storage mission, and Anniston and Letterkenny Munitions Centers based on their proximity to Army depots. During these site visits, we interviewed officials and obtained relevant documentation regarding the extent to which they used LMP to conduct their operations, were taking actions to improve the accuracy of the data used in LMP, and had realized nonfinancial and financial benefits from LMP.\nWe also obtained and analyzed Army documents, including the business case and an accompanying economic analysis, that were developed to support the Army’s proposal to move forward with the development and acquisition of Increment 2. We met with officials from AMC headquarters and the LMP product office to discuss their plans for Increment 2, and we also discussed the Army’s plans for Increment 2 with officials at individual AMC sites.\nTo determine the extent to which the Army has realized expected benefits from deploying the system, we obtained and reviewed Army documentation describing the expected benefits to be achieved from deploying LMP, including briefings describing the expected benefits and functionality of the system, a 2009 study supporting the fiscal year 2010 Investment Review Board certification of LMP, Army budget documents, and evidence that AMC headquarters, the individual sites, and the LMP Product Office were able to provide regarding actual benefits, if any, achieved to date. We also met with officials at AMC’s Logistics Support Activity to discuss their efforts to improve the accuracy of data used in LMP, and we obtained and reviewed AMC’s strategy for LMP data accuracy as well as documentation on LMP data accuracy assessments performed by the Logistics Support Activity. To assess the reliability of LMP data, we reviewed related documentation on LMP data accuracy and interviewed officials knowledgeable about LMP data. We determined the data were sufficiently reliable for the purposes of our report.\nWe conducted this performance audit from August 2012 to November 2013 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, Thomas Gosling (Assistant Director), Cynthia Grant, Joanne Landesman, Jim Melton, Geoffrey Peck, Amie Steele, and Michael Willems made key contributions to this report.", "DOD Financial Management: Reported Status of Department of Defense’s Enterprise Resource Planning Systems. GAO-12-565R. Washington, D.C.: March 30, 2012.\nDefense Logistics: Oversight and a Coordinated Strategy Needed to Implement the Army Workload and Performance System. GAO-11-566R. Washington, D.C.: July 14, 2011.\nDefense Logistics: Additional Oversight and Reporting for the Army Logistics Modernization Program Are Needed. GAO-11-139. Washington, D.C.: November 18, 2010.\nDOD Business Transformation: Improved Management Oversight of Business System Modernization Efforts Needed. GAO-11-53. Washington, D.C.: October 7, 2010.\nDefense Logistics: Actions Needed to Improve Implementation of the Army Logistics Modernization Program. GAO-10-461. Washington, D.C.: April 30, 2010.\nDefense Logistics: Observations on Army’s Implementation of the Logistics Modernization Program. GAO-09-852R. Washington, D.C.: July 8, 2009.\nDOD Business Transformation: Lack of an Integrated Strategy Puts the Army’s Asset Visibility System Investments at Risk. GAO-07-860. Washington, D.C.: July 27, 2007.\nArmy Depot Maintenance: Ineffective Oversight of Depot Maintenance Operations and System Implementation Efforts. GAO-05-441. Washington, D.C.: June 30, 2005.\nDOD Business Systems Modernization: Billions Continue to Be Invested with Inadequate Management Oversight and Accountability. GAO-04-615. Washington, D.C.: May 27, 2004.\nDOD Competitive Sourcing: Plan Needed to Mitigate Risks in Army Logistics Modernization Program. GAO/NSIAD-00-19. Washington, D.C.: October 4, 1999." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h0_full h2_full", "h0_full h2_full", "h2_full", "h0_full", "h1_full", "h1_full", "h1_full", "h2_full", "h3_full", "h3_full", "h2_full", "", "", "", "", "" ] }

{ "question": [ "Why is AMC using the LMP?", "What did officials at AMC sites say about LMP?", "What did army officials say about LMP?", "How will increment 2 deal with what army officials said about LMP?", "Why is it hard to know whether Increment 1 delivered the expected financial benefits?", "How has LMP helped the army?", "How did officials say LMP was beneficial?", "Why is there an inability to quantify benefits from LMP?", "What is LMP?", "Why was Increment 2 implemented?", "What is the estimated life cycle for increments 1 and 2?", "What does this report assess?", "How did GAO get information for this report?", "What does GAO recommend do the Army?", "How did the Army respond to GAO's recommendation?", "What should the process GAO recommended that the Army implement be linked to?" ], "summary": [ "The Army Materiel Command (AMC) is using the Logistics Modernization Program (LMP) Increment 1 to support its industrial operations, but additional development is necessary, according to the Army, because the current system does not support certain critical requirements, including enabling the Army to generate auditable financial statements by fiscal year 2017.", "Officials at the 14 AMC sites GAO visited stated that LMP provided the core functionality they needed to support their operations and that they are improving in their ability to use the system.", "Army officials stated that although LMP is functional, it currently does not support certain critical requirements that have emerged since its initial development, such as automatically tracking repair and manufacturing operations on the shop floor of depots and arsenals. In addition, according to Army officials, the current system will not enable the Army to generate auditable financial statements by 2017, the statutory deadline for this goal.", "Increment 2, which is estimated to cost $730 million through fiscal year 2026, is expected to address these shortcomings. The Army is in the process of developing Increment 2 and expects to complete fielding by September 2016.", "The use of LMP Increment 1 has provided the Army some benefits, but whether the system has delivered the expected financial benefits to date is unknown because AMC does not have a process for tracking financial benefits realized.", "For example, because LMP relies on accurate data to perform effectively and efficiently, the Army has made data accuracy a priority and improved the accuracy of its data by conducting data assessments, correcting data problems, and placing management emphasis on data accuracy. Additionally, the use of LMP has improved accountability for inventory stored at AMC depots, increased visibility over Army assets, and resulted in other efficiencies--such as providing faster access to information.", "AMC officials also stated that LMP has enabled them to develop and begin to implement a set of standardized, enterprise-wide performance measures to better assess the business operations of AMC sites.", "Officials stated that the inability to quantify benefits from LMP-driven performance improvements was due in part to the fluctuations in AMC workload resulting from operations in Iraq and Afghanistan.", "LMP is an Army enterprise resource planning system that supports industrial operations conducted by AMC at its life cycle management commands and its maintenance, manufacturing, and storage sites.", "In order to expand the system's capabilities, the Army plans to deploy a second increment of LMP.", "The life cycle cost for LMP Increment 1 and Increment 2, from fiscal year 2000 through 2026, is estimated to be over $4 billion.", "This report assesses the extent to which (1) LMP supports AMC's industrial operations and (2) the Army has realized the expected benefits from deploying LMP.", "GAO reviewed Army documents regarding LMP usage and interviewed officials from AMC headquarters, the LMP product office, and 14 AMC sites that use LMP to conduct their operations.", "To enable the Army to determine whether the expected financial benefits of LMP are being achieved, GAO recommends that the Army develop and implement a process to track the extent of financial benefits realized from the use of LMP during the remaining course of its life cycle.", "The Army concurred with GAO’s recommendation.", "This process should be linked with the LMP performance baseline now being developed by the Army for use at AMC industrial sites." ], "parent_pair_index": [ -1, -1, 1, 2, -1, -1, 1, -1, -1, -1, -1, -1, 3, -1, 0, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 0, 0, 0, 0, 0, 3, 3, 3 ] }

{ "title": [ "", "Background on the American Job Center System", "Report Structure and Programs Discussed", "Unemployment Insurance5", "Unemployment Compensation", "Extended Benefits", "Employment and Training Programs", "Grants with National Scope", "Programs Available to All Jobseekers", "Adult Employment and Training Activities", "Employment Services under the Wagner-Peyser Act of 1933", "Adult Education15", "Programs Targeted by Circumstances of Job Loss", "Dislocated Worker Employment and Training Activities", "Trade Adjustment Assistance (TAA) Program for Workers Adversely Affected by Foreign Trade17", "Programs Targeted by Jobseeker Characteristics", "Vocational Rehabilitation (VR) for Workers with Disabilities18", "Job Corps20", "Youth Activities", "Community Service Employment for Older Americans (CSEOA) Program21", "Jobs for Veterans State Grants (JVSG) Program22", "Competitive Grant Programs", "YouthBuild Program24", "Native American Program", "Migrant and Seasonal Farmworker Programs", "Reintegration of Ex-Offenders", "Other Mandatory Partner Programs", "Community Services Block Grant (CSBG)25", "Perkins Act Postsecondary Activities26", "Temporary Assistance to Needy Families (TANF)27" ], "paragraphs": [ "", "Many federally funded programs to assist unemployed workers are coordinated through state- and locally run Ame rican Job Centers (AJCs; also known as One-Stop Career Centers). Programs available to jobseekers at AJCs include income support (typically unemployment insurance), as well as a variety of reemployment and training services. Services may be provided on-site at an AJC or by a partner entity at a different location.\nAJCs are operated by state and local workforce development boards. Boards are made up of representatives from business, government, the workforce, and other stakeholders. The federal government delegates most employment and training service decisions to state and local boards under the premise that sub-federal boards are best suited to meet the needs of the local labor market. There are approximately 2,500 AJC locations nationwide.\nThe AJC/One-Stop system was created by the Workforce Investment Act of 1998 (WIA; P.L. 105-220 ). WIA established that a group of federal funding streams (\"mandatory partner programs\") would be coordinated through state and locally run centers. The Workforce Innovation and Opportunity Act of 2014 (WIOA; P.L. 113-128 ) amended and reauthorized many WIA programs and maintained the AJC/One-Stop system.", "This report aims to offer a brief overview of the programs administered through the AJC system. It emphasizes eligibility requirements and the scope of benefits and services available to individuals. It does not emphasize the roles and responsibilities of institutional actors such as state agency grantees and local workforce boards. Readers seeking additional information on the programs discussed are encouraged to consult the CRS products and other resources referenced throughout this report.\nThis report divides AJC partner programs into several groups and subgroups.\nUnemployment insurance provides weekly cash payments to workers who have involuntarily lost a job, have a demonstrated work history, and meet other requirements. G rant programs with national scope support employment and training services and have a presence in every state. Competitive grant programs provide employment and training services but tend to be narrower in scope and reach than formula grant programs. The funding from these programs does not necessarily reach every state. Other partner programs are mandatory AJC partners but may not typically provide benefits to individuals or may have a primary purpose other than placing individual jobseekers in employment.\nThis report focuses on mandatory partner programs in the AJC/One-Stop system with the primary purpose of providing workforce-related benefits to individuals. Some federally funded programs with employment and training components are not required partners with AJCs and therefore are not discussed in this report. As such, the group of programs included in this report may vary from other reviews of federal employment training programs and should not be considered exhaustive.", "Unemployment insurance (UI) provides a weekly cash payment to workers who involuntarily become unemployed after establishing a requisite work history. There are two programs currently authorized within the UI system:\nUnemployment Compensation (UC) Extended Benefits (EB)\nFederal laws and regulations provide broad guidelines on UC benefit coverage, eligibility, and benefit determination. The specifics of regular UC benefits are determined by each state. This results in essentially 53 different programs.\nWhen eligible workers lose their jobs, the UC program may provide income support through the payment of UC benefits. Individuals who exhaust UC benefits may be eligible for additional weeks of UI benefits through the permanent EB program, depending on worker eligibility, state law, and economic conditions in the state. No EB benefits were available in FY2016; and, as of the week of July 9, 2017, no EB benefits have been available in any state in FY2017 thus far.\nTable 1 provides data on recent outlays from the UC and EB programs.", "The UC program pays benefits to covered workers who become involuntarily unemployed for economic reasons and meet state-established eligibility rules. The UC program generally does not provide UC benefits to the self-employed, those who are unable to work, or those who do not have a recent earnings history. States usually disqualify claimants who lost their jobs because of inability to work, unavailability for work, or a labor dispute. Workers are also typically ineligible if they voluntarily quit without good cause, were discharged for job-related misconduct, or refused suitable work without good cause. To receive UC benefits, claimants must have enough recent earnings to meet their state's earnings requirements.\nUC is financed by federal taxes under the Federal Unemployment Tax Act (FUTA) and by state payroll taxes under the State Unemployment Tax Acts (SUTA). Maximum weekly benefit amounts in January 2017 ranged from $133 (Puerto Rico) to $742 (Massachusetts) and, in states that provide dependents' allowances, up to $1,103 (Massachusetts). In April 2017, the average weekly benefit was $348. In most states, regular UC benefits are available for up to 26 weeks.", "The EB program, established by P.L. 91-373 (26 U.S.C. 3304 note), may extend UC benefits at the state level if certain economic conditions exist within the state. The EB program is permanently authorized, and is triggered when a state's insured unemployment rate (IUR) or total unemployment rate (TUR) reaches certain levels. All states must pay up to 13 weeks of EB if the IUR for the previous 13 weeks is at least 5% and is 120% of the average of the rates for the same 13-week period in each of the two previous years. There are two other optional thresholds that states may choose. If the state has chosen a given option, they would provide the following:\nOption 1: an additional 13 weeks of benefits if the state's IUR is at least 6%, regardless of previous years' averages. Option 2: an additional 13 weeks of benefits if the state's TUR is at least 6.5% and is at least 110% of the state's average TUR for the same 13-week period in either of the previous two years; an additional 20 weeks of benefits if the TUR is at least 8%.\nIn addition to all state requirements for regular UC eligibility, the EB program requires claimants to have at least 20 weeks of full-time insured employment or the equivalent in their base period, and to conduct a systematic and sustained work search. A current listing of states that have triggered on for EB can be found at https://ows.doleta.gov/unemploy/claims_arch.asp .\nThe EB benefit amount is equal to the eligible individual's weekly regular UC benefits. Under permanent law, the federal government finances 50% of the EB payments and 100% of EB administrative costs through FUTA taxes. States fund the other half (50%) of EB benefit costs through their SUTA taxes.", "The AJC network co-locates and coordinates federally funded employment and training programs. Unlike UI, funding levels for employment and training programs are capped by statute or appropriation level. As such, it is possible that a jobseeker who is eligible for a program may not receive services. Table 3 at the end of this report provides brief descriptions of each AJC partner program and their FY2017 funding levels.", "The largest portion of AJC funding is from a group of grants that have a presence in all states. Most of these programs provide funding to state agencies via formula, though the specific funding processes and grant recipients vary by program. This report divides these partner programs with national scope into three groups:\nPrograms available to all jobseekers , which have no eligibility criteria; Programs targeted by circumstances of job loss , which provide services to workers whose job loss and work history meet certain conditions; and Programs targeted by jobseeker characteristics , which provide services to workers based on their personal characteristics (such as veteran status or disability) rather than their work history or reason for unemployment.\nTable 2 at the end of this section summarizes the eligibility criteria for these primary partner programs.", "The employment and training programs discussed in this section are funded by formula grants to states and do not have eligibility requirements. Funding levels are capped by annual appropriation levels. In times of high demand for services, jobseekers may receive less intensive services or be placed on waiting lists due to limited resources.", "This WIOA-authorized formula grant program provides funds to states for employment and training services for individuals ages 18 and older. It is a universal access system with no additional eligibility requirements other than age. Funds are allotted by formula grants to states (which in turn allocate funds to local entities) to provide training and related services to unemployed or underemployed individuals.\nServices include job search assistance, skill assessment, career planning, case management, and training (including occupational skills training and on-the-job training). Training is conducted through a voucher system that allows individuals to attend training at eligible training providers (e.g., community colleges).", "The Wagner-Peyser Act established the Employment Service (ES) as a system jointly operated by DOL and the state employment security agencies. The central mission of the ES is to facilitate the match between individuals seeking employment and employers seeking workers. ES funds are allotted from DOL to the states through a formula grant. Typically, UI recipients must register with the ES. Jobseekers who are not eligible for UI may also register with the ES.\nES offers an array of services to job seekers and employers, including career counseling, job search workshops, labor market information, job listings, applicant screening, and referrals to job openings. States provide ES services through three tiers of service delivery: self-service, facilitated self-help, and staff-assisted. As the names of the tiers imply, progressively more active staff involvement is required as services range from Internet job postings to career counseling.\nUpon the establishment of the Unemployment Compensation (UC) program in 1935, ES offices also began to administer the UC \"work test\" requirements. These offices monitor UC claimants to ensure that they are able to work, available for work, and actively seeking work. For the recently unemployed, the ES processes UC income support claims while helping the individual find new employment.", "Education activities under the Adult Education and Family Literacy Act (AEFLA) are a mandatory AJC partner. AEFLA provides formula grants to states to fund basic educational services at the high school level and below, as well as English language courses. States typically subgrant federal funds to local providers (such as school districts or community colleges) that provide the actual classes.", "The programs discussed in this section are available to workers who are involuntarily separated from their jobs and meet other criteria. In some cases, workers who have been notified of a layoff but have not yet been separated from their jobs may also be eligible for these programs.", "This program provides formula grants to states for services to dislocated workers. To qualify as a dislocated worker, an individual must have been laid off from employment, sufficiently attached to the workforce (e.g., eligible for unemployment benefits), and unlikely to return to the occupation or industry from which the worker was laid off. Services available under the Dislocated Worker program include job search assistance, skill assessment, career planning, case management, and training (including occupational skills training and on-the-job training).\nApproximately 80% of Dislocated Worker funds are allotted by formula grants to states (which in turn allocate funds to local entities) to provide training and related services to qualified unemployed individuals. The remainder of the appropriation is reserved by DOL for National Dislocated Worker Grants, which, in part, provide funds to states or entities that are affected by major economic dislocations, such as plant closures or mass layoffs.", "Workers whose job loss is attributable to outsourcing or increased imports may be eligible for the TAA program. To be eligible for TAA benefits, a group of workers must petition DOL to certify that foreign trade \"contributed importantly\" to their job loss. Once a group is certified, individual workers may receive benefits through the AJC system. TAA provides reemployment services, training subsidies, and income support while in training. TAA-certified workers age 50 and over who pursue reemployment at a lower wage may participate in a wage insurance program.", "The programs discussed in this section determine eligibility by workers' personal characteristics. These eligibility requirements may or may not include economic characteristics such as individual or household income.", "State VR agencies provide employment-related services to individuals with disabilities. These agencies are funded by a combination of federal formula grants and state funds. To be eligible for VR services, an applicant must establish that (1) he or she has a physical or mental impairment that results in a barrier to employment and (2) that the applicant would benefit from VR services. VR services are customized to each client and may vary. Services include (but are not limited to) counseling, job search assistance, training, and support services in the workplace.", "This primarily residential job training program provides a range of services to low-income individuals between the ages of 16 and 24. The purpose of the Job Corps program is to provide disadvantaged youth with the skills needed to obtain and hold a job, enter the Armed Forces, or enroll in advanced training or higher education. In addition to receiving academic and employment training, youth also engage in social and other services to promote their overall well-being. Services include educational support, work-based learning, counseling, and other support services.", "This WIOA-authorized state formula grant program provides funding for training and related services to certain youth who are in school or out of school. A youth is eligible for services funded by this program if the individual is between the ages of 14 and 21 (or 24 for out-of-school youth) and meets other statutory criteria regarding income (primarily for in-school youth only) and/or barriers to employment.\nEligible participants in a program funded by these grants receive services that provide assistance in achieving academic and employment success through activities that improve educational and skill competencies and foster effective connections to employers. Such services include those involving educational achievement, employment services, linkages between educational achievement and employment, and additional support services.", "CSEOA (Title V of the Older Americans Act) is a formula grant program, also known as the Senior Community Service Employment Program (SCSEP), which provides funding to promote part-time employment opportunities for unemployed low-income individuals who are age 55 or older. In addition to the age and income requirements to participate, individuals must generally have limited prospects of securing unsubsidized employment. The CSEOA provides funding to states and national sponsor organizations for subsidized employment in a variety of community-service activities, such as working at community centers, libraries, or schools. Participants in the program may receive training, counseling, transportation, and placement assistance into unsubsidized employment.", "JVSG provides grants to states to fund state personnel positions that provide employment services to and on behalf of veterans. JVSG-funded personnel are divided into Disabled Veteran Outreach Program (DVOP) personnel and Local Veterans' Employment Representative (LVER) personnel. DVOP personnel provide direct employment services to disabled and other high-need veterans. LVER personnel perform outreach to local employers, conduct employment workshops for veterans, and work with other AJC personnel to provide employment-related services to veterans.\nJVSG does not provide funding for training, though DVOP and LVER personnel may refer veteran jobseekers to programs administered by the Department of Veterans Affairs that provide funding for education and training. Veterans also receive priority of service in all DOL-administered employment and training programs for which they qualify.", "Several competitive grant programs are mandatory AJC partners. Unlike the programs discussed in the prior section, these funding streams may not have a presence in every state.", "Authorized by Section 171 of WIOA, this competitive grant program funds projects that provide education and construction skills training for disadvantaged youth. Participating youth gain work experience, job training, education (a GED or preparation for secondary education), and leadership development by working to rehabilitate and construct housing for homeless and low-income families.", "Authorized by Section 166 of WIOA, this competitive grant program provides training and related services to low-income Indians, Alaska Natives, and Native Hawaiians through grants to Indian tribes and reservations and other Native American groups.", "Authorized by Section 167 of WIOA, this competitive grant program provides training and related services, including technical assistance, to disadvantaged migrant and seasonal farmworkers and their dependents through discretionary grants awarded to public, private, and nonprofit organizations.", "Authorized by Section 212 of the Second Chance Act of 2007, this competitive grant program supports employment and training services for persons who have been incarcerated or are preparing for reentry.", "In addition to the previously discussed grant programs, several other federally funded programs are required AJC partners under Section 121 of WIOA. While these programs can support employment and training activities, they may also support activities with other purposes and may have accountability measures that are related to non-employment outcomes. This report does not include funding figures for these programs since only a portion of funding for these programs support employment and training activities.", "The CSBG provides federal funds to states, territories, and tribes for distribution to local agencies to support a wide range of community-based activities to reduce poverty. In some cases, CSBG funds may support employment and training activities. WIOA specifies that employment and training activities carried out with CSBG funds must partner with AJCs. CSBG is administered by the Department of Health and Human Services.", "The Carl D. Perkins Career and Technical Education Act provides funds to states to support vocational and technical career programs at secondary and postsecondary institutions. Postsecondary providers that receive Perkins funds can include (but are not limited to) community and technical colleges, vocational schools, adult workforce education centers, and correctional facilities. Perkins Act programs are administered by the Department of Education.\nPostsecondary activities supported under this act are a mandatory AJC partner. Unlike some other grant programs that are AJC partners, Perkins funds support institutions and do not provide direct funding to individual students.", "TANF block grants are federal grants to states to provide benefits and services to low-income families. The TANF block grant's overall purpose is to \"increase the flexibility of states to meet four statutory goals: (1) provide assistance to needy families so that children may remain in their homes; (2) reduce dependency of needy parents on government benefits through work, job preparation, and marriage; (3) reduce out-of-wedlock pregnancies; and (4) promote the formation and maintenance of two-parent families.\" States may use these funds for a variety of activities to meet these goals. TANF programs are administered by the Department of Health and Human Services." ], "depth": [ 0, 1, 1, 1, 2, 2, 1, 2, 3, 4, 4, 4, 3, 4, 4, 3, 4, 4, 4, 4, 4, 2, 3, 3, 3, 3, 2, 3, 3, 3 ], "alignment": [ "h0_title h1_title", "h1_full", "h1_full", "h0_full", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What is unemployment insurance?", "What workers can have UI?", "How is UI beneficial to these workers?", "How can UI benefits be extended?", "What is this report limited to?", "Why is this report limited?", "Why are other employment acts not discussed in the report?" ], "summary": [ "Unemployment insurance (UI) is a federal-state system and mandatory AJC partner.", "UI benefits are available to workers who have involuntarily lost their jobs and have demonstrated a required level of labor force attachment.", "UI provides weekly cash payments to replace a portion of the eligible workers' earnings, up to a statewide maximum.", "Certain economic conditions may extend the duration of UI benefits through the permanent Extended Benefit (EB) program.", "This report is limited to mandatory AJC partners under the Workforce Innovation and Opportunity Act of 2014.", "Some federally funded programs with employment and training components are not AJC partners and some AJC partners have primary purposes other than employment.", "As such, the group of programs discussed in this report may vary from other reviews of federal workforce programs and should not be considered conclusive nor exhaustive." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Empirical Evidence on the Effects of Price Transparency", "What Are the Implications for Health Care Markets?", "Why Do Different Prices Persist? Differentiated Products and Price Discrimination", "Cost Structures and Pricing", "Special Characteristics of the Health Care Markets", "Health Care Is Complicated", "Physicians as Agents", "Patients Pick Physicians and Hospitals Pick Physicians", "Other People's Money Pays for Most Hospital Care", "Patients Have Poor Information About Hospital Quality and Costs", "Summary: Special Characteristics of Health Care Markets", "Hospital Pricing", "Nuts and Bolts", "Price Variation Among Hospitals", "How Does Hospital Price Dispersion Compare To Other Markets?", "Implications of Hospital Price Dispersion", "Price Transparency Initiatives of Governments, Insurers, and Interest Groups", "Does Price Transparency Reduce Price Variability? Some Preliminary Results", "How Would Greater Price Transparency Affect the Health Care Sector?", "Internet Price Comparison Sites", "Will the Health Sector Change Like Other Industries?", "Appendix. Review of Empirical Studies on Price Transparency" ], "paragraphs": [ "", "Price transparency helps consumers obtain price information easily, which allows them to make useful comparisons of costs of alternative choices. Price transparency may also mean that consumers understand how prices are set and are aware of any price discrimination (different prices charged to different customers). In health care markets consumers often have difficulty finding useful price information. In particular, few consumers have a clear idea of what hospital stays or hospital-based procedures will cost, or understand how hospital charges are determined. Prices charged by hospitals vary significantly across hospitals and vary within hospitals across categories of patients.\nTransparent prices play a key role in the efficient allocation of goods and services. Under certain conditions, the decentralized and self-interested decisions of firms and households in a price system yield resource allocations that avoid waste and that match what suppliers make and what consumers want, which is how economists define efficiency. Financial economics researchers typically define markets as efficient when prices reflect all available information and when prices adjust swiftly as new information arrives. If buyers and sellers do not know what prices are, then some mutually agreeable trades will fail to occur, thus creating inefficiencies. If buyers can see and compare prices for the same good offered by different sellers, the buyers then save money by choosing the cheapest vendor. If goods are similar but not identical, buyers then can compare prices and qualities offered by different sellers and pick whichever offer suits them best. The buyers' ability to choose an offer that suits them best puts tremendous pressure on all sellers to lower prices, improve quality, or both. Without such competitive pressure firms that are less efficient or that are earning excess profits can remain in the market, and prices will be higher than they would otherwise be.\nLack of transparent prices may also contribute to price discrimination, which can cause different customers to pay higher prices, an outcome that may be acceptable in some markets but may lead to undesirable consequences in others. For example, if the customers with the least bargaining power also tend to be those with the least ability to pay, such discrimination may be deemed particularly undesirable.\nBarriers to price transparency include both explicit restrictions on information (such as government restrictions on price advertising or concealment by firms of prices or price-setting approaches, including negotiated prices) and costs of search by consumers. The simplest theories suggest that more information about prices should decrease prices and also bring prices closer together, but certain theories predict that more price information could raise average prices, and advertising might raise prices by increasing demand or brand identification.\nThe first section of this paper briefly reviews the empirical studies of the effect of changes in price transparency on prices and quality of goods in a variety of industries. Most of this evidence relates to markets where buyers are the final end users of the good, and the bulk of evidence suggests that more transparent prices lead to lower prices and transactions costs. This section includes examples of direct effects of price transparency acting through normal market mechanisms (as in the case of lifting advertising restrictions or reducing search costs) as well as instances in which publicity about pricing strategies altered firms' behavior. (An appendix contains a more detailed discussion.)\nThe second section addresses the extent to which this evidence might be applicable to the health care market. It addresses certain special characteristics of the health care market which may reduce the importance of prices as signals, for example, the complicated nature of health care, the intermediation of physicians in making health care choices including choosing hospitals, and the presence of third party payment (e.g., insurance companies).\nThe third section then turns to a closer examination of how prices are actually set by hospitals and the evidence that exists on price dispersion both across hospitals and across patient categories.\nThe fourth section discusses some initiatives undertaken by governments, insurers, and interest groups to improve information about prices and to regulate price discrimination.\nThe final section draws the pieces together, suggesting that while it is difficult to determine the consequences of greater consumer price transparency, it is reasonable to believe that greater transparency would improve outcomes.", "Isolating the effects of price transparency from other determinants of price is empirically difficult, and the literature contains a variety of approaches used to identify these effects. A more detailed discussion of this extensive literature is presented in the appendix.\nSome examples of the effects of price transparency relate to the effect of publicity about pricing practices that may be viewed as inappropriate and that may lead to fears of regulatory involvement or consumer backlash. One such example relates to NASDAQ. In 1994, William Christie and Paul Schultz, two Vanderbilt University financial economists, noticed that NASDAQ dealers almost never quoted prices using odd eighths (i.e., 1/8, 3/8, 5/8, and 7/8) for many high-volume stocks of companies such as Microsoft, Intel, and Apple. This practice effectively created a quarter dollar minimum spread between sellers' asks and buyers' bids, which increased the trading profits of dealers. The day after these economists issued a press release about their findings the practice was abandoned, and spreads for several major stocks fell by about half.\nSome other examples of transparency in financial markets suggested transparency lowered prices. When Island, an electronic communications network, ceased displaying limit order data in 2002, trading costs rose; when Island resumed a year later, trading costs fell. Another study found prices more volatile after hours than during regular market hours when trades are immediately reported.\nA second example of the effect of publicity involves the case of Amazon.com, the internet seller. Amazon, according to reports, used characteristics gathered about individual customers from the Internet itself (such as whether a customer was new to the site, what browser the customer was using and what the customer purchased in the past, etc.) to charge different prices to different individuals. Once this strategy was publicized, the protests led Amazon to cease the pricing variations and apologize.\nAnother case study focused on the intermediate market. In 1993, the Danish Competition Authority required that all ready-mixed concrete contracts be made public, which it hoped would stimulate greater competition. Instead, average prices rose by 15%-20% and other factors such as changing demand conditions played no discernable effect. There are two possible explanations for this unexpected increase in prices with publicity. First, public prices may make collusion among sellers easier. Rivals can observe sellers who undercut their competitors, and may be able to mete out punishments in various ways. Second, price transparency may alter the strategic incentives of sellers, inducing them to become tougher bargainers.\nA larger body of studies estimates the effects of restrictions on advertising and posting of prices. Most of these studies involved comparing jurisdictions that banned certain types of advertising, primarily for vision exams and eyeglasses. Some studies focused on the effects of restrictions on the advertising of prescription drugs and alcoholic beverages and restrictions on posting gasoline prices. (It is important with advertising, which can increase demand for branded products, to examine cases where some outside authority, in this case the government, restricts advertising.) Two studies examined the effects of local advertising of food prices, one examining the effects of the 1978 newspaper strike in New York City and another where researchers provided advertising via direct mail. Although studies of quality are more difficult to undertake, two studies examined these effects: one study examined the effect of mandatory fat content labeling and another the effect of requiring restaurants to post hygiene quality grade cards. Almost all of these studies found that more information on prices and quality lowered prices, improved quality, or both.\nThe final part of the appendix discusses the relatively new and growing body of studies on the effect of better price information and lower search costs through computers and the Internet. Studies have examined a wide range of items: automobiles, books and CDs, airline tickets, and life insurance. The evidence was mixed for cars and for books and CDs, but showed reductions in prices for airline tickets and insurance. These studies suggested that consumers using comparison sites did pay lower prices and later studies, as the Internet became more common, more frequently pointed to lower prices. Part of the difficulty of studying the effect of the Internet is that Internet sellers may offer benefits to customers compared to conventional sellers, so that the evidence on price comparison sites, which appeared to reduce prices and price variation, may be more relevant than comparing prices of Internet and conventional sellers.\nConsidering all of the evidence of price transparency, the majority of the empirical studies tend to find that greater price transparency, including advertising and reduction in costs of finding information through the Internet, leads to lower and more uniform prices.", "Can the evidence from other markets be used to analyze the effects of greater price transparency in health care markets, or provide guidance about what measures might best be considered? While the special features of the health care market that distinguish it from other markets are well known among health economists, researchers and policy makers have sought ways to capture the potential gains from increasing efficiency in the health care sector by the introduction of market-like reforms. Whereas published prices in other markets provide important signals of the true economic value of goods and services in other parts of the economy, the impenetrability of many health care billing practices creates a barrier to rational decision making and analysis.\nPrices in the health care markets reflect physician charges, hospital pricing, prescription drugs, costs for medical devices and diagnostics, as well as other types of health care goods and services. Certain market characteristics of industries that provide many of these products are important in analyzing the effects of price transparency: they are subject to quality differences (and are thus not entirely homogeneous products); the product may be one whose nature and benefits are not easily understood by the customer; sellers charge different prices to different customers and customers pay different (and often small) shares of the costs because of insurance; and within specific geographic areas there may be few providers, at least in the case of hospitals. These aspects of the health care market not only mean that prices will vary but they also (in many cases) complicate the consumers' understanding of expected prices or their response to price differences; they also may mean that it is difficult for prices to bring about economic efficiency (for example, because of lack of competitive markets). All of these aspects of the health care market therefore may mute the effects of transparency on prices.\nPrices clearly vary in the health industry, and why they vary is relevant to the implications of price transparency. The discussion below reviews basic aspects of pricing that lead to different prices in a market and are relevant to discussing barriers to the effect of transparency on prices in the health market. The first section discusses two reasons that different prices persist for the same product: product differentiation and price discrimination. As we shall see, both characteristics exist in the health care market. Secondly, the cost structure of an industry may lead to market power that allows different prices to be charged. Following that discussion, some specifics of the health care market and how they relate to pricing characteristics are discussed. Many of these characteristics are directly related to the role of price in consumers' decisions. Finally, the empirical evidence on price transparency presented in the first part of this report is examined in light of these issues.", "The \"Law of One-Price,\" which states the same good will sell for the same price, is a simple consequence of buyers' ability to pick the most advantageous offer. In many situations, however, prices will vary. This may happen because two goods are not identical. For example, a store in a more convenient location can charge more than a store in an out-of-the-way location. Spending time in a resort during peak season is different than spending time in the same resort during low season. Conversely, as the real estate maxim states, if the price of an apartment with a view is the same as an otherwise similar apartment without a view, then there really isn't a view. Moreover, products that otherwise seem quite similar may be differentiated, if no more than in consumers' minds, by brand, and certainly a great deal of advertising appears directed at differentiating similar products, which permits suppliers to increase prices and profits. Because health care depends on location, quality, and patient characteristics it is not a homogeneous product, and so some price differential is expected.\nSome sellers may gain larger profits by charging different prices to different groups of consumers. For this to happen, firms must have some market power, meaning that they can raise their average selling price by cutting back on the amount they sell. If the seller can identify different groups that differ in their sensitivity to price changes, and if buyers cannot resell or use arbitrage, then firms will earn higher profits by charging groups with lower price sensitivity a higher price. For instance, airlines know that business travelers are usually less sensitive to prices than leisure travelers. By imposing \"Saturday night stayover\" requirements for cheaper fares, airlines are able to charge higher prices to business travelers who want to sleep in their own beds on weekends.\nFirms can price discriminate in a number of ways. Consumer electronics manufacturers offer mail-in rebates in order to charge higher prices to customers who either value their time highly or who are poorly organized, and who therefore fail to obtain those rebates. Car dealers charge different prices for identical cars, an outcome of the bargaining process.\nPrice discrimination often benefits some classes of consumers: those who would probably pay higher prices under uniform pricing. If airlines could not charge business passengers higher fares, leisure travelers would certainly have to pay higher fares. Some price discrimination schemes, such as college financial aid, are often justified on the grounds of fairness, although they can also be explained by the desire to maximize profits. Hospitals before the Medicare Act often sought to justify charging different rates to different customers on the grounds of fairness, although some economists who examined the issue at the time were skeptical. Hospitals in the current health finance environment—dominated by large insurers and managed care firms on the private side and Medicare and Medicaid on the public side—typically attempt to charge more to uninsured patients who have less ability to negotiate, even though uninsured patients are more likely to have lower incomes than insured patients.", "The structure of costs within an industry has important effects on the nature of pricing. Firms with market power, which often arises from cost structures, will have some ability to set prices differently from cost, and may be more resistant to competitive pressures that result from price transparency.\nFirms will have limited market shares and will face strong competitive pressures to keep profit margins low when firms have\nfixed costs that are small relative to operating costs that can be added or cut in the short run (variable costs), and unit costs that increase as output increases.\nOn the other hand, if fixed costs are large relative to variable costs or if firms use an increasing returns technology, then uniform pricing may be difficult to maintain, especially if the firm cannot store its output. Economic theory suggests that industries that have high fixed costs and which sell perishable goods or services face strong pressures to charge different customers different prices and compete in markets subject to unstable prices. Increasing returns can often be found in industries with network characteristics. For example, a phone connection is more valuable within a large network than within a small one because more connections are possible. Learning-by-doing effects are another example of increasing returns.\nIn addition, many hospitals provide indigent care for which they are not wholly compensated. Such hospitals must find other ways to finance this care, which often involve cross-subsidies. In these conditions, a simple flat-rate price system may not be a viable strategy for hospitals. Therefore, imposing greater transparency of health care prices may require closer attention to cross-subsidies and uncompensated training and care.\nThe hospital industry has some natural monopoly or natural oligopoly characteristics. A natural monopoly exists where incremental costs fall as output rises through the relevant range of output for a market. A natural monopoly would suffer losses if it set prices equal to incremental cost, which is a standard condition for socially efficient pricing. Therefore, a natural monopoly must be supported by some subsidy or must charge prices above incremental cost, which from an economic perspective causes inefficiencies and market distortions. Industries with natural monopoly characteristics are often regulated, and prices are often set administratively through rate-of-return type regulations. The outputs of industries regulated under rate-of-return procedures, however, are much simpler than the set of outputs which hospitals provide. For example, electric power distribution, which generally has been subject to rate-of-return regulation, deals with a single commodity which is uniform in its physical characteristics.\nEntry of new firms in an industry with natural monopoly characteristics is inefficient because at least some firms will be forced to operate at inefficiently low levels. For example, entry of a new hospital might cause the average number of empty beds in a market area to increase, which increases average prices. Because of the hospital industry's natural monopoly characteristics, state and federal regulators have often imposed restrictions, such as Certificates of Need, on entry of new hospitals. Theoretical models have been developed to better understand the tradeoffs between the gains in competitive pressure and the loss of scale economies. In U.S. v. Carilion Health System a federal district court accepted the argument of two hospitals that wished to merge that higher market concentration would lead to lower prices, and rejected the Department of Justice's claim that the merger would raise prices, providing an illustration of a case where the scale economy argument prevailed.", "Health care markets differ from markets for standardized commodities described in economics textbooks in several important ways. The special features of health care have had a strong effect on the evolution of health care markets. Five key features of health care markets are discussed below; in general, they point to price being a less important signal than it typically is in other markets. Prices could, however, become more important with a shift to insurance types such as Health Saving Accounts where consumers confront higher prices at the margin.", "By its nature, health care cannot be easily standardized, making price dispersion difficult to monitor. Different diseases affect different people in different ways, and treatments that work for one patient may fail to help another. Patients may not know what disease or condition is affecting them, and may have difficulty in articulating what is wrong with them and what they would like treatment to accomplish. Hospitals are sometimes described as \"job shops\" to emphasize their dissimilarity to assembly lines. Thousands of different types of procedures may be performed in an average general hospital, and even specialized hospitals must be equipped to face a wide range of conditions and complications.\nBecause hospitals produce many different outputs with many of the same inputs, allocating costs to particular outputs or to specific patients can be somewhat arbitrary. There is no unambiguous way to allocate the costs of employing nurses, pathologists, accountants, and billing clerks to specific procedures or patients. Hospital management strategies that seek to assign such costs to specific \"profit centers\" appear to rely more on rules of thumb than on precise economic calculations.", "Because patients cannot always know what they want, physicians must serve as their agents. In most cases, physicians will make a preliminary diagnosis, recommend which specialists will be seen, and determine whether a patient is admitted to a hospital or not. It is true that ethical and professional guidelines stress that physicians must act in the best interests of the patient. Still, physicians may be swayed directly or indirectly by insurers, pharmaceutical companies, hospitals, and peers in ways that might not benefit patients. While the vast majority of physicians feel a strong professional compunction to provide the best care possible, they also face pressure to reduce costs to patients or insurance companies. The problem of agents considering their own interests, along with those on whose behalf they act, exists in this market as well as many other markets.", "Because patients rely upon physicians as their agents, patients often do not choose which hospital they enter. Rather, patients choose a physician, and the physician's admitting privileges determine where the patient goes. Hospital credentials committees decide which physicians get admissions privileges based on a physician's training, residency program, malpractice record, and other relevant information. Although some physicians have admitting privileges at more that one hospital, the available evidence suggests that most physicians admit the bulk of their patients to one hospital. A patient needing an operation may have some choice of hospital if her physician provides referral to more than one surgeon. While this provides the patient with some choice, the patient rarely has detailed information about cost and quality, and is rarely in a position to make an informed choice.\nIf a patient wishes to go to a certain hospital, then the patient must select a physician with privileges there. Insurance companies offer physician directories which list hospital affiliations, and hospitals often sponsor \"physician-finder\" services that feature \"their\" M.D.s. Therefore, patients may have sufficient information to figure out which physicians they would need to choose in order to go to a particular hospital in the event of some medical condition. (Emergency admissions are generally sent to the nearest hospital with an emergency room or to a hospital which specializes in trauma cases.) In some cases they may have information on quality through studies that rank hospitals. The fact remains, however, that patients are usually in a poor position to choose a hospital which best suits their needs because they lack the right information and because they are shielded from information about cost differences among hospitals.", "Hospitals get slightly less than a third of their revenue from Medicare, another third from private insurers and slightly more than a sixth of their revenue from Medicaid. While public or private insurance protects patients from the financial consequences of a hospital stay, insurance also makes patients insensitive to prices. By the time a patient reaches a hospital deductible, out-of-pocket payment limits for most insurance policies may have been reached for many patients. In particular, for the most complicated episodes (which account for a disproportionate share of hospital costs), most patients may be fully covered or fully bankrupt. In either case, price plays little or no role in either choice of treatment or location of treatment.\nPatients may indirectly choose their hospital and nature of their care through their choice of insurance plan, and as noted above, through their choice of physician. Many plans using Preferred Provider Organization (PPO) approaches restrict policy holders' choice of hospital, or impose financial penalties for using hospitals outside the PPO network. One plan may be cheaper than another because it is able to drive a harder bargain with hospitals or because it can restrict the cost or amount of care which policy holders receive. While consumers can obtain information about features of different insurance plans, that information arguably is often incomplete and confusing.", "Patients may also be in a poor position to choose their own hospital because they have little access to information about hospital prices and quality or are not familiar with the information that is available (such as hospital ratings). As with any other good or service, a good decision about hospital selection must be supported with adequate information on costs and quality. Hospitals in most states are not required to make public individual prices for items, and other resources for comparative pricing information are limited. Aetna, for example, has provided price information for physician services in selected areas, but this information is available only to its subscribers.\nThe impenetrability of hospital bills is legendary. Hospital bills for privately insured patients routinely run for pages and contain hundreds of individual items. Hospital billing and coding have become arcane arts, practiced by highly specialized clerks and consultants. Insurers and government analysts have access to files that can be used to generate meaningful average costs, but this information is not available to patients.\nCompounding the problems patients face, they generally have access to little useful information about health care quality. In part this is due to the inherent complexity of medical care and the difficulty of defining and measuring quality. Consumers can quickly judge the quality of most goods they buy on a daily or weekly basis, and make changes in shopping routines accordingly. In some cases, such as obstetrics, word-of-mouth and reputation may lead patients to reasonably well-informed choices among hospitals. In general, however, hospital stays are for most an infrequent event and not many patients have enough experience or connections to compare experiences in a range of different hospitals.\nLarge corporations, insurance companies, and government agencies have developed extensive databases containing information reflecting the quality of health care. The development of large electronic databases has opened the possibility of creating quality indices based on sophisticated statistical methods. Presently, however, these data are largely unavailable to consumers. Traditional approaches to quality monitoring in health care focus on \"zero/one\" indicators. Physicians are licensed, and others are barred from providing medical care. Hospitals are accredited and providers are certified for Medicare reimbursement. Such measures, however, serve only to set lower bounds.\nProviding consumers with more useful data on outcomes may improve health care quality. Of course, outcome data must include risk adjustments, so that statistics reflect the fact that healthier patients will on average have better outcomes. For example, the United Network for Organ Sharing, established by Congress in 1984, collects data on all transplant operations in the United States. Risk-adjusted outcome data for each transplant center are available at http://www.unos.org . Public availability of risk-adjusted outcome data puts pressure on surgeons and transplant centers to improve performance. New York State has published risk-adjusted average mortality rates for cardiac surgery since 1991. Once New York State started publishing average mortality rates, patients at a top-performing hospital or surgeon reportedly had about half the chance of dying as did those who picked a hospital or surgeon from the bottom-performing 25%. Massachusetts maintains a website with death rates for coronary artery bypass graft (CABG) operations for specific hospitals and surgeons. This site lists the number of procedures performed by specific surgeons for several other types of operations. Pennsylvania published a report on cardiac surgery that listed hospital-specific data on average charges, average payment by commercial insurers and Medicare, and risk-adjusted mortality and readmission rates. This report also listed surgeon-specific data on risk-adjusted mortality and readmission rates for CABG procedures. Data presented in the report showed little connection between average charges and adjusted mortality rates.", "If the market satisfies conditions of the model of perfect competition, which imply that consumers are fully informed and can choose the lowest price, prices will converge to the cost of producing the last unit of output and goods will be distributed efficiently. More generally, the \"Law-of-One-Price\" asserts that consumers' ability to choose the most advantageous offer will ensure that the same good will sell for the same price. To the extent that transparent pricing helps markets rapidly converge by bringing prices in line with incremental costs, it promotes economic efficiency.\nMany markets do not satisfy conditions of the model of perfect competition. If consumers are poorly informed, or hindered from taking their most advantageous option, prices might not converge to efficient levels, if they converge at all. While such problems can arise in markets for simple goods, the problems are exacerbated for more complex goods and services, such as health care. Several aspects of health markets, including natural differentials in the product due to differences in quality and patient characteristics and the widespread practice of price discrimination, limit the effects of price transparency. In addition, other important characteristics interfere with price signals and competitive pricing outcomes: the product is complicated, physicians rather than consumers tend to determine the product purchased, patients generally do not directly pick hospitals, many costs are covered by third parties, and patients have poor information about costs.\nIn sum, health care patients often have only a limited and indirect ability to choose which hospital they will be treated in the event of some medical episode. Choosing a different hospital may require a change of physician or of insurance plan. Even if patients could switch among hospitals more easily, their incentives to search for cheaper hospital care are dulled by third-party payment, and patients typically lack price and quality data that would be necessary for them to make a fully informed choice. Much of the difficulty in instituting market-like reforms in the health care sector stems from the nature of health care itself, and from the ways health care institutions have evolved to deal with special features of health care. Improvements, while possible, would probably be neither quick nor easy.\nThese characteristics, however, all point to some important conclusions. Prices as signals are diluted and muted in the health care market as compared to many other markets. That muting of price signals tends to suggest that improvements in price transparency may be less effective in the health care market than in other markets and that this problem is particularly serious with hospital pricing. At the same time, the lack of understandable price information in the health care market may suggest significant room for improvement. To understand this last issue, it is important to be clear about just how complex and dispersed hospital pricing is, an issue considered in the following section.", "As the previous section suggests, the barriers to direct consumer choice are high for hospitals, and it is for hospitals that many initiatives, discussed below, have been made to improve information and transparency. Hospital costs are also a major portion of health care costs, accounting for 31% of the $2 trillion of costs in 2005. To interpret and apply the evidence on price transparency requires a more specific understanding of how hospitals set prices. This section provides an overview of how hospitals set and administer prices. This section also investigates the variability of hospital prices.", "Every hospital maintains a \"chargemaster,\" a document which lists prices for each item and procedure offered by the hospital. A chargemaster may contain about 10,000 to 20,000 separate items. By comparison, the U.S. tariff schedule has about 10,000 separate rate lines, and a regular supermarket sells about 15,000 items. A Lewin Group study of hospital pricing practices found that few hospitals in its sample conducted systematic reviews of their chargemasters. Many hospitals stated that their charges had little relation to costs, although hospitals that were larger, urban, or which conducted substantial amounts of research were more likely to report some link between costs and chargemaster prices. Supplies and pharmaceutical charges appeared to be reviewed more regularly and were more likely to be related to costs. Most hospitals in the Lewin sample charged higher markups on less-expensive items.\nPrices listed on the chargemaster bear little resemblance to what is actually paid. On average, insurers and patients paid hospitals about 38% of their \"charges\" in 2004. Medicaid pays about 17% of total hospital revenues. Medicaid payment arrangements differ by state. All states use a prospective payment system for Medicaid hospital reimbursement, with most either paying a flat fee according to diagnosis related groups (DRGs) or paying a flat per diem rate. All states also make special payments to hospitals for unusually high-cost cases, and most make payments to hospitals that serve low-income or medically needy populations.\nMedicare pays a flat fee for inpatient care based on the average relative cost of a case within one of about 600 DRGs. A DRG weight, reflecting the relative cost and complexity of a given diagnosis code, is multiplied by a monetary conversion factor. Medicare payments are adjusted to reflect differences in regional labor costs and some other local factors. Other adjustments are made for outliers (extraordinarily complex cases with exceptionally high costs) and \"disproportionate share\" adjustments made for hospitals that serve a larger than usual portion of indigent patients. DRG weights are recalculated to account for changes in technology, practice patterns, and other trends. Congress typically adjusts the monetary conversion factor each year. From time to time, the Medicare Payment Advisory Commission (MEDPAC) proposes technical changes in the definition of DRGs and in payment and adjustment details.\nPrivate insurers are responsible for about a third of the hospitals' revenues (hospital revenues were $612 billion in 2005). Private insurers' payment arrangements vary: some pay a fixed portion of charges, some pay negotiated per diems or pay flat fees according to DRGs. Private insurers typically use Medicare's list of DRGs, but may assign their own weights. Medicare's calculations of DRG weights use claim experiences of Medicare beneficiaries, who are older than the average private health plan policy holder, and so may not reflect relative costs for younger patient populations. Private insurers vary in their ability to extract discounts from hospitals, and arrangements between insurers and hospitals are tightly guarded trade secrets.\nAccording to many analysts familiar with health care finance, Medicare and Medicaid payments on average fall short of the fully allocated costs associated with patients in those programs. Thus hospitals must shift costs to private insurers, increase efficiency, or reduce services to balance their books. As a result, payments for a particular patient's case will reflect not just the complexity of the case and the resources used, but also depend on the negotiating prowess of the patient's insurer.", "Prices for specific items may vary wildly from one hospital to the next, as Figure 1 and Figure 2 show. For instance, a comprehensive metabolic panel, which costs $97 at San Francisco General, costs $1733 at Doctors Hospital in Modesto, about 18 times more expensive. To some extent disparate prices reflect different markup formulae, which act to allocate hospital overhead costs among items.\nTable 1 presents data on average costs and charges by type of payer for three hospitals, all located in urban areas. In each case, the average charges for managed care patients were about 20%-30% above average operating costs as reported to the Centers for Medicare and Medicaid Services (CMS). By contrast, average charges for uninsured patients were substantially higher.\nTable 2 presents payment-to-cost ratios by type of payer for community hospitals from 1991 to 2000. The mix of services that each type of payer funds differs, which precludes direct comparisons of payment rates across payers. Nonetheless, these data underline the point that the relationship between costs and payments differs among payers. Average Medicare payments since the mid 1990s nearly match hospital costs, while Medicaid payments, on average, fall short of covering costs. The ratio of payments to costs is highest for private payers (i.e., private insurers and managed care firms), although that ratio fell significantly during the 1990s. The ratio of payments to costs is lowest for uncompensated care, although many hospitals receive subsidies from state and local governments, not reflected in Table 2 , that serve to defray expenses associated with uncompensated care.\nData in Table 2 lump all uninsured payers together, although these payers include indigent patients, from whom much smaller payments may be received, and non-indigent patients. We were unable to locate aggregate data that would separate these two groups. However, an illustration based on aggregate California data, provided in testimony by Glenn Melnick, shows the importance of this distinction. The average chargemaster price for an appendectomy in 2002 was $18,229; the indigent uninsured paid $1,783, the Medicare payment was $4,805, the managed care payment $6,174, and payments by the non-indigent uninsured was $8,143. The payment from the non-indigent, indeed, did fall below the list price, and may reflect both ad hoc discounts and failure to collect the payment. Even so, the uninsured non-indigent paid a third more than the managed care patients and 70% more than Medicare patients for this procedure. Melnick also points out that the list price remains important not only because some uninsured patients are charged the list price, but also because of stop-loss provisions in contracts (where list is paid above a threshold), lack of contracts with all third party providers, and out-of-network use. He also points out that increasing revenues is an incentive to charge a high list price.\nSome hospitals have been strongly criticized for charging uninsured patients, who typically have less ability to pay for care than insured patients, far higher prices. In some apparently isolated circumstances, news stories detailing some hospitals' attempts to use aggressive collection methods against uninsured patients purportedly caused those hospitals to cancel those debts.\nAlthough some hospitals and hospital associations have argued that some federal regulations prohibit hospitals from offering discounts and fee waivers on a case-by-case basis, the Centers for Medicare and Medicaid Services (CMS) contends that no federal law prevents hospitals from reducing or waiving charges for an indigent uninsured patient so long as such reductions or waivers conform to the hospital's indigency policy. Moreover, the CMS Inspector General has stated that it is \"highly unlikely\" that hospitals that waived charges to indigent uninsured patients would run afoul of the federal anti-kickback statute.\nMore detailed analysis of hospital charge and cost data shows that uninsured and self-pay patients are charged, when confronted with the full list price, on average, about 2½ times more than what insurers pay hospitals, and about three times Medicare-allowable costs. The gap between what uninsured and self-pay patients pay and what insurers pay hospitals appears to have widened since the mid 1980s.", "Chargemaster prices charged by different hospitals for the same procedure can vary wildly, as noted in Figure 1 and Figure 2 . Actual charges for specific procedures, which are generally lower than chargemaster prices, also vary widely, although information on them is unavailable. Chargemaster prices are nevertheless important, because they are prices billed to uninsured patients who do not have discounts, and are the starting point for discounted prices.\nFigure 3 shows the distribution of average charges per stay for normal vaginal birth for California hospitals in 2004, which aside from newborn care is the most common DRG. (The discrete data are converted into a smoothed curve using a technique called kernel density estimation.) Average charges at the mode of the smoothed distribution lie between $5,000 and $10,000. The distribution has a fat right-hand tail, indicating more variation on the high side of charges than on the low side.\nFigure 4 shows average charges per stay by hospital for heart failure and shock in 2004. Unlike the conditions which occur at birth, heart attack victims have substantially less time to plan their hospital stay. Indeed, the typical heart attack victim has no time to select a hospital or to consult with his physician about treatment options. Further, because of variation in the time spent in hospitals, the variation of total charges per episode is much greater in the case of heart attacks, with a handful of hospitals having average charges above $500,000.", "Does evidence on the effects of price transparency in other markets, which by and large supports the view that better information on pricing reduces prices, imply that greater price transparency would affect health markets in the same way, despite the specific structures and characteristics of the health care market? Of course, how the examples are applied depends on how pricing information is provided. For example, allowing the public to examine charge books and data on actual average charges at a hospital's finance office provides more limited access than posting that information on the Internet. Additional information could be conveyed by providing information on the pricing of complete, but typical, procedures as well. (Selective reporting could provide opportunities for hospitals to game the system by lowering costs on the reported procedures and raising costs on others.) Even more information could be conveyed by also reporting prices for the different categories of patients (Medicare, Medicaid, uninsured, or insured by specific health plans).\nOne caution is that prices of goods commonly sold on the Internet also show substantial price variation, although the degree of price dispersion may be less than for average daily hospital charges. For example, Figure 5 shows prices for a Samsung HP-R6372 high definition television found using two common Internet price search engines, Froogle.com and Pricescan.com. The mode of the smoothed distribution is slightly less than $6,000, which is slightly less than the mode for daily average charges for normal vaginal birth. However, the right-hand tail of the distribution of TV prices is not nearly as fat as the distribution of average daily charges for normal vaginal birth. (Note : horizontal scales differ for each figure.) Only one seller listed a price for the Samsung TV above $8,000, and 37 of 47 sellers posted prices between $5,500 and $7,500. By contrast, 10 of 251 California hospitals charged more than $9,000 per day and 33 charged less than $3,000 per day.\nA formal way of comparing variability of distributions with different averages is to compute coefficients of variation. Table 3 presents statistical estimates of price variability for two of the most common types of hospital episode as well as for a similarly expensive consumer good, namely, a particular HDTV. The coefficient of variation is a dimension-free measure, and thus is an appropriate tool for comparing different distributions. As expected, the coefficients of variation for average hospital charges for normal birth and for heart attacks are substantially greater than for the Samsung television.\nThe comparison of HDTV prices advertised by retailers and average charges per day for a given DRG is not an \"apples-to-apples\" comparison. Prices advertised by retailers do not necessarily represent actual sales prices. Posted prices on the Internet may vary considerably, even if prices at those websites that make most of the sales vary less. To the extent that most units are sold by sellers with prices near the minimum posted price, sales-weighted measures of price variability will be less than unweighted measures.\nWe checked whether combined average daily charges for mother and baby varied less than average charges for normal vaginal birth alone, which could occur if different hospitals allocated charges to mother and baby differently. The coefficient of variation for the sum of average daily charges for normal newborn and normal vaginal birth, however, was about the same (.356) as for normal birth alone (.366). The coefficient of variation for average stay charges for the sum of normal birth and normal newborn care (.416) was nearly the same as for normal birth alone (.414).\nThese illustrations are just examples of pricing variability and do not constitute a statistically valid universe. Nevertheless, they do indicate considerably more price variability for medical procedures than for an expensive consumer durable that might be expected to show much more variation than more frequently purchased commodities. They also show much more variation for an unanticipated procedure (heart failure) than for an anticipated one (birth). They are suggestive, therefore, of a considerable amount of price variability in hospital costs.", "Several states have enacted regulations intended to enhance price transparency in the health sector in general, and hospital pricing in particular. Several private insurers also allow policyholders access to online tools that allow some price comparisons for medical procedures. California has required hospitals to provide a variety of pricing data to the public, discussed in more detail below. Average hospital charges per day and per stay for selected DRGs are available on state government websites sponsored by Arizona, California, Florida, Maryland, and Massachusetts. Other states, such as Iowa, New Hampshire, and Wisconsin, in cooperation with state hospital associations, provide some pricing information.\nAetna has published price information for physicians and hospitals in the Cincinnati area, and recently extended this program to other parts of the country. Other insurers, including Cigna, Humana, United HealthCare, and Wellpoint have created websites that provide price comparison data for certain procedures.\nHospitals also submit data to the Centers for Medicare and Medicaid Services (CMS), which compiles annual Medicare Cost Reports (MCR). The MCRs contain extensive information about hospitals' cost structures and finances. These reports, which are quite large and complex, are available for download on the CMS website. The website HospitalVictims.com provides cost data for individual hospitals derived from Medicare Cost Reports, suggesting that hospitals with high charge-to-cost ratios be avoided, or that the patient negotiate for a discount. It suggests that a high charge-to-cost ratio is evidence of a significant amount of price discrimination and a likelihood that the uninsured patient will be charged a high price.\nInitiatives to impose price transparency requirements on hospitals, such as allowing the public to inspect chargemaster data or have access to average daily charges data, were motivated in part by a desire to allow consumers to make informed choices about selecting hospitals. Better information on prices, according to this view, would increase competitive pressure on hospitals, slowing the growth of hospital prices and reducing price variability. These initiatives are relatively new and do not yet appear to have had significant effects on the level and dispersion of medical costs.\nIn August 2006, Executive Order 13410 called for greater transparency of quality and price information and for more widespread use of information technology in federal health care programs using compatible data standards. The executive order also directed federal agencies to develop health care quality measurement programs. The National Coordinator for Health Information Technology within the U.S. Department of Health and Human Services oversees these initiatives, although other offices also have major responsibilities.\nThe executive order directed federal agencies to \"make available ... to the beneficiaries or enrollees of a Federal health care program (and at the option of the agency, to the public) the prices that it, its health insurance issuers, or its health insurance plans pay for procedures to providers.\" It was reported that the Bush administration earlier in 2006 declined to release Medicare claims data to the Business Roundtable, which had requested them. The Business Roundtable is an association of chief executives of very large corporations. Whether the order signifies a change in policy or there was another reason for not releasing these data remains unclear.\nThe effects of the executive order on pricing information are unknown, including how widely available the information is, since the implementation of the order is in its early stages. But it is an example of another government initiative to provide more information about pricing.\nIn some areas, the initiatives outlined by the Executive Order parallel ongoing efforts. Several federal agencies have already taken some measures to provide federal health care users with better price and quality information. For example, the Federal Employees Health Benefit Program (FEHBP) provides a website that compares premiums, plan details, and customer satisfaction measures for all plans. Changes made in response to the order appear minor. CMS (Centers for Medicare and Medicaid Services) now publishes summarized inpatient price data for the 30 most common elective DRGs for individual hospitals. These data are taken from Medicare Provider Analysis and Review (MEDPAR) data, which has been collected since 1991. However, locating this information on the CMS website may be difficult for consumers since the website covers a range of material.\nMedicare's \"Hospital Compare\" website, accessed via the Medicare.gov site, allows beneficiaries to see data that compares how closely different health care providers follow accepted treatment protocols. Whether such initiatives give consumers enough relevant information in an easily accessible way, whether patients and their families would be able to locate such information, and whether such information would motivate patients to make major changes in their treatment plans is unclear. One consulting firm concluded that while a previous version of the Hospital Compare website \"does an average job of presenting the quality information, it lacks the robust data found in commercially available products and leaves consumers fumbling with insufficient help.\" In June 2007 a redesigned HospitalCompare website was launched that allows limited comparisons of hospital mortality rates for heart failure and heart attacks with national mortality rates. However, nearly all hospitals were judged to have mortality rates \"no different than the U.S. national rate.\" Out of almost 4,500 hospitals, only 17 were recognized as \"above average\" in treating heart attacks and only seven were rated \"below average.\"\nOn the other hand, more information about health care provider quality and pricing is becoming available on the Internet, and these sources will continue to evolve. A major review of information available on websites that provide hospital price and quality information expressed concern that some consumers might be confused rather than enlightened by the reported data, but also noted that momentum continues to build for making health care data more easily available to consumers.\nThe following section of this report presents an analysis of the California price transparency initiative's effect on the dispersion of hospital prices.", "The California hospital price transparency initiative, according to analysis of available data, has had negligible or no observable effect on hospital prices.\nIn September 2003, California legislators passed Assembly Bill 1627, which required hospitals (except for certain small and rural hospitals) to make chargemaster data public by July 1, 2004, either in electronic form or by allowing onsite inspection. Sponsors of this bill contended that these reporting requirements would prevent hospitals from \"gouging\" customers and would make patients into better-informed consumers. In July 2005, hospitals had to begin submitting chargemaster data to the Office of Statewide Health Planning and Development Healthcare Quality & Analysis Division (OSHPD). In 2004 and 2005, hospitals also had to list charges for 25 common services or procedures. In 2006, hospitals were required to submit data on average charges for 25 common diagnosis-related groups (DRGs). The state of California makes these data available online.\nIf patients became better-informed customers, most economists would expect that hospitals that raised their prices more would lose patients, unless there were offsetting increases in the quality of medical care or level of amenity. That is, if customers are sensitive to and aware of prices, increases in hospital prices would be negatively related to changes in hospital admissions, other things equal.\nIf consumers were becoming more sensitive to price as a result of greater price transparency, then one might expect to see stronger effects for procedures for which patients can plan ahead. Expectant mothers planning for a normal vaginal birth can compare what various hospitals have to offer and their prices, unlike victims of sudden medical emergencies. Figure 6 shows the distribution of average daily charges (adjusted for general inflation) for normal vaginal birth at California hospitals in 2003, 2004, 2005, and 2006. Over this time period, the modal (i.e., most frequent) nominal price drifts upwards because average daily charges have been rising faster than the general price level. The distribution of prices shows no signs of convergence.\nHospitals that had increased average daily charges for normal vaginal birth, on average, did not lose patients. Figure 7 (above) presents a scatter plot with percentage change in hospital discharges on the vertical axis and percentage change in average daily charges on the horizontal axis. Different plotting symbols divide hospitals into four categories defined by the number of (normal) births in 2003. If expectant mothers avoided hospitals that raised their prices, then a downward-sloping relationship would be evident between the two variables. Regression analysis shows a statistically significant, albeit small, positive relationship between changes in average charges and changes in hospital volume for normal births over the 2003-2006 period.\nSeveral explanations are possible for the lack of a discernable relationship between changes in average charges and changes in hospital volume. Differences in perceived quality or care or amenity levels may matter more than price for many patients, especially if insurance coverage insulates them from prices. Patients' relationships with their physicians and those physicians' relationships with hospitals might reduce patients' sensitivity to hospital prices. Alternatively, patients may care about prices, but might be unable, unwilling, or disinclined to examine online price data. Finally, changes in prices might correlate to offsetting changes in quality or amenity levels. Distinguishing among these explanations would require more sophisticated data. However, the available evidence, while preliminary, suggests that the California price transparency initiative so far has had little observable effect where it might have been expected to have the greatest effect.", "The experience of the Danish Competition Authority, noted above (in the section titled \" Empirical Evidence on the Effects of Price Transparency \"), suggests that imposing price transparency in negotiations between sellers and buyers of intermediate goods does not necessarily lead to sharpened competition or lower prices. At the same time, some evidence suggests that information about the process of setting prices, including practices of price discrimination, may produce a change in pricing, as in the NASDAQ and Amazon cases. Much of the remaining evidence also suggests that transparency lowers prices and makes them more uniform.\nThe evidence cited on price transparency involves two types of effects: a response through publicity effects and a response through normal market mechanisms. The price discrimination that occurs in hospitals—brought about partly by government policies with respect to Medicare and Medicaid, partly due to bargaining power of insurance companies (and the desire to set high list prices to leave room for discounting), and partly through providing free care for the indigent—leads to potentially high prices for a small segment of uninsured individuals. As more of these pricing differences are revealed and spotlighted, public opinion might force a reduction in cross subsidies (charging some patients higher prices to cover the costs not fully applied to other patients). Indeed, such a response has already occurred. An example is the case of the state of Minnesota, which entered into a voluntary agreement with most of its hospitals to limit the charges for uninsured patients. Under the agreement, uninsured patients with $125,000 or less in annual income would pay no more than the amount paid for the procedure by the private insurance company that provided the greatest amount of the hospital's revenue.\nThe Minnesota example suggests that publicity can affect pricing. What about the effects through normal market mechanisms? The survey of evidence included cases where price transparency did not affect prices, or in some instances, led to higher prices. In addition, many of the studies analyzed goods that lack the special characteristics of health care. These shortcomings do not, however, necessarily mean that price transparency in the health sector would not be beneficial.\nFirst, the ready-mix concrete example, in which price information resulted in higher prices also involved for-profit businesses, which presumably were attempting to maximize profits. This example may not apply to many hospitals that are non-profit and may have different behavioral responses.\nSecond, the evidence from the advertising studies includes not only simple uniform goods such as alcoholic beverages and gasoline, but complex differentiated products such as vision exams, where quality matters. And while insurance pays much of the cost of medical care, the studies summarized above also included examples of price reductions for prescription drugs after direct advertising to consumers, whose prices are also subject to third party payment. In these cases as well, the evidence suggests that prices fell after advertising was permitted, without deterioration in quality.\nThird, evidence from the Internet suggested that price comparison sites may help reduce commodity prices, including differentiated commodities that are subject to bargaining (automobiles). Over time, price comparison websites have become more sophisticated and are playing an increasingly important role in consumer behavior in many markets.", "The Internet has begun to affect the availability of price information in the health care sector, although this does not appear to have influenced a large proportion of consumers. According to the New York Times , 32 states require hospitals to publish price information. Some new websites provide consumers with data on health care costs. For example, Vimo http://www.vimo.com provides information on average list prices and average negotiated prices charged by hospitals for specific procedures. One company, My Medical Control, provides a negotiation service for consumers through its website http://www.mymedicalcontrol.com . A consumer forwards a bill, via the website, to a claims adjuster who negotiates a reduced rate with the provider. This company then deducts a 35% fee and returns the remainder to the consumer. At present, such websites have little observable effect on health care markets. In the future, however, such sites could have large effects.\nThe Carol.com website allows consumers to compare prices and offerings of health providers in the Twin Cities region of Minnesota, and in addition it allows them to book services. The intention of the website's creators is to follow the example of web-based booking services such as Expedia.com, which have transformed the travel industry in the past decade. Many state governments have opened their own sites that allow consumers to compare prices or provider characteristics.\nThe effect of information on quality is much more difficult to obtain, and it is hard to make a judgment based on the available evidence. As noted above, the United Network for Organ Sharing publishes risk-adjusted outcome data on its website http://www.unos.org . Some other organizations, also noted above, also publish some data reflecting quality of health care.", "One of the most important differences between hospital care and other commodities is that typically patients pick physicians and physicians pick hospitals. Although this characteristic means that direct consumer pressure to hold down prices (or at least have a sensible pricing system) is more difficult, it does not mean that physicians would not become more sensitive to differences in costs among various hospitals on behalf of their patients, particularly if their patients raise questions about these costs. Not everyone in a market is required to be attentive to price for pressure to be exerted at the margin. Moreover, publicity about price differentials may result in voluntary compliance by hospitals. Nevertheless, this aspect of the delivery of hospital services makes it more difficult to apply evidence from other markets to the expected outcome of introducing more price transparency in health care markets.\nChanges in the airline industry might provide some insight into how increased price transparency and competition could affect the hospital industry. While the air travel and hospital industries have important structural differences, airlines, like hospitals, have high fixed costs and offer a non-storable product. Before the Airline Deregulation Act of 1978 ( P.L. 95-504 ), airlines competed largely on the basis of amenity levels rather than on price. The Airline Deregulation Act restricted the Civil Aviation Board's price administration powers, and led to the abolition of the board in 1984. After deregulation, several new airlines entered the market, while several major airlines went bankrupt and exited the market. Increasing competitive pressure led airline companies to cut back amenities to passengers and led to contentious negotiations with labor unions that resulted in sharply reduced wages in many cases. Employees with highly specialized skills, such as pilots and mechanics, appeared to fare better in resisting wage and salary reductions compared to other employees. Air service to some small cities, supported by implicit cross subsidies, ceased, while service to some other small cities expanded, in part because some airlines found ways to serve such markets at lower cost. Lower fares (in real terms) led to an enormous expansion in air travel and increases in air travel employment. Some relatively new airlines, such as Southwest Airlines, prospered and expanded, while other airlines struggled, including several major carriers that declared bankruptcy.\nWere price transparency to improve, and if consumer choice in health care were to become more sensitive to price differentials, then economic analysis would suggest that these effects would increase pressure on hospitals to become more productively efficient, that is, to use fewer inputs to produce the same or greater output. Cost-cutting measures would put pressure on health sector salaries and wages, which some occupational groups would resist more successfully than others. Services, such as indigent care, now in part supported by implicit cross subsidies, could face cutbacks unless direct subsidies to support such services were increased. Innovative providers, however, may find ways to expand access to health care by the indigent using more efficient and cheaper methods. Some prices might fall, along with amenity levels. Lower prices, in turn, could expand access to health care, and to the extent that demand for medical procedures is sensitive to price, could expand the volume of medical services provided. Some existing health care providers, especially those unable to change their cost structures and operating procedures quickly, would be at a comparative disadvantage to more nimble providers. Such changes would produce both winners and losers, just as airline deregulation produced winners and losers. Increased price transparency, however, to the extent that it allowed health care markets to function more efficiently, would be expected to generate more gains than losses.", "Pricing Reforms in Financial Markets\nThe effects of price transparency on how financial markets function depend on how those markets are set up. Financial exchanges are structured as auction markets or dealer markets. In an auction market, such as the New York Stock Exchange (NYSE), investors send orders to a specialist, who coordinates trading for a particular stock. Investors can send market orders, which are to be executed immediately for the best possible price, or limit orders, which instruct a broker to buy a stock at a set price or to sell a stock at a set price. The specialist executes market orders by matching them with orders from the other side of the market, or by buying or selling on his own account. Limit orders that are not executed are entered into the specialist's order book. In a dealer market, such as NASDAQ, orders for a particular stock flow to market makers who then post bids (i.e., prices at which buyers are willing to trade) with asks (i.e., prices at which sellers are willing to trade) via an electronic market. In NASDAQ each stock must have at least two market makers, and for major stocks there may be 30 or more market makers.\nPrice transparency can mean several things in financial markets. The most basic form of price transparency is the timely reporting of executed trades. A second form of transparency is information about outstanding limit orders listed in a specialist's order book. Order book information can signal impending price movements, and a trader with special knowledge about outstanding orders can make profits. For example, an order book with many buy orders just above the market price and very few sell orders may signal that the market price is about to rise, and a specialist who buys before that rise occurs will reap profits. A third form of transparency concerns information about how dealers or specialists handle orders. A dealer often has some discretion in how and when orders are executed and may sometimes exploit that discretion to earn profits at the expense of the investor who placed the order.\nPast NASDAQ pricing practices illustrate the importance of the third form of price transparency. In 1994, William Christie and Paul Schultz, two Vanderbilt University financial economists, noticed that NASDAQ dealers almost never quoted prices using odd eighths (i.e., 1/8, 3/8, 5/8, and 7/8) for many high-volume stocks of companies such as Microsoft, Intel, and Apple. This practice effectively created a quarter dollar minimum spread between sellers' asks and buyers' bids, which increased the trading profits of dealers. The day after these economists issued a press release about their findings the practice was abandoned, and spreads for several major stocks fell by about half.\nEconomists often argued that collusion is difficult or impossible with large numbers of traders. A more careful argument is that collusion depends on the ability to make explicit or implicit agreements, and maintaining agreements may be more difficult for larger groups. Should a large group of sellers collude, each seller has strong incentive to increase his or her market share by making small reductions in price. If a seller can reduce its price and increase sales without other sellers noticing, then it will reap extra profits. For example, many members of the Organization of Petroleum Exporting Countries (OPEC) have been suspected of making hidden side deals which allow them to sell more oil than their OPEC quotas specify, which may have led to softened oil prices.\nIn the case of NASDAQ, it appears that a very simple rule—no trading on odd eighths—created artificially high trading spreads, which allowed dealers to reap higher profits. Young traders reportedly were cautioned not to narrow inside spreads by using odd-eighths, and traders who violated the no-odd-eighths convention may have been subject to intimidation or isolation. In addition, securities dealers rely on trades with other dealers to rebalance their inventories of stocks in order to minimize financial risks associated with sudden price movements. If other dealers refused to trade with a dealer who violated the pricing convention, then that dealer would be exposed to higher levels of financial risk. Furthermore, the practice of \"preferencing\" among NASDAQ dealers, which involves guaranteeing flows of orders to preferred dealers or dealer subsidiaries, meant that order flows were less sensitive to spreads. A dealer who violated the pricing convention in order to attract order flow would therefore gain little additional market share because of existing \"preferencing\" arrangements, which in turn reduced incentives for dealers to compete by narrowing spreads.\nWhile no evidence was found that this pricing convention was the result of an explicit collusive agreement, that convention enhanced traders' profits for many years. While investors and regulators were not aware this pricing convention existed, transparency of dealers' prices, which were visible on trading monitors, made enforcement of the pricing convention possible. All other dealers could immediately observe if any dealer violated the no-odd-eighths convention.\nWhile prices of stocks and other equities are publicly published, bond prices are less transparent, which has put small investors at a distinct disadvantage relative to large trading institutions. Trading of stocks is highly centralized, but except for U.S. Treasury securities, most bond trading occurs \"over the counter.\" In the past decade transparency of bond prices has improved. In particular, the Trade Reporting and Compliance Engine (TRACE), which was launched by the National Association of Security Dealers (NASD) in July 2002, reports bond trades within 15 minutes, and covers a large portion of the fixed income and bond market. Before the introduction of TRACE, some argued that improved transparency of prices would come at the cost of reduced market liquidity, meaning that some large bondholders or dealers would trade less frequently in order to protect proprietary pricing information. However, the expansion of trading volume has improved or maintained market liquidity.\nBecause large traders may gain some proprietary advantage from keeping the traded prices of bonds hidden, the advance of bond price transparency has been slow. The European Union's \"Markets in Financial Instruments Directive,\" which comes into force November 1, 2007, requires traders to provide real-time trading data for a wide range of financial instruments and markets.\nFinance researchers contributing to the new \"market microstructure\" literature have taken several approaches to analyzing the effects of price transparency. The market microstructure approach looks at how individual traders act in financial markets. In addition to the well-known Christie and Schultz work on NASDAQ, other research has found other ways to examine the effects of price transparency. An electronic communications network named Island discontinued displaying limit order data in three exchange-traded funds (ETFs) in which it played a dominant role from September 2002 to the end of October 2003 rather than comply with a regulatory mandate. During this time period ETF prices adjusted less quickly and trading costs rose. When Island resumed displaying limit order data, trading costs fell. Another study compared trades before, during, and after the regular trading day to examine the effects of price transparency. Trades made during the regular trading day are immediately reported and available to all investors. Much less information is available about trades that occur before or after regular hours, and because trade volumes are much smaller, there are fewer prices to report. Barclay and Hendershott found that prices are more volatile after hours, suggesting that pre-open and after-close markets are less efficient than markets during regular trading hours.\nIn some cases existing firms have beat back efforts to improve transparency in order to keep a strategic advantage over would-be entrants. For instance, following Mexico's 1994 financial crisis the World Bank sought to create a credit registry, which would list all assets pledged as collateral by borrowers. A credit registry allows any lender to see what a loan applicant has already pledged in collateral, thus giving potential lenders a better opportunity to price risk. Incumbent banks strongly opposed creation of the registry because they could already obtain information about lenders, while less established lenders could not. Although a credit registry would have expanded and strengthened Mexico's financial system, it was thwarted by banks who feared a more competitive environment.\n\"Dynamic Pricing\" at Amazon.com\nThe Internet seller Amazon.com's \"dynamic pricing\" experiment illustrates how marketing strategies can affect prices and create a consumer backlash. Dynamic pricing is a term that has come to be used to refer to a particular type of price discrimination. Price discrimination usually takes the form of sorting customers into groups with different price sensitivity based on their purchasing behavior. For instance, for airline fares a Saturday night stay-over requirement separates price-insensitive business travelers from price-sensitive tourists. Price discrimination typically raises prices for some groups and lowers them for others. In 2000, two episodes of differential pricing by Amazon were publicized; the second episode involved the sale of DVDs. Amazon, according to reports, used characteristics gathered about individual customers from the Internet itself (such as whether a customer was new to the site, what browser the customer was using and past purchases, etc.) to charge different prices to different individuals.\nAmazon stated that it was simply conducting tests, but nevertheless apologized and promised not to do it again. The same availability of information that permits individualized pricing also makes it much easier to expose such price differentials, as occurred with the Amazon case. Once this strategy was publicized, the protests led Amazon to cease the pricing variations and apologize. This example illustrates that a consumer backlash against differential pricing affected pricing behavior and provides evidence that people generally disapprove of price discrimination based on individual characteristics.\nReady-Mixed Concrete: Intermediate Markets May Run Differently\nAntitrust authorities and consumer groups have often advocated price transparency on the grounds that consumers could more easily make comparisons among sellers, which would sharpen competition among sellers. Competition generally leads to greater efficiency and lower prices. Price transparency, however, can change the workings of markets in unexpected ways, which can lead to higher prices. For example, in 1993, the Danish Competition Authority required that all ready-mixed concrete contracts be made public, which it hoped would stimulate greater competition. Instead, average prices rose by 15%-20% and other factors such as changing demand conditions played no discernable effect.\nThere are two possible explanations for this unexpected increase in prices. First, public prices make collusion among sellers easier. Rivals can observe sellers who undercut their competitors, who may be able to mete out punishments in various ways. Second, price transparency may alter the strategic incentives of sellers, inducing them to become tougher bargainers. Hviid and Møllgaard, motivated by the Danish concrete case, developed a model in which different buyers negotiate with a seller of an intermediate good. Some buyers are better informed than others, which makes them tougher bargainers. If less-informed buyers can observe prices negotiated by more-informed buyers, then the seller will become less willing to offer lower prices to the informed buyers. This happens because the seller understands that by offering an informed buyer a better price creates an obligation to offer less-informed buyers a better price. Thus, in this model greater price transparency, in the sense that less-informed buyers are allowed to see prices negotiated by informed buyers, can actually increase average prices. The underlying logic resembles that of price discrimination, where different prices are charged to different groups of consumers, with lower prices for those who are more sensitive to price. In this model buyers differ in their bargaining power, whereas in standard price discrimination models consumers differ in price sensitivity. Bargaining power and high price sensitivity are related because both depend on the availability of good alternatives.\nMore generally, some competition experts argue that some exchanges of information about production costs or prices among sellers often have anti-competitive effects. In particular, flows of information among firms can make coordination or collusion easier, as the cases of the Danish ready-mix concrete and the NASDAQ odd-eighths pricing convention suggest. On the other hand, flows of information to buyers make price comparisons among sellers easier and thus make consumers more sensitive to prices. Therefore, in general giving firms better price or cost information about other firms may harm competition, but giving consumers better price or cost information may enhance competition.\nThe Hviid and Møllgaard model in some ways resembles the negotiations between hospitals and insurers. Hospitals engage in negotiations with private insurers, which make about one-third of hospital payments. Some insurers are in a stronger bargaining position than others due to better data analysis, larger size, or managerial talent. The Hviid and Møllgaard model and the Danish experience with price transparency in the concrete market suggest that it is not inevitable that greater price transparency in hospital markets would lead to lower average prices. Most of the evidence discussed below, however, suggests that for a variety of markets more information on prices leads to lower overall prices.\nRestrictions on Advertising\nIn determining the effects of greater price transparency, restrictions on advertising which vary across jurisdictions or across time can provide evidence on the effects, as advertising can make price comparisons easier. Advertising has sometimes been banned for some goods and services. For example, many states prohibited lawyers and other professionals from advertising prices. In general, most studies that examined prices across jurisdictions that restricted or permitted advertising found lower prices in those jurisdictions that permitted advertising. Some studies also examined changes over time, involving a control group, which allows a simple method of controlling for other variables. The findings of this body of evidence may provide important insights about how improving price information for consumers in the health sector, where price-oriented advertising is uncommon and basic information about prices is often unavailable or difficult to obtain, might affect the level and dispersion of prices.\nAn important consideration is distinguishing between voluntary advertising and restrictions by a third party. Also, for some types of commodities, it is possible that low prices signal inferior quality. The clearest test of the effect of advertising occurs when a third party (usually the government) prevents advertising. Note that many of the studies discussed below are older because most advertising bans no longer exist, although their findings remain relevant.\nVision Exams and Eyeglasses\nSeveral of the studies that compared effects across jurisdictions focused on optometry and the pricing of vision exams and eyeglasses, as past rules restricting advertising varied across states. Benham examined the effects of advertising on eyeglasses by comparing prices paid in states with and without advertising restrictions in 1963. He first pointed out that the effect of advertising is theoretically ambiguous, as it may increase demand as well as competition. Subsequently, he separated the sample into states that permitted no advertising, that permitted advertising but not price advertising, or that permitted any type of advertising. He found the lowest prices in states with no restrictions, but also some benefit from advertising without price advertising. Overall, complete advertising restrictions caused prices to be higher by 25% or more. In two subsequent studies Feldman and Begun compared prices for vision examinations, controlling for quality (using length of exam and office equipment). In the first study they found that state bans on price advertising by either opticians or optometrists had an insignificant effect on prices, but prices were higher by 16% when advertising was banned for both . In the second study they found that prices were higher by 11% when state governments and state optometry boards imposed bans. This study also indicated that the variance of prices increased with advertising restrictions. Maurizi and Moore found that eyeglasses and contact lenses are less expensive \"if the optician or optometrist provides price information by telephone and advertises outside the telephone book.\"\nBond, Kwoka, Phelan, and Whitten report the results of an experiment where survey interviewers were sent to report on both the prices and characteristics of vision exams and eyeglasses and outcomes measured by an examination of the quality of the eyeglasses and evaluation of prescriptions. The study found that prices were lower in cities where advertising was restricted and chain firms did not operate; quality was about the same. Kwoka studied exams by optometrists, dividing the observations into cities where advertising was not allowed, and cities where it was, which included non-advertisers who practice in professional-looking offices, those who do not advertise but have prominent signs in storefronts, small firms who are affiliated with firms that do advertise, and those who advertise heavily. This study found that advertisers offered lower prices than non-advertisers and also that non-advertisers in non-restricted markets offered lower prices than firms in restricted markets, but the differences were not nearly as large.\nTime spent in the exam provides a proxy measure for quality. Optometrists that advertised spent less time in exams, but non-advertisers in markets in which advertising was allowed spent more time in exams than those in markets with advertising restrictions. These findings suggest that high quality service is not endangered by advertising. Overall, the analysis found quality was higher and price lower when advertising was permitted. Haas-Wilson explored other restrictions on optometrists, but found media advertising reduced average prices and no effect on quality. Haas-Wilson and Savoca, who analyzed survey data collected by the Federal Trade Commission, found that advertising restrictions on optometrists had no effect on the quality of contact lens outcomes.\nPrescription Drugs\nRestrictions on advertising prescription drugs, according to some research, also lead to higher prices. In 1976, Cady found that prescription drug prices were 4.3% higher on average in states restricting advertising of prices than in states allowing such advertising. The restrictions examined included limitations on outdoor signs with information identifying the products and prices offered by the pharmacy, prohibitions on implying the pharmacy has discount drugs, prohibitions on price advertising, and prohibitions of promotional schemes such as senior citizens' discount. He also found that the quantity of prescription drugs bought was unaffected. Cady found no evidence that advertising or lower prices would increase the consumption of drugs, as supporters of advertising restrictions had contended. (This result would not necessarily apply to drug manufacturers' current advertising to consumers that promotes potential benefits of drugs, but does not advertise prices.) Kopp analyzed how the initiation of direct-to-consumer advertising affected retail drug prices from 1986 through 1992. He found that average retail margins of 13 drugs that were advertised fell on average by 40% after the introduction of direct-to-consumer advertising, while the change in average price for 120 drugs that were not advertised did not fall.\nGasoline\nThe final set of cross section studies related to restrictions on posting gasoline prices. In 1972, Maurizi compared prices in cities with ordinances against posting large signs advertising price at gasoline stations and found that ordinances against the signs increased the variation in prices, but reduced the average price. He considered the price differences unimportant because he was unable to completely control for discounts in wholesale prices in areas subject to price wars, but did consider the variation evidence that restrictions on signs reduce competition. A subsequent critique by Marvel argued that Maurizi's results were not valid because of a statistical issue, except for premium gasoline. A subsequent study by Maurizi and Kelly, with access to a more extensive database, indicated that posting prices reduced prices.\nAlcoholic Beverages\nTwo studies analyzed changes in restrictions on advertising and alcoholic beverages. Luksetich and Lofgreen examined the effect of an accidental repeal of liquor advertising restrictions in Minnesota, which led to an ability to post prices and distribute price lists. The result was a decline in price and slightly more variability in price. This latter effect was not predicted by the simple theory; however, the authors suspect it arose from abandoning wide usage of the manufacturer's suggested retail price. Milyo and Waldfogel found that when restrictions on advertising in Rhode Island were eliminated, advertising stores cut prices on products they advertised and on products advertised by rivals. Non-advertising stores did not change prices, and advertising stores did not change prices of items not advertised. Also stores with the initial lower prices were more likely to advertise, and advertising stores drew more consumers.\nAvailability of Consumer Price Information\nSome studies were also done on changes in information. Two studies related to food prices. Glazer used the 1978 newspaper strike in New York City to examine the pattern of price movements compared to neighboring jurisdictions on several commodities whose prices could easily be altered, such as produce and meat. He found that prices went up in stores that normally advertised in the newspapers, relative to stores in other jurisdictions and to stores that did not advertise. He found the effects relatively small and that they declined over time, speculating that individuals may have found other sources of information on prices, such as radio. Grant and Devine used an experiment in two Canadian cities where, in one city, price lists for a market basket of supermarket goods were provided via newspaper advertising and by direct mail to a sample of consumers, while this information was not provided in the other city. The study found that supermarket prices fell in the city with the advertising and mail data compared to the city without it. Food prices eventually declined by 7%, and the variation also declined. Prices began to rise when the public information program was ended.\nProduct Quality Information\nExamining the effect of information on product quality is difficult. We summarize two related studies. Mathios examined the effect of mandatory nutrition labeling on salad dressings. Low fat products advertised fat content on a voluntary basis, but high fat products (which varied in fat content) did not. Following the mandatory labeling, sales in the highest fat products declined significantly, suggesting that consumers used the information to make more desirable choices. Jin and Leslie studied hygiene report cards for restaurants. In 1997, a Los Angeles television program showed unsanitary conditions in some restaurants. Los Angeles County officials responded by requiring restaurants to post hygiene quality grade cards. Incorporated cities in the county, however, retained the power to pass their own regulations. In cities that delayed requiring restaurants to post report cards, restaurants could display voluntarily hygiene report cards once an inspection occurred. The authors, by analyzing variations in the timing of implementation of the report card requirement, found evidence that the displaying cards increased hygiene scores, but were concerned that this may have reflected \"grade inflation.\" However, they also found an increase in revenues and a decrease in food-borne illnesses in the areas posting hygiene scores, compared to other areas.\nSearch Costs and the Internet\nIn some markets consumers obtain price information with difficulty or at high cost. For example, car buyers traditionally have had to negotiate with car dealers in person. Obtaining a price quote from a dealer can therefore require several hours of effort, from identifying local dealers, traveling to the dealer's lot, and negotiating with salesmen and finance specialists. When obtaining price information is costly, a consumer may settle for a given firm's price, even though further search might have identified a firm with lower prices. The economic theory of search describes a consumer's optimal strategy when obtaining price quotes is costly. A consumer gets a price quote, then either decides to search further or to settle for one of the price quotes he has in hand. An optimal search rule balances the cost of obtaining an additional price quote against the expected gains of further search. If a consumer has previous experience in the market, and knows something about the distribution of prices, then computing an optimal stopping rule for a search is straightforward. If the distribution of prices is unknown, then no known optimal stopping rule exists.\nIn search theory models, firms cannot price discriminate, but consumers still pay different prices. On average, consumers who search more pay lower prices. Because consumers have different costs of search, different firms will offer different prices. Firms with higher prices earn higher markups on a smaller number of sales, while firms with lower prices have smaller markups but a higher number of sales. If search costs for consumers fall, then both average prices and price dispersion fall.\nPrices and the Internet\nMany economists expected that the Internet, which enabled the emergence of cheap and efficient price searching mechanisms, would lead to lower prices. Some studies, conducted when the Internet use had just started to spread to the general public, found higher prices online, although later studies tended to show some price reductions. Pricing and marketing techniques have changed as the Internet has evolved, often in different ways for different markets. In addition, studies of Internet pricing have become more sophisticated over time. In general, later studies, and studies of comparison sites, tend to find lower prices as a result of the Internet.\nCars\nLee studied an electronic automobile auction network in Japan and found that prices can be higher than in more traditional markets, even after controlling for quality. This effect might be attributable to the reduction in transaction costs and the better matching of desired car type. In two papers, Settlemeyer, Morton, and Silva-Risso examined the effect of the Internet on car prices and found that prices were lower for direct Internet buying. Buyers referred to offline dealerships also paid lower prices, apparently because additional information increases bargaining power and because of the referral service.\nBooks and CDs\nBailey, in one early Internet pricing study, found that prices for books, CDs, and software in 1996 and 1997 were higher online than in conventional outlets. Brynjolfsson and Smith, however, studying a later period and using a more sophisticated methodology, found prices for books and CDs on the Internet were 9%—16% lower than prices in conventional outlets. Although posted Internet prices showed considerable dispersion, so that an unweighted measure of price variation for Internet sellers exceeded that for conventional sellers, prices weighted by market share varied less than conventional sellers' prices. This effect occurred because sales at a few Internet booksellers, whose prices were relatively close to one another, comprised a large proportion of book sales. Clay, Krishman, Wolff, and Fernandes, in 2001, found that book prices were no lower on the Web than at physical booksellers. They also found evidence of product differentiation, given the higher prices charged by Amazon, compared to both Barnes & Noble online and Borders online. Goolsbee and Chevalier found significant price variability for books on the Internet. Waldfogel and Chen found that those who used price comparison sites reduce their shopping at branded retailers, such as Amazon, by a tenth if performing price comparison, and by a fifth if comparing both price and quality. Price comparison site users reduced purchases from Amazon and from offline chains.\nAirline Travel\nVerlinda and Lane found an increase in unrestricted airline fares relative to restricted fares as Internet price searches increased, but this difference was statistically insignificant. Over the time period of this study the share of restricted tickets decreased substantially. This trend, on which the authors did not focus, could be interpreted as an increase in quality, as it allows more travelers flexibility in their travel plans. In addition, airline fares had long been subject to comparison through travel agents, which means the increase in information may not have been as great for this product as for other products. Clemons, Hann, and Hitt found similar tickets on different sites in 1997 varied on average by 18%. By 2002, Chen found these differences had narrowed to 0.3%-2.2% for fares available at multiple travel websites. This convergence appears to stem from several major changes in the air travel market. First, the launch of several online ticket agencies and airlines' efforts to promote their own direct ticketing websites have substantially changed the online travel market. Between 1997 and 2002, use of online travel agencies increased elevenfold. Second, more consumers buy air tickets on the Internet. According to one recent estimate, 60% of travelers buy tickets on-line.\nLife Insurance\nBrown and Goolsbee found that the appearance of Internet sites which allowed for comparisons among term life insurance policies led to significant decreases in prices. This study found that an increase in the share of individuals using the Internet comparisons of 10% led to a 5% decrease in price.\nSummary of Internet Studies\nThe evidence from Internet studies is mixed, and it is, of course, possible that Internet purchasers are willing to pay higher prices to purchase on the Internet because of the reduction in transactions cost or other advantages.\nThe characteristics of the Internet as it evolves have complex effects on marketing and pricing strategies. The Internet is well suited to increasingly sophisticated price comparison tools, which tend to reduce prices and price dispersion for those who use them. The evidence on the use of comparison sites (as opposed to direct sales on the Internet), which may be most relevant to the question at hand, seems to suggest that having access to direct price comparisons reduces prices when consumers use price comparison sites. Baye and Morgan contend that prices reached via price comparison sites are lower than prices obtained directly from a vendor's website.\nOn the other hand, some Internet characteristics make entry of new firms difficult. Internet traffic patterns show strong winner-take-all features: a small number of websites account for a large proportion of total traffic. Designing, building, and maintaining a major retail website are expensive tasks. Some Internet sellers have been able to establish strong brand identification that permits higher prices. Because of these characteristics, in some product markets a few dominant firms may be able to maintain substantial market power in the Internet Age. Highly visible firms, however, can be vulnerable to public pressure, as the case of Amazon's dynamic pricing experiment illustrates.\nEmpirical Research on Price Transparency: Conclusions\nMost research suggests that when better price information is available prices for goods sold to consumers fall. The largest and most straightforward body of evidence relates to the effect of advertising, where nearly all research indicates advertising prices is associated with lower prices. This reduction in prices suggests that advertising's increased information on prices and increases in competition outweigh any tendency to increase prices through increasing demand and brand identification. Evidence on price comparison sites on the Internet also seems to support this view. (Again, this conclusion may not apply to current manufacturers' drug advertising that does not include price information.)\nEvidence for markets in intermediate goods is more complicated. When middlemen are involved the effects of price transparency depend on the particulars of market structure. Price transparency gives buyers and sellers important information about the true economic value of goods, services, or assets, but may also enable traders to observe deviations from collusive practices. Allowing weaker bargainers to see prices negotiated by stronger bargainers will change incentives facing buyers and sellers, and can lead to price increases. In financial markets dealers need to trade with other dealers on a frequent basis to rebalance portfolios and take actions to maintain liquidity, which leads to a complex relationship among price transparency, trading costs, and market efficiency. Studies in experimental financial economics suggest that price transparency can either increase or decrease prices. In short, how price transparency affects intermediate goods markets is an active area of research, and settled conclusions have not yet been reached.\nIn traditional economic theory consumers react to price differences because lower prices mean that consumers can buy more goods and services. The unwillingness of consumers to pay higher prices imposes market discipline upon firms. Other mechanisms, however, may act to discipline firms as well. Firms that charge unusually high prices may face political or legal pressure. For example, sellers of gasoline may face complaints of price gouging with sharp price increases, as happened in some states following Katrina. Also consumers are willing to punish firms by not doing business with them, even if this action reduces the welfare of consumers. For example, many consumers reported that they had resolved not to buy from Amazon.com after experiencing \"dynamic pricing,\" even if this meant that they would pass up advantageous offers in the future. NASDAQ spreads narrowed not because of consumer pressure, but because NASDAQ administrators feared adverse media coverage and lawsuits filed by investors and regulators. Thus, price transparency may impose discipline upon firms, even if this occurs through non-market mechanisms." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3, 3, 2, 1, 2, 2, 2, 2, 1, 2, 1, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full h1_full", "h3_full h1_full", "h0_full h2_title h1_full", "h2_full", "", "h2_title", "", "", "", "h2_full", "", "h2_full", "", "", "", "", "", "h3_full", "h3_full", "h3_full h1_title h0_title", "h3_full", "h3_full h1_title h0_title", "h0_full h3_full h1_full" ] }

{ "question": [ "What are consumer advocates calling for?", "What specific measures do they want imposed?", "What is price transparency?", "What are consumers unaware of in health care markets?", "What have empirical studies investigated?", "What do these studies suggest?", "How could these studies apply to the health care market?", "What could cause changes to pricing strategies?", "Why is it difficult to apply evidence from other markets to the health care market?", "What specific characteristics make application difficult?", "What does high dispersion of prices for similar healthcare procedures suggest?", "How does the amount that people without insurance pay compared to the amount that those with private insurers pay?", "What could greater price transparency lead to?", "How would greater price transparency help patients?", "What suggests that the complexity of health care may not be a barrier to greater price transparency?", "What could change hospitals' and health care providers' pricing behavior?" ], "summary": [ "Consumer advocates, proponents of wider use of market incentives in the health care sector, and some policy makers have called for greater price transparency.", "These measures might include posting prices in an accessible form or regulations constraining price discrimination (different prices charged to different customers).", "Price transparency implies that consumers can obtain price information easily, so they can usefully compare costs of different choices. Price transparency may also mean consumers understand how prices are set and are aware of price discrimination.", "In health care markets consumers often have difficulty finding useful price data. In particular, few consumers have a clear idea of what hospital stays or hospital-based procedures will cost, or understand how hospital charges are determined.", "Many empirical studies have investigated how changes in price transparency have affected various markets.", "Most of this evidence, largely relating to advertising restrictions and lower search costs on the Internet, suggests that price transparency leads to lower and more uniform prices, a view consistent with predictions of standard economic theory.", "If this evidence could be applied to the health market, it would suggest that reforms that increase transparency would reduce prices.", "In cases involving NASDAQ and Amazon.com, public reaction created pressure to change pricing strategies.", "However, the special characteristics of the health market make it difficult to directly apply empirical evidence gathered from other markets.", "These characteristics include limits on competition among hospitals, complicated products that vary in quality, intermediate agents (physicians) who make choices, and third-party payment of costs through insurance.", "The dispersion of prices for similar health care procedures is high, which suggests that these markets are not working well with respect to price outcomes, as would be expected in ordinary competitive markets.", "On average, patients without insurance or who pay their own bills pay much more relative to what private insurers, Medicare, and Medicaid pay.", "Despite these complications, greater price transparency, such as accessibly posted prices, might lead to more efficient outcomes and lower prices.", "Better price information might allow patients, either directly or through their physicians, to obtain better value for health care services.", "Some markets where lifting advertising restrictions led to lower prices also involved complicated products such as eye care, suggesting that the complex nature of health care may not be a barrier to benefits from price transparency.", "Public pressure, which in some cases has caused hospitals to curtail aggressive bill collection tactics, might change hospitals' and health care providers' pricing behavior." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 0, -1, -1, 0, -1, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Medicaid Payments to Hospitals", "DSH Payments", "Non-DSH Payments", "The Patient Protection and Affordable Care Act (PPACA) and DSH Allotments", "States Increasingly Made Supplemental Payments to Hospitals", "States Increasingly Made Supplemental Payments to Hospitals, while Reducing or Freezing Hospitals’ Base Payments", "States Have Relied on Multiple Sources of Funds to Finance Their Nonfederal Share", "Supplemental Payments Allow States to Target Payments to Certain Hospitals or Types of Hospitals", "GAO and Others Have Noted Concerns With States’ Use of Supplemental Payments", "Hospital Uncompensated Care Costs and DSH Payments Varied by State; Some Types of Hospitals Received a Greater Proportion of DSH Payments", "Uncompensated Care Costs Varied by State and Were Mainly for Costs Related to Treating Uninsured Patients", "Across States, DSH Payments Varied Significantly in Amounts, Percentage of Uncompensated Care Costs Covered, and Percentage of States’ Medicaid Spending on Hospitals", "Deemed-DSH, Public, and Teaching Hospitals Received a Greater Share of DSH Payments Relative to their Proportion of Uncompensated Care Costs", "Agency Comments", "Appendix I: Selected Bibliography", "Appendix II: Data on Disproportionate Share Hospital Payments and Hospital Uncompensated Care Costs by State", "Appendix III: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments" ], "paragraphs": [ "CMS and states jointly administer the Medicaid program and generally share in the financing of Medicaid payments according to a formula established in law. States may deliver health care services to Medicaid beneficiaries through fee-for-service payments to participating providers or through Medicaid managed care plans, through which states pay plans a fixed amount per beneficiary—typically per member per month—to provide a specific set of Medicaid-covered services. States finance their share (nonfederal share) of Medicaid program spending in a variety of ways, including state funds, such as state general funds appropriated to the state Medicaid program and funds collected through taxes levied on health care providers. Within limits, however, states may also use other sources of funds—including funding from local government providers, such as county-owned or county-operated hospitals, or from local governments on behalf of government providers. Federal law allows states to finance up to 60 percent of the nonfederal share of Medicaid payments from local government funds.", "State Medicaid agencies have two primary mechanisms for making payments to hospitals—base payments and supplemental payments— and both can qualify for federal matching funds.\nBase payments are payments to hospitals for specific services provided to Medicaid beneficiaries through both fee-for-service and managed care. These payments are set by state Medicaid programs or managed care plans, and can vary considerably across states for the same services. Payment amounts for the same service may also vary within a state. States’ Medicaid base payments are typically lower than other payers’, and often are below the costs of providing services.\nSupplemental payments are typically lump sum payments made to hospitals that are not specifically tied to an individual’s care. Like all Medicaid payments, supplemental payments are required to be economical and efficient. Supplemental payments can be grouped into two broad categories: (1) DSH payments, which states are required to make to certain hospitals; and (2) non-DSH payments, which states are allowed to make, but are not required by law.", "DSH payments are designed to help offset uncompensated care costs for hospitals serving a high proportion of Medicaid beneficiaries and uninsured low-income patients. In fiscal year 2017, total DSH payments to hospitals nationally were about $18.1 billion. States may distribute DSH payments to any eligible hospital in the state; however, under federal law, the total amount of DSH payments to a hospital must not be more than the total amount of uncompensated care provided by the hospital (both the Medicaid shortfall and uncompensated costs for care for the uninsured). To be eligible for a DSH payment, hospitals must meet minimum requirements such as having a Medicaid inpatient utilization rate of at least 1 percent. States are required to make DSH payments to certain hospitals—termed deemed-DSH hospitals—with a Medicaid inpatient utilization rate of at least one standard deviation above the mean for hospitals in the state that receive Medicaid payments, or a low-income utilization rate that exceeds 25 percent.\nThe amount of federal funding each state may claim for DSH payments is limited by federal law. Since fiscal year 1993, each state is subject to a federal DSH allotment that establishes the maximum federal funding available for the payments. A state’s DSH allotment is largely based on its fiscal year 1992 DSH spending, although Congress has since made several incremental adjustments to these allotments. Ultimately, however, the states that spent the most in fiscal year 1992 continue to have the largest allotments; conversely, the states that spent the least in fiscal year 1992 have the smallest allotments.\nStates may choose to make DSH payments to institutions for mental disease (IMD), which can include state-operated psychiatric hospitals. Prior to 1997, a large share of DSH payments went to state-operated IMDs, where they were used to pay for services not covered by Medicaid and any remaining funds were returned to the state treasuries. In general, Medicaid excludes fee-for-service base payments for beneficiaries aged 21-64 who are residents of IMDs—called the IMD exclusion—and using DSH payments allowed states to support the costs of IMDs. In 1997, Congress restricted the total amount of DSH payments a state could make to IMDs as a group by establishing an annual limit on payments to IMDs for each state. Any unspent funds within the IMD-designated limit can be used for other hospital types.", "Non-DSH payments include four types of supplemental payments that states may make, but are not required to do so, to hospitals and other providers.\nMedicaid upper payment limit (UPL) payments are lump-sum payments that are made in addition to fee-for-service base payments. The UPL is a limit or ceiling on the amount of a state’s Medicaid payments for which the federal government will match spending. The UPL is based on the difference between Medicaid fee-for-service base payments and an estimate of what Medicare would pay for comparable services. The UPL is not a hospital-specific limit, but is applied in the aggregate across certain categories of providers. States have some flexibility in deciding which hospitals will receive a UPL payment, and how to allocate UPL payments among hospitals. In fiscal year 2017, UPL payments totaled nearly $13 billion.\nUncompensated care pool payments are payments that some states make to hospitals specifically for uncompensated care costs in conjunction with section 1115 demonstration waivers and pilot projects for which they have received approval from the Secretary of HHS. Specifically, section 1115 of the Social Security Act authorizes the Secretary of HHS to waive certain federal Medicaid requirements and allow costs that would not otherwise be eligible for federal matching funds for experimental, pilot, or demonstration programs that, in the Secretary’s judgment, are likely to assist in promoting Medicaid objectives. States have received approval to make supplemental payments for hospital uncompensated care in their Medicaid programs. In fiscal year 2017, states reported total spending of about $8 billion through uncompensated care pools.\nDelivery system reform incentive payment (DSRIP) programs, which have also been authorized under section 1115 demonstrations, allow states to make supplemental payments to providers engaging in various improvement projects that align with state delivery system reform objectives. Examples of reform objectives include improving care for patients with specific conditions or increasing capacity. In fiscal year 2017, DSRIP program payments totaled about $7.3 billion.\nGraduate medical education payments help support teaching hospitals, and can include teaching costs, such as physician resident salaries, though states are not required to make such payments to teaching hospitals. States have significant flexibility in designing and administering these payments; however, the payments are subject to the UPL. In fiscal year 2017, Medicaid graduate medical education payments totaled about $2 billion.", "Effective January 1, 2014, PPACA allowed states to expand Medicaid eligibility to certain non-pregnant, non-elderly individuals. PPACA also required a phased reduction in DSH allotments to states, reflecting the expectation that the number of uninsured individuals would decline—and so would hospital spending on uncompensated care. As of May 2019, there were 37 “expansion states”—those states that chose to expand Medicaid eligibility—and 14 “non-expansion states”—those that did not choose to expand Medicaid. Congress has delayed the reduction in DSH allotments several times. The reductions are scheduled to begin in fiscal year 2020.\nBetween 2013 and 2014, both expansion and non-expansion states reported different degrees of change in care for the uninsured and Medicaid shortfall. In particular, MACPAC reported that between 2013 and 2014, the year in which most state Medicaid expansions took effect, expansion states’ uncompensated care costs for the uninsured declined by $2.2 billion (19 percent), while non-expansion states’ uncompensated care costs for the uninsured increased by $0.6 billion (5 percent). During the same period, expansion states’ Medicaid shortfall increased by $2.2 billion (36 percent), and non-expansion states’ Medicaid shortfall increased by $1.8 billion (546 percent).", "States’ use of supplemental payments has grown in recent decades, partly due to the flexibility supplemental payments provide. This flexibility is twofold: supplemental payments provide states with flexibility in financing the nonfederal share of supplemental payments, and flexibility to target the payments to specific hospitals or types of hospitals.", "Total supplemental payments to hospitals have grown over time, while states’ base payments have often been frozen or reduced. Congress imposed limits on DSH spending in the 1990s, and since then states’ use of non-DSH payments has grown. Between fiscal year 2000 and fiscal year 2017, DSH payments increased about 16 percent, from $15.6 billion to $18.1 billion. In prior work, we reported that in fiscal year 2006 state Medicaid agencies made at least $6.3 billion in non-DSH payments, though the exact amounts are unknown, because states did not report all their payments to CMS. By fiscal year 2017, the amount of non-DSH payments had increased to $30.4 billion. Both uncompensated care pool payments and DSRIP programs are relatively new types of non-DSH payments, and thus contributed to the overall increase in supplemental payments. In prior work, we reported that, as of February 2017, CMS authorized nearly $38.7 billion in DSRIP spending nonconsecutively over 2011 to 2022 in four states with the largest DSRIP programs.\nOur prior work found that new or increased supplemental payments helped mitigate the increasing gap between Medicaid base payments and hospital costs. While supplemental payments increased, the number of states reducing or freezing base payments to hospitals has increased, in part, because states reported challenges paying the nonfederal share with state general funds. Our work found that from 2008 to 2011, across all providers, the number of states making at least one base payment reduction grew from 13 to 34, while the number of states increasing at least one base payment fell over the same period. Across all 4 years, states most frequently reported reducing base payments for hospitals.\nThe Kaiser Family Foundation’s annual survey data shows the trend continued in more recent years. Specifically, over half of states froze or reduced inpatient hospital base payments each fiscal year from 2011 to 2018, ranging from a low of 28 states in 2011 and 2018, to a high of 39 states in 2012. (See table 1.)\nIn a September 2018 study of five states, MACPAC found that hospitals and state Medicaid officials often prefer increases to supplemental payments rather than increases to base payments, because supplemental payments come with more predictability. MACPAC found that all five states reported reducing hospital base payments from 2007 to 2011. After 2011, all five states kept base payments frozen with no adjustment for inflation. As a result, base payments to hospitals in these states were lower in 2018 relative to other payers and hospital costs. To address the growing gap between base payments and hospital costs, states collaborated with hospitals to establish or increase supplemental payments. In the five states, supplemental payments ranged from 18 percent to 61 percent of total hospital payments.", "More often than with base payments, states have relied on sources other than state general funds to finance the nonfederal share of supplemental payments. For example, states may receive funds for the nonfederal share of supplemental payments through taxes levied on health care providers. (See fig. 1.) In previous work, we found that funds from local governments and health care providers constituted about 50 percent of the nonfederal share for DSH and non-DSH payments in fiscal years 2008 through 2012. In contrast, funds from local governments and health care providers constituted approximately 30 percent of base payments during the same time period. The MACPAC study of five states also found that states and hospitals preferred supplemental payments, because hospitals can track the extent to which their tax assessments are recouped through supplemental payments.\nIn a July 2014 report, we found that the number of states relying on provider taxes increased, and that provider tax revenues were then used for the nonfederal share of supplemental payments. In particular, the total number of provider taxes increased from 119 taxes in 42 states in 2008 to 159 taxes in 47 states in 2012—a 34 percent increase. Kaiser Family Foundation data show this trend has continued. According to state survey data, the number of states using inpatient hospital provider taxes has steadily increased from fiscal year 2011 to 2018, ranging from a low of 34 states in 2011, to a high of 42 states in 2017 and 2018. (See table 2.)", "Supplemental payments provide states with flexibility that allows them to address states’ goals by targeting payments to particular hospitals or hospital types, such as public hospitals or teaching hospitals. States may choose to target supplemental payments to hospitals that may not have the highest uncompensated care costs. Our prior work found some states’ DSH payments were not proportionally targeted to hospitals with the highest uncompensated care costs, which DSH payments are designed to address. Based on our prior analysis of annual hospital-specific 2010 DSH data, we reported that in 30 of 42 states, hospitals receiving the largest share of state DSH payments did not provide the largest share of total uncompensated care. Moreover, our prior review of the independent DSH audits found that\n41 states made DSH payments to 717 hospitals that exceeded the individual hospitals’ uncompensated care costs as calculated by the auditors,\n9 states did not accurately calculate the uncompensated care costs of 206 hospitals in those states for purposes of making DSH payments, and\n15 states made DSH payments to a total of 58 hospitals that either did not retain their DSH payments or were not qualified to receive them.\nStates’ criteria for identifying eligible DSH hospitals and how much funding they receive vary, but were often related to hospital ownership, hospital type, and geographic factors. Our prior work found that 2006 DSH payments to individual hospitals varied widely, ranging from 1 cent to about $395 million. For example, California reported both the lowest and highest 2006 DSH payment amounts; the state made a total of only $160 in DSH payments to 96 private hospitals and paid $2 billion in DSH payments to 51 government hospitals.\nBased on our analysis of 2014 DSH audits, several states targeted DSH payments to certain hospitals and hospital types, including the following:\nPublic hospitals: States targeting nearly all (93 percent or higher) of their DSH funding to public hospitals included Arkansas (99 percent), California (100 percent), Illinois (99 percent), Iowa (93 percent), Maine (100 percent), and Washington (97 percent).\nNonprofit hospitals: Nebraska targeted 98 percent of its DSH funding to nonprofit hospitals.\nHigh-teaching hospitals: Arkansas targeted 98 percent of DSH funding to high-teaching hospitals, defined as teaching hospitals with an intern-and-resident-to-bed ratio of 0.25 or greater.\nIMDs: Maine makes DSH payments to the two state-run IMDs. In 2014, 18 states directed their entire IMD-designated DSH limit to IMDs. (For additional information on DSH payments to IMDs, see table 9 in app. II).\nSimilarly, states can target UPL payments to certain hospitals. We and the HHS Office of the Inspector General have reported that some states concentrated these payments to a small number of providers.", "Our work has highlighted a number of concerns about the use of non- DSH payments from various perspectives, highlighting the need for transparent reporting, ensuring expenditures meet Medicaid purposes, and concerns regarding arrangements that shift costs from the states to the federal government. For example, in November 2012, we recommended that Congress consider requiring CMS to improve the transparency of and accountability for non-DSH payments by requiring facility-specific payment reporting and annual audits. The report noted that the annual DSH reports and audits that states began submitting in 2010 were important steps toward improving transparency and accountability for Medicaid DSH payments; however, similar information is lacking for non-DSH payments. Moreover, the report stated that the limited information available on non-DSH payments shows that a large share of these payments are paid to a small number of hospitals; when these payments are combined with Medicaid base payments, hundreds of hospitals may be receiving Medicaid payments well in excess of their actual costs of providing Medicaid services. As of March 2019, Congress has not taken any action, but CMS announced in fall 2018 that it was planning a proposed rule on supplemental payments that, if finalized, would improve transparency by requiring states to provide CMS with certain information on Medicaid supplemental payments. The agency plans to release the proposed rule for comment by fall 2019.\nIn 2014, we recommended that CMS develop a data collection strategy ensuring states report accurate and complete data on all sources of funds used to finance the nonfederal share of Medicaid payments. Such data are needed to (1) track trends in financing the nonfederal share, and (2) oversee compliance with current limits on sources of financing the nonfederal share. CMS did not concur with our recommendation, but did acknowledge the agency does not have sufficient data to oversee compliance with the 60 percent limit on local government contributions to a state’s nonfederal share.", "", "Among hospitals receiving DSH payments in 2014, total uncompensated care costs varied by state, ranging from $5.9 million in North Dakota to $6.2 billion in New York. In the hospitals, most uncompensated care costs were related to costs to care for uninsured patients, rather than the Medicaid shortfall. For example, among hospitals receiving DSH payments in the 48 states studied:\nCosts related to care for the uninsured comprised about two-thirds (67.9 percent) of total uncompensated care costs for DSH hospitals. The remaining share of DSH hospital uncompensated care costs consisted of the Medicaid shortfall.\nIn 34 states, costs for care for the uninsured exceeded the Medicaid shortfall. In the remaining 14 states, the Medicaid shortfall exceeded costs related to care for the uninsured.\nIn 15 states, Medicaid paid hospitals more than the total cost of services provided to Medicaid beneficiaries, resulting in a surplus of Medicaid payments—even prior to receiving DSH payments. Termed a negative Medicaid shortfall, these surplus funds can be the result of non-DSH Medicaid supplemental payments. The remaining 33 states had some Medicaid shortfall. (See table 3.) No states had a surplus of total uncompensated care costs. (For additional information on state uncompensated care costs and DSH payments in 2014, see table 10 in app. II.)", "DSH payments—both the federal and nonfederal share—varied significantly in the amount that each state paid to hospitals in 2014. (See table 4 and fig. 2.) Wyoming made the smallest amount of DSH payments at about $500,000, while New York made the largest amount in DSH payments at $3.5 billion. Differences in DSH payments are largely the result of differences in the state allocations established in law.\nThe proportion of total DSH hospital uncompensated care costs covered by total DSH payments in 2014 also varied considerably by state. Nationally, DSH payments ($18.3 billion) covered about half of DSH hospital uncompensated care costs ($36.2 billion). Nineteen states made DSH payments totaling at least 50 percent of uncompensated care costs for the states’ DSH hospitals, while 29 states made DSH payments of less than 50 percent of uncompensated care costs for the states’ DSH hospitals. (See table 5.) Four states (California, Illinois, Maryland, and Missouri) made DSH payments that exceeded aggregate hospital uncompensated care costs. (For additional information on state uncompensated care costs and DSH payments in 2014, see table 10 in app. II.)\nAmong hospitals receiving them, DSH payments accounted for 13.6 percent of total Medicaid payments, nationally, but there was considerable variation across states. For example, DSH payments comprised 96.6 percent of Medicaid payments to DSH hospitals in Maine and 0.7 percent of Medicaid payments to DSH hospitals in Tennessee. In 40 states, DSH payments accounted for less than 20 percent of total Medicaid payments to hospitals, but in 8 states, it exceeded 20 percent. (See table 6.) (For additional information on state Medicaid payments to hospitals, see table 11 in app. II.)", "Among deemed and non-deemed DSH hospitals, overall deemed-DSH hospitals received larger relative DSH payments compared to non- deemed DSH hospitals. Deemed-DSH hospitals received 69.9 percent of DSH payments in 2014, but carried 51.2 percent of uncompensated care costs, relative to all hospitals receiving DSH payments that year. Each of the 48 states that distributed DSH payments in 2014 had at least one deemed-DSH hospital. (See table 7 for hospital type definitions.) Most of these states (36) provided deemed-DSH hospitals with a greater share of DSH payments relative to their share of total uncompensated care costs. (See table 8 for a summary of how states’ DSH payments to deemed-DSH hospitals compared to the hospitals’ share of uncompensated care costs, and table 12 in app. II for additional information by state.)\nIn terms of ownership and teaching hospital status, hospitals that were publicly owned or teaching hospitals also generally received a greater proportion of DSH payments relative to their share of total uncompensated care costs.\nAmong the three different ownership groups (public, non-profit, and private), public hospitals generally received a larger share of DSH payments relative to their share of uncompensated care. Among hospitals receiving DSH payments in 2014, public (36.7 percent) and nonprofit (53.7 percent) hospitals accounted for more uncompensated care costs than that of privately owned hospitals (9.6 percent). States generally provided more DSH payments to public hospitals (62.8 percent) relative to their share of total uncompensated care costs (36.7 percent). (For additional information on DSH payments and hospitals’ uncompensated care costs by ownership, see table 13 in app. II.)\nStates distribute DSH payments to teaching hospitals at different rates, but generally provided a greater proportion of DSH payments to high-teaching hospitals (56.5 percent) relative to their share of total DSH hospital uncompensated care costs (44.0 percent). (For additional information on DSH payments and hospitals’ uncompensated care costs by hospital teaching status, see table 14 in app. II.)\nNationally, urban hospitals received a greater share of DSH payments relative to rural hospitals, with 89.6 percent of DSH funds distributed to urban hospitals and the remaining 10.4 percent distributed to rural hospitals. This proportion corresponds to a similar distribution of uncompensated care costs, with 88.2 percent of uncompensated care costs among DSH hospitals carried by urban hospitals and the remaining 11.8 percent carried by rural hospitals. (For additional information on DSH payments and hospitals’ uncompensated care costs by urban/rural status, see table 15 in app. II.)\nFor additional information on variation in uncompensated care and DSH payments by hospital category and sole community provider status, and state characteristics, see tables 16 through 19 in appendix II.", "We provided a draft of this report to HHS for review. HHS provided technical comments, which we incorporated as appropriate.\nAs 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 to appropriate congressional committees, to the Secretary of Health and Human Services, the Administrator of CMS, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114, or [email protected]. 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.", "This bibliography contains citations for the eight Kaiser Family Foundation reports referenced in the report.\nKaiser Family Foundation and Health Management Associates. States Focus on Quality and Outcomes Amid Waiver Changes: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2018 and 2019. Washington, D.C.: Kaiser Family Foundation, and National Association of Medicaid Directors, October 2018.\nKaiser Family Foundation and Health Management Associates. Medicaid Moving Ahead in Uncertain Times: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2017 and 2018. Washington, D.C.: Kaiser Family Foundation, October 2017.\nKaiser Family Foundation and Health Management Associates. Implementing Coverage and Payment Initiatives: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2016 and 2017. Washington, D.C.: Kaiser Family Foundation and National Association of Medicaid Directors, October 2016.\nKaiser Family Foundation and Health Management Associates. Medicaid Reforms to Expand Coverage, Control Costs and Improve Care: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2015 and 2016. Washington, D.C.: Kaiser Family Foundation and National Association of Medicaid Directors, October 2015.\nKaiser Family Foundation and Health Management Associates. Medicaid in an Era of Health & Delivery System Reform: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2014 and 2015. Washington, D.C.: Kaiser Family Foundation, and National Association of Medicaid Directors, October 2014.\nKaiser Family Foundation and Health Management Associates. Medicaid in a Historic Time of Transformation: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2013 and 2014. Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, October 2013.\nKaiser Family Foundation and Health Management Associates. Medicaid Today; Preparing for Tomorrow: A Look at State Medicaid Program Spending, Enrollment and Policy Trends Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2012 and 2013. Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, October 2012.\nKaiser Family Foundation and Health Management Associates. Moving Ahead Amid Fiscal Challenges: A Look at Medicaid Spending, Coverage and Policy Trends Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2011 and 2012. Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, October 2011.", "To conduct this analysis, we used data compiled by Acumen for the Medicaid and CHIP Payment and Access Commission. These data consist of measures from several sources. The measures used within this report were collected from state disproportionate share hospital (DSH) audits and Medicare cost reports. The 2014 DSH audits, which report data on hospital uncompensated care costs and DSH payments to hospitals, were submitted by 48 states and the District of Columbia. These data do not include a census of all hospitals, but only those hospitals that were reported in the 2014 DSH audits. As a result, these data do not capture all uncompensated care costs in each state, only uncompensated care costs for those hospitals reported in the 2014 DSH audits. Two states, Massachusetts and Hawaii, did not submit a 2014 DSH audit, because they did not make DSH payments. Additionally, while South Dakota submitted a 2014 DSH audit, we excluded the state from our analysis because of concerns about the reliability of the reported cost measures.\nIn addition, not all hospitals reported every data element we analyzed. As a result, total uncompensated care costs and total DSH payments vary between tables, as hospitals were excluded from a given table if they did not report the characteristic described by the table. The numbers of hospitals excluded because they did not report a given data element are noted in each table for which this is the case. Likewise, as uncompensated care costs are an important focus of the report, we also excluded from all analyses 13 hospitals that did not report a value for uncompensated care costs.", "", "", "In addition to the contact named above, Lori Achman (Assistant Director), Dawn Nelson (Analyst-in-Charge), Sean Miskell, and Jeffrey Tamburello made key contributions to this report. Also contributing were Tim Bushfield, Drew Long, Vikki Porter, and Emily Wilson." ], "depth": [ 1, 2, 3, 3, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h1_title", "h0_title h1_full", "h0_full h1_full", "", "", "h2_title", "", "", "h2_full", "", "h0_title", "h0_full", "", "", "h2_full", "", "h2_full", "", "", "" ] }

{ "question": [ "What are DSH payments?", "What components make up the DSH program?", "What did GAO's analysis of the DSH program say?", "What is Medicaid?", "What are supplemental payments?", "What determines hospital payment amounts?", "How are hospital payment amounts scheduled to change?", "How did GAO get data for this report?", "Why were 3 states excluded from the data?", "How was the GAO report dealt with?" ], "summary": [ "Medicaid disproportionate share hospital (DSH) payments are one type of supplemental payment and are designed to help offset hospitals' uncompensated care costs for serving Medicaid beneficiaries and uninsured patients.", "Under the Medicaid DSH program, uncompensated care costs include two components: (1) costs related to care for the uninsured; and (2) the Medicaid shortfall—the gap between a state's Medicaid payment rates and hospitals' costs for serving Medicaid beneficiaries.", "GAO's analysis of hospitals receiving DSH payments showed that in 2014, costs related to care for the uninsured comprised 68 percent of total uncompensated care costs, and the remaining 32 percent was the Medicaid shortfall.", "Medicaid, the joint federal-state program that finances health care coverage for low-income and medically needy individuals, spent an estimated $177.5 billion on hospital care in fiscal year 2017.", "About a quarter ($46.3 billion) of those hospital payments were supplemental payments—typically lump sum payments made to providers that are not tied to a specific individual's care.", "States determine hospital payment amounts within federal limits.", "Beginning in fiscal year 2020, the amount of DSH payments each state can make is scheduled to be reduced.", "GAO analyzed data from the 2014 DSH audits—states' independently audited and certified reports of hospital-level uncompensated care costs and DSH payments—from 47 states and the District of Columbia (48 states).", "Three states were excluded from the analysis because they either did not make DSH payments or the submitted data were unreliable.", "The 2014 data were the most recently available audited, hospital-specific, data at the time of GAO's analysis. We provided a draft of this report to HHS for review. HHS provided technical comments, which we incorporated as appropriate." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 2, -1, 0, -1 ], "summary_paragraph_index": [ 3, 3, 3, 0, 0, 0, 0, 2, 2, 2 ] }

{ "title": [ "", "Overview", "Background", "Key Concepts and Definitions", "Regional Transmission Operators /Independent System Operators", "Economic Supply and Electricity Dispatch", "Transmission Congestion Constraints", "Locational Marginal Prices (LMP)", "Multiple Revenue Sources", "Day-Ahead and Real-Time Prices", "Bilateral Contracts", "Uplift/Make-Whole Payments", "Cost Recovery and Amortization", "Negative Prices", "Multiple Factors Can Affect Wholesale Electricity Prices", "Impacts of Wind Power in Competitive U.S. Electricity Markets", "How Might Wind Power Affect Market Clearing Prices?", "Does Wind Power Generation Contribute to Negative Wholesale Electricity Price Events?", "MISO", "PJM", "ERCOT", "Does Wind Power Impact Electric System Reliability?", "Real-Time System Operations", "Resource Adequacy and Capacity Margins", "Policy Discussion", "Concluding Remarks" ], "paragraphs": [ "", "This report analyzes the impacts of wind generation on competitive power markets, including financial and economic impacts on electric power generators. Overall, the goal of this report is to provide context for several electricity market concepts that are relevant to understanding the economic effects of wind power generation. Additionally, this report addresses three specific questions about the market interaction of wind power and electric power generators: (1) How might wind power affect wholesale market clearing prices? (2) Does wind power contribute to negative wholesale power price events within competitive electric power markets? and (3) Does wind power impact electric system reliability? This report focuses on data and information available for competitive electricity markets that are managed by a regional transmission operator (RTO) or independent system operator (ISO). Specific information for three RTO/ISO organizations is provided in this report: (1) Midwest Independent System Operator (MISO), (2) PJM, and (3) Electric Reliability Council of Texas (ERCOT). These three RTOs were selected for the analysis in an effort to limit the scope of this report. Furthermore, these RTOs are commonly cited as markets that are being affected by wind power generation. As a result, there is no discussion of wind power market impacts within cost-of-service, vertically integrated electricity markets that are common in the West and Southeast regions of the United States, nor is there any discussion of how wind power is managed by federally owned transmission system operators such as the Bonneville Power Administration.", "Wind electricity generation in the United States has experienced rapid growth over the last two decades. In 1992, cumulative installed U.S. wind capacity was approximately 1,500 megawatts (MW). In August of 2012, the U.S. wind industry reached a new milestone of 50,000 MW of installed wind power capacity. In 2011, 3% of electricity generated in the United States was derived from wind power, compared to less than 1% in 1992.\nGrowth in the U.S. wind power sector has been influenced by complementary policies and incentives at both the state and federal level. States essentially create demand for wind power projects by implementing renewable portfolio standard (RPS) policies that require a certain amount of renewable power to be generated by a certain date. For example, a state-level RPS may require that 25% of retail electricity sales be derived from renewable energy sources by 2025. As of September 2012, 29 states and the District of Columbia had established binding RPS policies. Each state RPS policy is unique with respect to its design, goals, and means of compliance.\nFederal incentives that support wind electricity generation are generally provided in the form of tax credits and depreciation benefits for qualified wind power projects. Federal tax incentives for wind power provide an economic incentive for wind projects and they may reduce the financial impact to rate payers in states that require a certain amount of renewable electricity generation. Currently, qualified wind power projects can receive either a production tax credit for every kilowatt-hour of electricity produced during the first 10 years of operation or a project can elect to receive a one-time investment tax credit equal to 30% of qualified project capital costs. The federal production tax credit is currently 2.2 cents ($0.022) for each kilowatt-hour of electricity produced from a qualified wind project. Under current law, tax credit incentives for new wind power projects are scheduled to end on January 1, 2013.\nU.S. wind power growth has resulted in several challenges that are being addressed in various power markets throughout the country. The variable nature of wind power generation has led to several integration studies aimed at analyzing transmission system operational challenges that may need to be addressed as wind power continues to grow. Additionally, as will be discussed further in this report, some U.S. electricity markets have experienced lower, and even negative, wholesale market prices at certain locations at certain times that may be linked to wind power generation. Reports by consulting companies have been published indicating that low and negative wholesale prices resulting from wind power are distorting markets, adversely impacting the financial economics of conventional power generators, and skewing the economic signals necessary to stimulate new capacity builds to ensure electric system reliability. However, other studies have concluded that additional wind power production within RTO markets will reduce wholesale prices and ultimately reduce electricity costs to consumers.\nCompetitive electricity markets are extremely complex and vary regionally, with different markets having different rules regarding electricity dispatch, and revenue opportunities, among others. Additionally, the financial performance of electricity generators operating in competitive power markets is multi-dimensional and is influenced by a number of variables (e.g., natural gas costs, coal costs, electricity demand, and transmission congestion). As a result, identifying and quantifying the direct and absolute impact of one factor, such as wind power generation, on competitive markets can be difficult.\nA comprehensive analysis of electricity markets and how wind power affects each respective market is beyond the scope of this report. Generally, however, there are two distinct types of markets in the United States: (1) competitive markets, in which power generators are subject to price competition when selling power into wholesale markets, and (2) cost-of-service markets, in which power generators earn a regulated rate-of-return established by a public utilities commission. This report's analysis is confined to how wind power is integrated into competitive markets.", "In order to provide some context for the discussions below about how wind power might affect wholesale electric power markets, an overview of some important concepts and definitions is provided to orient the reader. These concepts and definitions provide some insight into the complexities associated with U.S. power markets, and the relationships between wind power generation, wholesale power markets, and the financial economics of power generators.", "RTO/ISO organizations are generally wholesale power markets operated by an independent third party entity. The RTO/ISO controls the wholesale power and transmission system within a defined area and is responsible, in part, for balancing electricity supply with demand, and dispatching generation, through market price mechanisms. There are seven RTO/ISO organizations in the United States (see Figure 1 ) that serve approximately two-thirds of U.S. electric power customers. Each RTO/ISO organization has a different structure and set of market rules that members must follow in order to participate in each respective market. How wind power might affect other generators depends on the structure of specific markets, and rules for dispatch of power plants.", "In order to supply reliable power at the lowest possible cost, wholesale electricity is typically dispatched to demand centers based on the lowest marginal cost of electricity available to satisfy demand. Generally, the marginal cost of electric power is based in part on the cost of fuel needed to generate a unit of electricity (typically measured in megawatt-hours) as well as the efficiency of the power plant. In competitive markets, the RTO/ISO will request wholesale price bids from all generators within the respective system for a defined period of time. Once bids are received, the ISO typically arranges the bids from lowest to highest in order to create what is known as a \"dispatch curve.\" Figure 2 provides an example illustration of how a dispatch curve might look.\nThe slope of the dispatch curve and the clearing price can differ in each location based on factors such as the types of generators providing bids into the market, the season and time-of-day, transmission congestion, and the demand level served during a particular interval.", "Transmission congestion can occur when the amount of power attempting to use a certain transmission corridor exceeds the transfer capacity of that transmission infrastructure. For example, if a transmission line has a transfer capacity of 300 MW and the combination of generation resources attempting to use that transmission line during a certain period is 400 MW, then the RTO must manage generation in order to not exceed the transfer limitations of the line. Economic dispatch depends on an electric system having sufficient transmission capability to deliver power from the chosen generating units. When this is not the case, system operators will lower the output of lower price units in one area and raise the output of higher cost units in another area until the expected loading of the transmission lines between the two areas is equal to their carrying capacity. Another way of thinking about this is that when transmission constraints result from the initial dispatch result, the model will re-dispatch the two regions separately. This yields different prices in the two areas. Transmission congestion is typically cited as one of the primary causes of negative prices in RTO/ISO markets.", "RTO/ISO electricity markets use locational marginal prices (LMP) in order to reflect individual prices that are determined for different zones and/or nodes within the RTO's system. Zones/nodes are typically located near power generators and at load busses where power is delivered to load-serving entities' distribution systems. LMPs are marginal because they are set based on the bid of the first generator not taken in the supply stack. While RTOs produce prices at many locations, the prices are not always different. However, differences can arise due to transmission congestion, as discussed above. Instead of having a single wholesale price across the entire RTO, different prices are set in different areas in order to manage transmission constraints that may exist within the respective power market. Generators in areas with higher LMPs will be paid a higher price and generators in areas with lower LMPs will be paid a lower price.", "Power generators operating in competitive markets may have multiple revenue opportunities. Generally, these opportunities can include: (1) energy sales—the units of electricity (megawatt-hours) sold into the wholesale market, (2) capacity payments—payments made to generators in order to maintain resource adequacy for reliability requirements, and (3) ancillary services—including services such as frequency regulation and voltage control. Energy sales typically represent the largest revenue opportunity for generators in competitive markets. As briefly discussed above, each wholesale power market is different and revenue opportunities can vary by market and region. For example, PJM, the operator in the mid-Atlantic region, has a capacity market and an energy market in which generators participate. However, ERCOT only has an energy market. Material presented and discussed in this report is primarily focused on energy sales impacts—impacts of other revenue sources are not discussed. Table 1 compares the generation capacity, wind capacity, and market types for MISO, PJM, and ERCOT.\nAs indicated in Table 1 , each RTO has a different level of wind penetration and has different types of markets that are available to all participating generators. The most notable differences are with capacity markets; for example, ERCOT does not operate a capacity market, while MISO has a voluntary capacity market.", "As described in Table 1 , RTOs manage several markets as part of their operations. With regard to energy sales, the most commonly monitored prices are those for day-ahead and real-time energy sales. For each hour of each following day, RTOs will set market clearing prices (see Figure 2 above) based on expected load demand and supply bids from power generators. RTOs commit to purchase power from generators based on day-ahead market clearing prices. Approximately 95% of energy sales within the RTO are transacted in the day-ahead market, with the remaining 5% transacted in the real-time market. Real-time market clearing prices, also known as balancing energy prices, represent energy prices that reflect deviations of forecasted versus actual load and generation. By their nature, real-time prices are generally much more volatile than day-ahead prices. Typically, wind-influenced negative prices are reported based on real-time market outcomes. However, real-time power prices can impact both day-ahead clearing prices and bilateral power purchase agreements, as they can influence pricing expectations for contract negotiations.", "Generators operating in RTO/ISO power markets can enter into bilateral power purchase contracts directly with load serving entities (LSE) that purchase power for distribution to end-use customers. These bilateral contracts can serve to establish a consistent price for electricity supplied by a power generating facility. From the power generator's perspective, the risk of low wholesale power prices is reduced and these contracts can provide a stable revenue stream for the generator. The mechanism for settling the power purchase price defined in the bilateral contract is sometimes referred to as contracts for differences. The difference between the market clearing price and the power purchase price in a bilateral contract is generally settled between the contract counterparties. While these types of contracts can mitigate the impact of low and negative wholesale power prices, since many bilateral contracts are on a short-term basis (e.g., one to three years), persistent low and negative wholesale prices could impact a generator's ability to negotiate future electricity purchase contracts.", "Many RTOs use uplift/make-whole payments as a means to encourage power generation facilities to offer electricity at the marginal cost of production and at the direction of system operators. Uplift/make-whole payments are essentially compensation paid to some generators in the event that revenue received from the wholesale power market is less than marginal operating costs. While these payments do not guarantee dispatch, a price for electricity generated, or a threshold rate of return, uplift/make-whole payments, in essence, do provide some degree of assurance that generators might not operate at a loss.", "In order to obtain sources of financial capital necessary to build a new power generating facility, each plant must have a revenue, operations and maintenance, and profitability plan that allows for all installation costs to be recovered over an asset's lifetime. Typically, capital cost recovery might occur within the first 20 to 30 years of plant operations. A project developer looking to construct a generating facility that might be located in a power market would need some degree of assurance that revenue from the combination of energy sales, capacity markets, and ancillary services, over time, would be adequate to pay for all necessary costs (i.e., capital, operations, maintenance, fuel, and finance) and provide an acceptable financial return. Alternatively, new power generating projects could potentially enter into bilateral contracts with LSE counterparties as a means of ensuring an adequate revenue stream that would attract investment capital. However, some older generators (generally more than 20 to 30 years old) may have achieved full cost recovery. Owners of these facilities may be more comfortable operating in wholesale power markets as they only need to recover fuel and operations/maintenance expenses. For these fully recovered facilities, wholesale power markets could be more lucrative than for power plants still amortizing and recovering capital costs.", "Negative wholesale electricity prices can occur in RTO-managed competitive markets due to a combination of transmission congestion and a sufficient number of negative priced bids from power generators. In an RTO area where low-priced bid generators cannot deliver some of their production outside the area due to transmission congestion, the market model will lower the output of, or not dispatch, some generators based on their price bids. To ensure that they continue to be dispatched, generators may lower their bids even to below zero if necessary. If all the generators taken in a particular area had negative bids, the resulting LMP for the location will be negative. Negative LMPs are a disincentive to generate power at certain times and under certain conditions.\nSome generators are willing to accept negative prices (essentially, the generator pays the RTO to provide power) for a variety of reasons, some of which might include: (1) maintenance and fuel costs associated with power plant shutdown and start-up may exceed the cost of the temporary negative price event, (2) technical difficulties with cycling nuclear plants on and off provide an inherent incentive to operate continuously, and (3) incentives are provided for electricity production, such as the production tax credit (PTC) that is currently available for wind power projects.", "Wholesale electric power prices are influenced by a number of different variables. Some of the most common variables include: (1) economic activity and load demand, (2) weather, (3) fuel prices, (4) transmission congestion, and (5) zero marginal cost generation. As described in Figure 2 above, wholesale prices are bid by generators based on the marginal (i.e., fuel) cost of production. Wholesale prices are cleared at the intersection of supply bid and load demand. As such, the amount of economic activity (load demand) and the price of fuel can significantly influence wholesale market clearing prices. For example, the MISO 2011 state-of-the-market report states that wholesale market prices were lower in 2011, compared to 2010, as a result of lower natural gas prices and lower loads. In many RTO-managed markets, natural gas generation typically sets the market clearing price during peak demand times when wholesale prices are highest and when generator margin opportunities are the greatest. Low natural gas prices result in lower natural gas generation costs, which reduce the wholesale clearing price and therefore the revenue and margins available to all generators. Additionally, weather conditions directly influence load demand, and can move clearing prices up or down depending on the seasonality or abnormality of annual weather conditions. Also, as briefly discussed above, transmission congestion can cause clearing prices to fluctuate in certain locations within an RTO operating area. Finally, as will be discussed in further detail below, the addition of zero marginal cost generation can potentially reduce market clearing prices by shifting out the power supply curve, thereby reducing the market clearing price at a specified demand level during certain times throughout the day.\nSince 2008, wholesale power prices in all RTO markets have declined. In some RTO markets, power price declines have been substantial (see Figure 3 ).\nAs indicated in Figure 3 , wholesale power prices and price declines vary across each RTO. Arguably, the wholesale price declines observed since 2008 are primarily due to lower natural gas generation costs and lower electricity demand. The power price fall coincides with the 2008 financial crises and the associated reduction in electricity demand due to lower levels of economic activity.\nAlso, increasing U.S. natural gas production through the expanded use of hydraulic fracturing and horizontal drilling techniques contributed to low natural gas prices. Low natural gas prices translate into low marginal costs for natural gas electricity generation. Since natural gas generation is typically used to supply power during peak demand periods, market clearing prices were generally lower during peak demand times when power generators might otherwise be able to capture higher revenues and operating margins.", "Various studies and reports, as referenced below, have been published regarding the wholesale electricity price impacts from the increased penetration of wind power. Considering the key concepts and definitions described above, the following sections examine three fundamental questions related to the impact of wind power in competitive electricity markets: (1) How might wind power affect market clearing prices?, (2) Does wind power contribute to negative wholesale electricity price events?, and (3) Does wind power impact electric system reliability?", "The addition of wind power capacity within competitive power markets can, in some markets and locations and under certain conditions, put downward pressure on electricity market clearing prices. Proponents of wind power generation argue that lower market clearing prices will reduce power prices for all consumers; therefore additional wind power can reduce the cost of electricity to a wide range of consumer groups. Opponents, however, argue that federal tax credits and state renewable portfolio standard policies result in lower market clearing prices, distort wholesale power markets, displace generation from base load power facilities, and unfairly impact the compensation received by existing generation assets. Both views are defendable to some degree; however each position assumes that energy sales are the only source of revenue and compensation available to all electric power assets. As an example, a theoretical \"all-wind\" power scenario would have a constant market clearing price at or near zero ($0.00), since the marginal cost (i.e., fuel) of generating a MWh of wind electricity is available at no cost. This, of course, is not economically feasible, since wind projects must capture revenue to pay for capital, operations and maintenance, and finance costs. In reality, electricity markets are inherently complex and can include multiple revenue opportunities. Nevertheless, the impact magnitude of lower market clearing prices resulting from increased wind power production and the economic impact to other power generators is uncertain and can be influenced by factors such as market rules, transmission congestion, and contractual conditions (e.g., bilateral contracts). In the 2011 PJM State of the Market report, the PJM market monitor states the following:\nOutput from wind turbines displaces output from other generation types. This displacement affects the output of marginal units in PJM. The magnitude and type of effect on marginal unit output will depend on the level of the wind turbine output, its location, the time of the output and its duration.\nAs illustrated in Figure 2 above, electricity supply bids are provided based on the marginal (i.e., fuel) cost of generation, with wind power being the least expensive (at or near zero), since the fuel cost for wind generation is zero. Nuclear power is typically the next lowest priced source of electricity as fuel costs for generation are minimal. As generation becomes more fuel intensive—for power generators that use coal and natural gas fuel sources—the marginal price begins to increase based on the cost of the fuel used and the efficiency of the respective power plants. At the intersection of electricity supply and power demand is what is known as the wholesale electricity clearing price (see Figure 2 ). Electricity is dispatched from each generator with bids at or below the electricity clearing price. However, all generators dispatched are compensated for their electricity at the clearing price level. For example, if a nuclear power plant bid $5.00 per megawatt-hour (MWh) and the clearing price was $20.00 per MWh, the nuclear generator would receive $20.00 for each MWh provided during the dispatch time period. Figure 4 illustrates how additional wind power within a competitive market might theoretically impact the electricity clearing price for all generators.\nFigure 4 includes two electricity dispatch curves: one for a low wind scenario (solid lines) and one for a high wind scenario (dashed lines). As indicated, additional wind power results in shifting the dispatch curve to the right, thereby reducing the electricity clearing price paid to all generators, including the wind electricity projects. In essence, the addition of more wind power reduces the value received by wind projects, and all other power suppliers, selling power into wholesale markets. Since wind power is typically dispatched first, due to its zero marginal cost bid, additional wind power could potentially result in less electricity provided from other fuel sources (nuclear, coal, and natural gas).\nThe illustration in Figure 4 is a hypothetical example only and is not meant to indicate the impact magnitude of adding a certain amount of wind power generation. To put into context how wind power might be affecting wholesale power prices, Figure 5 provides the actual economic supply and dispatch curves for ERCOT, PJM, and the California ISO (CAISO).\nIn 2009, PJM conducted a study that considered the wholesale power price impacts of adding 15,000 MW of wind power in the PJM market. Results from the study indicated that the addition of wind power would decrease wholesale market prices by $4.50 per MWh. As a result, market-wide expenditures for wholesale power would go down. For comparison, PJM's system-wide load-weighted average LMP was $45.19 in 2011.\nHowever, as discussed above, the wholesale clearing price may not reflect all of the compensation received by power generators. Electricity suppliers might have pre-negotiated power purchase agreements (PPAs) or other bilateral contracts with load serving entities that provide an agreed-upon power price regardless of the wholesale market clearing price. Additionally, power generators can also contract with LSEs to meet capacity needs that satisfy reliability and capacity requirements. Furthermore, other market factors such as additional economic activity and its associated load demand, along with rising natural gas prices, could result in upward pressure on wholesale market clearing prices. This upward price pressure could potentially result in opportunities for power generators to earn additional revenue and margins. Finally, exactly how much lower wholesale prices will impact other generators will be generator-specific and will include considerations such as location, contractual conditions, and the amount of cost recovery realized by each generating facility.", "Several published reports, as referenced in the text below, provide insight into the relationship between wind power and negative wholesale electricity prices. Generally, reports reviewed for this analysis indicate that in some locations there is a positive correlation between wind electricity generation and the occurrence of negative real-time electricity prices. As discussed above, real-time prices are naturally much more volatile than day-ahead prices but the majority of market transactions are based on day-ahead clearing prices. In some markets, and during some time intervals, wind is setting the clearing price at a negative value by bidding into the market at a negative price level. The ability of wind to bid negatively priced electricity is a result of value received from federal production tax credit incentives and the potential opportunity to sell renewable energy credits (RECs) to third parties. Typically, transactions for these additional revenue sources occur outside of the RTO market operation.\nEach generator typically operates under a different set of contractual conditions and transmission constraints; therefore the absolute impact of negative wholesale prices can vary on a case-by-case basis. In addition, the overall magnitude of the impact of negative prices on other power generators' revenue and margins is also uncertain and the lack of available data makes it difficult to quantitatively assess the direct impact of negative prices. Reasons for this uncertainty include many of the concepts and definitions discussed above: bilateral contracts—how much generation is contracted with LSEs at an agreed upon purchase price; uplift/make-whole payments—how much of the negatively priced real-time power is recovered through make-whole payments; and other revenue sources—how much revenue is captured through capacity, ancillary services, and other markets within each RTO. Furthermore, power generation revenues and margins are influenced by a number of factors such as fuel prices, weather, and electricity demand.\nThe time-of-day aspect is also an important parameter when considering negative prices. Wind power generation is greatest during nighttime and off-peak demand periods when wholesale prices are typically at their lowest levels. However, wind power generation is generally the lowest during peak demand periods when wholesale prices are typically at their highest levels. Negative power prices associated with wind power might generally occur at night when wind is producing at high levels. Large amounts of wind power generation can potentially contribute to transmission congestion and result in negatively priced wholesale power in certain locations. However, this negative price event is occurring when generator revenues and margins are typically at their lowest levels. During periods of peak demand, and high prices, wind typically generates power at lower levels, thereby allowing other power suppliers to take advantage of high-price/revenue/margin periods throughout each operating day. Nevertheless, since wind power generation typically peaks during night time (i.e., low demand) hours, the potential exists for traditional base load generators in certain locations to not get dispatched since they might be the marginal cost supply units.\nAs illustrated in Table 1 , each RTO is unique with respect to its total generation mix and capacity, wind capacity, market types, and dispatch rules. Therefore, the impact of negative price events can impact generators in different ways depending on the RTO in which the generator operates. The following sections discuss available information about negative prices in MISO, PJM, and ERCOT.", "While the MISO wholesale electricity market has experienced negative price events in certain locations throughout the year, negative wholesale prices rarely occur and they are concentrated in certain hubs within the MISO service territory. Figure 6 provides price duration curves for four different MISO hubs.\nPrice setting in MISO by wind resources was enabled through the introduction of the Dispatachable Intermittent Resources (DIR) program in 2011. Under the DIR program, wind production forecasts are used to determine maximum wind output for specific time intervals. Based on these forecasts, wind generation can be dispatched either up or down depending on system and economic conditions. As a result, the DIR program allows MISO more control over the variable nature of wind power generation, thereby reducing the need for electric system regulation. According to MISO's Independent Market Monitor (IMM):\nDIRs are wind resources that are physically capable of responding to dispatch instructions (from zero to a forecasted maximum) and can therefore set the real-time energy price. DIRs are treated comparable to other dispatchable generation, and therefore are eligible for all uplift payments and are subject to all requisite operating requirements. By June 2013, most wind units in MISO will be DIRs.\nMISO's IMM reports that in 2011 wind power generation set the wholesale price of electricity during certain time periods and in certain locations, at an average price of negative $20 per MWh. The IMM attributes this negatively set wind price to the availability of federal production tax credit incentives. However, negative price offers may also be incentivized by the opportunity of wind power projects to sell renewable energy credits (RECs) to entities in order to comply with state RPS policies.\nThe MISO IMM observes that average real-time energy prices in 2011, for the entire MISO market area, declined 1.9% compared to 2010. Two primary reasons for this decline, according to the IMM, were: (1) lower natural gas prices, and (2) lower average load demand. However, when adjusting for fuel costs, the IMM indicates that roughly two-thirds of energy price changes were due to a combination of declining load demand, increased net imports, and increased generation from intermittent resources (i.e., wind). Exactly how much wind generation directly contributed to the average price decline is not indicated in the IMM report. In 2011, wind power supplied 5.2% of electricity generation in the MISO RTO market.", "In June 2009, PJM modified its market rules to allow all generator units to submit negative price offers into PJM energy markets. According to PJM's independent market monitor (IMM), \"wind and solar units were the only unit types to make negative offers\" since the new rule was established. The IMM reports that an average of 935.5 MW, out of approximately 5,300 MW, of wind resources were offered at a negative price to PJM's real-time market in 2011. These negative price offers are directly attributed to federal production tax credit incentives and the opportunity for wind generators to sell renewable energy credits (RECs) for each MWh of generation. The market monitor states the following:\nThe out-of-market payments in the form of RECs and federal production tax credits mean these units have an incentive to generate MWh until the negative LMP is equal to the credit received for each MWh adjusted for any marginal costs. These subsidies affect the offer behavior of these resources in PJM markets.\nDuring calendar year 2011, wind represented 2% of the marginal generation used for the real-time energy market. Wind was never a marginal generation source for the day-ahead market in 2011. As discussed above, the day-ahead and real-time markets typically include 95% and 5% of energy transactions, respectively. In 2011, wind power accounted for 1.5% of electricity generation in PJM.", "ERCOT is an often-cited example of how wind power generation can directly cause negative wholesale electricity prices in RTO-managed power markets. ERCOT, which includes the majority of Texas, has four primary pricing zones within its system (Houston, North, South, and West). With more than 10,600 MW of wind power installed, out of a total installed capacity of approximately 84,000 MW, Texas has more wind power capacity than any other state. The West Zone includes the majority of installed wind capacity in the ERCOT system, and this zone typically experiences the highest degree of price volatility in the real-time energy markets. Figure 7 provides real-time wholesale price duration data for the four ERCOT zones.\nAs indicated in Figure 7 , the ERCOT West zone experienced the majority of real-time negative price events within the ERCOT system in 2011. According to one report, 90% or more of ERCOT wind capacity is located in the West zone. It is important to note, however, that the West zone also experiences the greatest duration of high energy prices (see Figure 7 ), although the disparity with other zones is generally less than that for negatively priced energy.\nThe profile of wind generation is inversely correlated with the load demand profile in ERCOT. Much like other regions of the country, when load demand is high, wind production is low and vice versa. Especially during nighttime hours, wind generation can potentially exceed load demand in a particular zone and the transmission infrastructure may not have enough capacity to transfer the wind-generated electricity to other demand centers. To resolve this situation, ERCOT may need to ramp down generation in order to balance supply and demand. Generators can offer down-balancing-energy services, which basically indicate the price level at which a generator will stop producing electricity and will instead purchase at the ERCOT clearing price for power needed to satisfy its production obligations. These down-balancing-energy prices are typically positive (i.e., greater than zero). However, according to a National Renewable Energy Laboratory report, wind generators in ERCOT can submit negative price offers since they receive federal production tax credits for each MWh generated, and they can also sell renewable energy credits for electricity produced.\nThe Public Utility Commission of Texas (PUCT) is actively working to establish transmission infrastructure that would transmit wind power from West Texas to other load centers within the state. The program through which this infrastructure is being deployed is known as the Competitive Renewable Energy Zone (CREZ) Transmission Program. Once CREZ projects are complete, negative price frequency in ERCOT's West zone may be reduced as wind power is transmitted to other demand centers. However, generators in other ERCOT hubs may be concerned that additional wind power could potentially put downward pressure on their revenues and operating margins.", "Two specific aspects of electric system reliability are typically discussed in the context of how wind power might impact electricity markets. First, RTO system operators must be concerned with real-time system operations and the ability to constantly manage supply and demand. Large amounts of wind electricity generation can potentially result in operational reliability issues due to the variable and sometimes unpredictable nature of wind power. Second, some arguments have been made that since wind power can potentially reduce revenues and margins available to all generators, the economic signals necessary to build new capacity for resource adequacy requirements are being distorted and the long-term reliability of power systems is being jeopardized. Each of these issues is unique, and each is addressed separately in the following sections.", "Wind power generation is naturally variable and wind electricity production can change outside of the system operator's control. Therefore, large amounts of wind generation can potentially create operational issues associated with managing the variable output of wind power facilities. A primary operational challenge that system operators could encounter when managing a large wind power fleet is the constant balancing of electricity supply and demand when power output can potentially change rapidly based on wind conditions. As a result, certain types of reserve capacity will likely be needed in order to respond to wind output variations. There are two specific reserve types that may be needed to manage the variable nature of wind power production: (1) operating reserves, and (2) spinning reserves. Generally, these types of reserves would enable the rapid (within minutes in some cases) ramping and load following capabilities needed to accommodate sudden changes in wind power output as well as frequency and regulation services to ensure that the electric power system functions within normal operating parameters.\nThe National Renewable Energy Laboratory (NREL) has studied and analyzed the challenges associated with large amounts of wind power and has published several reports on this topic including the \"Eastern Wind Integration and Transmission Study (EWITS),\" which analyzed the reliability and integration aspects of a 20% wind power scenario in the Eastern Interconnect footprint. The EWITS report indicates that the operational challenges associated with large amounts of wind power can be addressed with an expansion of the transmission infrastructure.\nSome U.S. power system operators are currently experiencing operational challenges associated with wind generation and are taking steps to address and manage some of these issues. As briefly discussed above, MISO has instituted the Dispatchable Intermittent Renewables (DIR) program that aims to provide the system operator with more control over the variable nature of wind electricity generation. Other system operators have implemented various curtailment policies that require wind generators to stop producing electricity under certain power system operating conditions. Additionally, improved wind forecasting and more frequent electric power scheduling and dispatch can potentially serve to address operational issues associated with wind output variability.", "RTO system operators are typically concerned with the long-term operational reliability of the electric power system, and they generally monitor and plan for the power generation resources needed to satisfy expected load demand during a certain period of time (sometimes referred to as resource adequacy). A key metric used by RTOs to measure and track reliability and resource adequacy is \"reserve margin.\" Reserve margins basically indicate the amount of excess power generation capacity available to the RTO when compared to the expected peak load demand for a given year. For example, if 2012 peak load is expected to be 1,000 MW and an RTO had a target capacity margin of 15%, then the RTO would need access to 1,150 MW of generating capacity in order to meet the target capacity margin.\nSome groups may argue that by reducing market clearing prices ( Figure 4 ) and contributing to negative locational marginal prices, wind power reduces the economic signals (revenue and profit) necessary to stimulate investment in new power generation facilities. The argument continues that this lack of investment might cause reserve margins to further decline, thereby putting system reliability at risk. As discussed in additional detail above, it is important to understand that wholesale electricity prices, typically the largest source of revenue available to power generators, are influenced by a number of factors (i.e., demand, weather, and fuel prices). Furthermore, the market design and operation of each respective RTO can also influence reserve margin and system reliability outcomes.\nAs indicated in Table 1 , MISO, PJM, and ERCOT each have different market designs and different means to address resource adequacy and reserve margin issues. Although fundamentally very different, both MISO and PJM operate a capacity market that is designed to provide a source of income to generators that may not sell enough electricity to be economically viable, but are necessary to RTOs in order to satisfy target reserve margins and ensure system reliability. As more variable energy sources are added to an RTO system, the premium for reserve capacity could rise. If this occurs, generators providing capacity to meet resource adequacy requirements may see more revenue coming from capacity payments and less revenue from energy sales. As a result, the revenue profile for power generators may change. Ideally, net revenues would be adequate to incentivize generators to provide the capacity needed to maintain reserve margins. ERCOT, however, only operates an energy/ancillary services market.\nIn order to estimate and plan for resource adequacy and reserve margins, RTOs assign capacity credits (expressed as a percentage of nameplate capacity) to generators based on a generator's ability to supply needed power during peak demand periods. Capacity credits generally take into account planned and unplanned outages for power generators during a calendar year. Wind generators are typically assigned relatively low capacity credits to reflect the variable nature and generation profile of wind power. In the MISO RTO, wind generators receive a 14.9% capacity credit, while PJM assigns wind generators a 13% capacity credit. As an example, a 100 MW wind project in PJM would only contribute 13 MW towards resource adequacy and reserve margins. By comparison, a coal or nuclear generator may be assigned 80% to 85% capacity credits.\nThe 2011 MISO State of the Market report indicates that an inverse relationship exists between the amount of wind generation and capacity margins. This relationship is associated with the capacity credits applied to wind projects and the reduced amount of wind power production during peak periods. As wind generation increases, capacity margins may decrease. As capacity margins go down the value of capacity should go up and be reflected in capacity market transactions. In theory, these capacity premiums would provide the economic signals necessary to stimulate additional capacity needed to satisfy target reserve margins.\nFurthermore, power system reliability and resource adequacy is yet another complex element of RTO market operations that is influenced by multiple factors. One 2012 study assessed resource adequacy in the ERCOT market and the economic signals required to incentivize adequate generation capacity and reserve margins. Unlike PJM and MISO, ERCOT only has an energy market. The study indicates that market conditions such as low natural gas prices, ERCOT's generation mix, and wind penetration have created challenging economic conditions for motivating new capacity additions. Additionally, the study indicates that several environmental regulations may also present challenges to ERCOT's resource adequacy. Regulations evaluated include (1) Cross-State Air Pollution Rule, (2) Mercury and Air Toxics Standards, (3) Clean Water Act, Section 316(b), and (4) Coal Combustion Residuals Disposal Regulations. However, CRS analysis indicates that environmental regulations may not be significant factors that affect system reliability. Nevertheless, the combination of low power prices, low fuel prices, low levels of electricity demand, environmental regulation compliance, and the addition of zero marginal cost generation could potentially contribute to resource adequacy issues in RTO-managed markets.", "The immediate policy issue related to the market and economic effects of wind power is the future of production tax credit (PTC) incentives for wind projects. As briefly discussed above, the PTC has supported U.S. wind industry growth since being introduced in 1992. Under current law, PTC incentives will no longer be available to new wind projects on January 1, 2013. Debate about PTC incentives for wind power includes many aspects and considerations, the financial and economic impacts discussed in this report being only one. Proponents of extending the PTC incentive may contend that the wind industry supports thousands of U.S. manufacturing and project development jobs, supports many environmental objectives, helps diversify U.S. energy supply, and can potentially reduce consumer electricity bills. Opponents of a PTC extension may argue that wind is a mature electric power technology that no longer needs federal subsidies, the cost of the PTC is too expensive relative to the small amount of overall generation provided by wind, and the intermittent and variable nature of wind power may result in power system operational reliability challenges. Others have advocated a gradual phase-out of the PTC incentive as a way to eventually eliminate them while allowing the industry time to adjust to incentive reductions.\nThe Senate Finance Committee reported the Family and Business Tax Cut Certainty Act of 2012 ( S. 3521 ) on August 28, 2012. Among a number of tax-related provisions and extensions, S. 3521 includes language that extends the availability of production tax credits for wind facilities until January 1, 2014. The bill also modifies the definition of a qualified facility by allowing projects that start construction, rather than be placed in service, by January 1, 2014 to qualify for PTC incentives. This modification could be viewed as important to wind projects as it alleviates investment and development pressures that might result from having to place new projects into service by the end of 2013.", "Increasing amounts of wind power can potentially impact wholesale power prices in RTO-managed markets by possibly reducing market clearing prices and contributing to negative price events in certain locations during certain seasons and times of day. However, the absolute financial impacts of wind power generation are unclear due to the complex nature of wholesale power markets and the many variables that can impact wholesale electricity prices and generator revenues (i.e., location, natural gas prices, generation mix, and electricity demand).\nIndependent market monitor reports, as referenced in the text above, for the three selected RTOs (MISO, PJM, and ERCOT) indicate that wind power can contribute to negative price events; however, negative prices are more likely to occur at night when wind power generation is high, load demand is low, and electricity prices are low. However, during peak demand, when power prices are high, wind power generation is typically low. Therefore, wind power may have less of a price impact during times when generators can capture high revenues and earn high margins.\nFinally, some studies suggest that wind power could potentially influence reliability issues or contribute to resource inadequacy. However, each RTO has created a unique power market that is designed to incentivize reliability and resource adequacy within its operating territory. Nevertheless, should wind power continue to experience growth, it is uncertain whether current RTO market designs would function to ensure availability of the types of generation that would be necessary to both maintain resource adequacy and manage the variable and intermittent nature of wind power." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 1, 2, 2, 3, 3, 3, 2, 3, 3, 1, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "", "h0_full", "h2_title h1_full", "", "", "", "", "h2_full", "", "h2_full", "", "", "", "h1_full", "h2_title h1_title h3_title", "h2_full", "h2_full", "", "", "", "h3_full h2_title h1_title", "", "h3_full h2_full h1_full", "", "h3_full h2_full" ] }

{ "question": [ "How has US wind power generation changed over time?", "What has contributed to US wind power generation changes?", "What contribution did US wind power have to US electricity generation in 2011?", "What is important to recognize when considering the impact of wind power?", "What are whole sale power markets influenced by?", "Why is it difficult to determine the direct impact of a single variable?", "What likely caused the decline in whole sale electric power prices?", "What can wind power generation reduce?", "What do independent market monitor reports say about this?", "What determines the ability of wind generators to bid negatively priced power?", "What needs to be considered with wholesale power price reductions associated with wind generation?", "Why is it difficult to determine the absolute impact of wind electricity on the economics of power generators?", "What impacts electricity system reliability?", "Why are RTOs implementing various initiatives?", "What are RTOs designed to provide?", "What is uncertain in the future of RTO market designs?" ], "summary": [ "U.S. wind power generation has experienced rapid growth in the last 20 years as total installed capacity has increased from 1,500 megawatts (MW) in 1992 to more than 50,000 MW in August of 2012.", "Two primary policies provide market and financial incentives that support the wind industry and have contributed to U.S. wind power growth: (1) production tax credit (PTC)—a federal tax incentive of 2.2 cents for each kilowatt-hour (kWh) of electricity produced by a qualified wind project (set to expire for new projects at the end of 2012), and (2) renewable portfolio standards (RPS)—state-level policies that encourage renewable power by requiring that either a certain percentage of electricity be generated by renewable energy sources or a certain amount of qualified renewable electricity capacity be installed.", "According to the Energy Information Administration (EIA), wind power provided approximately 3% of total U.S. electricity generation in 2011.", "When considering the potential impacts of wind power on electric power markets, it is important to recognize that wholesale power markets are both complex and multi-dimensional.", "Wholesale power markets are influenced by a number of factors, including weather, electricity demand, natural gas prices, transmission constraints, and location.", "Wholesale power markets are influenced by a number of factors, including weather, electricity demand, natural gas prices, transmission constraints, and location. Therefore, determining the direct impact of a single variable, in this case wind power, on the financial economics of power generators can be difficult.", "In 2012, wholesale electric power prices were down from recent highs in 2008, and lower price trends can result in financial pressure for power generators in RTO markets. Arguably, however, the two primary contributors to this decline are low natural gas prices and low electricity demand.", "Wind power generation can potentially reduce wholesale electricity prices, in certain locations and during certain seasons and times of day, since wind typically bids a zero ($0.00) price into wholesale power markets.", "Additionally, independent market monitor reports for three different RTOs each indicate that wind generators will sometimes bid a negative wholesale price in order to ensure electricity dispatch.", "The ability of wind generators to bid negatively priced power is generally attributed to value associated with PTC incentives and the ability to sell renewable energy credits (REC).", "However, wholesale power price reductions and negative electricity prices associated with wind generation need to be considered in context with other dimensions of organized power markets. For example, other revenue sources (i.e., capacity markets) may be available to generators in certain RTO market areas.", "Therefore, the absolute impact of wind electricity on the economics of power generators is difficult to determine due to the many variables and dimensions that influence wholesale power markets.", "With regard to how wind power might impact electricity system reliability, two aspects of reliability are typically discussed: (1) impacts to system operations—the ability of the power system to manage the variable and sometimes unpredictable nature of wind power production, and (2) resource adequacy and capacity margins—the potential for wind power generation to either influence power plant retirements or contribute to market conditions that do not support investment in new capacity resources.", "RTOs are currently implementing various initiatives (i.e., dispatchable resource programs, renewable energy transmission projects) to address the variable generation characteristics of wind power.", "Furthermore, each RTO market is designed to provide the economic signals necessary to stimulate capacity additions in order to ensure resource adequacy and maintain capacity margins.", "However, should wind power generation continue to grow, it is uncertain if current RTO market designs will provide the signals needed to encourage specific types of generation capacity (e.g., operating and spinning reserves) necessary to manage the variable nature of wind power." ], "parent_pair_index": [ -1, 0, -1, -1, 0, -1, -1, -1, 0, -1, -1, -1, -1, -1, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "Background", "Advance Directives and POLST Forms", "Advance Directive", "POLST Form", "Information on Completing and Storing Advance Care Planning Documents", "Websites Related to Advance Care Planning Were Available for All States; About One Quarter of States Had Registries for Completed Documents For All States, Advance Care Planning Information, Such as Blank Documents, Was Available Online", "About One-Quarter of States Had Registries for Completed Advance Directives, POLST Forms, or Both", "Challenges to Advance Care Planning Include Understanding the Types of Documents and Ensuring Access to Completed Documents", "Various Strategies Used in Selected States to Improve Individuals’ and Providers’ Understanding of and Access to Advance Care Planning Documents", "Selected States Used Education and Training to Increase Understanding of the Need for and Use of Advance Care Planning Documents", "Educating Individuals", "Training Providers", "Selected States’ Strategies to Improve Access to Completed Documents Included Interoperability between Electronic Health Records and Registries", "Access in Electronic Health Records", "Access to Registry Information", "Additional Strategies Used in Selected States Address Resource Needs for Advance Care Planning Registries and the Portability of Documents.", "Agency and Third Party Comments", "Appendix I: Information on the Extent to Which Individuals Have Advance Directives", "Appendix II: Types of Information Found on a POLST Form", "Section A: Cardiopulmonary Resuscitation", "Section B: Medical Interventions", "Section C: Artificially Administered Nutrition", "Other Section: Signatures", "Backside of a POLST Form", "Appendix III: Information on CMS’s Promoting Interoperability Programs Related to Advance Care Planning Documents", "Appendix IV: Selected State Statutes Related to Advance Care Planning Documents", "Document Execution Requirements", "Format of Advance Care Planning Documents", "Provider Objections to Advance Care Planning Directions", "Provider Liability Protections", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Decisions about end-of-life care are based on an individual’s personal beliefs and values. Advance care planning documents, including advance directives and POLST forms, allow individuals to express their wishes for end-of-life care. These documents serve different purposes depending on an individual’s stage of life or health condition. (See fig. 1.)\nAccording to a report by the Institutes of Medicine, advance care planning documents are most effective when used as part of broader advance care planning efforts, which may involve multiple, in-depth discussions with family members and health care providers. The report also stated that multiple discussions at various stages of life are needed, with greater specificity as an individual’s health deteriorates, because an individual’s medical conditions and treatment preferences may change over time. Therefore, a comprehensive approach to end-of-life care, rather than any one document, helps to ensure that medical treatment given at the end of life is consistent with an individual’s preferences.", "An advance directive is a written instruction recognized under state law and relating to the provision of health care when an individual is incapacitated. For example, an advance directive may be used to record an individual’s wish to receive all available medical treatment, to withdraw or withhold certain life-sustaining treatments, or to identify an agent to make medical decisions on the individual’s behalf if necessary. The most common advance directive documents are living wills and health care power of attorney.\nLife-Sustaining Treatment Life-sustaining treatment means the use of available medical machinery and techniques, such as heart-lung machines, ventilators, and other medical equipment and techniques, that may sustain and possibly extend life, but which may not by themselves cure the condition.\nLiving will. A living will is a written expression of how an individual wants to be treated in certain medical circumstances. Depending on state law, a living will may permit an individual to express whether they wish to be given life-sustaining treatment in the event they are terminally ill or injured, to decide in advance whether they wish to be provided food and water via intravenous devices (known as tube feeding), and to give other medical directions that affect their health care, including at the end of life. A living will applies to situations in which the decision to use life-sustaining treatments may prolong an individual’s life for a limited period of time and not obtaining such treatment would result in death. Having a living will does not mean that medical providers would deny medications and other treatments that would relieve pain or otherwise help an individual be more comfortable.\nHealth care power of attorney. A health care power of attorney is a document that identifies a health care agent—also called a health care proxy—as the decision maker for the patient. Under state law, the health care power of attorney typically becomes operative when an individual is medically determined as unable to make decisions. Most commonly, this situation occurs either because the individual is unconscious or because the individual’s mental state is such that they do not have the legal capacity to make decisions. As with living wills, the process for validly executing a health care power of attorney depends on the state of residence. The health care power of attorney may be designated by using a model form in state statute or it may be drafted specifically for an individual by a lawyer. Similar to the living will, medical providers will make the initial determination as to whether an individual has the capacity to make their own medical treatment decisions.\nMost adults in the United States do not have an advance directive. According to a 2017 study, about 37 percent of adults had an advance directive. However, the proportion of individuals with an advance directive can vary by demographic group. See appendix I for more information related to the prevalence of advance directives.", "POLST forms differ from advance directives in that they are medical orders used to communicate an individual’s treatment wishes, and are appropriate for individuals with a serious illness or advanced frailty near the end-of-life. For these individuals, their current health status indicates the need for medical orders. In the event of a medical emergency, the POLST form serves as an immediately available and recognizable medical order in a standardized format to aid emergency personnel. Following the POLST form orders, emergency personnel can honor the individual’s treatment wishes as communicated to and documented by the individual’s health care provider. See appendix II for information on the types of information included on a POLST form.", "Both government and non-government organizations, such as state agencies or the National POLST Paradigm, provide individuals and providers information on how to access or download blank advance care planning documents through their websites and education campaigns. For Medicare and Medicaid providers, the Patient Self Determination Act requires certain providers participating in these programs—such as hospitals and nursing homes—to maintain written policies and procedures to inform individuals about advance directives, and document information about individuals’ advance directives in their medical records. Once the advance care planning documents are completed, individuals and providers can access them through various systems. For example, an individual may have their advance directive or POLST form in their electronic health record (EHR), which can be accessed by their provider or other medical personnel in the event that the individual has a medical emergency. In addition, advance directives can be stored in a lawyer’s office or in an individual’s home; these documents would have to be found and transported to the medical setting if needed. Some states have registries (either electronic or paper-based) for advance directives or POLST forms, whereby individuals and providers can access the registry and obtain the necessary documents.", "We found websites related to advance care planning for every state; however, the amount of information on these websites varied. In addition, about a quarter of states had registries to provide access to completed advance directives, POLST forms, or both.\nFor all states, either government or non-government websites provided information, which could include blank documents, on advance care planning for individuals and providers within the state. However, the amount of available information about advance care planning varied by state. The information available online varied from having an advance care planning document available to download, to extensive information on advance care planning. For example, in Mississippi, the State Board of Medical Licensure provided a POLST document that could be downloaded from its webpage with no additional information. In contrast, California—through its state attorney general’s website—offered a blank advance directive document that could be downloaded, as well as additional information on advance directives, including who should fill out particular types of advance care planning documents, and the importance of filling out these documents; and other resources, including brochures or information packets detailing advance care planning and other relevant documents.", "To give providers, individuals, or both access to completed advance care planning documents, about one-quarter of states (14) had active registries (either electronic or paper-based) of completed advance directives, POLST forms, or both, as of November 2018. (See fig. 2.) Specifically,\n3 states had active registries for both completed advance directives\n8 states had active registries solely for completed advance directives;\n2 states had active registries solely for completed POLST forms,\n1 state had an active registry for completed advance directives and was piloting registries for completed POLST forms, and\n37 states did not have active registries for either advance directives or POLST forms.\nThe 14 states with active registries varied in how they administered them. Some states’ registries were administered through state agencies or by contracting with an outside organization. For example, in Oregon, the state contracted with a large health system in the state to operate the technical aspects of the state’s POLST registry, while in Vermont, the Department of Health administered the state’s registry with technical support from a private national document registry company. For other states—such as New York, Virginia, and West Virginia—the state registries were administered through non-government organizations in collaboration with state agencies.", "Based on our interviews with officials from national stakeholder organizations, state agencies and stakeholder organizations in selected states, and articles we reviewed, we identified two broad challenges to advance care planning: (1) a lack of understanding about advance care planning, including how to initiate conversations about advance care planning and how to complete and follow advance care planning documents; and (2) ensuring access to completed documents. In addition to these two broad challenges, the officials we interviewed identified challenges related to resources and the portability of advance care planning documents.\nIndividuals and providers may struggle with how and when to initiate advance care planning conversations. We previously reported that providers identified informing individuals about advance care planning as a challenge due to reluctance to talk about end-of-life issues. In addition, officials from both national and state stakeholder organizations identified challenges to providers properly counseling their patients about advance care planning, either to avoid discussing death and dying with their patients, or because of their own uncertainties regarding the timing of when to hold such discussions. In addition to challenges related to having advance care planning conversations, individuals and providers may not understand that filling out the document is voluntary or how to complete and follow the advance care planning document, according to officials from national stakeholder organizations and officials in the four selected states. Officials from national stakeholder organizations and articles we reviewed noted that challenges with voluntarily completing advance care planning documents can arise when there are language or cultural barriers to understanding these documents. When individuals or providers do not understand the information being requested in advance care planning documents, it can affect whether an individual’s wishes for care are accurately represented. A state agency official in one state identified challenges in ensuring EMS providers understand the appropriate actions to take when they encounter a document that is different from a traditional POLST form. For example, the state official noted that EMS providers might assume that individuals who have a wallet card on their person do not want CPR when the card actually indicates that the individual has completed an advance directive or POLST form to express their care wishes. This could result in treatment that does not match the individual’s expressed wishes.\nOnce advance care planning documents are completed, additional challenges exist to ensuring that providers have access to these documents when needed, such as in an emergency situation. Officials from the national stakeholder organizations, state agencies, and state stakeholder organizations we interviewed identified challenges related to accessing advance directives and POLST forms stored in EHRs. Specifically, stakeholders identified challenges related to EHR interoperability, such as where a provider in one health system cannot access advance care planning documents recorded in an EHR at a different health care system. While interoperability is not limited to advance care planning documents, the challenges associated with accessing advance care planning documents in EHRs can affect providers’ abilities to honor an individual’s wishes in an emergency if they do not have ready access to the documents. For example, when emergency providers cannot readily access advance care planning documents in another health system’s EHR, the providers might not be aware of and provide treatment inconsistent with the wishes of someone they are treating in the emergency room. National stakeholder officials also noted challenges due to a lack of standardization in EHR systems. For example, one national stakeholder official noted that EHR systems in health care facilities do not always have standardized processes for storing advance care planning documents—that is, one health care facility might enter advance directive information into a physician’s notes section of the EHR, while another might have a specific tab in the EHR for advance directives. Due to the lack of standardization, providers might not be able to find an individual’s advance care planning document, and consequently provide treatment inconsistent with the individual’s expressed wishes.\nIn addition to challenges related to understanding and accessing advance care planning documents, officials from the national stakeholder organizations, state agencies, and state stakeholder organizations we interviewed identified other challenges related to resources and portability of advance care planning documents.\nState agency officials told us that the lack of dedicated resources for advance care planning efforts, such as maintaining a registry, can be challenging. For example, an Idaho official stated that, due to resource constraints within the Secretary of State’s Office—which administers its Health Care Directive registry—the office does not have the personnel to maintain the registry at current document submission rates.\nNational stakeholder officials discussed challenges with states’ legal structures for accepting advance care planning documents—that is, the portability of documents across state lines. For example, an individual might fill out an advance directive or POLST form in one state, but become ill in another state where these documents may not be valid.", "In our four selected states—California, Idaho, Oregon, and West Virginia—state agencies and state stakeholder organizations pursued various strategies to improve individuals’ and providers’ understanding of advance care planning documents, as well as to improve their access to completed advance care planning documents.", "Officials from state agencies and stakeholder organizations in our selected states described efforts to educate individuals about the importance of advance care planning and train providers on the use of advance care planning documents.", "To address individuals’ lack of understanding of advance care planning, state agency officials and stakeholders in our selected states used strategies to inform them about the purpose of the documents and how to fill them out. The following are some examples of these efforts.\nOregon. The Oregon POLST Coalition used its relationship with stakeholder groups in the state—a large health system, and the state health authority—to educate individuals about POLST forms. These efforts included online videos and brochures intended to improve individuals’ voluntary and informed completion of the documents.\nWest Virginia. The West Virginia Center for End-of-Life Care—which administers the state’s advance care planning registry—collaborated with the West Virginia Network of Ethics Committees and a national organization to conduct public education presentations and webinars.\nFor three of our selected states, educational efforts also included making information about advance care planning available in other languages. For example, in California, Idaho, and Oregon, POLST forms and other information on advance care planning are available in Spanish. Articles we reviewed stated that providing culturally sensitive documents that communicate how to fill out the documents could help improve voluntary and informed completion of advance care planning documents.", "Officials from state agencies and state stakeholder organizations in all four selected states reported conducting provider training, which included working with EMS and hospital providers to train them on advance care planning documents, such as how to use advance directives and POLST forms and when to conduct end-of-life care conversations. The following are examples of these efforts.\nCalifornia. A state stakeholder organization in California conducted train-the-trainer sessions to educate providers about POLST forms, so the providers could subsequently conduct community training events. The organization also published decision aids for providers and individuals to help facilitate advance care planning conversations. The organization, which focused on POLST education and training, noted that it holds periodic conference calls with previous session participants to provide ongoing support and continue discussions about advance care planning.\nIdaho. The state—through collaborations with stakeholder organizations in Idaho—focused on improving advance care planning through education efforts. Specifically, the state collaborated with stakeholder organizations to conduct trainings on locating and understanding advance care planning documents. In addition, the organizations created EMS protocols related to accessing individuals’ wishes during emergencies. An Idaho official noted that successful advance care planning education and outreach within the state has led to a large increase in the number of advance care planning documents submitted to the state’s registry.\nOregon. State stakeholder organizations conducted provider training on advance directives and POLST forms. For example, an organization that focused on improving advance care planning education in the state developed an initiative, which included educational materials and training programs, to improve patient understanding of filling out and updating advance directives through health care organizations and provider training. Further, according to an official from the state health authority, POLST information is included in the curriculum for all medical education in the state ranging from emergency medical technicians to physicians.\nWest Virginia. The West Virginia Center for End-of-Life Care created training manuals, led EMS training webinars, and provided other online education materials to improve provider education about using POLST forms and related protocols in the field.\nNational stakeholder organizations we interviewed and articles we reviewed also noted that increasing the quality of the advance care planning conversations between providers and their patients is an important aspect of successful advance care planning efforts. One strategy to improve the advance care planning conversations is to conduct the conversations over multiple visits, according to national stakeholders and articles.", "Officials from state agencies and stakeholder organizations in our selected states utilized strategies to improve access to current advance care planning documents, including better interoperability between EHRs and a state registry, and access to completed documents stored in registries.", "Officials from state agencies and stakeholder organizations identified strategies to improve providers’ access to advance care planning documents stored in an EHR and to ensure the EHR has the most current copy of the document. One strategy used in Oregon enabled information sharing between EHR systems and the state’s electronic registry of completed POLST forms, allowing providers access to the most current POLST forms, according to state officials. Certain EHR systems— including those in three large health systems in the state—are interoperable with the state’s electronic POLST registry using bidirectional technology, meaning that the systems are coded in a way that they can seamlessly exchange information with each other. This allows providers to receive updated POLST forms from the registry upon the individual’s admission to the hospital. It also updates the POLST forms in the registry when changes are made in the EHR by the provider in the hospital. The Oregon officials described another strategy taken within a large health system in the state, which allows providers to quickly know whether a patient has an advance directive in an EHR by using a tab in the medical record indicating that the documents are in the EHR. Stakeholder organizations identified other strategies for increasing access to completed advance care planning documents, such as standardizing information. For example, one national stakeholder organization noted that advance care planning documents could be in a standardized location within an EHR to help providers find these documents more easily.\nAnother strategy used in our selected states is the use of a health information exchange to facilitate access to advance care planning documents. According to a West Virginia stakeholder organization, using the state’s health information exchange allowed West Virginia to easily provide authorized individuals with direct access to completed advance care planning documents—both advance directives and POLST forms—in its registry.", "Officials from state agencies and stakeholder organizations also developed strategies to improve access to completed advance care planning documents in their state registries. All four selected states used registries to facilitate access to completed advance care planning documents: two states (Idaho and West Virginia) had registries for both advance directives and POLST forms, one state (California) had an advance directive registry and was piloting an electronic POLST registry in two communities, and the remaining state (Oregon) had a POLST registry. Officials in these states reported strategies to facilitate access through their registries. Below are examples of these strategies.\nCalifornia. To test whether partnering with a health information exchange organization would provide benefits to the state’s POLST eRegistry uptake and expansion, one of the two California communities chosen to pilot the POLST eRegistry was led by a health information exchange. The other community selected for the pilot was led by a for-profit commercial service. According to a California EMS official, using the health information exchange allowed advance care planning documents to be exchanged quickly between ambulances and hospitals.\nWest Virginia. West Virginia’s registry used the state-wide EMS structure, enabling EMS providers to access the information in an individual’s POLST form while en route to an emergency call. The medical director at the EMS state office noted that EMS providers could call one of its five medical command centers, which could access the registry online to “pre-screen” individuals, to determine if there was a valid advance care planning document on file. EMS providers then received the individual’s information from the medical command center. According to an official involved with the state registry, authorized individuals—i.e., individuals with a registry-issued username and password—could also directly view registry documents.\nOregon. State officials reported using an opt-out strategy for the submission of POLST forms to the state’s registry to help ensure that the information in the registry was current. That is, the state has a legislative mandate for providers to submit all POLST forms to the state’s POLST registry unless the patient elected to opt out of the submission. According to Oregon stakeholders, Oregon attributes the widespread use and adoption of the registry to this strategy. One article noted that, in Oregon, successful access to POLST forms through the registry by EMS providers influenced the treatment of individuals. Oregon officials and stakeholders told us that they have not experienced many challenges related to administering its POLST registry and providing access to completed POLST forms, because they leveraged their existing centralized EMS system and created a state administered registry that is interoperable and available to all health systems within the state. Oregon officials stated that the state’s registry success is largely attributable to the fact that it was designed to meet the access and workflow needs of both EMS providers in the field and acute care providers.\nAt the federal level, to support state registry efforts, in February 2016, CMS published a State Medicaid Director letter alerting states to the availability of federal Medicaid funding for the development of and connection to public health systems, such as registries. A July 2018 report by the Office of the National Coordinator for Health Information Technology noted that end-of-life care advocacy groups should consider working with State Medicaid Directors to apply for CMS funding to pilot POLST registries. According to CMS, as of October 2018, one state, Louisiana, received approval to fund an electronic registry for advance directives.", "Officials from state agencies and stakeholder organizations in our selected states discussed the importance of having adequate funding and staff resources to administer their registries. For example, according to an Oregon stakeholder organization, dedicated state funding for the state’s registry allows multiple benefits, such as continuous availability of the registry for individuals and providers. Oregon POLST officials stated that in order to ensure access to individuals’ POLST forms between health systems within a state, they believe POLST registries should be state funded and administered. According to the Office of the National Coordinator for Health Information Technology report and a West Virginia registry official, the state’s registry, which received state-funding from 2009 until 2017, functioned as a central source of information on individuals’ wishes, which were recorded in documents such as advance directives and POLST forms and alleviated multiple access issues. However, officials involved in receiving and providing registry services reported challenges when the registry did not receive state funding in 2018. As a result, online access to advance directives and POLST forms through the registry was discontinued. In California, officials involved with the POLST eRegistry pilot stated that one goal of the pilot project was to identify potential plans for sustainable funding of a registry.\nRegarding acceptance of out-of-state advance care planning documents—that is, the portability of documents across state lines—we found that all four selected states have statutes that address the validity of advance care planning documents executed in another state. To ensure individuals’ wishes are honored, according to an American Bar Association official, states need to engage in efforts to develop processes and protocols that will allow advance care planning documents to be accepted between states. While the states’ language varies, all selected states allow use of out-of-state documents. Under Idaho’s statute, out-of- state documents that substantially comply with Idaho’s requirements are deemed to be compliant with Idaho’s statute. California’s, Oregon’s, and West Virginia’s statutes note that out-of-state documents executed in compliance with that state’s laws are valid within their states. For more information on the states’ statues related to advance care planning, see appendix IV.", "We provided a draft of this report to the Department of Health and Human Services. HHS provided technical comments, which we incorporated as appropriate. We also provided relevant information from the draft report to state officials and stakeholders in each of the four selected states in our review (California, Idaho, Oregon, and West Virginia), and to one national stakeholder organization (the National POLST Paradigm), and incorporated their technical comments, as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Health and Human Services, the Administrator of the Centers for Medicare & Medicaid Services, the National Coordinator for Health Information Technology, the National Institute on Aging, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or [email protected]. 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.", "Officials from the National Institutes of Health’s National Institute on Aging, the Centers for Disease Control and Prevention’s National Center for Health Statistics, and representatives of national stakeholder organizations identified specific surveys and a comprehensive national study of the prevalence of individuals who have completed advance directives. Table 1 provides information from selected research on the prevalence of advance directives. Table 2, below, shows the percentage of individuals age 65 and older responding to the Health and Retirement Survey who reported having a living will or power of attorney in 2012, 2014, and 2016.", "Physician orders for life-sustaining treatment (POLST) forms are different in each state, and the order of the sections or the options within a section may differ. However, according to the National POLST Paradigm, POLST forms cover the same information. Information about the forms, including sections on cardiopulmonary resuscitation (CPR), medical interventions, artificially administered nutrition, and signatures, is provided below.", "This section only applies when the individual is unresponsive, has no pulse, and is not breathing. This is similar to a do-not-resuscitate order, but the individual only has a do-not-resuscitate order when they do not want CPR. The POLST form allows individuals to clearly show they do want CPR. If this is left blank, the standard protocol is for emergency personnel to provide CPR if medically indicated. (See fig. 3.)", "This section gives medical orders when CPR is not required, but the individual still has a medical emergency and cannot communicate. There are three options and a space for a health care professional to write in orders specific for the individual. Care is always provided to individuals. This section is for letting emergency personnel know what treatments the individual wants to have. (See fig. 4.) 1. Full treatment. The goal of this option is to provide all treatments necessary (and medically appropriate) to keep the individual alive. In a medical emergency, individuals want to go to the hospital and, if necessary, be put in the intensive care unit and on a breathing machine. 2. Limited treatment / select treatment. The goal of this option is to provide basic medical treatments. These individuals want to go to the hospital, but do not want to be put in the intensive care unit or on a breathing machine. They are okay with antibiotics and intravenous fluids. 3. Comfort measures only. The goal of this option is to focus on making the individual as comfortable as possible where they are. These individuals do not want to go to the hospital. If the individual’s comfort cannot be taken care of where they are, transfer to the hospital may be necessary.\nAccording to the National POLST Paradigm, in many states, if an individual chooses CPR—or leaves Section A blank—the individual is required to choose “Full Treatment” in Section B. This is because CPR usually requires intubation and a breathing machine, which are only options under “Full Treatment.” If an individual has a medical emergency, but does not want CPR, this is the section emergency personnel will look at to see whether the individual wants to go to the hospital or not (for Full Treatment and Limited Interventions: yes; for Comfort Measures Only: no). If the individual only has a do-not-resuscitate order, emergency personnel would take them to the hospital.", "This section is where orders are given about artificially administered nutrition (and in some states artificially administered hydration) for when the individual cannot eat. All POLST forms note that individuals should always be offered food by mouth, if possible. (See fig. 5.)", "Health care professional. Since this document is a medical order, a health care professional is required to sign it in order for it to be valid. Which health care professionals can sign (e.g., physician, nurse practitioner) varies by state. The document has a statement saying that, by signing the form, the health care professional agrees that the orders on the document match what treatments the individual said they wanted during a medical emergency based on their current medical condition.\nPatient or surrogate. According to the National POLST Paradigm, most states require the patient or the surrogate to sign this form. This helps to show the patient or surrogate was part of the conversation and agrees with the orders listed on the form.", "The backside of the POLST form has directions and information, usually for health care professionals. Other information it may have includes information on how to void a POLST form; contact information for surrogates; and information on who completed the POLST form.", "This appendix provides information about incentive programs provided by the Centers for Medicare & Medicaid Services (CMS) to encourage providers to use electronic health records related to advance care planning documents. CMS provided incentive payments to eligible providers who reported certain measures through its Medicare electronic health records (EHR) Incentive Program (meaningful use program), which started in 2011. At certain points in the program, measures related to advance care planning were optional measures. In 2017, eligible professionals (physicians) began reporting “promoting interoperability” measures through the Merit-based Incentive Payment System (MIPS).\nThe American Recovery and Reinvestment Act of 2009 established the Medicare and Medicaid EHR Incentive Program. This program provided incentive payments for certain eligible providers—certain hospitals and physicians—that successfully demonstrated meaningful use of certified EHR technology and met other program requirements established by CMS. The program was implemented in three stages—measures were established at each stage to promote the use of EHRs in the delivery of health care and to ensure that providers capture information in their EHRs consistently. For example, one measure assessed whether providers have the technical capability in their EHRs to notify the provider of potential interactions among the patients’ medications and with patients’ allergies. In all three stages of meaningful use, providers had to report certain mandatory or core measures, as well as on a set of optional or menu measures.\nThe recording of advance directives was not included as a mandatory measure for eligible providers during any stage of meaningful use. For stages 1 and 2 of meaningful use (2011 through 2015) the recording of advance directives was an optional measure, meaning hospitals could choose to report it or could choose to report a different measure. This optional measure for eligible hospitals was a yes/no measure of whether users could record whether a patient has an advance directive. In October 2015, CMS released the stage 3 final rule that also modified elements of stage 2 reporting; this modification eased reporting requirements and aligned them with other quality reporting programs, according to agency officials. For both modified stage 2 and stage 3 (2015 through 2017), the original advance directive measures were no longer included. CMS noted that a goal for stage 3 measures was to include more advanced EHR functions, and one stage 3 measure addressed capturing and incorporating a broad range of data into the EHR, including advance directives.\nOne national stakeholder organization recommended a measure to ensure that if there are any advance care planning documents in the medical record, that the documents be accessible to all health care providers. CMS noted that advance care planning directives can be included in the notes and is addressed by certification requirements applicable to EHRs. Participants in these CMS programs must use certified EHR technology, which is technology that has been determined to conform to certification criteria developed by the Department of Health and Human Services’ Office of the National Coordinator for Health Information Technology. The 2015 certified EHR technology criteria—the most recent edition—includes a criterion that relates to advance care planning documents.\nThe Medicare Access and CHIP Reauthorization Act of 2015 established the Quality Payment Program, which consolidated components of three previously used payment incentive programs, including the Medicare EHR Incentive Program, into MIPS. Under the MIPS program, which affects clinician payments beginning in 2019, participating clinicians will generally be assessed in four areas, one of which is the “promoting interoperability” performance category that aims to achieve the same objectives as the original meaningful use program. MIPS-eligible clinicians report measures and activities to earn a score in the performance categories. Under the “improvement activities” performance category, one optional activity—advance care planning—covers items such as implementation of practices or processes to develop advance care planning that includes documenting the advance care plan or living will, and educating clinicians about advance care planning. Clinicians who meet the criteria for this activity can report this advance care planning activity to earn credit for the “improvement activities” performance category. Further, the advance care planning activity could earn bonus points in the “promoting interoperability” category, if the activity was conducted using certified EHR technology in 2017 and 2018.", "Our four selected states—California, Idaho, Oregon, and West Virginia— had statutes with similar provisions that affected access to advance care planning documents; however, the statutes differed in the specificity of these provisions. This appendix provides information on provisions related to (1) document execution requirements, such as signature and witness requirements; (2) the validity of other advance care planning documents; (3) provider objections to advance care planning directions; and (4) provider liability protections.", "Statutes in the four selected states required advance care planning documents to contain specific elements for the documents to be valid. The document requirements included the following:\nSignature requirements. All four selected states required individuals or designated representatives to sign the advance care planning document for the document to be legally valid. In addition, California allows individuals to sign the documents with a digital signature.\nWitness requirements. Three of the states (California, Oregon, and West Virginia) have statutes that require at least one witness to be present during the completion of advance care planning documents for that document to be legally valid. These states varied regarding the relationship the witness could have with the individual and number of required witnesses. For example, for advance care planning documents that were signed by witnesses, California required that at least one of the witnesses not be related to the individual by blood, marriage, or adoption, nor be entitled to any portion of the individual’s estate upon the individual’s death under an existing will. In contrast, according to state officials in Idaho, the state removed witness requirements from its advance care planning documents in 2012 to make the documents easier to complete.", "All four selected states’ statutes contained model forms that could be used as a valid advance care planning document. All of the states contained provisions regarding the acceptance of documents other than the forms set out in statute. A document other than the model form is valid if it includes required statutory elements (e.g., signature requirements). For example, in Idaho, the document must be substantially like the model form or contain the elements laid out in the statute. In Oregon, the advance directive statute states that, except as otherwise provided, Oregon residents’ advance directives must be the same as the statutory model form to be valid.", "All four selected states’ advance care planning statutes had provisions related to provider objections—the statutes address situations in which the provider is unable or unwilling to comply with advance care planning directions. However, the statutes varied on the grounds for provider objection, the required steps to be taken, and the extent to which providers were responsible for taking those steps. For example, California’s and Idaho’s statutes allow providers to object on ethical and professional grounds; and California’s, Idaho’s, and West Virginia’s statutes allow providers to object on reasons of conscience. In addition, the four states’ statutes specified the steps that providers or health systems must take after an objection is made. For example, all four selected states require that specified steps be taken with regard to transferring the individual to a provider that will honor their wishes. Further, California and Oregon explicitly require patient or health care representative notification as soon as provider objections are made.", "All four states also had statutes that addressed the circumstances under which providers would not be subject to civil or criminal liability, or professional disciplinary action with regard to administering advance care planning documents and directions. The states’ statutes varied with regard to the actions that were covered under these liability provisions. For example, California’s statute addresses situations in which a provider or institution either complied with or objected to the directions provided in advance care planning documents, while Idaho’s, Oregon’s, and West Virginia’s statutes only addressed situations in which providers and other parties complied in good faith with the directions.", "", "", "In addition to the contact named above, Kim Yamane (Assistant Director), Shirin Hormozi (Analyst-in-Charge), Leia Dickerson, Drew Long, Ian P. Moloney, Monica Perez-Nelson, and Vikki Porter made key contributions to this report." ], "depth": [ 1, 2, 3, 3, 2, 1, 2, 1, 1, 2, 3, 3, 2, 3, 3, 2, 1, 1, 1, 2, 2, 2, 2, 2, 1, 1, 2, 2, 2, 2, 1, 2, 2 ], "alignment": [ "h0_title", "h0_full", "h0_full", "h0_full", "", "", "", "h3_full h1_full", "h2_full h3_title", "", "", "", "h2_full h3_title", "", "h3_full", "h2_full", "h3_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What is the purpose of Advance care planning documents?", "What are advance directives?", "Under what circumstances are POLST documents appropriate?", "What are challenges related to the use of advance care planning documents?", "What challenges were seen related to the initiation of advance care planning?", "What challenges were seen in emergency situations?", "What have stakeholders done to improve understanding of advance care planning documents?", "In addition to the education effort, what is another strategy that helps to improve access to completed documents?", "How can states facilitate the acceptance of out-of-state documents?", "How did GAO address the challenges associated with advanced care planning?", "What state agencies were evaluated?", "Why were these four states selected?" ], "summary": [ "Advance care planning documents—including advance directives and physician orders for life sustaining treatment (POLST)—allow individuals to express their wishes for end-of-life care.", "Advance directives, which include living wills and health care power of attorney, provide direction regarding care when an individual becomes incapacitated.", "POLST documents are appropriate for seriously ill individuals whose health status indicates the need for medical orders to be documented in their medical records.", "Stakeholders from national organizations and officials in the four states GAO selected to review cited several challenges—affecting both individuals and health care providers—related to the use of advance care planning documents.", "In particular, they noted a lack of understanding about how to complete the documents and how to initiate conversations about advance care planning.", "They also cited challenges related to the difficulty of ensuring access to completed documents when needed, such as in an emergency situation.", "Officials from state agencies and stakeholder organizations in the four selected states reported pursuing various strategies to improve understanding of advance care planning documents by conducting education efforts for individuals and providers.", "In addition, the states utilized strategies to improve access to completed documents, such as improving the electronic exchange of information between health records and a state registry, which is a central repository intended to improve access to the documents.", "Further, stakeholder officials reported strategies related to the acceptance of out-of-state advance care planning documents; all four selected states had statutory provisions that address the validity of documents executed in another state.", "GAO reviewed documents and interviewed officials from national stakeholder organizations involved in advance care planning or aging issues, and conducted a literature review of relevant articles published from January 2012 to April 2018 in peer-reviewed and other publications.", "In addition, GAO interviewed officials from state agencies and stakeholder organizations in California, Idaho, Oregon, and West Virginia.", "GAO selected those four states because they were active in encouraging advance care planning and had registries for completed documents that were in different stages of development." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 0, -1, 0, -1, -1, -1, 1 ], "summary_paragraph_index": [ 4, 4, 4, 5, 5, 5, 6, 6, 6, 2, 2, 2 ] }

{ "title": [ "", "Background", "Pre-PRWORA Enactments", "PRWORA", "Post-PRWORA Enactments", "Legal Issues", "Noncitizens' Rights to Equal Protection", "Application to Federal Restrictions on Public Benefits", "Application as to State and Local Restrictions on Public Benefits", "Whether PRWORA Provides a Uniform Rule for States and Localities", "Level of Scrutiny Applied to State Measures Affecting Lawful Nonimmigrants", "Preemption of State and Local Measures", "Restrictions on Benefits as Regulations of Immigration", "Preemption by the INA or PRWORA", "Defining \"Benefits\" and Related Terms", "\"Public Benefits\" for Purposes of PRWORA", "\"Affirmatively Providing\" for Unauthorized Aliens' Eligibility", "Agency Determinations Regarding Federal Means-Tested Public Benefits", "Conclusion" ], "paragraphs": [ "Congress's interest in the receipt of government assistance by noncitizens dates back to at least 1882, when the country's first general immigration law excluded aliens who were deemed \"likely to become a public charge\" after they came to the United States. The term public charge has historically meant persons who are \"primarily dependent upon the government for subsistence,\" and the 1882 measure effectively limited aliens' receipt of government assistance by barring aliens who were likely to substantially rely upon such assistance from entering the United States. Since that time, Congress has returned periodically to the topic of noncitizens' eligibility for public benefits, sometimes restricting noncitizens' eligibility for public benefits and sometimes expanding it. Congressional interest has been particularly high in recent years due to the sizable number of aliens who are unlawfully present in the United States (i.e., entered without inspection, or overstayed or otherwise violated the terms of their visas). Some have suggested that noncitizens' eligibility for public benefits is a \"magnet\" for unauthorized immigration and ought to be further restricted. Others have sought to expand at least certain aliens' eligibility for public benefits on humanitarian or public interest grounds.\nWhether and when persons who are present in the United States, but not U.S. citizens or nationals, may receive particular types of government assistance can be difficult to ascertain because of the various federal, state, and local laws governing their eligibility for such assistance. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) was enacted to establish \"national policy with respect to welfare and immigration.\" With certain exceptions, PRWORA bars aliens who are not \"qualified aliens\" from receiving federal, state, or local \"public benefits,\" and precludes qualified aliens from receiving federal \"means-tested public benefits\" for 5 or more years after they enter the United States in a qualified status. However, there are also a number of other federal, state, and local measures adopted prior to, or after, the enactment of PRWORA, some of which make different provisions for noncitizens' eligibility for particular benefits. The applications of these measures can raise complicated issues of constitutional law, statutory interpretation, and administrative law.\nThis report provides an overview of PRWORA and illustrative pre- and post-PRWORA enactments regarding noncitizen eligibility for public benefits as background, before turning to a discussion of the major legal issues raised by such measures. The discussion of enactments other than PRWORA and the legal issues they raise is selective. The report does not attempt to identify all legal measures that might affect noncitizens' eligibility for particular benefits, or all legal issues that could potentially be raised. Rather, its focus is upon illustrative measures, and major legal issues that have recurred.\nThe report also does not address legal issues that could potentially be raised by noncitizens' receipt of public benefits, particularly whether the receipt of such benefits may result in aliens being found to be inadmissible or deportable on public charge grounds. A separate report, CRS Report R43220, Public Charge Grounds of Inadmissibility and Deportability: Legal Overview , by [author name scrubbed], discusses these issues. There are also several CRS reports addressing policy issues related to noncitizens' eligibility for public benefits.", "PRWORA, as amended, establishes certain default rules regarding noncitizens' eligibility for federal, state, and local public benefits by creating various categories of aliens and benefits, and prescribing when particular aliens may receive certain benefits. However, numerous measures had been enacted prior to PRWORA, which PRWORA effectively nullified or modified. In addition, Congress, states and, in some cases, localities have enacted additional measures post-PRWORA that either expand, or restrict, noncitizens' eligibility for particular benefits.", "Prior to the enactment of PRWORA, there generally were no overarching rules regarding noncitizens' eligibility for public benefits. Rather, individual statutes generally governed noncitizens' eligibility for benefits provided pursuant to the statute, and often classified aliens in terms of categories specific to the statute. For example, the Unemployment Compensation Amendments of 1976 expressly prohibited the payment of unemployment insurance on the basis of services performed by an alien unless the alien was (1) a lawful permanent resident (LPR) when the services were performed; (2) \"lawfully present\" for purposes of performing the services; or (3) residing in the United States \"under color of law\" when the services were performed. Noncitizens not belonging to one of these three classes—most notably, aliens who were unlawfully present or working in the United States when they provided the services upon which compensation would be based—were barred from receiving unemployment insurance. The Social Security Amendments of 1965 similarly provided that\nEvery individual who (1) has attained the age of 65, and (2) (A) is a resident of the United States, and is either (i) a citizen or an alien lawfully admitted for permanent residence who has resided in the United States continuously during the 5 years immediately preceding the month in which he applies for enrollment under this part ... is eligible to enroll in the [Medicare Part B] insurance program.\nHere, the only noncitizens eligible for Medicare Part B were LPRs who had resided in the United States \"continuously\" for the five years prior to applying for enrollment. All others were excluded, including LPRs who had not yet resided in the United States for five years, or whose total period of residence, while longer than five years, had not been \"continuous.\" In yet other cases, the statute was silent as to noncitizens' eligibility for benefits provided pursuant to the statute (e.g., school lunch and nutrition, supplemental food program for women, infants, and children (WIC), earned income credit), which was often taken to mean that noncitizens were not barred from receiving such benefits.\nIn a few cases, however, states, in particular, enacted measures that addressed noncitizens' eligibility for public benefits more broadly. Perhaps the best known of these was California's Proposition 187, adopted by voters in 1994, and described by some commentators as the \"impetus\" for PRWORA. Proposition 187 was intended to \"prevent illegal aliens in the United States from receiving benefits or public services in the State of California.\" Among other things, Proposition 187 barred the provision of \"public social services\" and \"publicly-funded health care services\" to persons who were not U.S. citizens, LPRs, or \"admitted lawfully for a temporary period of time.\" It also barred persons who were not citizens, LPRs, or \"otherwise authorized under federal law to be present in the United States\" from admission to public elementary, secondary, and postsecondary schools. However, these and other provisions of Proposition 187 were found to be preempted by federal law, or otherwise impermissible, and not enforced.\nSome of these pre-PWRORA laws remain on the books, but their implementation has generally been shaped by the subsequent enactment of PRWORA. As discussed below, PRWORA \"effectively invalidated all existing\" federal, state, or local measures governing noncitizens' eligibility for public benefits, replacing them with default rules that states, in particular, may opt out of only in specified circumstances (e.g., by enacting a measure subsequent to PRWORA that \"affirmatively provides\" for unauthorized aliens' eligibility). PRWORA has, thus, resulted in unauthorized aliens being ineligible for various state services. The U.S. Department of Education similarly modified its guidance regarding which noncitizens are eligible for federal financial aid under the Higher Education Act after PRWORA's enactment.", "Congress enacted PRWORA in 1996, in part, to bring a degree of uniformity to noncitizens' eligibility for federal, state, and local public benefits. When enacting PRWORA, Congress provided that the restrictions and conditions it imposed apply \"[n]otwithstanding any other provision of law,\" except as otherwise provided in PRWORA. This language has been construed to mean that PRWORA generally \"invalidated\" or rendered unenforceable preexisting federal, state, and local measures, at least to the degree that these measures were inconsistent with PRWORA. Then, in place of these varied measures—which often had their own ways of describing both categories of noncitizens and particular types of benefits—PRWORA established standardized taxonomies of aliens and benefits. It also prescribed general rules regarding when particular aliens are eligible for specific benefits.\nUnder PRWORA, aliens are divided into two basic categories: qualified and not qualified. PRWORA defines qualified alien to encompass: LPRs; aliens granted asylum; refugees; aliens paroled into the United States for a period of at least one year; aliens whose deportation is being withheld; aliens granted conditional entry; and Cuban and Haitian entrants. However, certain aliens who have been subject to domestic violence are also treated as qualified aliens for purposes of PRWORA. All other aliens are not qualified. This includes those who are unlawfully present; have been granted temporary protected status, deferred enforced departure, or deferred action; or are lawfully present in the United States on nonimmigrant visas.\nPRWORA similarly categorizes benefits as: federal public benefits, federal means-tested public benefits, and state and local public benefits. With certain exceptions, it defines federal and state and local public benefit s to mean the following:\nany grant, contract, loan, professional license, or commercial license provided by [a government] agency ... or by appropriated funds ...; and any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by [a government] agency ... or by appropriated funds.\nIn contrast, federal means-tested public benefit is not affirmatively defined by PRWORA, although certain benefits are expressly excluded from the application of this term (e.g., short-term, non-cash, in-kind emergency disaster relief). Because this term is not defined, PRWORA has generally been seen as granting federal agencies discretion to designate which public benefits are federal means-tested ones. As is discussed below, the Office of Legal Counsel at the Department of Justice has opined that agency interpretations of this term as encompassing only Medicaid, food stamps, supplemental security income (SSI), Temporary Assistance to Needy Families (TANF), and the State Child Health Insurance Program (SCHIP) are entitled to deference. PRWORA itself does not address state means-tested public benefits, beyond providing that affidavits of support provided by aliens' sponsors may be enforceable by any state or locality that provides \"means-tested public benefit[s]\" to the alien.\nPRWORA relies upon the taxonomies of aliens and benefits that it creates in prescribing specific rules regarding which aliens are eligible for particular benefits. The \"default\" rules established by PRWORA are arguably simple (although, particularly as amended, PRWORA provides for numerous exceptions ). First, aliens who are not qualified aliens are generally barred from receiving public benefits. Such aliens are not eligible for federal, state, or local public benefits (means-tested or otherwise). However, states and localities may furnish public benefits to unauthorized aliens if the state enacts legislation subsequent to PRWORA's enactment that \"affirmatively provides\" for their eligibility. Second, even aliens who are qualified aliens are generally subject to significant restrictions on their eligibility for SSI, TANF, Medicaid, food stamps, social services block grants, and other means-tested public benefits. Such aliens are barred from receiving federal means-tested public benefits for five years after their entry into the United States in a qualified status. In addition, certain qualified aliens are ineligible for SSI, TANF, Medicaid, food stamps, and social services block grants unless they have worked, or can be credited with, 40 qualifying quarters of work under the Social Security Act, and did not receive any federal means-tested public benefits during that time. Moreover, in determining qualified aliens' eligibility for means-tested benefits, the income and resources of the aliens' sponsor may be attributed to the alien until the alien naturalizes or has worked 40 quarters.\nPRWORA's \"national policy with respect to welfare and immigration\" is, however, subject to numerous exceptions. Some of these exceptions are incorporated into PRWORA, as amended. Others, however, exist because PRWORA grants states the authority to make various determinations affecting noncitizens' eligibility for federal, state, and local public benefits. Specifically, PRWORA permits (but does not require) states to\ndetermine, with certain exceptions and subject to certain restrictions, the eligibility of qualified aliens for TANF, social services block grants, and Medicaid, and for state public benefits; limit aliens' eligibility for \"programs of general cash public assistance\" furnished by states or localities, provided that any such limitations are not more restrictive than the limitations imposed under comparable federal programs; attribute the income and resources of the alien's sponsor(s) to the alien when determining aliens' eligibility for state public benefits; and provide state and local benefits to unauthorized aliens by enacting a measure subsequent to PRWORA's enactment that provides for such eligibility.\nAs discussed later, these provisions, permitting a range of state actions, have played a significant role in certain courts' finding that PRWORA does not provide a \"uniform rule\" for states to follow, such that challenged state measures enacted pursuant to it are reviewed more deferentially than other state measures classifying persons on the basis of alienage.", "PRWORA has been amended periodically since its enactment to further clarify Congress's intent, as well as to permit certain noncitizens who were ineligible for particular benefits under PRWORA to receive such benefits. For example, the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996, enacted a little over a month after PRWORA, added a provision apparently intended to deter states from using their authority under PRWORA to grant in-state tuition to unauthorized aliens. This provision bars states from providing \"postsecondary education benefits\" to unauthorized aliens based on the alien's residence within the state unless other citizens or nationals are eligible for such benefits, regardless of their state of residence. IIRIRA also made certain other amendments to PRWORA, including by providing that certain victims of domestic violence are deemed qualified aliens for purposes of PRWORA. Other measures enacted in 1997 and in 1998 similarly amended PRWORA to permit some aliens to receive benefits they could not have received under PRWORA, as originally enacted.\nCongress has also enacted legislation that addresses noncitizens' eligibility for particular benefits separate and apart from PRWORA, in many cases making noncitizens eligible for benefits that would be denied to them under PRWORA's default rules. For example, Section 214 of the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA) grants states the option to provide Medicaid and CHIP coverage to all children and pregnant women \"who are lawfully residing in the United States … and who are otherwise eligible for such assistance.\" The phrase \"lawfully residing in the United States\" has been construed to include certain aliens who are not qualified aliens for purposes of PRWORA, such as lawful nonimmigrants, as well as those with temporary protected status, under deferred enforced departure, in deferred action status, or whose visa petitions have been approved and have a pending application for adjustment of status. The Patient Protection and Affordable Care Act (ACA) of 2010 similarly permits persons who are \"lawfully present\" to participate in certain health care programs established under the act. Lawfully present for purposes of ACA has generally been construed in the same way as lawfully residing for purposes of CHIPRA (i.e., including those with temporary protected status or under deferred enforced departure), although beneficiaries of Deferred Action for Childhood Arrivals (DACA) have been viewed as ineligible for certain benefits under ACA.\nStates, in particular, have also enacted a number of post-PRWORA measures addressing noncitizens' eligibility for public benefits. Some of these measures were expressly authorized by PRWORA, and make aliens eligible for state and local benefits that they would otherwise be denied. Others restrict qualified aliens' eligibility for TANF, Medicaid, and social services block grants, as permitted by PRWORA. In yet other cases, however, states and localities have enacted measures that would define public benefit more broadly than PRWORA does, and seek to bar unauthorized aliens, in particular, from receiving such benefits. For example, the City of Farmers Branch, Texas, attempted to characterize residential occupancy licenses as \"public benefits\" when barring persons from renting housing to unauthorized aliens. The State of Georgia relied upon a similarly broad definition of public benefit —including adult education; business, gaming, and professional licenses; registration of regulated businesses; state identification cards; and tax certificates required to conduct commercial businesses—when proscribing the provision of public benefits to unauthorized aliens. More recently, Montana voters adopted a referendum which prohibits the provision of \"state services\" to unauthorized aliens, and defines this term to encompass cash payments, state licenses or permits, enrollment at state public universities, and services for crime victims and persons with physical disabilities.", "Construing and applying PRWORA and related measures to determine whether individual aliens are eligible for particular benefits can raise a number of legal issues, including (1) the constitutional rights of aliens; (2) whether federal law preempts state or local measures; and (3) whether particular types of government assistance constitute benefits under particular definitions of this term. In particular, questions regarding noncitizens' rights to equal protection and preemption are particularly likely to arise in facial challenges seeking to invalidate particular measures. Questions regarding what constitutes a benefit , in contrast, tend to occur in challenges to applications of particular measures.", "The constitutional guarantee of equal protection applies to all \"persons\" within the United States, including aliens (regardless of their immigration status). Thus, measures governing eligibility for public benefits could potentially be subject to legal challenges if they treat aliens differently than citizens. The level of scrutiny applied by the courts in reviewing challenges to such measures frequently determines whether the law is upheld, or struck down. With \"rational basis review,\" the challenged measure will generally be upheld if it is a rational means of promoting a legitimate government objective. The measure is \"presumed constitutional,\" and the persons challenging the law have the burden of negating all possible rational justifications for the classification. In contrast, with \"strict scrutiny,\" the challenged measure will be upheld only if the government can demonstrate that the measure is necessary to achieve a compelling interest, and has been narrowly tailored to achieve that interest. Other \"intermediate\" degrees of scrutiny are also possible, depending upon the persons and rights affected by the challenged measure.", "Because Congress's plenary power over immigration permits it to enact measures as to aliens that would be unconstitutional if applied to citizens, federal restrictions on noncitizens' eligibility for public benefits are subject to rational basis review, and have generally been upheld. For example, in its 1976 decision in Mathews v. Diaz , the Supreme Court upheld a federal law that barred LPRs who had not resided in the United States for five years from enrolling in Medicare Part B, because it viewed the measure as a valid exercise of the federal government's authority to regulate the entry and residence of aliens, not as \"irrational.\" In particular, the Mathews Court noted that Congress could have reasonably determined that the strength of the aliens' ties to the United States increases over their time here, and that \"as the alien's tie grows stronger, so does the strength of his claim to an equal share of the munificence.\" The Court further suggested that Congress could have considered the \"fiscal integrity\" of the benefits program in drawing this line. More recently, lower courts have upheld under rational basis review PRWORA's restrictions on the receipt of federal means-tested public benefits by qualified aliens who have not resided in the United States in that status for the requisite period of time. In so doing, the courts have rejected the argument that, as a welfare statute, PROWRA was not enacted pursuant to Congress's plenary power over immigration and, thus, should be subject to more stringent review. Courts have further noted that, while a five-year bar on qualified aliens' eligibility for certain benefits is \"arbitrary,\" as the plaintiffs asserted, this does not invalidate the measure. Rather, \"cutoff dates inevitably lead to persons 'who have an almost equally strong claim to favored treatment being placed on different sides of the [eligibility] line.'\"", "The situation as to state and local measures is more complicated, with the level of scrutiny applied in challenges to such measures generally depending upon the persons and rights affected by the measure. There is no fundamental right to receive public benefits. Rather, receipt of benefits falls within the \"area of economics and social welfare,\" and classifications affecting such interests, standing alone, are generally subject to rational basis review. However, courts also give heightened scrutiny to measures involving \"suspect classifications,\" regardless of whether a fundamental right is involved, and classifications based on alienage are suspect. Thus, because states and localities lack the federal government's plenary power over immigration, certain state and local measures restricting noncitizens' eligibility for public benefits—particularly measures restricting LPR's eligibility—have been subject to strict scrutiny. In its 1971 decision in Graham v. Richardson , for example, the Supreme Court struck down Pennsylvania and Arizona laws that barred or limited receipt of state \"general assistance\" by LPRs. In so doing, the Court expressly rejected the argument that states have a \"special public interest\" in favoring their own citizens over aliens in the distribution of limited resources such as welfare benefits. The Graham Court also emphasized that LPRs, like citizens, may live and work in a state for many years, contributing to its economic growth.\nCourts have, however, declined to apply strict scrutiny to state measures that exclude aliens, even long-term \"permanent resident\" aliens with significant ties to the United States, from employment involving \"political and governmental functions.\" Instead, courts have applied rational basis review to such measures on the grounds that states must have the power to \"preserve the basis conception of a political community\" for a democracy to function. Certain states have recently enacted measures that would define public benefits or state services in such a way as to encompass employment with state or local governments, and denials of certain employment pursuant to such measures could potentially be subject to more lenient review than denials of other benefits.\nCourts have also declined to view unauthorized aliens as a suspect classification on the grounds that \"their presence in this country in violation of federal law is not a 'constitutional irrelevancy.'\" This means that state and local measures denying benefits to unauthorized aliens are generally subject to more deferential review than measures denying benefits to LPRs, such as the state laws at issue in Graham . However, state and local measures denying particularly significant benefits to certain unauthorized aliens could potentially be subject to heightened scrutiny. Most notably, in its 1982 decision in Plyler v. Doe , the Supreme Court struck down a Texas statute which prohibited the use of state funds to provide elementary and secondary educations to children who were not \"legally admitted\" to the United States on the grounds that the statute did not further a \"substantial\" state goal. While noting that education did not constitute a fundamental right, the Court distinguished it from other benefits, describing primary and secondary education as of \"supreme importance\" in preserving a democratic system of government. The Court further noted that denying public elementary and secondary educations to unauthorized alien children would contribute to the formation of a permanent underclass, which the Fourteenth Amendment was designed to prevent. Lower courts have reached similar conclusions as to Proposition 187's denial of public elementary and secondary educations to unauthorized alien children, and certain Alabama requirements regarding verification of the citizenship and immigration status of students enrolling in public elementary and secondary schools.\nThe Plyler Court also suggested, however, that state and local measures classifying persons on the basis of alienage could potentially enjoy more deferential review if Congress has \"by uniform rule prescribed what it believes to be appropriate standards for the treatment of an alien subclass.\" Following PRWORA's enactment, questions have arisen as to whether PRWORA provides such a uniform rule, as discussed below. If it does, state and local measures that follow this rule could potentially be subject to rational basis review, like federal measures, and thus more likely to withstand legal challenges. Similarly, several courts and commentators have noted that the Supreme Court precedents applying strict scrutiny to measures classifying persons on the basis of alienage all arose from challenges brought by LPRs (i.e., lawful immigrants ). Some have suggested that classifications affecting lawful nonimmigrants (i.e., aliens lawfully permitted to remain in the country on a temporary basis) might be subject to less stringent review, regardless of whether PRWORA provides a uniform rule, as is also discussed below.", "Courts have reached differing conclusions about whether PRWORA provides a uniform rule regarding noncitizens' eligibility for public benefits, like that contemplated in Plyler . Some courts, including one federal appellate court, have suggested that it does. In its 2004 decision in Soskin v. Reinertson , the U.S. Court of Appeals for the Tenth Circuit (\"Tenth Circuit\") characterized the state law in question—which repealed optional state-funded Medicaid coverage for certain aliens—as \"addressing the Congressional concern (not just a parochial state concern) that 'individual aliens not burden the public benefits system.'\" The Tenth Circuit further noted that, although PRWORA expressly authorizes states to make a number of determinations affecting noncitizens' eligibility for public benefits, it \"does not give the states unfettered discretion. Some coverage must be provided to aliens; some coverage is forbidden. State discretion is limited to the remaining optional range of coverage.\" Previously, in its 1999 decision in Cid v. South Dakota Department of Social Services , the Supreme Court of South Dakota had reached a similar conclusion, finding that an administrative rule which terminated certain noncitizens' eligibility for benefits did not conflict with national policies regarding aliens, and placed no burdens on aliens other than those contemplated by federal law.\nOther courts, in contrast, have found that PRWORA does not establish a uniform rule that permits states to classify persons on the basis of alienage when providing public benefits. New York's highest state court reached this conclusion in its much-cited 2001 decision in Aliessa v. Novello . There, the court applied strict scrutiny in reviewing a challenge to a state law that barred the provision of state-funded Medicaid coverage to lawfully present aliens who were not qualified aliens for purposes of PRWORA, as well as to qualified aliens who had not resided in the United States for five years. The court did so because it did not view PRWORA's provisions regarding aliens' eligibility for public benefits as reflecting \"a uniform national policy.\" Rather, according to the Aliessa court,\n[PRWORA] expressly authorizes States to enact laws extending \"any State or local public benefit\" even to those aliens not lawfully present within the United States ... The converse is also true and exacerbates the lack of uniformity: ... subject to certain exceptions, States are authorized to withhold State Medicaid from even those qualified aliens who are eligible for Federal Medicaid under PRWORA. Thus, in administering their own programs, the States are free to discriminate in either direction—producing not uniformity, but potentially wide variation based on localized or idiosyncratic concepts of largesse, economics and politics.\nMaryland's highest court took a similar view in its 2006 decision in Ehrlich v. Perez . There, the court applied strict scrutiny in invaliding a state budget measure that did not appropriate funds for the State Medical Assistance Program for resident alien children and pregnant women who immigrated to the United States on or after PRWORA's enactment, but funded the same benefits for citizens and resident aliens who arrived before that date. The state argued that this was permissible, because Congress had prescribed \"a uniform rule for the treatment of an alien sub-class in regard to the provision of medical benefits.\" The court, however, disagreed, finding that PRWORA did not prescribe a uniform rule. The court further suggested that it was not inclined to view as compelling the alleged government interests that PRWORA recognized as such (i.e., enacting new rules for eligibility and sponsorship agreements in order to assure that aliens are self-reliant in accordance with national immigration policy, and removing the incentive for illegal immigration provided by the availability of public benefits). It also suggested that, even if PRWORA had prescribed a uniform rule, state measures that classify persons on the basis of alienage would remain subject to strict scrutiny because Congress cannot authorize the states to violate the constitutional guarantee of Equal Protection.\nIt is important to note, however, that the structure of the programs in question, as well as the framing of the issues by the litigants, can substantially affect the outcome in such cases. Several courts have, for example, recently suggested that the repeal of state programs that had benefited qualified aliens who were ineligible for federal means-tested public benefits because they had not been present in the United States in a qualified status for the requisite period of time are not subject to strict scrutiny, so long as (1) the beneficiaries of the state program are exclusively aliens, and (2) the only comparable programs benefitting citizens are federal ones. The U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit), for example, found that the noncitizens challenging the repeal of a Washington law failed to raise an equal protection claim, since they had failed to show that the state had \"treated the plaintiff[s] differently from similarly situated individuals.\" Because there were no similarly situated individuals, the Ninth Circuit rejected plaintiffs' Equal Protection challenge without subjecting the repeal measure to either strict scrutiny or rational basis review.\nOther courts, however, have applied rational basis review in upholding similar measures, sometimes on the grounds that rational basis review should govern state measures that repeal (as opposed to create) programs that benefited only aliens. In other cases, the court has suggested that rational basis review is appropriate so long as the measure only distinguishes between classes of aliens, and does not distinguish between aliens and citizens.", "Questions have also been raised recently regarding the level of scrutiny to be applied to state and local measures denying lawful nonimmigrants drivers or occupational licenses, which constitute benefits under certain definitions of this term. Many of the Supreme Court and other cases discussed previously, scrutinizing state and local benefits measures, involved LPRs (i.e., lawful immigrants , many of whom reside and work in the United States for extended periods of time). Far fewer challenges have involved aliens lawfully admitted to the United States as nonimmigrants (such as guestworkers), and two federal courts of appeals expressly noted the lack of Supreme Court precedent applying strict scrutiny to measures affecting nonimmigrants in finding that such measures are subject to a lower level of scrutiny than that given to measures affecting LPRs.\nIn its 2005 decision in LeClerc v. Webb, the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit) upheld a Louisiana law that prohibited lawful nonimmigrants from sitting for the state bar exam, in part, because it viewed \"rational basis review ... [as] the appropriate standard for evaluating state law classifications affecting nonimmigrant aliens.\" In so doing, the Fifth Circuit distinguished an earlier case, In re Griffiths , wherein the Supreme Court invalidated a Connecticut law that conditioned bar admission on U.S. citizenship, on the grounds that the plaintiffs in Griffiths were LPRs, and the Supreme Court \"ha[s] never applied strict scrutiny review to a state law affecting ... other alienage classifications.\" In particular, the Fifth Circuit found that LPRs are distinguishable from lawful nonimmigrants because LPRs are unable to \"exert political power in their own interest given their status as virtual citizens,\" while lawful nonimmigrants' lack of legal capacity is \"tied to their temporary connection to this country.\" The Fifth Circuit also found that, while LPRs can be said to be \"similarly situated\" to citizens in their economic, social and civic conditions, lawful nonimmigrants are not. The Fifth Circuit noted, among other things, that lawful nonimmigrants may not serve in the U.S. military, are subject to strict restrictions on employment, and incur different tax treatment than citizens and LPRs. The Fifth Circuit relied upon similar reasoning in its 2011 decision in Van Staden v. St. Martin , upholding a Louisiana law that barred lawful nonimmigrants from obtaining practical nursing licenses.\nThe U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) reached a similar conclusion in its 2007 decision in League of United Latin American Citizens [LULAC] v. Bredesen . There, in upholding a Tennessee law that permitted lawful nonimmigrants to obtain only \"certificates for driving,\" not driver's licenses, the Sixth Circuit observed that \"lawful permanent residents are the only subclass of aliens who have been treated as a suspect class.\" Like the Fifth Circuit, the Sixth Circuit noted that the Supreme Court had never applied strict scrutiny to a state or local measure affecting aliens who were not LPRs, and found that lawful nonimmigrants differ from LPRs in ways which suggest that the traditional rationale for applying strict scrutiny to measures affecting LPRs (i.e., their similarity to citizens) might not apply to measures affecting lawful nonimmigrants. The Sixth Circuit further found that the Tennessee law withstood rational basis review since it \"was designed to serve homeland security interests by indicating to third parties that the State of Tennessee does not vouch for the identity of the person holding a certificate for driving while at the same time allowing the holder of the certificate to validly operate a motor vehicle in Tennessee,\" and the plaintiffs had failed to show why these restrictions are not rationally related to a legitimate government interest.\nMost recently, however, the U.S. Court of Appeals for the Second Circuit (Second Circuit) reached the opposite conclusion in its 2012 decision in Dandamudi v. Tisch , applying strict scrutiny to strike down a New York law that permits only U.S. citizens and LPRs to become licensed pharmacists. The Second Circuit reached this conclusion, in part, because it viewed Supreme Court precedent as recognizing only two circumstances in which state and local classifications based on alienage are not subject to strict scrutiny: namely, (1) when a state excludes aliens from political and governmental functions; and (2) when a state denies certain benefits to unauthorized aliens. It thus declined to recognize a third exception for measures involving aliens who are not LPRs, although it acknowledged that the Supreme Court had \"never explicitly applied strict scrutiny review to a statute discriminating against nonimmigrant aliens.\" The Second Circuit also rejected the reasoning applied by the Fifth and Sixth Circuits, particularly their grounds for distinguishing lawful nonimmigrants from LPRs. According to the Second Circuit, lawful nonimmigrants are, in practice, no different than LPRs in that they often live and work in the United States for extended periods of time. Relatedly, the Second Circuit noted that the purported \"transience\" of nonimmigrant aliens does not provide a compelling justification for barring nonimmigrants from obtaining pharmacist licenses and practicing in the state, since \"[c]itizenship and Legal Permanent Residency carry no guarantee that a citizen or LPR professional will remain in New York ..., have funds available in the event of malpractice, or have the necessary skill to perform the task at hand.\"\nWhile these decisions all focus upon licenses, they could have potentially significant implications for state and local measures regarding noncitizens' eligibility for public benefits more generally. Certain states, in particular, have adopted definitions of public benefits or related terms that would encompass drivers' licenses or occupational and professional licenses. However, PRWORA expressly exempts professional and commercial licenses for nonimmigrants whose visas are related to employment in the United States from its definition of public benefits , which would appear to limit the ability of states and localities to assert that they are complying with a \"uniform rule\" established by the federal government when restricting nonimmigrants' ability to obtain occupational and professional licenses. To the contrary, an argument could potentially be made that, to the degree that the state or locality purports to deny an occupational or professional license to an alien whom the federal government admitted to work in a particular field, the state or local measure is preempted by federal law. In fact, the Second Circuit indicated that it viewed the New York law as \"stand[ing] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.\" However, its holding in Dandamudi was not based on preemption since some plaintiffs had \"TN status\" created pursuant to the North American Free Trade Agreement (NAFTA), and only the federal government may bring suit challenging state laws inconsistent with NAFTA.", "State and local measures concerning noncitizens' eligibility for public benefits can raise questions of preemption, because the Supremacy Clause of the U.S. Constitution establishes that federal law, treaties, and the Constitution itself are \"the supreme Law of the Land, ... any Thing in the Constitution or Laws of any state to the Contrary notwithstanding.\" In particular, the Constitution entrusts Congress with the power to regulate immigration. This means that state or local measures that purport to regulate immigration—by determining which aliens may enter or remain in the United States, or the terms of their continued presence—are, per se , preempted, regardless of whether Congress has legislated on the matter. Other measures, which affect aliens, but do not constitute regulation of immigration, could also be found to be preempted, depending upon the scope of any congressional enactments. Specifically, federal statutes may preempt state and local measures in one of three ways: (1) the statute expressly indicates its preemptive intent (express preemption); (2) a court concludes that Congress intended to occupy the regulatory field, thereby implicitly precluding state or local action in that area (field preemption); or (3) state or local action directly conflicts with or otherwise frustrates the purpose of the federal scheme (conflict preemption). Preemption claims have recently been raised in response to state and local measures that would define benefits broadly and bar the provision of benefits to unauthorized aliens.", "The Supreme Court distinguished between impermissible regulations of immigration, and permissible measures affecting aliens, in its 1976 decision in De Canas v. Bica . There, in reversing and remanding a state court decision finding that a California law which prohibited the knowing employment of unauthorized aliens was preempted, the Court noted that\nthe fact that aliens are the subject of a state statute does not render it a regulation of immigration, which is essentially a determination of who should or should not be admitted into the country, and the conditions under which a legal entrant may remain. ... In this case, California has sought to strengthen its economy by adopting federal standards in imposing criminal sanctions against state employers who knowingly employ aliens who have no federal right to employment within the country; even if such local regulation has some purely speculative and indirect impact on immigration, it does not thereby become a constitutionally proscribed regulation of immigration.\nSubsequent decisions have generally followed De Canas , striking down state and local measures that are seen as determining who should be admitted to the country, or the conditions under which entrants may remain, and reviewing other measures affecting aliens within the context of congressional enactments, as discussed below. However, courts have reached differing conclusions as to what types of measures are to be seen as determining who may be admitted to the country or the conditions under which they may remain.\nIn several cases, state or local measures that would deny benefits to certain noncitizens have been found to be preempted regulations of immigration because they would create their own categories for classifying aliens, or would involve state and local officials in determining aliens' status. For example, the provisions of California's Proposition 187 restricting noncitizens' eligibility for \"public social services\" and \"publicly-funded health care services,\" discussed previously, were initially struck down on these grounds. In particular, the reviewing court noted that, by categorizing persons as citizens, LPRs, or \"admitted lawfully for a temporary period of time,\" Proposition 187 \"created its own scheme setting forth who is, and who is not, entitled to be in the United States\" that \"is not in any way tied to federal standards.\" According to the court, the creation of this independent scheme constituted a regulation of immigration because it was tantamount to determining which aliens may enter and the conditions on which they may remain. The court similarly viewed Proposition 187's requirement that state officials \"make independent determinations as to whether a person is deportable under federal law\" as a regulation of immigration, since it, too, would have involved the state in determining who may be admitted to and remain in the country. Subsequent state or local measures have similarly been found to be preempted because they created their own classifications of aliens and/or authorized state or local officials to determine aliens' status, including an Alabama law that prohibited various categories of aliens from attending public post-secondary institutions of higher education, and a Montana law that barred \"illegal aliens\" from receiving state services.\nThere is less agreement as to whether measures that would deny benefits to noncitizens, but do not involve state or local classifications or determinations of aliens' status, are regulations of immigration. Some courts have suggested that they are on the grounds that aliens are effectively excluded from jurisdictions where they cannot obtain necessary benefits. Other courts, however, have held that the denial of benefits can only be said to have a \"purely speculative and indirect impact on immigration,\" and thus does not constitute a regulation of immigration under De Canas . Yet other courts have found that, while the denial of benefits, in itself, is generally not a regulation of immigration, the denial of benefits that significantly affect noncitizens' ability to obtain housing within the jurisdiction should be viewed as such. One federal district court, for example, found that, while the local ordinance in question was \"grounded in federal immigration classifications ..., ... it use[d] those classifications for purposes not authorized or contemplated by federal law\" when attempting to deny residential occupancy licenses to aliens who were not lawfully present.", "Measures that are not per se preempted as regulations of immigration can also be challenged on the grounds that they are expressly or impliedly preempted by federal statute. The outcome in such cases can vary considerably, depending upon the terms of the state or local measure, and the provisions of the federal statute that allegedly preempts it. However, certain issues have been litigated with some frequency, and often addressed in similar fashion by the courts. For example, the provisions of the Immigration and Nationality Act (INA) barring the employment of unauthorized aliens have generally not been seen as preempting such aliens' eligibility for public benefits and, particularly, their recovery of workers' compensation. Similarly, the INA's provisions regarding alien harboring have not been seen as preempting state and local measures (enacted pursuant to PRWORA) providing benefits to unauthorized aliens. Nor has the INA's provisions regarding nonimmigrant visas (particularly student visas) been seen as preempting state measures that would permit unauthorized aliens who have completed a certain number of years of secondary education within the state from obtaining in-state tuition.\nCourts have disagreed as to whether PRWORA constitutes a comprehensive scheme such that it could be said to have occupied the regulatory field concerning noncitizen eligibility for benefits, precluding States and localities from establishing their own eligibility standards. Some courts have suggested that it does, noting,\nThe intention of Congress to occupy the field of regulation of government benefits to aliens is declared throughout Title IV of [PRWORA]. Whatever the level of government extending the benefits and whatever the source of the funding for the benefits—federal, state or local—they are all included within the expansive reach of [PRWORA]. The ... law includes: statements of national policy regarding the denial of public benefits to illegal immigrants ...; rules regarding immigrant eligibility for federal, state and local benefits, including definitions of the benefits covered ...; a description of state legislative options in the area of immigrant eligibility for state or local benefits ...; and a system for verifying immigration status to determine eligibility for benefits and services. Together, these provisions both demarcate a field of comprehensive federal regulation within which states may not legislate, and define federal objectives with which states may not interfere.\nOther courts, however, have noted the range of discretion that PRWORA left to the state, and found that PRWORA does not constitute a \"comprehensive scheme,\" or \"purport to offer a definitive approach to the problem that Congress perceived.\" Such courts have generally emphasized that PWRORA expressly authorizes states to enact measures making unauthorized aliens eligible for state and local benefits. In such courts' view, the fact that Congress has granted this authority to the states—with \"no ... limits on the duration, extent, or quantity of state or local benefits\" that may be provided—precludes a finding that Congress has impliedly preempted the field. Courts have generally also relied upon similar logic in rejecting the argument that state and local measures providing benefits to unauthorized aliens are preempted because they conflict with the stated congressional policy that \"aliens within the Nation's borders not depend on public resources to meet their needs.\"", "What constitutes a benefit for purposes of particular federal, state, and local statutes can raise issues of statutory interpretation and administrative law. Statutes generally cannot address all potential circumstances wherein questions might arise about whether individual aliens are entitled to specific benefits. Thus, courts frequently must construe various statutes addressing noncitizens' eligibility for public benefits in the course of applying them in particular cases and controversies. In many cases, the court does this by relying upon the \"plain meaning\" rule. This rule calls for courts to look to the statutory text, as opposed to legislative history, when the meaning is clear. In other cases, the court may consult the legislative history of the statute in an attempt to determine lawmakers' intent; or resort to other canons of statutory construction. In yet other cases, the executive agency tasked with implementing the statute has, formally or informally, interpreted the statute in the course of administering it, and the court must determine what degree of deference, if any, is to be accorded to the agency's interpretation. Courts generally grant the greatest deference to agency interpretations that were adopted by an agency through notice-and-comment rulemaking, although interpretations adopted through other means may also be granted some deference.\nThree questions, in particular, have recurred as to noncitizens' eligibility for public benefits: (1) what constitutes a public benefit for purposes of PRWORA; (2) what does it mean for a state law to \"affirmatively provide\" for unauthorized aliens' eligibility for public benefits; and (3) what constitutes a federal means-tested public benefit for purposes of PRWORA. These three questions are the focus of the discussion below. However, it is important to note that PRWORA and other measures affecting noncitizens' eligibility for public benefits have also raised related questions (e.g., what it means for an alien to have entered the United States in a qualified status, what constitutes an emergency medical condition, etc.), that are outside the scope of this report. It should also be noted that identical terms can be construed differently in different provisions of law. Relatedly, courts in different jurisdictions could potentially construe the same statute differently.", "As previously noted, PRWORA encompasses various types of government assistance within its definitions of public benefits , including grants, contracts, loans, and professional or commercial licenses, as well as retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, and unemployment benefits. However, it also refers to \"other similar benefit[s],\" raising questions about whether particular types of assistance constitute federal, state, or local public benefits for purposes of PRWORA. Some have argued that this term be construed narrowly, as encompassing only cash payments provided directly to the alien. Others have proposed that the term be construed broadly, to encompass every function that government instrumentalities perform for persons within their jurisdictions. Courts have, to date, generally declined to adopt either of these views, instead viewing \"other similar benefit[s]\" as services that \"assist people with economic hardship,\" and could potentially \"create [an] incentive for illegal immigration.\"\nIn County of Alameda v. Agustin , for example, the California Court of Appeals rejected the argument that \"child collection support services\" and the issuance of a court order requiring child support payments constituted state and local public benefits and, thus, could not be provided to an unauthorized alien in the absence of a state law that expressly provided for noncitizens' eligibility. While the court's primary rationale for reaching this conclusion was that child support payments were made from private funds, it noted the county's role in obtaining these funds, but found this role permissible given the purposes of PRWORA and the types of benefits encompassed within its definition of state and local public benefits . According to the court, PRWORA was intended to \"reduce the incentive for illegal immigration by denying publicly financed social welfare benefits to aliens not residing legally in the United States.\" The court also noted that all the benefits listed in PRWORA are \"direct income support payments\" or \"services intended to meet the daily needs of disadvantaged persons,\" and are \"continuing or potentially continuing benefits, intended to provide ongoing public support for the recipients for as long as required.\" It viewed the child collection support services as \"quite different\" from the benefits listed in PRWORA because such services do not \"foster[] dependence on public support.\" Rather, according to the court, such services are intended to help recipients support themselves, and terminate with the award of child support. Thus, the court concluded that, because child collection support services \"provide no continuing public assistance to recipients\" and \"create little or no incentive for illegal immigration,\" they are not state and local public benefits for purposes of PRWORA. The court further noted that, \"when properly provided, child support collection services return to the local agency considerably more funds than they cost.\"\nOther decisions by various state courts have expressly or apparently relied upon similar logic in finding that workers' compensation; benefits payable from a state fund for compensating victims of hit-and-run accidents and uninsured motorists; admission to or enrollment at public institutions of higher education (but not in-state tuition); residential occupancy licenses for renters; payment of prevailing wages; funding of an entity that provides services to day laborers ; and death benefits under federal employees' group life insurance policies do not constitute public benefits for purposes of PRWORA. However, in-state tuition and certain health programs have been found by some reviewing state courts to be public benefits.\nMore recently, similar questions have arisen as to what it means for professional licenses to be provided by a government agency or with appropriated funds. In particular, in challenging petitions from unauthorized aliens seeking admission to the California and Florida bars, the federal government and other parties have suggested that PRWORA generally bars unauthorized aliens from receiving law licenses unless the state legislature has adopted a statute that \"affirmatively provides\" for their eligibility. According to this view, state high courts, which generally regulate admission to the state bar, are state agencies because they are part of the state's judicial branch. Similarly, according to this view, law licenses are provided by appropriated funds since state high courts rely, in part, on appropriated funds to finance their operations. Others, however, have argued that state courts are not state \"agencies,\" as that term is conventionally understood, and that bar applicants pay fees for their licenses. It remains to be seen what the courts will decide, or whether administrative agencies or the courts will adopt an equally broad view of what it means for other (non-license) benefits to be provided by a government agency, or by appropriated funds.", "Because PRWORA bars states and localities from providing benefits to unauthorized aliens unless the state has enacted a measure that \"affirmatively provides\" for such eligibility, questions have also been raised about what it means to affirmatively provide for unauthorized aliens' eligibility. Some have asserted that a measure must expressly reference Section 411(d) of PRWORA (8 U.S.C. §1621(d)), and clearly specify that unauthorized aliens will be eligible, in order to affirmatively provide for such aliens' eligibility. This view is generally based on the conference report accompanying PRWORA, which states that \"[o]nly the affirmative enactment of a law by a ... legislature and signed by the Governor after the date of enactment of this Act, that references this provision , will meet the requirements of this section.\" However, as enacted, PRWORA does not require that states refer to either Section 411, or to the aliens being unauthorized, and reviewing courts generally have found that there are no such requirements. In reaching this conclusion, the courts have noted that Congress has elsewhere required states to reference specific provisions of federal law when enacting particular measures, and PRWORA does not do this. Thus, they concluded, Congress is presumed not to have intended to impose such a requirement with PRWORA. Courts have also found that nothing in PRWORA requires states to include in any measures making unauthorized aliens eligible for public benefits language that \"clearly put[s] the public on notice that tax dollars are being used to benefit illegal aliens.\"\nHowever, one court has suggested that a state could not be said to have \"affirmatively provided\" for unauthorized aliens' eligibility if it were to \"confer[] a benefit generally without specifying that its beneficiaries may include undocumented aliens.\" This court further found that resorting to the conference report and PRWORA's legislative history in construing \"affirmatively provides\" is inappropriate, since the plain meaning is clear.\nCourts have also found that state legislatures may, consistent with Section 411 of PRWORA, delegate to administrative agencies or local governments the authority to determine whether unauthorized aliens are eligible for particular benefits. At least one court has indicated that it views the judicial branch as similarly entitled to provide for unauthorized aliens' eligibility for any \"benefits\" within the court's power to grant. However, PRWORA does refer to measures being \"enacted,\" and certain parties challenging unauthorized aliens' eligibility for law licenses have asserted that, while courts could be said to \"adopt\" rules, they do not \"enact\" legislation.", "Some have questioned the degree of deference to be accorded to federal agency determinations regarding federal means-tested public benefits and, specifically, whether benefit programs other than the five historically recognized by the federal government ought to be included. As noted previously, PRWORA does not affirmatively define federal means-tested public benefits . Rather, it excludes certain benefits (e.g., some emergency disaster relief) from the application of the general bar upon the receipt of such benefits by qualified aliens during their first five years after entering the United States in a qualified status. Executive agencies have determined that federal means-tested public benefits means SSI, TANF, Medicaid, food stamps, and the state Child Health Insurance Program (SCHIP).\nAs introduced in the House and Senate, PRWORA would have defined federal means-tested public benefits to mean the following:\na public benefit (including cash, medical, housing, and food assistance and social services) of the Federal Government in which the eligibility of an individual, household, or family eligibility unit for benefits, or the amount of such benefits, or both are determined on the basis of income, resources, or financial need of the individual, household, or unit.\nHowever, this definition was stricken from the bill passed by the Senate because PRWORA was brought to the floor as a reconciliation bill and, as such, was subject to procedural rules allowing challenges to extraneous provisions. As used here, extraneous provisions included provisions that \"produced changes in outlays or revenues which are merely incidental to the non-budgetary components of the provision.\" The proposed definition of federal means-tested public benefits was deemed to be extraneous because it \"reached discretionary spending programs, which, in this context, lay beyond the proper scope of the reconciliation process.\" However, the conference report accompanying the language that was ultimately enacted as PRWORA includes a statement that the conferees intended the term federal means-tested public benefit to be construed in light of the definition given in the bill as introduced.\nFollowing PRWORA's enactment, the Departments of Health and Human Services and Housing and Urban Development proposed regulations, which other agencies either concurred in or deferred to, that construed federal means-tested public benefits as encompassing only mandatory spending programs, not discretionary ones. The Office of Legal Counsel (OLC) at the Department of Justice subsequently expressed its view that these regulations are entitled to deference, since the statutory text is ambiguous, and the agency's construction is a reasonable one. OLC acknowledged that \"[s]everal aspects of the text and legislative history of [PRWORA], when viewed in isolation,\" could potentially be said to \"support a broad[er] interpretation of 'federal means-tested public benefit' that would include discretionary programs.\" However, OLC found that these factors carried less weight than Congress's ultimate decision not to incorporate a definition of federal means-tested public benefits that encompassed discretionary spending programs in the text of PRWORA as enacted. In so finding, OLC cited the \"well-settled canon of interpretation that 'where the final version of a statute deletes language contained in an earlier draft, [it may be presumed] that the earlier draft is inconsistent with ultimate congressional intentions.\" It also pointed to several provisions that had been struck from the Senate-passed version of PRWORA on the grounds that they were extraneous, and subsequently been reintroduced by the conference committee. The definition of federal means-tested public benefits was not one of these. OLC further suggested that PRWORA ought to be construed in light of the rules governing reconciliation that shaped its enactment, which foreclosed consideration, in that context, of provisions affecting discretionary spending. Following the OLC's opinion, individual agencies promulgated additional regulations identifying specific mandatory spending programs that they administered as providing federal means-tested public benefits.\nNo court appears to have addressed the permissibility of these agency interpretations. However, as noted in OLC's opinion, any party seeking a broader (or narrower) application of the term federal means-tested public benefit in the courts could face significant legal barriers, since PRWORA does not define this term, and the agencies tasked with implementing the statute have done so by notice-and-comment rulemaking. Where Congress has not addressed the \"precise question at issue,\" courts generally defer to \"reasonable\" agency interpretations. On the other hand, it should be noted that the fact that federal agencies have historically interpreted the phrase federal means-tested public benefit to mean five specific mandatory spending programs would not necessarily preclude them from interpreting the phrase differently in the future.", "As the foregoing discussion illustrates, noncitizen eligibility for public benefits can raise complicated legal issues in part because of the various federal, state, and local statutes regarding such eligibility, and in part because the construction and application of these statutes can raise questions of constitutional law, statutory interpretation, and administrative law. The situation does not seem likely to change in the near future. In fact, Congress has recently considered a number of changes to noncitizens' eligibility for public benefits, some intended to expand, and other to restrict, such eligibility. Issues related to noncitizens' eligibility are also being litigated in the courts, with different jurisdictions coming to sometimes different conclusions on the same question (e.g., the standard of review applicable to measures affecting nonimmigrant aliens)." ], "depth": [ 0, 1, 2, 2, 2, 1, 2, 3, 3, 3, 3, 2, 3, 3, 2, 3, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_title", "", "h0_full", "h2_full", "h3_full h2_title h1_title", "h1_full", "h1_full", "h1_full", "h1_full", "", "h2_full", "", "", "h3_title", "h3_full", "h3_full", "h3_full", "h0_full" ] }

{ "question": [ "Why is it hard to attain government assistance?", "What is the purpose of PRWORA?", "How does PRWORA affect aliens?", "What constitutional conflict does the public benefit policy raise?", "To what extent will federal measures distinguishing between citizens and aliens be upheld?", "How does the treatment of federal measures compare to that of state and local measures?", "To what extent has this issue found consensus in the judicial system?", "How have some states and localities addressed the presence of unauthorized aliens?", "How may these measures be challenged?", "How may federal statutes affect state and local measures?", "What is a problem regarding public benefit programs?", "What litigation has been seen over the precise definition of benefits?", "What is another debate parties faces regarding PRWORA?" ], "summary": [ "Whether and when noncitizens may receive particular types of government assistance can be difficult to ascertain because of the various federal, state, and local laws governing their eligibility for such assistance.", "The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 was enacted to establish \"national policy with respect to welfare and immigration.\"", "With certain exceptions, PRWORA bars aliens who are not \"qualified aliens\" from receiving federal, state, or local \"public benefits,\" and also precludes qualified aliens from receiving \"federal means-tested public benefits\" for five or more years after they enter the United States in a qualified status.", "The constitutional guarantee of equal protection applies to all \"persons\" within the United States, including aliens. Thus, measures governing eligibility for public benefits could be subject to legal challenge if they treat aliens differently than citizens.", "Because of Congress's plenary power over immigration, federal measures that distinguish between aliens and citizens will generally be upheld so long as they are rationally related to a legitimate government interest.", "However, state and local measures that follow a \"uniform rule\" established by Congress could potentially receive the same deferential review afforded to federal measures.", "Courts have reached differing conclusions as to whether PRWORA establishes such a uniform rule. Courts have also disagreed as to whether measures that treat lawful nonimmigrant aliens differently from citizens are subject to the same level of scrutiny as those that distinguish between lawful immigrant aliens and citizens.", "Some states and localities, concerned about the presence of unauthorized aliens within their jurisdiction, have recently enacted measures which would define benefits or related terms more broadly than PRWORA does, and further restrict aliens' eligibility for them.", "Such measures could potentially be challenged on preemption grounds because the Constitution grants Congress the power to regulate immigration.", "Federal statutes can also preempt state and local measures by expressly prohibiting them, containing conflicting requirements, or occupying the field.", "Moreover, in the application of particular measures, there have been questions about whether particular government programs, services, or types of assistance are benefits.", "Parties have litigated whether particular assistance constitutes a benefit \"similar\" to those governed by PRWORA. They have also litigated whether PRWORA bars aliens from receiving benefits whose provision entails the expenditure of appropriated funds, even if the aliens themselves must pay a fee for the benefit; as well as what it means for a state to \"affirmatively provide\" for eligibility.", "Similarly, because PRWORA does not affirmatively define \"federal means-tested public benefits,\" there has been debate about the degree of deference to be accorded to agency interpretations of this term as encompassing only five mandatory spending programs (e.g., Medicaid), and no discretionary spending programs." ], "parent_pair_index": [ -1, -1, 1, -1, 0, 1, -1, -1, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "Most Recent Developments", "FY2007 Supplemental Appropriations Acts", "FY2007 Appropriations Bill Enacted", "Continuing Resolutions Enacted", "Senate Committee Passage", "House Passage", "President's Budget Submitted", "Introduction to the Department of Housing and Urban Development (HUD)", "FY2006 Appropriations", "FY2007 Budget Issues", "Budget Pressures", "Tenant-Based Rental Assistance (Section 8 Vouchers)", "Voucher Renewals", "Administrative Fees", "Tenant Protection Vouchers", "Incremental Vouchers", "Section 8 Project-Based Rental Assistance", "Contract Renewals", "Contract Administrators", "Housing Certificate Fund Rescission", "Public Housing", "Operating Fund", "Capital Fund", "HOPE VI", "Native American Block Grants", "Housing for Persons with AIDS (HOPWA)", "Rural Housing and Economic Development", "Community Development Fund/Block Grants", "Economic Development Initiatives (EDIs) and Neighborhood Initiatives (NIs)", "CDBG Section 108 Loan Guarantees", "Brownfields Redevelopment", "The HOME Investment Partnership Program", "Formula Grants", "American Dream Downpayment Initiative", "Housing Counseling Assistance", "Self Help and Assisted Homeownership", "Homeless Programs", "Housing Programs for the Elderly and the Disabled", "Federal Housing Administration (FHA)", "Government National Mortgage Association (Ginnie Mae)", "Office of Federal Housing Enterprise Oversight (OFHEO)", "Fair Housing", "Lead-Based Paint Hazard Reduction", "Research and Technology" ], "paragraphs": [ "", "", "On May 1, 2007, the President vetoed the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Act ( H.R. 1591 ), a supplemental appropriations bill that included several housing-related provisions. When the House failed to override the President's veto, another supplemental appropriations bill with the same name ( H.R. 2206 ) was introduced on May 8, 2007. The bill, which was in conference as of the date of this report, contains identical housing-related provisions. Specifically, the bill provides additional funding for HUD's Inspector General in order to oversee Hurricane Katrina funding, additional funding for the Office of Federal Housing Enterprise Oversight, language clarifying how the department should distribute FY2007 Section 8 voucher funding, language extending the availability of Katrina voucher funds, and language clarifying how HUD should treat the renewal of certain project-based voucher contracts.", "On February 15, 2007, President Bush signed a revised yearlong continuing resolution into law ( P.L. 110-5 ). With some exceptions, the act funds accounts at their FY2006 levels. Those exceptions include funding a number of HUD programs at levels higher than those enacted in FY2006:\nTenant Based Rental Assistance: $15,920 million Project-Based Rental Assistance: $5,976 million Public Housing Operating Fund: $3,864 million Indian Housing Loan Guarantee: $6 million Homeless Assistance Grants: $1,442 million Salaries and Expenses: the FY2006 levels, plus such sums as necessary to meet 50% of the need for cost-of-living increases for federal employees\nThe act funds three HUD accounts below their FY2006 level:\nSelf Help Homeownership: $49 million Research and Technology: $50 million Community Development Fund: $3,772 million\nThe decrease in funding for the Community Development Fund does not decrease funding for the primary program funded by the account, the Community Development Block Grant (CDBG) program. Instead, the decline can be attributed to the Congress's decision not to fund the Economic Development Initiatives (EDI) program that is also funded under that account. The EDI account has traditionally been a source of funding for congressionally driven projects, or earmarks.", "Congress did not enact the majority of FY2007 appropriations bills before the end of the 2006 fiscal year. In order to fund government operations until final appropriations bills are enacted, Congress attached a continuing resolution (CR) to the FY2007 Defense Appropriations conference report ( H.Rept. 109-676 ). It was adopted by Congress on September 26, 2006, and signed into law on September 29, 2006 ( P.L. 109-289 ). It funded HUD programs—through November 17, 2006—at the lower of the House-passed or FY2006 enacted funding level. Programs that received funding in FY2006, but were not slated to receive any funding under the House-passed bill, were funded at the FY2006 level. A second CR, extending the previous CR through December 8, 2006, was approved by Congress on November 15, 2006 ( P.L. 109-369 ). A third CR was enacted on December 8, 2006, just prior to adjournment of the 109 th Congress ( P.L. 109-383 ). It extended the original CR through February 15, 2007. For more information, see CRS Report RL33681, FY2007 Regular Appropriations Acts: Procedures for End-of-Session Wrap-Up , by [author name scrubbed].", "Two days after subcommittee passage, on July 20, 2006, the Senate Appropriations Committee approved its version of the FY2007 Transportation, Treasury, and Housing and Urban Development, the Judiciary and Independent Agencies Appropriations bill, providing $36.6 billion for HUD ( H.R. 5576 ).", "On June 14, 2006, the House passed its version of the FY2007 Transportation, Treasury, and Housing and Urban Development, the Judiciary, District of Columbia and Independent Agencies Appropriations bill ( H.R. 5576 ), providing $35.3 billion for HUD. Several floor amendments were adopted to the bill, which had been reported out of subcommittee on May 26, 2006, and out of full committee on June 6, 2006.", "The President submitted his FY2007 budget to the Congress on February 6, 2006, requesting $34.1 billion for HUD. This represents an increase of just under 2% over the regular FY2006 appropriation (not including FY2006 supplementals related to Hurricane Katrina), and an increase of about 17% over the President's FY2006 request of $29.1 billion.", "Most of the appropriations for the Department of Housing and Urban Development (HUD) are designed to address housing problems faced by households with very low incomes or other special housing needs. These include programs of rental assistance for the poor, elderly, or disabled, housing assistance for persons with AIDS, and shelter for those who are homeless. The two large HUD block grant programs, HOME and Community Development Block Grants (CDBG), also help communities finance a variety of activities to address the housing and community development needs of disadvantaged populations. In recent years, HUD has focused more attention on efforts to increase the homeownership rates for lower-income and minority households. HUD's Federal Housing Administration (FHA) insures mortgages made by lenders to lower-income home buyers, many with below-average credit records, and to developers of multifamily rental buildings containing relatively affordable units.", "On November 30, 2005, the President signed P.L. 109-115 , the FY2006 Appropriations Act for the Departments of Transportation, Treasury, and HUD, the Judiciary, the District of Columbia and Related Agencies. The bill included just under $34 billion for HUD, a significant increase from the President's $29 billion request. The law rejected the President's proposal to eliminate the CDBG program and replace it with a new block grant program called \"Strengthening America's Communities\" in the Department of Commerce (for more information, see CRS Report RL32823, An Overview of the Administration ' s Strengthening America ' s Communities Initiative , by [author name scrubbed] et al.). Congress also rejected major cuts requested by the President for the Section 811 Housing for the Disabled program and the HOPE VI program. (For more information, see CRS Report RL32869, The Department of Housing and Urban Development (HUD): FY2006 Budget , by [author name scrubbed] et al.).\nOn December 30, 2005, the FY2006 Department of Defense Appropriations bill ( P.L. 109-148 ) was enacted, including supplemental appropriations for Hurricane Katrina relief. The act provided almost $12 billion in supplemental funds for HUD, $11.5 billion of which was allocated for the CDBG program, and $390 million for HUD's Disaster Assistance Vouchers. To offset the cost of hurricane recovery, the act also included a 1% across-the-board rescission to all domestic discretionary programs, including all HUD programs. In total, the rescission reduced HUD's budget by $380 million. On June 15, 2006, the President signed a second supplemental appropriations, P.L. 109-234 , that provided an additional $5.2 billion in CDBG assistance for Hurricane Katrina relief activities, bringing the total supplemental appropriations for CDBG-supported hurricane relief to $16.7 billion. (For more information, see CRS Report RL33298, FY2006 Supplemental Appropriations: Iraq and Other International Activities; Additional Hurricane Katrina Relief , by [author name scrubbed] et al., and CRS Report RL33330, Community Development Block Grant Funds in Disaster Relief and Recovery , by [author name scrubbed] and [author name scrubbed].)", "", "The President's FY2007 request highlights growing pressures within the HUD budget between the discretionary programs that require appropriations and the rescissions and offsetting collections and receipts that subsidize—or offset—the cost of those appropriations. As can be seen in Table 2 , while the President's overall funding request is a slight increase over the previous year (1.6%), the amount of appropriations requested is actually a slight decrease (less than 1%). This seeming contradiction results from the reality that the amount of offsetting collections and receipts has been decreasing as the Federal Housing Administration's mortgage insurance programs have produced a smaller amount in offsetting receipts. From FY2006 to FY2007, under the President's budget, the amounts of offsetting receipts will drop by more than a billion dollars, from more than $1.6 billion to about $650 million. (For an expanded discussion, see \" Federal Housing Administration (FHA) \" and Table 16 .) With less available to offset the cost of the budget, higher appropriations are required to maintain the same funding level. At the same time, many programs—such as the Section 8 voucher program—require increased appropriations to maintain current service levels. Also, the President has set a goal of restraining domestic discretionary spending increases to at or below the rate of inflation, and has encouraged the executive branch Secretaries to examine programs to ensure that they are using taxpayer dollars wisely. HUD's FY2007 budget summary states that the budget intends to use \"taxpayer money more wisely,\" and \"reform programs in need of repair.\" The combination of these factors has led to proposals for flat funding or cuts for many HUD programs.\nTable 2 , below, presents the President's FY2007 HUD budget request compared to the prior year's budget, and the Congressional response to date.", "The tenant-based rental assistance account funds the Section 8 Housing Choice Voucher program. (See CRS Report RL32284, An Overview of the Section 8 Housing Programs , by [author name scrubbed].) Section 8 vouchers are portable rent subsidies that low-income families use to reduce their housing costs in the private market. HUD currently funds more than two million Section 8 vouchers, which are administered at the local level by quasi-governmental Public Housing Authorities (PHAs). This account funds the cost of those vouchers and the cost of administering the program.", "The majority of tenant-based rental assistance funding is dedicated to voucher renewals. Congress has authorized the creation of more than 2 million vouchers over the history of the program, and the funding for virtually all of them expires every year. If a family is using a voucher to lease an apartment but funding is not sufficient to renew it, then the family will lose its assistance and likely lose its current housing. Prior to FY2004, HUD funded PHAs based on the number of vouchers they were using and the cost of those vouchers. If costs went up or PHAs were able to use more of their vouchers, they received additional funds to cover those costs. Since FY2004, Congress has moved away from funding PHAs based on their actual costs, and now provides agencies with a pro rata share of renewal funding based on what they received in the prior year. This formula change has provoked much controversy among low-income housing advocates and PHA advocacy groups, who argue that it does not reflect agencies' actual needs and results in some agencies receiving less funding than they need to maintain their programs, and others receiving more than they can use under the current law (for more information, see CRS Report RL33929, Recent Changes to the Section 8 Voucher Renewal Funding Formula , by [author name scrubbed]). The Administration's budget documents state that HUD supports the current budget-based funding formula, and that it complements the Administration's Section 8 voucher reform initiative, the Flexible Voucher Program proposal (for more information, see CRS Report RL34002, Section 8 Housing Choice Voucher Program: Issues and Reform Proposals , by [author name scrubbed]).\nThe President's FY2007 budget requested $14.4 billion for voucher renewals, an increase of 3.5% over FY2006. Most of these funds ($14.3 billion) would have been distributed to PHAs based on the amounts they were eligible to receive in FY2006, prior to prorations, plus the HUD-developed regional inflation factor (the annual adjustment factor, or AAF). The Secretary would have been permitted to adjust agency budgets to account for deposits to Family Self Sufficiency program escrow accounts or for the first-time renewal of tenant-protection vouchers. The amounts would then be reduced proportionally to fit within the amount appropriated. Agencies participating in the Moving to Work demonstration would be funded based on their contracts, but their budgets would be subject to proration. The President's budget request would have removed a clause included in the FY2006 appropriations law requiring that the entire amount of funding for renewals be obligated up front. It also would have lifted the ban on overleasing that Congress enacted in FY2003. Presumably, lifting this ban would permit agencies with decreased costs to more fully utilize their funding.\nThe remaining $100 million would have been used by the Secretary to provide one-time adjustments to agency budgets for increased portability costs or additional rental subsidies in response to unforeseen exigencies. In FY2006, Congress provided the Secretary with a $45 million set-aside to adjust agencies' budgets under a number of circumstances, including cost increases due to portability.\nThe House-passed bill provided $70 million more than the President requested for voucher renewals, and would have distributed the funds following the President's request (including the $100 million set-aside). The additional $70 million was not included in the bill reported by the Appropriations Committee, but was added in a floor amendment, and its cost was offset by a $100 million reduction in HUD's Working Capital Fund.\nThe Senate Appropriations Committee-passed version of the FY2007 HUD funding bill would have funded voucher renewals at the President's request, but adopted a different formula for allocating the funds. The Secretary would have been directed to fund agencies based on their leasing and costs for the most recent 12 consecutive months for which data are available, adjusted by the Annual Adjustment Factor (AAF), deposits to tenant escrow accounts, first-time renewal of tenant protection vouchers, and vouchers set aside for project-based commitments. Budgets would have then been prorated to fit within the amount appropriated. Moving to Work agencies would have been funded according to their agreements. Up to $100 million would have been made available to adjust agency budgets for significant increases in renewal costs resulting from unforseen exigencies or from portability vouchers. Agencies would have continued to be prohibited from overleasing.\nThe final FY2007 yearlong CR ( P.L. 110-5 ) funded Section 8 voucher renewals at the President's request ($14,436 million) and adopted a funding formula similar to the formula proposed in the Senate bill. Agencies are to be funded based on their most recent, verifiable, 12 months of leasing and cost data, adjusted for the AAF, for the first-time renewal of tenant protection and HOPE VI vouchers and the cost of project-based commitments, and prorated to fit within the amount appropriated. Moving to Work agencies are to be funded based on their agreements. The law set aside up to $100 million for adjustments for PHAs experiencing a significant increase in renewal costs resulting from unforeseen circumstances or portability, and adjustments for PHAs facing a significant decrease in funding due to the formula change. The prohibition on overleasing was continued.", "Prior to FY2004, PHAs were paid a fixed fee per voucher administered. Beginning in FY2004, at Congress's direction, HUD changed the way it distributed administrative fees, providing agencies with a pro-rata share of the amount appropriated for administrative fees, based on what they had received in the previous year. The change was designed to contain the cost of administrative fees, which were estimated to have grown to account for 10% of the cost of a voucher. For FY2007, the Administration requested $1.3 billion for administrative fees, $30 million of which would have been available to the Secretary to use for special purposes. The request represents a 4% increase over the amount provided in FY2006; however, since more would have been set aside for special fees in FY2007 (only $10 million was set aside in FY2006), the base administrative fees would have only increased by 2%.\nThe House-passed version of the HUD funding bill would have cut administrative fees by 8% from the FY2006 enacted level, providing just over $1.1 billion. Like the President's request, the House bill would have set aside $30 million for the Secretary to distribute for special fees. With the set-aside, the base amount for administrative fees to be allocated across agencies would have been reduced by almost 10%.\nThe Senate Appropriations Committee-passed version of the bill would have provided just under $1.3 billion for administrative fees. The funds would have been allocated to PHAs based on the formula that was in effect prior to FY2004 and prorated to fit within the amount appropriated. Of the amount, $30 million would have been set aside for the Secretary to allocate to PHAs needing extra funds to administer their programs. Under the Senate bill, base administrative fees would have been increased about 1% over the FY2006 level.\nThe FY2007 yearlong CR did not specify an amount for administrative fees. Presumably, they will be funded at the FY2006 enacted level ($1,238 million), with $10 million set aside for special fees. This amount is $43 million below the President's FY2007 request. The FY2007 supplemental funding bill under consideration ( H.R. 2206 ) would amend the CR to specify that administrative fees be funded at the President's requested level, rather than the FY2006 level.", "Tenant protection vouchers are provided to families in a variety of circumstances, including families who are threatened with displacement because the contract on their assisted unit is ending (project-based Section 8, for example), families who are displaced from public housing (due to demolition or disposition), families in the witness protection program, and families in the child welfare system (through the Family Unification Program).\nIn FY2006, Congress provided $178 million for tenant protection vouchers. The President's FY2007 budget requested $149 million for tenant protection vouchers and also requested the authority to supplement the amount provided with amounts recaptured from unobligated Section 8 balances. Beginning in FY2006, the President announced a new policy in which tenant protection vouchers will be issued to replace only those units that were under lease at the time they were demolished or disposed, rather than all units. While this policy has been adopted administratively, the President requested that the FY2007 appropriations language specify that tenant protection vouchers be proved only for units under lease. The House bill adopted the President's requested funding level and language for tenant protection vouchers. The Senate committee-passed bill would have funded tenant protection vouchers at the President's requested level; however, it did not contain the language limiting them to units under lease, as requested by the President.\nThe CR did not specify an amount for tenant protection vouchers, so, presumably, they will be funded at the FY2006 level ($178 million). This amount is $29 million more than the President requested. The FY2007 supplemental funding bill ( H.R. 2206 ) proposes to amend the CR to specify that tenant protection vouchers be funded at $149 million.", "Congress has not funded any new vouchers—called incremental vouchers—since FY2002 (outside of tenant protection vouchers). The Senate Appropriations Committee-passed FY2007 HUD funding bill contained $10 million for new incremental vouchers targeted to the Family Unification Program (FUP). FUP vouchers are given to families involved in the child welfare system for whom housing is a major barrier to reunification. They are also provided to youths aging out of foster care. The CR did not provide funding for incremental vouchers.", "This account provides funding to administer and renew existing project-based Section 8 rental assistance contracts between HUD and private landlords. Under those contracts, HUD provides subsidies to units owned by private landlords that allow eligible low-income families to live in the units but pay only 30% of their incomes toward rent. No new contracts have been entered into under this program since the early 1980s; the funding provided is used only to renew existing contracts and pay administrative costs.", "The President's budget included a request for a 13% increase in project-based renewal funding for FY2007. The level of funding requested was based on an assumption that recaptured funds will be available to supplement the account as necessary, although budget documents do not provide an estimate of how much the Administration believes may be necessary. The House-passed version of the HUD funding bill would have provided $200 million less than the President's request for contract renewals. The committee report accompanying the bill notes that the Secretary can use recaptured funds to supplement the amount appropriated. The Senate committee version would have funded the President's request. The CR provided over $300 million more than the President's request for contract renewals.", "Contract administrators are subcontracted by HUD to manage the contracts between landlords and the Department. HUD formerly administered all of the contracts directly, but has set a goal to transfer all contract administration to subcontractors. The amount requested by the Administration was a decrease from the FY2006 enacted level, but the Administration asked for the authority to supplement the appropriated amount with amounts recaptured from Section 8 unobligated balances. The Administration states in its budget documents that full transition over to contract administrators depends on whether sufficient funds can be obtained from unobligated balances, although an estimate of the full amount required is not provided. The House-passed and Senate committee-passed bills would have funded the President's request for contract administrators, and the CR funds contract administrators at the FY2006 level, which is the same as the President's request.", "The two Section 8 programs—tenant-based rental assistance and project-based rental assistance—were previously funded under a joint account called the Housing Certificate Fund (HCF). The HCF was split by the FY2005 appropriations law, although the account still retains funding from prior years' appropriations. Each year, the Administration makes available for rescission an amount it estimates will be available from unobligated or recaptured Section 8 funds within the HCF. In FY2006, the President requested that Congress rescind $2.5 billion from the HCF, and that Congress provide the Secretary with the authority to use funds from other accounts to meet the rescission if the HCF had insufficient funds. Out of concern that the full amount may not be available from within the HCF, Congress rescinded about half a billion less than the Administration requested, and directed the Secretary to inform the committee before taking funds from other accounts.\nFor FY2007, the Administration requested that Congress rescind $2 billion from the HCF, and again requested the authority to meet the rescission from other sources if sufficient funds are not available within the HCF. The House bill matched the President's request. The Senate committee-passed version would also have rescinded $2 billion; however, the bill included language directing the Secretary to take $10 million each from HUD and the Office of Management and Budget's (OMB) salaries and expenses account before taking funds from other HUD programs. The report language indicated that the committee felt that the Administration provided insufficient evidence that $2 billion would be available in the Housing Certificate Fund. Similar language was included in the Senate-passed version of the FY2006 funding bill, but was not included in the final version. The CR rescinded $1.65 billion in unobligated balances.", "The public housing program provides publicly owned and subsidized rental units for very low-income families. While no new public housing developments have been built for many years, Congress continues to provide funds to the more than 3,100 public housing authorities (PHAs) that maintain the existing stock of more than 1.2 million units. Through the Operating Fund, HUD provides funds to PHAs to help fill the gap between tenants' contributions toward rent and the cost of ongoing maintenance, utilities, and administration. Through the Capital Fund, HUD provides funding to PHAs for large capital projects and modernization needs. HOPE VI is a competitive grant program that provides funds to help demolish and/or redevelop severely distressed public housing developments, with a focus on building mixed-income communities.", "Calendar year 2007 is first year that a new operating subsidy formula will be used to distribute funds to PHAs. Under the new rule, some agencies qualify for a significant increase in funding, while others are eligible for less funds. The President's budget asked for a set-aside of $6 million to help agencies transition to asset-based management, which can serve as a stop-loss option for agencies facing major funding decreases in their operating subsidies. Even for those that will benefit under the formula, the amount the President requested for operating subsidies was not enough to fund agencies at 100% of their eligibility. Rather, HUD estimated that agencies would receive only 85% of their eligible budget, compared to just under 89% in FY2005. Some advocates contend that the final proration would be even lower than the President's estimate because of factors such as increasing utility costs. Because of the proration, some agencies that will qualify for an increase under the new formula may face a decrease from their prior year's funding, and those facing a decrease will likely face an even deeper reduction. The President's budget also requested a new set-aside for \"housing self sufficiency\" funds, which would be provided to agencies, presumably on a competitive basis, to fund economic self-sufficiency and financial management skills training for residents. This appears to replace the Graduation Bonus initiative that was funded in FY2005, but not in FY2006.\nThe House-passed bill would have funded the account at the President's request. The Senate committee-passed bill would have provided a $100 million increase in funding for formula grants, but would not have funded the self-sufficiency initiative. The Senate bill provided $30 million to aid small PHAs in adjusting to the new operating fund formula. Language in the administrative provisions portion of the bill would have delayed for one year the phase-in of increases and decreases under the new formula and the requirements for converting to asset-based management, although it specified that agencies facing a decrease would still face a 5% reduction in FY2007.\nThe CR provided $300 million more than the President requested (and provided in FY2006) for the Operating Fund. It did not provide any transition or self-sufficiency funding as requested by the President. The CR amount should be sufficient to fund agencies at around 83% of their formula eligibility. For more information, see CRS Report RS22557, Public Housing: Fact Sheet on the New Operating Fund Formula , by [author name scrubbed].", "The President's FY2007 budget proposed an 11% reduction for the public housing Capital Fund. The largest numeric decrease came from an 11% decrease in funding for formula grants. The Administration claims that the funding requested is sufficient to meet the estimated $2 billion in annual accrual of capital needs, and that the backlog in unmet capital needs—which is estimated to be between $18 and $20 billion—is decreasing as units are rehabilitated, either through HOPE VI or capital funds, or demolished. The President's budget notes that 85% of public housing units now meet HUD physical standards, compared to 82% in 2001. The Department's budget documents also highlight the use of private financing to meet capital needs, noting that PHAs have used their stream of capital funds to secure more than $2.5 billion in approved private capital funds, and that requests for another $88 million are pending.\nThe President's budget included a 37% decrease in Resident Opportunities for Self Sufficiency (ROSS) program funding. This follows a 29% decrease enacted in FY2006. ROSS is a competitive grant program that funds job training and supportive services to help residents of public housing transition to work, and provides funding to provide independent living services to elderly and disabled residents. Budget documents note that the Administration changed the structure of the grants to expand eligible activities. As in FY2006, the President's budget also proposed to eliminate funding for Neighborhood Networks, which provides funds to PHAs to establish, expand, and update community technology centers.\nThe version of the House bill that was reported by the Appropriations Committee funded the Capital Fund at the President's request. A floor amendment offered by Representative Artur Davis added $30 million to the Capital Fund, although his floor statements indicated it was intended for the HOPE VI program. Language was not added to the bill directing the funds to be used for HOPE VI, so it is unclear whether the additional $30 million would be distributed via the Capital Fund formula or though the competitive HOPE VI program.\nThe Senate committee-passed bill would have increased the Capital Fund to just above the FY2006 level. Formula grants were increased slightly over the FY2006 level, which was almost $300 million more than the President's request and the House-passed level. The bill would have funded ROSS at $30 million, $6 million more than the President requested, but $8 million less than FY2006.\nThe CR did not contain a specific funding level for the public housing Capital Fund, so the account is funded at the FY2006 level.", "Each year since FY2003, the President has requested no new funding for HOPE VI, although each year Congress has continued to fund the program. The Administration notes that in 2003, the Office of Management and Budget's Program Assessment and Rating Tool (PART) rated the program as ineffective due to slow expenditure of funds as well as the costs of development. Furthermore, the Department argues that the program has largely met its goal of eliminating the worst public housing. For FY2007, as in FY2006, the President asked Congress to provide no new money for the HOPE VI program, and to rescind the funding that Congress provided in the previous year before the Department awarded it to grantees. The House version of the FY2007 funding bill as reported out of committee did not rescind FY2006 HOPE VI funds, but did not provide FY2007 funds for the program. As noted in the previous \"Capital Fund\" section, an amendment adopted during floor consideration of the bill added $30 million to the Capital Fund. Floor statements by the amendment's sponsor indicated that the funds were intended for the HOPE VI program, although legislative language directing the funds to HOPE VI was not included in the bill, making it unclear whether the funds would be used for the competitive HOPE VI program or distributed through the capital fund formula. The Senate committee-passed version of the bill would have funded HOPE VI at $100 million, nearly level with FY2006 funding. It did not rescind FY2006 funding. The CR did not specify an amount for the HOPE VI program, so it is funded at the FY2006 level ($99 million).", "The Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA) reorganized the system of federal housing assistance to Native Americans by eliminating several separate programs of assistance and replacing them with a single block grant program. In addition to simplifying the process of providing housing assistance, the purpose of NAHASDA was to provide federal assistance for Indian tribes in a manner that recognizes the right of Indian self-determination and tribal self-governance. NAHASDA provides block grants to Indian tribes or their tribally designated housing entities (TDHE) for affordable housing activities. Affordable housing activities include any programs currently authorized in law, as well as model activities as approved by HUD.\nFor FY2007, the Administration requested an increase in formula grants and a decrease in technical assistance from the amounts provided for these purposes in FY2006. No funding was proposed for the National American Indian Housing Council.\nBoth the House-passed version of H.R. 5576 and the version passed by the Senate Appropriations Committee would have funded NAHASDA at just under $626 million as requested by the budget. In determining the amount to be allocated to each tribe, both versions of H.R. 5576 required HUD to make the two calculations. One calculation would be based on single-race Census data, and the other calculation would be based on multi-race Census data. The greater result would be the tribe's allocation. The Senate Appropriations Committee noted its concern that HUD did not use notice and comment rulemaking when changing the allocation formula. The committee directed HUD to reassess the decision through notice and comment rulemaking.\nThe Senate Appropriations Committee noted its concern that HUD has attempted to micro-manage many of the activities of NAIHC \"to the detriment of NAHIC, the tribes, and the program.\" The committee provided $2 million to NAHIC to provide training and technical assistance in support of NAHASDA. An administrative provision in both versions of the bill would have required that NAHASDA funds made available to Native Alaskans must be allocated to the same Native Alaskan recipients who received funds in FY2005. P.L. 110-5 funded the Native American Block Grant program at the FY2006 level ($624 million).", "HOPWA provides housing assistance and related supportive services for low-income persons with HIV/AIDS and their families. Funding is distributed both by formula allocation and competitive grants to states, localities, and nonprofit organizations.\nThe President's budget for FY2007 proposed to increase funding for HOPWA to just over $300 million. This would have been an increase of nearly 5% over FY2006, and more than $30 million over the Administration's budget request for FY2006. According to HUD, the President's FY2007 requested funding level would have been sufficient to continue to serve the same number of households as in FY2006, plus 3,500 additional households. The House version of the HUD funding bill ( H.R. 5576 ), passed on June 14, 2006, would have funded the HOPWA program at the same level as that proposed by the President. The Senate Appropriations Committee, which reported H.R. 5576 to the Senate on July 26, 2006, would have provided $295 million for HOPWA, an increase of $9 million over FY2006, but $5 million less than the President's budget request and House proposal. The FY2007 yearlong CR ( P.L. 110-5 ) did not specify funding for HOPWA, so the FY2006 funding level of $286 million applies for FY2007.", "This program provides competitive grants to states and localities to fund capacity building and innovative housing and economic development activities in rural areas.\nThe Administration proposed no funding for the Rural Housing and Economic Development program, and none was proposed in the House-passed version of H.R. 5576 . The Administration argued that the program's efforts can be continued through the HOME and CDBG programs of HUD, and through the rural housing programs of the U.S. Department of Agriculture. The House-passed version of H.R. 5576 did not contain funds for the Rural Housing and Economic Development program, while the Senate version would have funded the program at $20 million. The CR funded the program at the FY2006 level.", "The CDBG program is the largest source of federal assistance in support of the housing, community, and economic development activities of states and local governments. For the second consecutive year, the Administration included in its budget request a proposal that would eliminate a number of federal economic and community development programs. Last year, the Administration's FY2006 budget recommendations included a proposal that would have consolidated the activities of at least 18 existing community and economic development programs into a two-part grant proposal called the \"Strengthening America's Communities Initiative\" (SACI). Seven of the programs that would have been eliminated are administered by HUD. Under the Administration's FY2006 proposal, the Department of Commerce would have administered a core program and a bonus program. The bonus program would have awarded additional funds to communities that demonstrated efforts to improve economic conditions. Congress rejected the proposal and appropriated $4.2 billion for the seven HUD programs that would have been eliminated, including $3.7 billion in CDBG funding.\nThe President's FY2007 budget also contained an outline of some general elements of a SACI proposal, although no formal legislative proposal was introduced when the budget was first released on February 6, 2006. Under the FY2007 version, two of the 18 existing community and economic development programs would be funded and retooled—HUD's CDBG and a new Regional Development Account (RDA) to be administered by the Economic Development Administration (EDA). As initially outlined in Administration budget documents, the proposal would likely to call for the following:\nthe development of a new CDBG allocation formula targeted to the neediest communities; the development of a bonus fund component for the CDBG program; reforms that would address the CDBG program's shortcoming as outlined in the Program Assessment Rating Tool; the creation of a new Regional Development Account (RDA) that would be administered by EDA, replacing the agency's current budget categories of public works, economic adjustment assistance, technical assistance, and research and evaluation. the continued funding of planning grants to EDA-designated Economic Development Districts and university programs; and the development of a common set of goals and performance measures for CDBG and EDA programs.\nThe FY2007 budget proposed a funding level of $3.360 billion—nearly $2 billion less than the aggregate FY2006 appropriation for the 18 programs included in the Administration's original proposal. The CDBG would have been funded at just under $3 billion in FY2007. The budget also requested $327.2 million for EDA assistance, including $257 million for RDA assistance.\nOn May 25, 2006, the Secretary of HUD unveiled its reform proposal for the CDBG—The Community Development Block Grant Reform Act of 2006. The legislative proposal, which was not formally introduced because of a lack of congressional sponsor, would have\neliminated the dual CDBG formula and replaced it with a single weighted formula that targets assistance based on a community or state's relative share of households living in poverty (excluding college students); female-headed households with minor children; overcrowded housing; housing 50 years or older occupied by low-income families; and per capita income; no longer allocated funds to entitlement communities and states using a 70%/30% formula allocation split; instead, states and entitlement community allocations would have been drawn from a single pool of funds; required entitlement communities to meet a minimum grant threshold in order to receive a direct annual allocation—communities that fail to meet the minimum grant amount could join with their urban county, creating a new combined entitlement community, or could have had their data included in the state totals; established a two-year transition for communities that no longer meet the minimum grant threshold amount; directed HUD to establish a set of performance measures and accountability standards; and created a $200 million bonus grant program dubbed the Economic Development and Revitalization Challenge Grant, which would have rewarded entitlement communities that had programs resulting in improved living conditions in distressed neighborhoods.\nOn June 14, 2006, the House approved the HUD funding bill, H.R. 5576 . It included $4.2 billion for the Community Development Fund, which was $1.2 billion more than requested by the Administration. The $4.2 billion funding level recommended by the House included $3.9 billion for the CDBG formula program, which was $898 million more than requested by the President; $57 million for Indian tribes, $250 million for EDI assistance; $20 million for Neighborhood Initiative (NI) funding and $15 million for HUD's Brownfields Redevelopment Program. Funding for brownfields was approved as an amendment ( H.Amdt. 1013 ) during floor consideration of the bill.\nOn July 26, 2006, the Senate Appropriations Committee reported its version of H.R. 5576 ( S.Rept. 109-293 ). The bill recommended an appropriation of $4.2 billion for CDF activities, including $3.9 billion for CDBG formula grants and $58 million for Indian tribes, $250 million for EDI assistance, and $30 million for NI funding.\nOn February 15, 2007, the President signed the Revised Continuing Appropriations Resolution, P.L. 110-5 , which established a $3.772 billion appropriations level for the Community Development Fund account activities. This included $3.711 billion for CDBG formula grants. The act specifically stated that none of the funds appropriated under the CDF account could be used to fund EDI, NI, and YouthBuild activities. The act did not identify a specific funding amount for the Indian Tribes CDBG activities.", "During the past few budget cycles, Congress used both the EDI and NI accounts to fund hundreds of congressionally earmarked projects. For FY2006, Congress approved $307 million in EDI funds for 1,126 earmarked projects and $49 million in NI funds for 50 projects identified in the conference report ( H.Rept. 109-307 ) accompanying the FY2006 TTHUD Appropriations Act, P.L. 109-115 . The Administration's FY2007 budget proposal would have rescinded any unobligated balances remaining from EDI and NI funds appropriated in FY2006. The House-passed version of H.R. 5576 would have appropriated $250 million for EDI earmarks and $20 million for NI projects. In addition, recipients of EDI and NI funding would have been required to provide 40% in matching funds, which would have been a new requirement for the programs. The Senate Appropriations Committee also recommended $250 million in EDI funding, but recommended $30 million in NI assistance, which was $10 million more than recommended by the House. P.L. 110-5 included language specifying that none of the funds appropriated under the CDF account were to be used to fund EDI or NI activities for FY2007.", "The Section 108 loan guarantee program allows states and entitlement communities to leverage their annual CDBG allocation in order to help finance brownfield redevelopment, large scale economic development, and housing projects. CDBG entitlement communities and states are allowed to borrow up to five times their annual CDBG allocation for qualifying activities. As security against default, states and entitlement communities must pledge their current and future CDBG allocation.\nConsistent with the Administration's budget request, the bill as reported by the House Appropriations Committee did not include funding for the program. During floor consideration of the measure, the full House approved an amendment ( H.Amdt. 1023 ) sponsored by Representative Maxine Waters that would have appropriated more than $2.9 million for the program for FY2007. Funding for the program would have been offset by a reduction in HUD's management and administration account. Inclusion of funding for Section 108 loan guarantee activities is an important element in the effort to restore funding for HUD's Brownfield Redevelopment program. (See the discussion of HUD's brownfields program). The Senate Appropriations Committee bill recommended $3 million for loan guarantee activities. The FY2007 CR did not specify an amount for Section 108 loan guarantees, so it is funded at the FY2006 level.", "The Brownfields Redevelopment program is a competitive grant program that provides funds to assist cities with the redevelopment of abandoned, idled, and underused industrial and commercial facilities where expansion and redevelopment are burdened by real or potential environmental contamination.\nThe Administration requested no funding for this program for FY2007. Its budget documents note that this program activity would be eligible for CDBG funding. The House bill as reported out of committee did not include funding for the program for FY2007. During floor consideration of the measure, the House approved an amendment ( H.Amdt. 1013 ), offered by Representative Gary Miller, that would have appropriated $15 million for the program for FY2007. Funding for the brownfield program would have been offset by reducing funding for IRS business systems modernization program by $15 million.\nThe availability of Section 108 loan guarantees for FY2007 makes it possible to fund HUD's brownfield program as it is presently authorized. The statutory authority governing the HUD program (42 U.S.C. §5308) restricts the use of brownfield funds to projects that also include Section 108 loan guarantees. Although a community can receive CDBG Section 108 loan guarantees without receiving HUD brownfield funds, it can not receive brownfield funds without procuring Section 108 loan guarantee authority. This peculiar arrangement has proven troublesome for some communities, particularly small nonentitlement jurisdictions, which must have the cooperation of the state government agency that controls the state CDBG program in order to access the loan guarantee program. In 2006, the House approved H.R. 280 , which was introduced by Representative Gary Miller. The bill would have decoupled the brownfield program from the Section 108 loan guarantee program, thus allowing small communities direct access to the program and relieving entitlement communities and states of the requirement of pledging their CDBG allocation as security against defaulting on the Section 108 loan guarantee. The Senate version of the bill did not include funding for the brownfield program. P.L. 110-5 does not include a specific appropriation for Brownfield activities; however, the program was funded at just under $10 million in FY2006.", "Created in 1990, the HOME Investment Partnership Program provides formula-based block grant funding to states, units of local government, Indian tribes, and insular areas to fund affordable housing initiatives. Eligible activities include acquisition, rehabilitation, and new construction of affordable housing, as well as rental assistance for eligible families. The HOME program account has also been used to fund related programs. The American Dream Downpayment Initiative (ADDI), created in 2003 ( P.L. 108-186 ), funds HOME grantees to provide downpayment, closing cost, and rehabilitation assistance to first-time home buyers. Housing counseling assistance is authorized under Section 106 of the Housing and Urban Development Act of 1968 (P.L. 90-448). HUD provides competitive grants to local housing counseling agencies, intermediaries, and state Housing Finance Agencies to provide several categories of housing counseling, including comprehensive counseling, counseling services that address predatory lending, counseling in conjunction with HUD's Homeownership Voucher Program, counseling services that specifically target colonias (rural communities on the U.S.-Mexico border), and Home Equity Conversion Mortgage counseling.", "The President proposed an increase of 7% in funding for HOME formula grants. This increase followed a decrease of 6% from FY2005 to FY2006. The FY2007 requested level was less than a 1% increase over the FY2005 enacted level ($1,789 million). The House-passed bill would have funded formula grants at $1,837 million, an increase of 2% over the President's request, 9% over the FY2006 enacted level, and 3% over the FY2005 level. The Senate committee-passed bill included a larger increase for formula grants than did the House bill. The Senate committee-bill would have provided a 3% increase over the President's request, an 11% increase over the FY2006 level, and a 4% increase over the FY2005 level. The CR did not specify an amount for formula grants, but the entire account was funded at the FY2006 level.", "From FY2002-FY2006, the President requested funding for the ADDI at an annual level of $200 million; each year, Congress funded it below the President's request. At its highest, ADDI was funded at $87 million (FY2004); at its lowest, ADDI was funded at $25 million (FY2006). For FY2007, the President requested that Congress fund the program at $100 million, half of what he has requested in the past but four times as much as Congress provided in FY2006. The House-passed and Senate committee-passed bills would have funded ADDI at $25 million. The CR funds the ADDI account at the FY2006 level ($25 million).", "Since FY2003, the President has requested that Congress provide funding for housing counseling assistance in a separate account, rather than as a set-aside within the HOME program. Each year, Congress has rejected that proposal and funded the program as a set-aside within HOME. While the FY2007 budget does not explain the desire to move the program, one factor may be that the HOME program is within the jurisdiction of the Assistant Secretary for Community Planning and Development at HUD, while housing counseling assistance is currently administered by the Assistant Secretary for Housing at HUD. If it were funded in a separate account, the account would be within the jurisdiction of the Assistant Secretary for Housing. The House-passed and Senate committee-passed bills would have continued funding for housing counseling assistance within the HOME account. Each would have provided $42 million for FY2007, even with the FY2006 enacted level and $3 million less than the President's request. The CR funds housing counseling assistance at the FY2006 level ($42 million).", "This account was created in FY2006 to fund a number of programs and set-asides that were formerly funded under the CDBG program. Under the Self-Help Homeownership Opportunity Program (SHOP), HUD makes grants to national and regional organizations and consortia that have experience in providing or facilitating self-help homeownership opportunities, including Habitat for Humanity. Prospective home buyers and volunteers provide \"sweat equity\" by contributing labor toward the construction of their homes. Section 4 Capacity Building grants are designed to develop the capacity and ability of community development corporations and community housing development organizations to undertake community development and affordable housing projects and programs. They are typically awarded to nonprofit intermediaries including LISC, the Enterprise Foundation, Habitat for Humanity, and YouthBuild USA.\nFor FY2007, the Administration requested a $19.9 million increase in SHOP funding, but proposed no funding for Section 4 capacity building grants or for several nonprofit organizations that received funding in FY2006. The House bill would have funded the Self Help and Assisted Homeownership account at the same overall level as FY2006, although the funds would be distributed differently. The Senate bill appropriated $66 million for account activities. This is just under $6 million more than appropriated in FY2006 or recommended by the House, and would have been used to fund several initiatives proposed for elimination in the President's budget and the House bill.\nThe FY2007 CR funded the Self-Help and Assisted Homeownership account at $49 million, just under $20 million of which was directed to SHOP and just under $30 million of which was to be allocated for capacity building using competitive grants. The CR did not provide funding for several nonprofit organizations that had received direct funding in FY2006.", "Homeless Assistance Grants is the blanket title given to the four homeless programs authorized by the McKinney-Vento Homeless Assistance Act ( P.L. 100-77 ) and administered by HUD. Three of the four programs are competitive grant programs: the Supportive Housing Program (SHP), the Shelter Plus Care program (S+C), and the Section 8 Moderate Rehabilitation Assistance for Single Room Occupancy program (SRO). Funding for the fourth HUD program, the Emergency Shelter Grants program (ESG), is distributed via a formula allocation to states and local communities.\nOn June 14, 2006, the House of Representatives passed the FY2007 HUD funding bill ( H.R. 5576 ), which would have allocated $1.5 billion to the Homeless Assistance Grants, the same amount proposed by the Administration, and an increase of just under $210 million over FY2006. However, while the Administration's budget proposal contained funding for two new programs—the Samaritan Initiative and the Prisoner Re-Entry Initiative—the House version of the HUD funding bill did not contain funding for these two programs. The Senate Appropriations Committee's version of H.R. 5576 , which was reported to the Senate on July 26, 2006, would have allocated approximately $25 million less to the Homeless Assistance Grants than the President's request and the House proposal, but would have still increased total funding over FY2006 by nearly $185 million. Like the House version of H.R. 5576 , the Senate Appropriations Committee version did not fund the Samaritan Initiative and the Prisoner Re-Entry Initiative. On February 15, 2007, the yearlong CR ( P.L. 110-5 ) was enacted. It specified that the Homeless Assistance Grants be funded at $1.442 billion for FY2007, an increase of $115 million over FY2006, but less than the amounts proposed by the President, House, and Senate Appropriations Committee.", "Formerly known together as Housing for Special Populations, the Section 202 housing for the elderly program and the Section 811 housing for the disabled program provide capital grants and ongoing project rental assistance contracts (PRAC) to developers of new subsidized housing for these populations. In addition, the Section 811 program provides vouchers for tenants with disabilities to use in the private housing market.\nThe Administration's budget proposed to reduce FY2007 funding for the housing for the elderly program from $735 million in FY2006 to $545 million in FY2007, a cut of almost 26%. However, the House-passed version of the HUD funding bill ( H.R. 5576 ) would have funded the program at approximately $747 million, about $12 million more than FY2006. Before the bill went to the House floor, it contained $735 million for housing for the elderly, but an amendment ( H.Amdt. 1020 ), passed by a vote of 335 to 90, added $12 million to the Section 202 program. Both the President's budget and the House-passed version of H.R. 5576 would have increased funding for service coordinators, from $51 million to $59 million, while grants for conversion to assisted living facilities would have remained approximately the same at just under $25 million. The Senate Appropriations Committee's version of H.R. 5576 would have increased funding above the House-approved amount by just under $3.5 million, to $750 million, and would have provided identical amounts for service coordinators and the assisted living conversion program. The yearlong CR for FY2007 ( P.L. 110-5 ) did not specify a funding level for elderly housing, which is therefore funded at the FY2006 amount of $734.58 million. However, P.L. 110-5 did state that none of the FY2007 appropriation could be used for the Intergenerational Housing Demonstration project, which was funded at $3.96 million in the FY2006 Appropriations Act.\nIn FY2007, for the second year in a row, the Administration's budget proposed to cut in half funding for the Section 811 program, to $119 million from $237 million in FY2006. However, H.R. 5576 , as passed by the House, would have increased funding by approximately $120 million more than the President's proposal, and $3 million more than the FY2006 appropriation, to nearly $240 million. The House added $3 million more to the Section 811 program than was originally contained in H.R. 5576 before it went to the floor through H.Amdt. 1020 . Unlike funding for FY2006, though, the House version of H.R. 5576 did not provide any funding for new Section 811 vouchers, down from approximately $5 million in FY2006. The Senate Appropriations Committee's version of H.R. 5576 would have slightly increased funding over the House-passed version, and would have provided $5 million for new vouchers. Under the yearlong CR ( P.L. 110-5 ), Section 811 is funded at the FY2006 level of $236.6 million.", "The FHA administers a variety of mortgage insurance programs that insure lenders against loss from loan defaults by borrowers. Through FHA insurance, lenders make loans that otherwise may not be available, and enable borrowers to obtain loans for home purchase and home improvement, as well as for the purchase, repair, or construction of apartments, hospitals, and nursing homes. The programs are administered through two program accounts—the Mutual Mortgage Insurance/Cooperative Management Housing Insurance fund account (MMI/CMHI) and the General Insurance/Special Risk Insurance fund account (GI/SRI). The MMI/CMHI fund provides insurance for home mortgages. The GI/SRI fund provides insurance for more risky home mortgages, for multifamily rental housing, and for an assortment of special-purpose loans such as hospitals and nursing homes.\nThe President's FY2007 budget proposed comprehensive reform of the FHA single family insurance program to enable FHA to be more flexible in responding to changes in the mortgage market, and to provide a lower cost alternative to borrowers who might otherwise choose subprime mortgage products or even become the victims of predatory lending. The budget assumed budget savings from transferring several single-family housing programs from the GI/SRI fund to the MMI fund. Neither version of H.R. 5576 assumed the transfer of these programs.\nMany of the Administration's reform proposals were included in H.R. 5121 , as passed by the House. An administrative provision in the House-passed version of H.R. 5576 included language from H.R. 5121 . It would have amended the National Housing Act (12 U.S.C. 1709(b)(2)) to limit FHA-insured home loans to the lesser of the median price for the area or the Federal Home Loan Mortgage Corporation (Freddie Mac) conforming loan limit. The loan limit for low-cost areas would have been raised from 48% to 65% of the Freddie Mac limit. FHA would have had authority to insure 100% mortgages, and HUD would have been permitted to determine what, if any, down payment would be required based upon the likelihood of borrower default. The borrower's mortgage insurance premium would have been based upon the risk that the borrower poses to the mortgage insurance fund.\nThe Senate committee did not include these provisions because the committee stated that it did not believe that the proposal included the necessary reforms to allow HUD to compete in the private market without increased financial risk to the FHA insurance fund and without subjecting the program to significant risk of fraud and abuse. The committee noted its concern that the proposals would move FHA closer to becoming the lender of last resort.\nThe budget and both versions of H.R. 5576 would have limited FHA mortgage insurance to $220 billion in FY2007. The total includes $185 billion in commitments under the MMI/CHMI account and $35 billion under the GI/SRI account. In addition, both funds would have been able to make up to $50 million in direct loans to facilitate the sale of HUD-owned properties for occupancy or ownership by low- and moderate-income families. An appropriation of $8.6 million was requested for the credit subsidies associated with the GI/SRI account.\nNo FHA reforms were enacted before the close of the 109 th Congress or included in the CR. Although no funding amounts were specified for the FHA account in the CR, the FY2007 funding level is not the FY2006 funding level. The estimates of offsetting receipts from the GI/SRI and MMI funds are lower for FY2007 than the amount collected for FY2006. Also, the total expenses amounts differ from the FY2006 amounts as a result of a scoring difference between FY2006 and FY2007. Each year, the Congressional Budget Office (CBO) makes an estimate of how much additional authorized contract authority FHA will use. In FY2006, CBO estimated HUD would use $5 million in additional contract authority. The House Appropriations Committee's estimates of the CR did not include that $5 million in additional contract expenses.", "Ginnie Mae is the entity within HUD that guarantees the timely payment of principal and interest on securities backed by mortgages insured or guaranteed by FHA, the Department of Veterans Affairs (VA), or the Rural Housing Service.\nFor FY2007, the President's budget requested $10.6 million for the administrative expenses of carrying out the mortgage-backed securities program as well as legislative change that would have converted a portion of the GNMA administrative fees that currently receive mandatory funding to discretionary funding. The budget also proposed that issuers of Ginnie Mae securities be charged an up-front fee to offset the administrative expense of the program. None of these reforms was enacted. The CR funded the discretionary administrative fees at the FY2006 level; however, the estimates of offsetting receipts for FY2007 differ from the actual offsetting receipts collected in FY2006, which is why the account totals differ.", "OFHEO is the office within HUD that is responsible for regulating the safety and soundness of Fannie Mae's and Freddie Mac's operations. The appropriations for OFHEO are completely offset by fees collected from Fannie Mae and Freddie Mac. In recent years, OFHEO has been criticized as ineffective in its role. The Administration's budget expected OFHEO to be transferred to a new, strengthened regulator. H.R. 1461 (109 th Congress), as passed by the House, would have combined OFHEO and HUD's regulatory division into a new independent agency called the Federal Housing Finance Agency. It was not enacted before the end of the 109 th Congress.\nThe House-passed bill would have appropriated $62 million for OFHEO, while the Senate Appropriations Committee recommended $67.6 million. No amount was specified for OFHEO in the CR, so it is funded at the FY2006 enacted level.", "The Office of Fair Housing and Equal Opportunity enforces the Fair Housing Act and other civil rights laws that make it illegal to discriminate in the sale, rental, or financing of housing based on race, color, religion, sex, national origin, disability, or family status. This is accomplished through the Fair Housing Assistance Program (FHAP) and the Fair Housing Initiatives Program (FHIP). FHAP provides grants to state and local agencies to enforce laws that are substantially equivalent to the federal Fair Housing Act. It provides grants on a non-competitive basis. FHIP provides funds for public and private fair housing groups, as well as state and local agencies, for activities that educate the public and housing industry about the fair housing laws.\nAs requested by the budget, both versions of H.R. 5576 would have funded the Fair Housing and Equal Opportunity program at $44.55 million. The budget requested more than $24 million for the Fair Housing Assistance program, a decrease of just under $1 million from the FY2006 level. The House-passed version of H.R. 5576 would have funded the program at the President's requested level, while the version passed by the Senate committee would have funded the program at just under $20 million. The budget requested $19.8 million for the Fair Housing Initiatives program, even with the FY2006 level. The House bill would have decreased the funding to $18.8 million. The Senate committee would have funded the program at more than $24 million. The budget assumed that legislation would be introduced and enacted that would enable HUD to collect tuition fees from participants in the National Fair Housing Training Academy. In response, the House bill provided that HUD may assess and collect fees to cover the cost of the Fair Housing Training Academy. Such legislation was not enacted before the end of the 109 th Congress. The FY2007 CR funded fair housing programs at their FY2006 level.", "The Office of Lead Hazard Control at HUD administers both the Lead-Based Paint Hazard Control Grant Program and the Healthy Homes Initiative (HHI), designed to reduce the hazards of lead-based paint in homes.\nFor FY2007, the budget requested $114.8 million for the program, the House-passed bill would have appropriated $114.8 million, and the Senate committee would have appropriated $152 million. The FY2007 CR funded the account at the FY2006 level.", "The Office of Policy Development and Research (PD&R) at HUD is responsible for maintaining current information on housing needs, market conditions, and existing programs, as well as conducting research on priority housing and community development issues. The Research and Technology account funds PD&R's core research. Beginning in FY2006, the account was expanded to fund the Section 107 University Partnerships, which were previously funded as set-asides within the CDF account. Section 107 grants are awarded to institutions of higher education to assist them in building partnerships with the communities in which they are located to foster and achieve neighborhood development and revitalization. The funds are also used to support a work study program for disadvantaged and minority students in graduate-level community building curricula. The Administration request did not set aside funding for the PATH (Partnership in Advancing Technology in Housing) program, but requested that it remain an eligible activity under the Research and Technology account. The House and Senate bills included $5 million for PATH. The CR provided just over $50 million for the Research and Technology account, specifying that none of the funds may be used for PATH." ], "depth": [ 0, 1, 2, 2, 2, 2, 2, 2, 1, 2, 1, 2, 2, 3, 3, 3, 3, 2, 3, 3, 2, 2, 3, 3, 3, 2, 2, 2, 2, 3, 2, 2, 2, 3, 3, 3, 2, 2, 2, 2, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_title h2_title h1_title", "h2_full", "h2_full", "h2_full", "h1_full", "h1_full", "h0_full", "", "", "h0_title h1_title", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_full", "h1_full", "", "", "", "", "", "" ] }

{ "question": [ "How does the FY2007 budget compare to FY2006?", "What did HUD comment regarding the FY2007 budget?", "To what extent did the funding bill meet the President's requested level of funding?", "How was the Senate's version of this bill passed?", "How did the Senate bill differ from the House bill?", "Why did Congress enact a series of stop-gap funding measures?", "How was yearlong funding eventually obtained?", "How would this affect HUD funding?", "How will this report be updated?" ], "summary": [ "On February 6, 2006, the President submitted his FY2007 budget to the Congress. It proposed funding the Department of Housing and Urban Development (HUD) at $34.1 billion, just over the FY2006 level (not including FY2006 supplementals related to Hurricane Katrina).", "HUD's FY2007 budget summary stated that the budget intended to use \"taxpayer money more wisely\" and \"reform programs in need of repair.\"", "The House passed its version of the HUD funding bill on June 14, 2006 (H.R. 5576). It funded most programs at or near the President's requested level, although it increased funding for the Section 8 voucher program, CDBG, and the Section 202 Housing for the Elderly and Section 811 Housing for the Disabled programs.", "The Senate Appropriations Committee passed its version of H.R. 5576 on July 20, 2006.", "It would have provided over $2 billion more for HUD than the President's request and the House bill, increased funding for Public Housing and restored funding for programs slated for elimination, including HOPE VI.", "Since the majority of the FY2007 appropriations bills were not approved before the end of FY2006, Congress enacted a series of stop-gap funding measures, or continuing resolutions, to maintain government operations.", "On February 15, 2007, Congress approved a revised yearlong continuing resolution, funding most accounts at their FY2006 level (P.L. 110-5).", "Congress is also considering FY2007 supplemental appropriations that may make changes to HUD funding (H.R. 1591).", "This report will be updated to reflect legislative activity." ], "parent_pair_index": [ -1, -1, -1, -1, 1, -1, -1, 1, -1 ], "summary_paragraph_index": [ 0, 0, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "The Office of Federal Student Aid", "FSA as a Performance-Based Organization", "Primary Functions", "Student Loan Ombudsman", "Processing Applications and Awarding Aid", "Applying for Title IV Student Aid", "Processing the FAFSA", "Central Processing System", "Institutions of Higher Education", "Verification", "Awarding and Disbursing Aid", "Calculating and Packaging Direct Loans", "Cost of Attendance", "Expected Family Contribution", "Determining and Packaging Types and Amount of Aid Available to Students", "Professional Judgment", "Accepting Aid", "Origination", "Professional Judgment", "Disclosures and Entrance Loan Counseling", "Disclosure Statement", "Plain Language Disclosure", "Entrance Counseling", "Disbursement", "Cash Management", "Origination Fees", "Additional IHE Administrative Procedures", "Overpayments and Return of Title IV Aid", "Exit Counseling", "Student Enrollment Reporting", "FSA Institutional Oversight", "Loan Servicing", "Loan Servicer Functions", "Common Servicing Activities", "Servicing Activities for Special Circumstances", "Servicing Activities During Delinquency", "Loan Servicing Contracts", "Recent History of Direct Loan Servicing", "Current Performance-Based Contracts", "Compensation", "Borrower Account Allocations", "FSA Federal Student Loan Servicer Oversight", "Loan Servicing and FSA Oversight Issues", "Default and Debt Resolution", "Direct Loan Default and Payment Collection Options", "Debt Resolution Activities", "Debt Management and Resolution System and the Default Resolution Group", "Private Collection Agencies", "Payment Collection Tasks", "Additional Administrative Tasks", "Office of Federal Student Aid", "Private Collection Agency Contracts", "Compensation", "Borrower Account Allocations", "FSA Private Collection Agency Oversight" ], "paragraphs": [ "", "The William D. Ford Direct Loan (Direct Loan) program is authorized under Title IV, Part D of the Higher Education Act of 1965 (HEA) and is the primary federal student loan program. It makes available loans to undergraduate and graduate students and the parents of dependent undergraduate students to help them finance postsecondary education expenses. Four types of loans are offered: Direct Subsidized Loans; Direct Unsubsidized Loans; Direct PLUS Loans; and Direct Consolidation Loans, through which borrowers may combine multiple loans into a single loan. The Office of Federal Student Aid (FSA), within the U.S. Department of Education (ED), administers the Direct Loan program. In total, ED manages an outstanding loan portfolio of approximately $1.3 trillion, making it one of the largest financial institutions in the nation. Direct Loan program loans make up approximately $963.5 billion (74%) of ED's loan portfolio.\nPrior to the establishment of the Direct Loan program, the primary federal student loan program was the Federal Family Education Loan (FFEL) program. Under the FFEL program, loan capital was provided to borrowers from private lenders and the federal government guaranteed lenders against loss through borrower default. FFEL program loans were originated by private lenders, and state and nonprofit guaranty agencies received federal funds to play the lead role in administering many aspects of the program, such as providing assistance in preventing delinquent borrowers from going into default.\nAuthorization for the Direct Loan program was enacted under the Student Loan Reform Act of 1993, part of the Omnibus Reconciliation Act of 1993 ( P.L. 103-66 ). The program was established with the goal of streamlining the student loan delivery system. At that time, the FFEL program involved numerous parties from both the private and public sectors and concerns had arisen about the program structure being difficult to monitor and cumbersome to borrowers and schools. When enacted, the Direct Loan program was originally intended to gradually expand and replace the FFEL program; however, provisions calling for a full transition from the FFEL program to the Direct Loan program were repealed under the Higher Education Amendments of 1998 ( P.L. 105-244 ). For nearly two decades, both the FFEL and Direct Loan programs operated simultaneously and institutions of higher education (IHEs) were able to participate in the program of their choice. In 2010, the SAFRA Act, part of the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ), terminated the authority to make new FFEL program loans.\nUnder the Direct Loan program, the federal government essentially serves as the banker by providing loans to students and their families using federal capital (i.e., funds from the U.S. Treasury). The federal government is also the owner of the loans and assumes the risk of loss through borrower default.\nAlthough the federal government is the lender and owner of Direct Loans, several parties perform key functions in administering the program:\nThe Office of Federal Student Aid (FSA) —FSA is a performance-based organization within ED that is the primary entity responsible for developing the administrative and financial management policies and functions for the federal Title IV student financial aid programs. FSA responsibilities are set forth in Section 141 of the HEA and include contracting for systems to support the programs; providing customer service, training, and user support for the administration of the programs; and ensuring the integrity of the programs. Institutions of Higher Education —IHEs involved in administering the Direct Loans are those schools at which students are using the program's loans to help finance their cost of attendance. IHEs help verify borrower eligibility to borrow Direct Loans, perform need analysis calculations and package student aid for current and prospective students, originate and disburse loans, report student enrollment information to ED, and make loan refunds to students and/or ED in specified situations. Loan Servicers —Loan servicers are nonfederal entities that are hired as contractors to perform loan servicing, accounting, and delinquency processing work. Some of their key responsibilities include processing payments, communicating with borrowers about the status of their loans, and providing information about Direct Loan benefits and features (e.g., deferment and repayment plan options). Private Collection Agencies (PCAs ) —PCAs are nonfederal entities that are hired as contractors to perform loan collection activities when borrowers default on their federal student loans. Some of their key responsibilities include locating and contacting delinquent borrowers and attempting to collect payment on defaulted loans.\nThis report discusses the major statutory and regulatory provisions and subregulatory guidance pertaining to the administration of the Direct Loan program. Although the administrative requirements for multiple Title IV student aid programs (e.g., Pell Grant) may be similar to or overlap with Direct Loan program requirements, unless otherwise noted this report will only discuss such requirements in the context of the Direct Loan program. The report begins by outlining FSA's broad role in developing administrative processes for the program. After that, it is organized in a manner that follows the \"lifecycle\" of a Direct Loan, highlighting key processes and parties involved in the various phases of the program's administration. These phases begin when a student's application for federal student aid is submitted and processed and continue through loan origination, disbursement, and repayment—and in some instances, default management. Processes, policies, and guidance related to the administration of the Direct Loan program are subject to regular change or adjustment; the descriptions herein are accurate as of the date of publication of this report.", "The U.S. Department of Education's Office of Federal Student Aid (FSA) is tasked with administering the Title IV federal student aid programs, including the Direct Loan program. Although FSA generally does not administer many of the day-to-day functions of the Direct Loan program (e.g., loan disbursement, loan servicing), it is responsible for implementing policies and procedures to enable them. This section of the report provides an overview of several duties FSA is responsible for carrying out to enable the operation of the Direct Loan program.", "FSA is specifically established as a performance-based organization (PBO) under Section 141 of the HEA. It was established in the Higher Education Amendments of 1998 ( P.L. 105-244 ) as the federal government's first PBO in response to the growing belief that ED needed restructuring to significantly improve the efficacy and efficiency of federal student aid delivery.\nPBOs are intended to be results-driven organizations that have clear objectives and measurable goals intended to improve an agency's performance and transparency. PBOs are led by chief executives who are personally accountable for meeting measurable goals within the organization. In exchange, PBOs are granted greater discretion to operate more like private-sector companies, with more control over budget, personnel decisions, and procurement.\nFSA operates as a discrete management unit within ED. It is responsible for the administrative and oversight functions supporting the HEA Title IV federal student aid programs, but the Secretary of Education (the Secretary) retains responsibility for the development and promulgation of policies and regulations relating to the Title IV programs. FSA is subject to the direction of the Secretary, but the Secretary is required to consult with FSA's Chief Operating Officer (COO) in the development of regulations and policies relating to the Title IV programs.\nHereinafter, the terms FSA and ED will be used interchangeably, unless otherwise noted.", "HEA Section 141(b)(2) describes the types of administrative functions for which FSA is responsible. They include the following:\n1. collecting, processing, and transmitting data to federal student aid stakeholders (e.g., students, IHEs); 2. defining technical specifications for software development and procurement, acquiring software and hardware, and contracting for all information technology and financial systems related to the administration of Title IV student aid; 3. providing all customer service, training, and user support related to the administration of Title IV student aid; and 4. ensuring the integrity of the Title IV student aid programs.\nThe Secretary may also allocate additional functions to FSA as the Secretary and COO determine necessary and appropriate.\nAlthough FSA has many functions, this report will describe a few key ones as they relate to student aid delivery in general, and the Direct Loan program specifically. Specific functions to be discussed include FSA's procurement and operation of some of the various Title IV processing systems (e.g., the Central Processing System), FSA's contracting for student loan servicing, and FSA's Student Loan Ombudsman. Each function will be discussed in detail throughout the report when appropriate.", "HEA Section 141 directs FSA's COO to appoint a Student Loan Ombudsman (the Ombudsman) to provide timely assistance to borrowers of Title IV loans. In doing so, the Ombudsman is tasked with reviewing and attempting to resolve informally borrower disputes with, as appropriate, IHEs, loan servicers, and other participants in the Title IV loan programs. For instance, the Ombudsman can help resolve discrepancies related to loan balances and payments; identify options to resolve borrower issues related to consolidation, service quality, default status, bankruptcy, and income tax refund offsets; explain loan interest and collection charges; and clarify requirements for loan deferment or forbearance and loan cancellation or discharge. The Ombudsman cannot, however, make binding decisions or overturn the decisions of other entities; accept complaints about grants, such as Pell Grants; or replace formal channels of dispute resolution within ED.", "This section of the report discusses key aspects of Direct Loan program administration from the time students complete and submit the Free Application for Federal Student Aid (FAFSA) through the time that Direct Loans are disbursed to borrowers. The key parties involved in this phase of the process are the following:\nFSA , which develops and maintains the FAFSA, contracts for the operation and maintenance of information technology systems, and provides oversight of Title IV participating IHEs and third-party servicers; IHEs , which verify student eligibility for loans, asses students' levels of need for financial assistance and package financial aid, disburse funds (received from FSA) to students and parent borrowers, provide loan counseling to students, and periodically report to the National Student Loan Data System (NSLDS) to confirm students' enrollment/aid eligibility status; and/or Third Party Servicers , which may perform any or all of the administrative duties of an IHE as a contractor for it. Third-party servicers must agree to comply with all statutory and regulatory provisions applicable to the administration of the Direct Loan program. In many ways, third-party servicers' and IHEs' responsibilities with respect to administering the Direct Loan program may be similar or the same; thus, hereinafter this report will only refer to IHEs.", "Students wishing to receive HEA Title IV student aid, including Direct Loans, must annually apply for assistance using the FAFSA. Income and personal information submitted via the FAFSA is used to determine an applicant's eligibility for Title IV aid and to calculate each student's expected family contribution (EFC). A student's EFC is a dollar amount that reflects the amount of financial resources that students and their families are expected to use to meet an IHE's cost of attendance. The EFC is used to determine the types and amount of student aid for which an individual may be eligible. FSA develops and maintains the FAFSA, in accordance with specifications set forth in the HEA.\nIndividuals usually complete and submit the FAFSA online. For academic year (AY) 2016 (i.e., July 1, 2016-June 30, 2017) and all preceding academic years, individuals use(d) income data from the previous tax year (commonly referred to as prior year, or PY) to complete the FAFSA. Thus, for AY2016 individuals use their tax year 2015 income information. In this situation, the processing cycle is 18 months, as students are permitted to submit the FAFSA as of January 1 of the initial year included in the award year for which the individual seeks aid through the end of the award year. For instance, in AY2016 an individual could have submitted a FAFSA as early as January 1, 2016, or as late as June 30, 2017.\nBeginning in AY2017 (i.e., July 1, 2017-June 30, 2018), the FAFSA will be available three months earlier and individuals will be able to use income data from the tax year two years prior to the award year (commonly referred to as prior-prior year, or PPY) when completing the FAFSA. Thus, for AY2017 individuals will use their tax year 2015 income information. Under PPY, the FAFSA becomes available on October 1, three months earlier than it did under PY. To facilitate the use of PPY for AY2017, the FAFSA processing cycle will be 21 months; thus, an applicant may submit the FAFSA between October 1, 2016, and June 30, 2018. Table 1 depicts the FAFSA processing cycle under PY and PPY.", "Both FSA and IHEs play significant roles in processing the FAFSA. FSA contracts for information technology systems that perform key FAFSA-processing functions, and IHEs then use the processed FAFSA data to verify student eligibility and determine a student's need for financial aid.", "After an aid applicant submits the FAFSA, the form is processed by the Central Processing System (CPS). The CPS is an automated system contracted by FSA to process the FAFSA and determine initial student eligibility for federal student aid and calculate a student's EFC. The CPS performs a variety of functions related to FAFSA processing, including the following:\nperforming database matches to determine student eligibility for aid (e.g., match student information against the Social Security Administration database to confirm each student's social security number and U.S. citizenship status); interfacing with the Internal Revenue Service Data Retrieval Tool, which links students', students' spouses', and parents' Internal Revenue Service tax information to the FAFSA; calculating each student's EFC on the basis of financial information provided on the FAFSA; checking applications for potential inconsistencies and mistakes and selecting applications for verification of information; and making processed FAFSA information available to students and student-designated IHEs.", "After the CPS completes initial processing of the FAFSA, the processed information is made available to the student and student-designated IHEs in the form of a Student Aid Report (SAR) and Institutional Student Information Record (ISIR), respectively. Upon receipt of the ISIR, an IHE may take a variety of steps before awarding federal student aid to an applicant, including verifying information provided on the FAFSA and using professional judgment to adjust data values provided on the FAFSA to respond to unusual student situations that cannot be fully anticipated in the statutes and regulations. The IHE then calculates the student's need for federal student aid and packages student aid awards.", "Verification is the process IHEs must use to review data reported on the FAFSA for accuracy and completeness. Annually, ED publishes in the Federal Register a list of potential FAFSA items IHEs may be required to verify for selected individual applications. Typical items IHEs may need to verify include an applicant's adjusted gross income and household size, or whether the intended student has a valid high school diploma.\nIn some instances, the CPS selects specific items on an application for verification, and in other instances, IHEs must verify specific items on applications they have reason to believe are inaccurate. It is estimated that CPS annually selects one-third of all Title IV applicants for verification; the number of Title IV applicants selected for verification by IHEs is unknown. If an application is selected for verification, IHEs must request additional documentation from an applicant to resolve the issue. IHEs may not disburse or originate subsidized federal student aid (e.g., Direct Subsidized Loan program loans, Pell Grants) before verification is completed if an IHE has reason to believe the applicant's FAFSA information is inaccurate.\nIHEs may also establish additional verification requirements, regardless of whether they have reason to believe that an applicant's FAFSA is inaccurate. In such situations, IHEs have discretion to withhold payment or origination of subsidized federal student aid from the applicant until verification is complete.", "IHEs are the primary actors in this phase of Direct Loan program administration. After processing the FAFSA data, an IHE calculates the aid for which a student is eligible, packages student aid, makes specified disclosures to the borrower, disburses aid funds to the student, and completes reporting and follow-up activities as needed.", "After receiving the FAFSA data, an IHE calculates and determines the amounts and types of aid that will be offered to the student. This process is known as packaging. The packaging of federal student aid in general, and Direct Loans specifically, is guided by statutory eligibility requirements and award rules.\nBeyond the basic Title IV eligibility requirements (e.g., U.S. citizenship or residency requirements), eligibility for many Title IV aid programs is contingent on student need. In general, student need is the difference between the cost of attendance (COA) and expected family contribution (EFC). Determining this need is known as need analysis.", "HEA Section 472 defines cost of attendance and lists numerous allowable costs IHEs may include in the COA for purposes of calculating a student's Title IV need. While the HEA provides a broad list of items to be included in an institution's COA—tuition and fees, books and supplies, room and board, and other expenses a student may face while enrolled, such as the cost of child care or transportation —individual IHEs determine the precise dollar amount for each of those items to be included in the COA. For instance, for the cost of room and board for students living off-campus, an institution may determine reasonable expenses based on rental market rates. Thus, expenses for room and board in an area with a high cost-of-living will likely be greater than they would be in a relatively less expensive area.", "HEA, Title IV, Part F prescribes specific formulas used to determine a student's EFC. The EFC is an expression of the amount of financial resources that students and their families are expected to contribute to meet the cost of the student's postsecondary education. It is calculated using income and asset information provided on the FAFSA.", "After a student's need has been calculated, IHEs' financial aid administrators (FAAs) then determine the types and amount of aid an IHE will offer a student. In all cases, an IHE must first determine whether a student is eligible for a Pell Grant and, if so, the amount of the grant. For purposes of other federal student aid programs, after a Pell Grant is awarded the amount of student need is decreased accordingly. Based on the remaining amount of need (known as \"unmet need\"), an IHE may then calculate amounts of other forms of student aid to offer a student.\nThe types and amount of student aid available to a student after his or her Pell Grant has been awarded depend on a variety of factors, including statutory and regulatory requirements and an IHE's own student aid packaging practices. Although myriad factors could affect the final types of student aid offered, several statutory and regulatory provisions guide the packing of Direct Loans:\nDirect Loans (including Direct PLUS Loans), in combination with other aid (e.g., Pell Grants, institutional scholarships) cannot exceed the student's COA, an individual cannot be awarded a Direct Subsidized Loan or Direct Unsubsidized Loan in an amount that exceeds statutory annual and aggregate borrowing limits, an IHE must offer a student a Direct Subsidized Loan before it offers a Direct Unsubsidized Loan, an IHE must offer a graduate or professional student a Direct Unsubsidized Loan before it offers a Direct PLUS Loan, a student may not receive a Direct Subsidized Loan for a period that exceeds 150% of the published length of the academic program in which he or she is enrolled, and Direct Unsubsidized Loans and Direct PLUS Loans may be substituted for a student's EFC.\nOnce an IHE has determined the types and amount of aid it will offer to a student, it then notifies the student of the financial aid package being offered. IHEs have the discretion to decide how they will notify students. For instance, the notification may be via a written letter or email.", "HEA Section 479A provides that in special circumstances, FAAs may use professional judgment to make adjustments to certain data points used to determine a student's eligibility for Title IV aid and, thus, potentially affect the amount of aid for which a student is eligible. This authorization to use professional judgement is intended to enable FAAs to respond to situations that cannot be fully anticipated in the statutes and regulations. Professional judgment cannot, however, be used to waive general student eligibility requirements or circumvent the intent of the law or regulations. Each time an FAA uses professional judgment, the reason for its use must be documented. Any student aid adjustments are valid only at the IHE making the adjustments and for the award year in which they are made.\nFAAs may, on a case-by-case basis, use professional judgment to make adjustments to the data values required to calculate the EFC or to adjust a student's COA. In addition, another form of professional judgment is the dependency override, in which an FAA determines that an otherwise dependent student should be considered independent for Title IV purposes. In any of these instances, the use of professional judgment may increase or decrease a student's eligibility for federal student aid.", "To accept and subsequently receive disbursements of a Direct Loan from an IHE as presented in the financial aid package, a borrower must sign a master promissory note (MPN). The MPN is a legal document containing the terms and conditions of the loan and under which a borrower agrees to repay the loan. Loan terms and conditions contained in the MPN include items such as deferment and forbearance options, potential loan discharge (forgiveness) benefits, and the consequences of defaulting on a loan. Loan terms and conditions are specified in statute and regulations.\nUnder HEA Section 432, FSA is required to develop, and IHEs are required to use, the MPN. IHEs can choose to use MPNs with a multi- or single-year feature. IHEs that use the single-year MPN may only make loans under the MPN for one academic year. IHEs that use the multiyear MPN may make one or more Direct Loans to borrowers for multiple award years for up to 10 years. That is, once a multiyear MPN has been signed by a borrower and accepted by FSA, IHEs are not required to obtain a new MPN for each academic year for which the individual wishes to borrow. However, IHEs that use the multiyear MPN must develop a process for borrowers receiving loans for a subsequent academic year to confirm their acceptance of a new Direct Loan in subsequent years.", "If a student accepts a Direct Loan, an IHE may then originate it. Origination is the process through which an IHE submits information to FSA regarding a borrower's eligibility for a Direct Loan and requests Direct Loan funds on behalf of a student. After an IHE has confirmed that a potential borrower remains eligible (e.g., determining that the student is enrolled at least half-time and ensuring the loan amount to be borrowed does not exceed annual and lifetime borrowing limits), it must submit the information related to the student's eligibility, loan period, anticipated disbursement dates, and disbursement amounts to FSA's Common Origination and Disbursement (COD) system, which then processes, accepts, edits, or rejects the records. COD is an FSA system to which IHEs have access in order to request, report, and reconcile Title IV funds.\nAfter COD accepts origination records, an IHE may then request funds for a student, based on the amount of Direct Loan for which the student is eligible, from FSA's G5 system. The G5 system provides funding authorizations to IHEs and enables them to draw down Title IV funds from ED to disburse to borrowers.", "Under HEA Section 479A, an FAA may use professional judgment to either refuse to originate a loan or to originate a loan for less than the student's maximum eligibility. For example, an FAA may refuse to originate a loan if the FAA has reason to believe that the borrower will be unable to repay the loan due to a high amount of debt. These professional judgments must be made on a case-by-case basis and the reasons for making them must be documented and provided to the student.", "Before an IHE may provide Direct Loan funds to borrowers, it must first make a variety of disclosures to them, and for certain borrowers, it must provide entrance loan counseling.", "In general, prior to disbursing any form of Title IV federal student aid to a borrower, an IHE must disclose to the student the amount of funds he or she (or his or her parents in the case of Direct PLUS loans) can expect to receive and how and when those funds will be disbursed. For Direct Loans, the notice must also inform the borrower of which funds are from subsidized loans and which are from unsubsidized loans, and their right to cancel all or a portion of the loan and the procedures to do so.", "In addition to the disclosures that all IHEs are required to provide borrowers prior to making disbursements, IHEs using a multiyear MPN are required to make disclosures to borrowers relating to various aspects of Direct Loans at or prior to the disbursement of any subsequent loans made under the multiyear MPN. This disclosure is known as the Plain Language Disclosure (PLD), which is developed by FSA. Information provided in the PLD includes items related to the loan terms and conditions, such as amount borrowed, interest rate, and any charges (e.g., origination fee) associated with the loans; a statement of the total cumulative balance owed by the borrower and projected monthly payments; and a definition of default and its consequences. IHEs using a single-year MPN are not required to provide the PLD to borrowers, because borrowers are required to complete a new MPN for each subsequent loan period and the MPN contains the loan terms and conditions.", "Prior to making the first disbursement on a Direct Subsidized Loan or Direct Unsubsidized Loan to first-time borrowers or the first disbursement on a Direct PLUS Loan to first-time graduate and professional student borrowers, an IHE is required by HEA Section 485(l) to ensure that the borrower receives entrance counseling. The information provided in entrance counseling generally relates to loan terms and conditions and borrower rights and responsibilities, which includes the following:\nthe effect of accepting the loan on the eligibility of the borrower for other forms of student financial assistance, an explanation of the MPN, information on how interest accrues and is capitalized, sample monthly repayment amounts based on a range of levels of indebtedness and the average cumulative debt of other borrowers in the same program as the borrower at the same IHE, the obligation of the borrower to repay the loan in full, and the likely consequences of default.\nIHEs can include additional information, materials, and resources in the entrance counseling but cannot require borrowers to complete additional counseling (other than exit counseling in certain circumstances).\nAn IHE may use FSA's online counseling tool, which includes the required counseling components and assists IHEs in keeping track of those borrowers who have completed the counseling. Alternatively, IHEs may develop their own entrance counseling, which can be delivered in a variety of ways—such as online, in-person, by audio/visual means, or with the use of worksheets and exercises—so long as it contains the required counseling components.", "Disbursement is the process of distributing aid to or on behalf of a borrower. In addition to completing the verification process described earlier in this report, IHEs must determine and document whether a borrower remains eligible to receive aid funds (e.g., confirm that the student is enrolled in classes for the period).\nAfter the student's eligibility is confirmed, an IHE then disburses funds. It may do so by either crediting a student's institutional account for allowable charges (e.g., tuition and fees) or paying the student (or parent borrower) directly. Typically, IHEs choose to first credit Title IV funds to a student's institutional account and then disburse the balance of the funds to the student or parent borrower. To disburse funds directly to a borrower, an IHE may issue a check, initiate an electronic funds transfer, or pay in cash.\nIn general, IHEs must disburse the proceeds of Title IV funds, including Direct Loans, in two or more installments. IHEs have some discretion as to scheduling when funds may be disbursed to students, but must disburse the funds requested \"as soon as administratively feasible but no later than three business days following the date the institution received\" the funds from ED.", "ED has in a place a number of cash management regulations that IHEs participating in Title IV programs are required to follow when requesting and managing program funds. Typically, schools operate under the \"advance payment method\" of requesting funds. Under this method, after an IHE has submitted origination records to and a borrower's completed MPN has been accepted by COD, the IHE requests aid funds from the G5 system, and if the request is accepted the school is permitted to draw down federal funds for disbursement to students. IHEs may choose to submit records verifying the Direct Loan funds have been disbursed prior to, on, or after the date of disbursement.\nIn instances where FSA has concerns about an IHE's ability to meet Title IV participation requirements, FSA may require an institution to use a different form of cash management, such as the reimbursement, Heightened Cash Monitoring 1, or Heightened Cash Monitoring 2 methods. Under these methods, an institution must first disburse funds to students from institutional funds before being provided Title IV funds by ED.", "To help defray part of the costs associated with subsidizing Direct Loans, HEA Section 455(c) provides for origination fees that are equal to a percentage of the total loan principal amount. Borrowers are responsible for the amount of the origination fee, which is deducted from the Direct Loan borrowed (thus, the amount of the Direct Loan funds disbursed to a borrower is less than the total amount borrowed). The borrower is responsible for repaying the entire amount of the loan borrowed, not just the amount disbursed. The HEA specifies that origination fees for Direct Subsidized Loans and Direct Unsubsidized Loans shall equal 1% and that the origination fee on Direct PLUS Loans shall equal 4%; however, recent budget sequestrations have required FSA to increase origination fees. For Direct Subsidized Loans and Direct Unsubsidized Loans disbursed on or after October 1, 2016, and before October 1, 2017, the origination fee is 1.069% of the amount borrowed. For Direct PLUS loans borrowed in the same time period, the origination fee is 4.276%.", "In addition to verifying student aid eligibility and awarding and disbursing aid to students, IHEs must fulfill a variety of other responsibilities related to Direct Loan program administration. These responsibilities include returning Direct Loan program funds to ED in specific instances, providing exit counseling to departing students, and reporting student enrollment information to ED.", "There are many instances in which an IHE or a borrower may be required to return Title IV aid, including Direct Loan program funds, to ED, including when an IHE has made an overpayment of funds to a student. An overpayment is the amount of Title IV aid disbursed to a student in excess of the amount for which he or she is eligible and may occur for a variety of reasons, such as when a student borrows above the annual or aggregate Direct Loan limits due to school processing errors or when a student withdraws or otherwise ceases attendance before the end of a payment period for which Direct Loan funds were disbursed. Whether an IHE or a student is required to return the Title IV funds and the amount of aid to be returned depend on a variety of circumstances, such as how much aid has been disbursed and how much aid has been \"earned\" in the case of a student withdrawal.\nIn general, an overpayment may be resolved in a variety of ways, depending on the circumstances. For instance, if an IHE has made the first disbursement on the Direct Loan but not the second, it may reduce or cancel any subsequent disbursements to account for the overpayment. In another instance, if an IHE has fully disbursed a Direct Loan to an ineligible student, for any of those funds disbursed directly to the student (e.g., via a check as opposed to crediting a student's institutional account) the IHE must contact and notify the FSA-contracted loan servicer (discussed later in this report) of the outstanding loan funds so that FSA, via the servicer, may issue a letter to the student demanding repayment of the loan. For those funds credited to a student's institutional account, the IHE may be required to return some or all of the funds to ED, typically via the G5 system.", "In addition to the entrance counseling IHEs are required to provide to first-time Direct Loan borrowers, HEA Section 485(b) requires them to provide exit counseling to all borrowers of Direct Loans, except for borrowers of Direct PLUS Loans obtained on behalf of dependent undergraduate students. The counseling must be provided to borrowers who are graduating, leaving school, or dropping below half-time enrollment. The information contained in the exit counseling generally pertains to available repayment plans and debt management strategies, and borrower rights and responsibilities. As with entrance counseling, IHEs may develop their own exit counseling, so long as it fulfills HEA requirements, or they may use the ED-developed online exit counseling.", "Throughout the award year, IHEs are required to report a variety of information to ED related to their administration of Title IV aid programs and student aid eligibility. One of the primary mechanisms that facilitates institutional reporting is the National Student Loan Data System (NSLDS). Authorized by HEA Section 485B, the NSLDS is ED's central database for federal student aid records. It tracks Title IV aid through its lifecycle and includes information such as the amount, type, and status of each student loan borrowed by each individual; the IHE that originated each loan; and the servicer of each loan. The NSLDS is maintained by an FSA contractor.\nA key item IHEs must report to NSLDS is enrollment data for students who received Title IV aid (or on whose behalf a Direct Parent PLUS Loan is made), such as whether a student is enrolled at an IHE and is attending full- or part-time, or whether a student has withdrawn or graduated. Student enrollment information is important because it is used to determine whether a borrower is eligible for a variety of Direct Loan benefits such as in-school deferment. In addition, it is used to determine whether a borrower should be moved into repayment status, whether the borrower is eligible for a grace period, and how soon the student must begin repaying his or her loan.", "To ensure IHEs and their third-party contractors are properly administering the Title IV student aid programs, including the Direct Loan program, FSA performs a variety of oversight and enforcement tasks. First, before IHEs begin participation in the Title IV programs, FSA ensures IHEs meet numerous institutional eligibility requirements for participation. Second, FSA monitors institutional (and third-party contractor) compliance with Title IV requirements by conducting program reviews and financial and compliance audits. Should FSA identify any program deficiencies, it has the authority to impose a variety of sanctions and corrective actions on an IHE. For instance, FSA may impose a fine, place specific conditions or restrictions related to the IHE's administration of Title IV funds (e.g., require it to make specific disclosures to students or use specified types of cash management), or terminate its participation in any or all of the Title IV programs.", "After a borrower's first Direct Loan is disbursed, it is assigned by FSA to a loan servicer, which performs a variety of Direct Loan program administrative functions as an FSA contractor. This section of the report discusses key aspects of Direct Loan program administration after Direct Loans have been disbursed to borrowers.\nThe key parties involved in this phase of the process are the following:\nFSA , which solicits and awards contracts for loan servicing and monitors the effectiveness and operation of the contracted loan servicers, and Loan S ervicers , which perform myriad loan servicing functions such as collecting payments on Direct Loans, processing applications for Direct Loan deferments or forbearance, and performing default prevention activities.", "After a Direct Loan is disbursed to a borrower, it is assigned to one of several federal student loan servicers with which FSA has contracted to perform myriad loan servicing functions. Loan servicing functions include a range of administrative tasks, including, but not limited to, processing payments, communicating with borrowers about the status of their loans, and providing information about Direct Loan benefits and features (e.g., deferment and repayment plan options). In addition, loan servicers may perform individually assigned specialized tasks specified by FSA. For instance, one federal student loan servicer is responsible for processing borrower applications for total and permanent disability loan discharges, while another is responsible for servicing all Direct Loans certified as eligible for the Public Service Loan Forgiveness (PSLF) program.\nHEA Section 456 authorizes ED to enter into contracts with third-party entities to perform loan servicing tasks; however, neither the HEA nor accompanying regulations identify the precise range of activities to be performed by contracted federal student loan servicers. Contracts between FSA and federal student loan servicers generally specify that loan servicers are expected to use \"due diligence\" to meet statutory and legislative requirements and other high-level requirements, but servicers are provided discretion in determining how to meet them. As such, servicers are responsible for ensuring that borrower loan terms and conditions specified in statute and regulations are met, but there is variability among the specific tasks servicers undertake to meet those requirements.\nThis section provides a broad overview of the common functions performed by federal student loans servicers for Direct Loans. Because servicers generally must meet statutory and regulatory program requirements but are given discretion in determining how to do so, the information presented in this section is intended to be illustrative rather than comprehensive in nature. Additionally, specific tasks performed by servicers may depend on a borrower's individual circumstances (e.g., whether the borrower is having difficulty making monthly payments or whether the borrower is seeking loan forgiveness benefits). The section first describes the loan servicing activities typically performed by servicers for a large proportion of Direct Loan borrowers. It then provides examples of specific tasks servicers may perform in special circumstances. Finally, it describes tasks specific to servicing loans for borrowers who are delinquent on their loan payments or who have defaulted on their loans.", "As described above, federal student loan servicers are required to ensure that Direct Loan terms and conditions are met. Although the precise method through which this is achieved may vary among servicers, in general, the following tasks are performed by all loan servicers for a large proportion of Direct Loan borrowers:\nproviding required disclosures to borrowers about various Direct Loan terms and conditions before a first payment on the loan is required and periodically during repayment; providing information to borrowers on the several repayment plan options, such as the Standard Repayment Plan and the various income-driven repayment plans, while the borrower is in school and during repayment; processing applications for enrollment in a borrower's selected repayment plan, calculating the amount of payments owed monthly by a borrower, and sending occasional communications to borrowers regarding their selected repayment plans; recertifying borrower eligibility for income-driven repayment plans and recalculating monthly payments based on borrower income and family size information provided during the annual recertification process; collecting and applying loan payments to outstanding balances; processing requests for loan deferment or loan forbearance; processing applications to consolidate federal student loans into a Direct Consolidation Loan; reporting loans and loan status to consumer reporting agencies and reporting loan status to NSLDS; providing information to borrowers about loan cancellation, discharge, and forgiveness benefits; reporting loan interest payments to the IRS and providing loan interest payment statements to borrowers; and providing delinquency and default prevention activities.", "In addition to the above-listed servicing activities completed for a large proportion of Direct Loan borrowers, some loan servicing activities are carried out in special circumstances. Some of these are completed by all federal student loan servicers, while others are completed by individual loan servicers to whom the tasks have been specifically assigned. Where applicable, servicers assigned specialized tasks by FSA are noted. Servicing activities for special circumstances include the following:\nprocessing requests for and applying a 6% interest rate cap to eligible servicemembers' student loans pursuant to the Servicemembers Civil Relief Act; processing applications for loan forgiveness benefits, including benefits offered under the Public Service Loan Forgiveness Program; processing applications for loan discharge, including applications for total and permanent disability discharge; and transferring loans to and accepting loans from other federal student loan servicers, as necessary.", "A Direct Loan becomes delinquent the first day after a borrower fails to make a scheduled monthly payment and continues to be delinquent until the borrower makes all payments to make his or her Direct Loan account current. Although HEA Section 435(l) provides that a Direct Loan enters default when a borrower fails to make payments on it for 270 days, in practice, a loan is not operationally treated as being in default until it has been transferred to FSA's Debt Management and Collection System (DMCS) for collection after 360 days of nonpayment. The activities loan servicers undertake from the time a Direct Loan first becomes delinquent to the time it is transferred to DMCS include the following:\noutreach to past-due borrowers, reporting all delinquencies of at least 90 days to consumer reporting agencies, performing skip-tracing activities, sending demand letters when a borrower is approaching default and notices of default when a borrower defaults, and entering into repayment arrangements with borrowers for loans not yet transferred to DMCS.", "As described earlier, under the Direct Loan program the federal government is the owner of the loans and assumes the risk of loss through borrower default. As such, it is ultimately responsible for collecting payments on outstanding federal student loans and performing other related administrative functions, such as processing applications for deferment or loan cancellation. HEA Section 456 authorizes ED to enter into contracts with third-party entities to perform these loan servicing tasks. Operating under this general authority, FSA maintains contracts with nine loan servicers. This section of the report discusses how the federal student loan servicers are compensated and the process FSA uses to allocate Direct Loans to servicers. In addition, a recent history of loan servicing is provided for context.", "Immediately prior to 2009, when FFEL and Direct Loans were being made simultaneously, Direct Loan servicing was performed by a single loan servicer, and FFEL program loan servicing functions were fulfilled by FFEL program lenders (which included IHEs, banks, and nonprofit state organizations), organizations with which FFEL program lenders had contracted, or nonprofit state-designated guaranty agencies through arrangements with the lenders and guaranty agencies participating in the FFEL program. In 2009, with the increase in volume of federally held student loans, FSA awarded contracts to four new loan servicers, known as Title IV Additional Servicers (TIVAS). In addition, in 2010 the SAFRA Act ( P.L. 111-152 , Title II-A) required ED to contract with eligible not-for-profit (NFP) servicers, many of which were affiliated with or part of not-for-profit state lending operations in the FFEL program.\nFor several years, TIVAS and NFPs operated side by side servicing Direct Loans, but they had different sources of funding and different contract provisions with FSA. Specifically, TIVAS were compensated with discretionary funds authorized under HEA Section 458 and entered into performance-based contracts with FSA. Under performance-based contracts, FSA specifies desired results, and the loan servicer has discretion to decide how best to achieve them.\nNFPs, on the other hand, were compensated for the administrative cost of the servicing contracts with mandatory funds until 2013. The Bipartisan Budget Act of 2013 ( P.L. 113-67 ) then eliminated the requirement that FSA contract with NFPs and the mandatory funding for those contracts. FSA decided to retain those NFP contracts, and the NFPs are now compensated under the same HEA Section 458 discretionary funds authorization as TIVAS.\nUnlike the TIVAS, until fall 2014 NFPs initially were allocated a minimum of 100,000 borrower accounts, and borrower accounts subsequently could be reallocated among the NFPs based on whether the NFPs met minimum performance requirements. During this time, the performance requirements for NFPs were similar to, but not the same as, the performance metrics for TIVAS under their performance-based contracts. For the first several years of acting as federal student loan servicers, NFPs did not receive borrower accounts for newly disbursed Direct Loans. Then, in the fall of 2014, FSA implemented a single set of performance metrics and pricing to be used for both TIVAS and NFPs. For the first time, in January 2015, NFPs began to receive newly originated loans; however, from that time until March 1, 2016, TIVAS and NFPs competed for new allocations in separate pools while using the common performance metrics established by FSA in 2014. Finally, in the Consolidated Appropriations Act of 2016 ( P.L. 114-113 ), Congress directed that new student loan borrower accounts be allocated to all loan servicers based on each servicer's performance as compared against all federal student loan servicers. Thus, as of March 1, 2016, TIVAS and NFPs now compete against each other for new Direct Loan allocations based on a single set of performance metrics and under a single pricing schedule. Hereinafter, TIVAS and NFPs will be referred to collectively as federal student loan servicers, unless otherwise noted.", "All FSA contracts with federal student loan servicers are performance-based; that is, FSA specifies desired results and the loan servicer has discretion to decide how best to achieve them. The use of performance-based contracts is intended to promote competition among federal student loan servicers to provide the best possible services to FSA and borrowers. Two ways in which FSA seeks to achieve the effective use of performance-based contracts are by providing compensation to federal student loan servicers based on borrower status and by allocating new borrower accounts to federal student loan servicers based on their ability to meet FSA-specified metrics.", "FSA seeks to achieve effective use of performance-based contracts by providing compensation to federal student loan servicers based on borrower status. For instance, federal student loan servicers are compensated at a monthly rate of $2.85 for each borrower account serviced that is in repayment status, $2.11 per borrower account serviced that is between 6 and 30 days delinquent on loan payments, and $0.45 per borrower account serviced that is delinquent more than 271 days (i.e., in default). In addition, loan servicers may receive \"bonuses\" when certain delinquency reduction benchmarks are met. For instance, a loan servicer can receive a bonus award of $200,000 if its delinquent borrower accounts at the end of a quarter are less than 23% and $300,000 if its delinquent borrower accounts at the end of the quarter are less than 23% and it improves upon its previous quarter's delinquency rate. This compensation schedule is structured in a way intended to incentivize servicers to keep borrower accounts in active repayment status, as opposed to less desirable outcomes such as delinquency or default.", "FSA also seeks to achieve effective use of performance-based contracts by allocating new borrower accounts to federal student loan servicers based on their ability to meet FSA-specified performance metrics. FSA scores each federal student loan servicer based on its performance in each of five metrics, and new borrower accounts are allocated proportionally based on the total score of all loan servicers. The five performance metrics FSA uses to determine new borrower accounts allocation, and the percentages of a servicer's score they are worth, are\ncustomer service satisfaction, worth 35%; the percentage of borrowers in current repayment status, worth 30%; the percentage of borrowers who are between 91 and 270 days delinquent (i.e., have not yet defaulted) on their federal student loan payments, worth 15%; the percentage of borrowers between 271 and 360 days delinquent (i.e., defaulted but not yet transferred to DMCS), worth 15%; and FSA employee quarterly survey results, worth 5%.\nFederal student loan servicers compete biannually for new borrower accounts based on their quarterly performance on these metrics. As with the compensation schedule, the allocation performance metrics are structured in a way intended to incentivize servicers to achieve more desirable outcomes (e.g., high customer satisfaction), by giving greater weight to them in the allocation scores.", "Although loan servicers generally have broad discretion in determining internal processes and procedures, FSA does provide oversight of their performance. First, as described above, FSA bases borrower account allocation and servicer compensation on servicers' ability to meet stated goals. Additionally, FSA issues guidance to loan servicers to assist them in day-to-day operations and conducts monitoring activities, such as completing annual compliance audits and assessing borrower-servicer interactions via selected phone call monitoring.", "Despite the numerous mechanisms for oversight of federal student loans servicers, in recent years there has been growing concern that borrowers may experience varying levels of customer service from them. For instance, GAO recently found that some borrowers may have difficulty getting ahold of their loan servicers because there are currently no minimum standards for hours of operations for loan servicer call centers. In another example, loan servicers operate their own websites for borrowers to access account information and often cobrand communications with borrowers (e.g., a loan servicer may include its logo and ED's logo in its communications with borrowers), which may cause confusion for borrowers regarding which entity is servicing their loans and whom to contact.\nTo help address concerns related to inconsistent customer experiences across loan servicers, Congress directed FSA, in an explanatory statement in the Consolidated Appropriations Act of 2016 ( P.L. 114-113 ), to publish a common policies and procedures manual for all Direct Loan servicers by March 1, 2016. FSA did not meet the March 1, 2016, deadline, and it appears that it has not yet published a common policies and procedures manual.\nIn anticipation of the expiration of current loan servicers' contracts in 2019, FSA has begun the competitive process for new student loan servicer contracts. As part of the process, FSA has announced the intention to award a contract for a \"single servicing solution,\" which would provide a singular loan servicing platform on which all ED-held loans would reside. Under this plan, multiple subcontracted customer service providers would have access to the platform and would provide customer service to borrowers. Thus, borrowers would be able to log onto a single website to get information about, make payments on, and apply for benefits for their loans. Subsequently, ED officials developed policy direction that was intended to be reflected in FSA's new single servicing solution. Contractors (and subcontractors) competing for the single servicing solution contract were to be evaluated based on the extent to which they could comply with policy directions ED developed and would have been expected to meet the policy directions in the future. Policies contained in the policy directions included, for example, ensuring borrower access to \"high-touch\" servicing staff (i.e., knowledgeable, specially trained personnel who will evaluate borrowers' specific circumstances when providing assistance), informing borrowers of income-driven repayment plans, and providing consistent branding under ED's name, all of which address previously identified deficiencies in federal student loan servicing. On April 11, 2017, the Secretary of Education withdrew the policy directions. However, the solicitation for loan servicing contracts has not yet been amended to reflect the withdrawal of the policy directions; thus, the extent to which the guidance included in those policy directions may be incorporated into any future loan servicing contracts is unclear.", "If a borrower defaults on his or her Direct Loan, a variety of actions may be taken by FSA and its contractors to attempt to reinstate it as a loan in active repayment and recover payment on it. This section of the report discusses administrative processes undertaken if a borrower defaults on his or her Direct Loan.\nThe key parties involved in the process are the following:\nFSA , which solicits bids and awards contracts for the Debt Management and Collection System (DMCS) and for private collection agencies (PCAs). FSA also monitors the effectiveness and operation of the contracted DMCS and PCAs. D ebt M anagement and C ollection S ervices , which is a system operated by a contractor that stores, retrieves, and edits debtor information; generates official correspondence to debtors from FSA, PCAs, and other interested parties; and processes payments on defaulted loans. To support DMCS, the Default Resolution Group (DRG) serves as the contact center for DMCS and manages and oversees FSA's collection efforts on defaulted loans, makes the first attempt at collecting on defaulted loans, and collects payments on certain loan accounts via DMCS. Private Collection Agencies , which perform tasks to recover payment on outstanding loans from borrowers who defaulted.", "As stated earlier, although the HEA provides that a borrower defaults on a Direct Loan when he or she fails to make required payments on the loan for 270 days, in practice, a borrower is not operationally treated as being in default on his or her Direct Loan until the loan has been transferred to DMCS. Both statute and regulations specify numerous potential consequences of default for borrowers, which include demand of payment of all principal and interest due in full, as well as collection costs; reports to consumer reporting agencies; and ineligibility for additional Title IV federal student aid and certain loan benefits and privileges.\nFSA has several debt collection options it may utilize to collect on defaulted Direct Loans and to potentially bring borrowers out of default. These can be classified as voluntary options (when a borrower agrees to make payments on the loan) and involuntary options (when the federal government takes action to collect payment from a borrower). Table 2 depicts the voluntary and involuntary methods FSA may use to collect payment on defaulted loans.\nBoth the Default Resolution Group (DRG) and PCAs (and to a limited extent, loan servicers) may use one or more of the methods described in Table 2 to attempt to collect defaulted Direct Loans. Statutory and regulatory provisions provide little guidance regarding the precise sequence in which these methods are to be applied. In general, the DRG and PCAs are not required to take these steps in a particular sequential order, and whether one or more of the methods is pursued depends on each individual borrower's specific circumstances. Ways in which the DRG and PCAs undertake each of these functions are discussed in the following sections; however, some generalizations can be made about the processes DRG and PCAs use to collect defaulted Direct Loans:\n1. Rehabilitation is the most frequently used method to collect defaulted Direct Loans and to bring a borrower out of default. Loan consolidation is the second most frequently used method. 2. Litigation is the last option used when attempting to collect defaulted Direct Loans and is used in a very small number of cases. 3. It is possible that multiple payment collection options could be utilized simultaneously (e.g., a borrower's income could be garnished via an administrative wage garnishment and they could enter into a loan rehabilitation agreement with a PCA).", "The DMCS and DRG, PCAs, and FSA all participate in debt resolution activities to attempt to bring borrowers out of default and to collect payment on defaulted Direct Loans. This section of the report describes some typical functions performed by each party.", "As described previously, the DMCS is a contracted system that performs myriad debt collection and other functions on default loans. The DRG serves as the contact center for DMCS. After a defaulted loan is transferred to DMCS from a loan servicer, DMCS generates a letter advising a borrower that he or she can avoid assignment of the defaulted loan to a PCA by either entering into a voluntary repayment agreement or by providing proof that the debt is legally unenforceable. If a borrower does not complete either of these actions within 60 days, the defaulted loan may be assigned to one of several contracted PCAs, which complete a variety of tasks related to attempting to bring borrowers out of default and collecting payment on defaulted loans (discussed below). In certain instances, the FSA may decide not to assign a borrower's account to a PCA, such as if the amount owed is less than $500. In these cases, the loan will remain in DMCS. In instances in which a PCA has been unsuccessful in collection on a defaulted loan, the PCA may be required to return the loan to DMCS for assignment to another PCA.\nFor those borrower accounts held by DMCS, DRG may perform many of the typical debt collection activities performed by a PCA, such as identifying accounts eligible for rehabilitation and identifying accounts eligible for administrative resolution, such as loan discharge due to death or total and permanent disability. In addition, the DMCS processes all payments made by defaulted borrowers on their loans, regardless of whether a loan has been assigned to a PCA. It also reports loan status to NSLDS, and reports loans and loan status to consumer reporting agencies.", "In many instances, if a borrower becomes more than 360 days delinquent on his or her Direct Loan, the account is assigned to one of several PCAs with which FSA has contracted to perform myriad debt resolution functions. These include determining whether a borrower account is eligible for administrative resolutions, such as loan discharge due to death or total and permanent disability; attempting to obtain voluntary payment from a borrower by, for instance, negotiating reasonable repayment schedules with a borrower for potential loan rehabilitation; and determining whether a borrower account is eligible for some involuntary payment methods, such as administrative wage garnishment.\nUnlike with loan servicing, a variety of federal statutes and regulations dictate many facets of federal debt collection in general and ED debt collection, via PCAs, specifically. For instance, the Federal Claims Collections Standards set forth the standards federal agencies use in the \"collection, offset, compromise, and the suspension or termination of collection activity for civil claims for money, funds, or property,\" and ED regulations contain requirements that specifically pertain to debt collections undertaken by ED. In addition, the Fair Debt Collections Practices Act prescribes standards that debt collectors in general must follow, which are intended to eliminate abusive debt collection practices. Finally, FSA's contracts with PCAs provide more detail than its contracts with federal loan servicers regarding specific tasks to be performed; however, PCAs are given some discretion to determine how to complete those tasks.\nThis portion of the report provides a broad overview of the common functions performed by PCAs when performing debt collection tasks. The first section describes payment collection tasks PCAs perform and the second section describes other administrative functions they perform. Because PCAs must meet numerous statutory, regulatory, and contract requirements, but are given some discretion in determining how to meet them, the information presented in this section is intended to be illustrative and not comprehensive in nature. In addition, the exact tasks and functions performed by PCAs vary depending on the precise circumstances of each borrower account allocated to them.", "PCAs' primary function is to collect payment on defaulted Direct Loans, and they have a variety of options available to them to do so. The precise conditions under which any of the collection options are available to PCAs depends on each borrower's individual circumstances; however, in general, PCA debt collection tasks can be summarized in the following manner:\nPCAs typically first attempt to determine whether a borrower's account is eligible for an administrative resolution. This could include determining whether a borrower is eligible for discharge of his or her loan due to death, total and permanent disability, or meeting certain loan forgiveness program requirements (e.g., Stafford Loan Forgiveness for Teachers) and determining whether a borrower's account is eligible for collection suspension due to incarceration. If these options are unavailable, typically PCAs will then attempt to contact the borrower and offer him or her voluntary options for debt resolution, including negotiating a \"reasonable and affordable\" payment schedule, which could include rehabilitation or consolidation. Depending on individual borrower circumstances, a PCA may also offer a compromise of loan payment or determine whether a borrower is eligible for administrative wage garnishment.", "In addition to the process of negotiating with borrowers and collecting payments on defaulted federal student loans, PCAs complete the following tasks:\nlocating (including skip-tracing activities) and contacting defaulted borrowers and providing information to them relating to the consequences of loan default and borrower options for addressing default; providing requested copies of loan records to borrowers if an offset of benefits with the TOP is initiated; preparing accounts for litigation, including conducting research to determine a borrower's ability to pay and notifying a borrower of intent to litigate; and returning accounts to FSA for failure to convert the account to active repayment status (at which point, the defaulted loan may be transferred to a new PCA) or to prepare an account for an administrative resolution.", "In addition to managing contracts that support FSA's debt collection activities (discussed below), FSA may refer a borrower's case to the Department of Justice for litigation, or may certify borrower accounts as eligible for the U.S. Department of the Treasury's Treasury Offset Program (TOP) and refer such accounts to the TOP. The TOP is a centralized offset program that collects delinquent debts owed to federal agencies by withholding all or a portion of payments of certain federal benefits (e.g., Social Security benefits, federal income tax refunds) and remitting those payments to the relevant federal agency to satisfy an individual's debt.", "HEA Section 456 authorizes ED to enter into contracts with third-party entities to perform debt collection activities. Operating under this general authority, FSA currently maintains contracts with multiple PCAs, and contracts were most recently awarded to seven PCAs in December 2016. This section of the report discusses compensation and how accounts are allocated to the PCAs awarded contracts in 2016, as the older PCA contracts will be phased out.", "Similar to federal student loan servicing contracts, contracts with PCAs base compensation on their overall performance. However, unlike loan servicing contracts, PCAs are paid either a commission based on the dollar amount of outstanding defaulted loans collected or a flat fee, depending on the collection method used. A PCA may receive a commission equal to 15.2% of the total amount collected on a loan (including principal, interest, collection costs, and other fees) via regular payments and administrative wage garnishment and 2.75% of the final pay-off value if a defaulted loan is consolidated if a borrower established a satisfactory repayment plan prior to certification of the new Consolidation Loan. PCAs are paid a flat fee of up to $1,710 per loan rehabilitation and $150 for administrative resolutions (e.g., loan discharge due to death or total and permanent disability).", "During the first few months of the 2016 PCA contracts, FSA will transfer a fixed number of borrower accounts to each PCA. However, after the first several months of the contracts, to incentivize PCAs to perform adequately under their contracts, new accounts will be allocated to PCAs based on their ability to meet FSA-specified performance metrics. This will be known as the Contractor Performance Monitoring and Evaluation (CPME) system. Using CPME, FSA will quarterly score each PCA based on its performance using specified metrics, and new accounts will be allocated proportionally based on the total score of all PCAs.\nTo determine new account allocations, first FSA will calculate a Base Allocation (BA) score, using the following metrics: borrowers resolved and dollars collected. PCAs failing to meet a minimum threshold score will be ineligible to receive new accounts in the approaching allocation.\nNext, FSA will calculate a Service Quality (SQ) score for each PCA. The SQ scores will be based on each PCA's call counseling compliance and borrower satisfaction and will be used to adjust (either upward or downward) each PCA's BA score. This adjusted BA score will be known as the Adjusted Allocation Score. As with the BA score, PCAs failing to meet a minimum SQ score will be ineligible to receive new accounts in the upcoming allocation. Finally, new borrower accounts will be allocated based on each PCA's Adjusted Allocation Score as compared to all PCAs' Adjusted Allocation Scores.", "In addition to FSA's use of the CPME for account allocations to PCAs, it uses a variety of other tools to oversee PCAs' debt collection activities and ensure adequate PCA performance. For instance, the 2016 PCA contracts establish Evaluation Scores that will be calculated quarterly for each PCA. These scores will represent each PCA's performance with respect to the above-described metrics as compared against all other PCAs and will be considered by FSA, along with other relevant information (e.g., compliance with federal and state laws governing collection activity, security risks, and violations) when reporting each PCA's past performance to contractor past performance databases. In addition, FSA issues guidance to PCAs to assist them in day-to-day operations and conducts monitoring activities, such as reviewing borrower complaints against PCAs and evaluating PCAs' interactions with borrowers via phone-call monitoring.\nOver the past several years, concerns have been raised that FSA may not be adequately monitoring and effectively responding to PCA performance. For instance, GAO found that although FSA monitors PCA phone calls with borrowers, it has not consistently completed the review of such calls. Moreover, for those calls reviewed, GAO found a range of issues raising concerns about PCAs' treatment of borrowers for which FSA failed to ensure corrective action on the part of the PCAs, including providing inaccurate or misleading information about loan rehabilitation requirements and other options to borrowers. GAO concluded that by failing to effectively monitor and respond to PCA performance issues, FSA may miss opportunities to target oversight and improve program performance. Final implementation of the 2016 PCA contracts may help to address some of these issues." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 2, 3, 3, 4, 2, 3, 4, 4, 4, 4, 3, 3, 4, 3, 4, 4, 4, 3, 4, 4, 2, 3, 3, 3, 2, 1, 2, 3, 3, 3, 2, 3, 3, 4, 4, 3, 4, 1, 2, 2, 3, 3, 4, 4, 3, 2, 3, 3, 3 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h0_full", "", "", "", "h1_full", "", "h1_title", "h1_full", "", "", "h1_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h3_full h2_title", "h2_full", "h2_full", "", "", "h3_title", "", "", "", "", "h3_title", "h3_full", "h3_full", "h3_full", "h3_title", "", "h3_full", "", "", "", "", "", "", "" ] }

{ "question": [ "How does the federal government affect student loans?", "What are the primary functions of the FSA?", "How do third-parties assist the FSA in its administrative functions?", "What is the first step in obtaining a direct loan?", "How is student eligibility determined?", "How do IHEs handle the processed information?", "How are loans handled after disbursement?", "What functions do loan servicers carry out?", "What tasks do loan servicers typically perform?", "What actions are taken after a default on a Direct Loan?", "What is done if the loan servicers attempts are unsuccessful?", "What debt-collection methods will do the FSA and PCAs utilize?" ], "summary": [ "Under the Direct Loan program, the federal government essentially serves as the banker by providing loans to students and their families using federal capital and assuming the risk of loss against borrower default.", "FSA is primarily responsible for developing the administrative functions and processes and performing oversight activities for the Direct Loan program to enable its day-to-day operation.", "Additional parties, including institutions of higher education (IHEs), contracted loan servicers, and contracted private collection agencies (PCAs), perform many of the routine administrative tasks for the program.", "The first step in administering a Direct Loan is processing a student's Free Application for Federal Student Aid (FAFSA).", "After a student has completed his or her FAFSA, FSA's automated systems process the application and make an initial determination regarding a student's eligibility for federal student aid.", "IHEs then receive the processed information and take a variety of steps to award financial aid, including Direct Loans, to the student.", "After a borrower's Direct Loan is disbursed, the loan is then assigned to one of multiple loan servicers with which FSA has contracted.", "Functions performed by loan servicers vary depending on the loan's status (e.g., repayment, grace period) and individual borrower circumstances; however, there are several tasks loan servicers typically perform.", "These include providing information to borrowers on loan terms and conditions, collecting and applying loan payments to outstanding balances, processing requests for loan deferment or forbearance, processing applications to consolidate federal student loans into a Direct Consolidation Loan, and providing delinquency and default prevention activities.", "If a borrower defaults after entering repayment on a Direct Loan, then a variety of actions may be taken to attempt to reinstate the loan into good standing and recover payment on it. Loan servicers provide initial outreach to defaulted borrowers and attempt to enter into repayment or rehabilitation agreements with them.", "If the loan servicer is unsuccessful, a borrower's defaulted loan is transferred to FSA and then may also be transferred to one of multiple PCAs with which FSA has contracted.", "FSA and PCAs will attempt to enter into voluntary repayment agreements with borrowers; however, a variety of other debt collection tools may also be used if these attempts are unsuccessful." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, -1, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "Background", "States Have Made Significant Progress Implementing Wireless E911", "According to FCC’s Reporting, Some States Have Used 911 Funds for Other Purposes, but FCC’s Reporting Could Be More Useful", "State Methods for Collecting 911 Funds", "States’ Use of 911 Funds", "Limited Usefulness of FCC’s Reporting", "Although NG911 Is in Preliminary Stages and Faces Challenges, the Federal Government Is Supporting NG911 Activities", "NG911 Challenges and State Activities", "Federal Efforts to Address Challenges and Facilitate NG911 Implementation", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Federal Communications Commission", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Nationwide implementation of E911 by local wireline telephone companies began in the 1970s. With wireline E911 service, emergency calls are automatically routed to the appropriate 911 call center, and the call taker receives the telephone number and street address of the caller. In 1996, FCC adopted rules for wireless E911. Wireless E911 technology provides emergency responders with the location and callback number of a person calling 911 from a mobile phone. Implementing wireless E911 involves deploying technologies that are able to calculate the geographic coordinates of the caller’s location at the time of the call and display these coordinates as a location the call taker can understand. When a wireless caller dials 911, the call must be routed along the networks of both a wireless telephone company and a wireline telephone company before terminating at a call center, known as a Public Safety Answering Point (PSAP). There are more than 6,000 PSAPs nationwide, often at a county or city level. PSAPs vary in size and technical sophistication. Some large urban PSAPs have dozens of call takers and split the functions of call taking and dispatching the proper emergency responder. Smaller PSAPs are sometimes staffed by only two or three call takers who also handle dispatch. In some rural areas, the PSAP may be the sheriff’s office.\nAs shown in figure 1, the wireless carriers, local exchange carriers, and PSAPs must have appropriate equipment and interconnections for wireless E911 calls to be sent to and received by PSAPs with the caller’s location information. For example, wireless carriers must finance the implementation of a caller location solution and test their equipment to verify its accuracy. Local exchange carriers are generally responsible for ensuring that all the necessary connections between wireless carriers, PSAPs, and databases have been installed and are operating correctly. The original E911 system was designed to carry only the caller’s telephone number with the call, and the associated fixed address was obtained from an established database. Wireless E911, however, requires more data items, and the mobile caller’s location must be obtained during the call and delivered to the PSAP separately using additional data delivery capabilities. To translate the latitude and longitude location information into a street address, PSAPs usually must acquire and install mapping software. PSAPs may also need to acquire new computers to receive and display this information. Getting PSAPs the technology needed to receive wireless E911 location information is primarily a state and local responsibility because PSAPs serve an emergency response function that has traditionally fallen under state or local jurisdiction. As a result, states and local jurisdictions establish timetables for implementation by their PSAPs and fund the equipment upgrades needed by their PSAPs for E911 service.\nThe only federally mandated time frames for implementing wireless E911 technologies are those placed on wireless carriers by FCC. In 1996, FCC responded to the rising number of mobile telephone subscribers and the resulting increase in wireless 911 calls by adopting rules for wireless E911 that established a two-phase implementation approach for the wireless carriers and set deadlines for wireless carriers regarding their part in E911 deployment.months of a request from a PSAP, wireless carriers be prepared to provide the PSAP with the wireless phone number of the caller and the location of the cell site receiving the 911 call (Phase I information); and (2) by October 2001, or within 6 months of receiving a request from a PSAP, wireless carriers be prepared to provide the PSAP with the geographic coordinates of the caller’s location with greater precision, FCC required that (1) by April 1998, or within 6 generally within 50 to 300 meters (Phase II information). As we reported in 2006, most states and the District of Columbia collect fees to cover the costs of implementing wireless E911. States collect fees on a variety of telecommunications services including wireline, wireless, “prepaid wireless,” and VoIP.\nDOT has recognized the relationship between wireless E911 services and highway safety and, in 2001, contracted with NENA to develop a state/county database that tracks E911 implementation. As part of the contract, NENA created a database of counties, including information about implementation of wireless E911, which is updated with data gathered directly from state and county representatives. Now completely funded by NENA, the database is accessible through http://www.nena.org.\nThe New and Emerging Technologies 911 Improvement Act of 2008 (NET 911 Act) requires FCC to submit an annual report to Congress detailing the status in each state of the collection and distribution of fees or charges for the support or implementation of 911 or E911 services to ensure transparency and accountability. The annual reports are to include findings on the amount of revenues obligated or expended by each state or political subdivision thereof for any purpose other than the purpose specified in the state or local law adopting the fee or charge. FCC has submitted four reports to Congress covering the state activities of calendar years 2008 to 2011. In addition, the National 911 Program— housed within NHTSA’s Office of Emergency Medical Services—has helped to provide federal leadership and coordination in supporting and promoting optimal 911 services.\" Because of changes in the public’s use of communications technology and the aging infrastructure of the legacy 911 network, 911 services are transitioning to an NG911 system that uses Internet Protocol (IP)-based technology to deliver and process 911 traffic. Such a system will provide increased capabilities as shown in table 1. With NG911, PSAPs are expected to be able to process all types of emergency communications including voice, data, and video. According to NENA, Emergency Services IP Networks are among the basic building blocks required for NG911. They are managed, multipurpose networks that support public safety communications services and use broadband technology capable of carrying voice plus large amounts of data using Internet protocols and standards. As part of the NG911 Initiative, DOT has created an NG911 system design and tested it to show that the design will be capable of accommodating communications from a wider range of devices including cellular calls, instant messaging, wireline calls, “telematics” (automatic crash notification data directly from the vehicle), VoIP calls, and live video feeds.\nIn September 2009, NHTSA and NTIA announced more than $40 million in grants to help PSAPs implement E911 and NG911 technologies. To be eligible for the program, the applicant had to certify that the state and other taxing jurisdictions within the state had not used designated E911 funds for any other purpose than for which they were designated within 180 days preceding the application date. The grant period concluded at the end of 2012. In all, NHTSA and NTIA awarded grants ranging from $200,000 to $5.4 million to 30 states and territories to help implement NG911 services. NHTSA officials told us that they are currently conducting an evaluation of the grant program and that they will release a final report on http://www.911.gov.", "Although states faced challenges and delays in the past, they have made significant progress implementing wireless E911. According to NENA data as of March 2013, 98 percent of PSAPs are capable of receiving Phase I location information and 97 percent have implemented Phase II for at least one wireless carrier. This represents a significant improvement in implementation since our previous reports in 2003 and 2006 as shown in table 2.\nAccording to NENA data, 142 U.S. counties (representing roughly 3 percent of the U.S. population) do not have some level of wireless E911 service. According to federal and association officials, these areas are primarily rural or tribal counties that face special challenges implementing wireless E911 service. According to the National 911 Program, rural agencies may lack the funding resources needed for technology upgrades, equipment, and training. Rural and tribal areas typically are large geographically but less densely populated than urban areas. In addition, because it may take first responders longer to reach the scene of an emergency, call-takers in PSAPs serving rural areas may be required to stay on the phone longer with callers or provide more extensive emergency instruction to callers until help arrives. Furthermore, federal and local officials told us about the following specific challenges facing rural and tribal areas:\nTribal lands face special challenges related to 911 services because of several barriers to improving telecommunications on tribal lands. We have previously reported that the barriers to improving telecommunications on tribal lands most often cited by tribal officials, service providers, and others we spoke with were the rural, rugged terrain of tribal lands and tribes’ limited financial resources. These barriers increase the costs of deploying infrastructure and limit the ability of service providers to recover their costs, which can reduce providers’ interest in providing or improving telecommunications services. Other barriers include the shortage of technically trained tribal members and providers’ difficulty in obtaining rights of way to deploy their infrastructure on tribal lands.\nThe limited emergency response resources typical of rural areas can be relatively quickly overwhelmed in disasters or large-scale incidents, according to the National 911 Program. For example, officials from rural counties in one state told us that their PSAPs were overwhelmed with multiple calls following a recent derailed train incident. These calls paralyzed their 911 systems and prevented other 911 calls from reaching the PSAPs during the incident.\nAccording to FCC officials, network-based “triangulation”—a solution used by some wireless carriers to determine a caller’s location— depends on the ability of three cell towers to access the caller’s Network-based triangulation can be particularly mobile device.challenging in rural areas that have fewer cell towers than more densely populated areas.\nAccording to rural officials in one state we contacted, some homes in rural areas do not have addresses and some streets do not have names. Before E911 can be implemented in these areas, addresses will have to be created and mapping of those addresses will have to be completed so that automated location services can be provided.\nProviding E911 services is primarily a state and local government responsibility, but USDA has programs that are available to help rural and tribal areas gain access to wireless E911 services. On September 12, 2011, USDA adopted a final rule that described program eligibility requirements for a 911 Access Loan Program to make loans and loan guarantees to finance the construction of interoperable, integrated public safety communications networks in rural areas. These networks offer several advantages, including the ability to precisely locate rural wireless 911 calls. Funds for this program are available through the Rural Utilities Service’s traditional Telecommunications Infrastructure Loan Program.In addition, USDA’s Community Facilities Program supports essential infrastructure and services for public use in rural areas of 20,000 in population or less. Financing for community facilities projects covers a broad range of interests, including health care, education, public safety, and public services. A USDA official said that this program could be used in a variety of ways to help rural areas gain access to wireless E911, including constructing PSAPs or providing the necessary equipment, software, computer networks, and power supplies.\nEven though some rural and tribal counties do not have wireless E911 service, almost 97 percent of the overall population has some Phase I wireless coverage and approximately 98 percent has some Phase II wireless coverage, according to NENA data. Furthermore, as shown in figure 2, 25 states and the District of Columbia have fully implemented wireless E911 Phase I and Phase II in all counties.", "", "As we reported in 2006, all 50 states and the District of Columbia collect—or have authorized local entities to collect—funds for 911. State methods for collecting funds vary in structure, fee amounts, and services covered, among other things. For example, some states collect fees or charges for 911 and administer a statewide 911 program. Other states authorize local entities to collect fees or charges for 911 and to administer 911 programs at the local level. Still other states use a combination of these approaches. However, some local jurisdictions have not begun collecting 911 funds even though they are authorized by their state to do so.told us that their county had not begun collecting 911 funds—even though they have state authorization to do so—because they would have had to collect $10 per line per month to obtain enough funding to implement E911.\nRepresentatives from a rural county with a population under 5,000 Overall, in response to FCC’s request that states report the total amount of 911 funds collected in calendar year 2011, 43 states reported collecting—or authorizing local entities to collect—a total of about $2.3 billion, although because of how this information was collected, the actual amount collected may be higher. States also reported a range of fees collected. For example, states reported wireline and wireless fees ranging from $0.08 to $5.00 per customer per month.", "According to FCC’s report, most states reported using 911 funds for purposes consistent with their funding statutes in 2011. In addition to spending 911 funds on implementing wireless E911 service, states and localities use 911 funds for operations, maintenance, personnel, and NG911 preliminary activities, among other things. However, six states— Arizona, Georgia, Illinois, Maine, New York, and Rhode Island—reported using almost $77 million of funds collected for E911 implementation for other purposes in 2011, as detailed below.funds for these purposes.\nState laws permit using\nArizona. The state reported transferring 13 percent (or about $2.2 million) of funds collected for 911 purposes to its general fund to help address the state’s budget crisis. Arizona also transferred 911 funds to its general fund in 2009 and 2010. According to state officials, these transfers occurred as part of a state budget bill that authorized the transfers. Once funds were transferred to the general fund, Arizona 911 officials could not be certain how they were spent. An Arizona official said that, because of the transfers to the general fund, Arizona had to return a $1.25 million grant to NHTSA and NTIA that would have been used to help Arizona with its deployment of Phase II of wireless E911.\nGeorgia. The state reported collecting $13.7 million in 911 fees for prepaid wireless phones and did not allocate any of these funds for 911 use. Georgia also collected fees on prepaid wireless phones in 2009 and 2010 but did not allocate these funds for 911 use. According to a written response from a Georgia official, Georgia law does not require that these funds be appropriated for 911 purposes. The funds were collected and deposited into the state’s general fund in accordance with state law.\nIllinois. The state reported legislatively transferring $2.9 million out of the state’s 911 fund in state fiscal year 2012, which is funded by a statewide fee on wireless subscribers and from which the state makes monthly distributions to local 911 authorities. According to state officials, these funds were transferred to another fund to maintain that fund’s liquidity. Moreover, in calendar years 2010 and 2011, the state borrowed $1.4 million and $5.2 million from the state’s fund used to reimburse wireless carriers for E911-related expenses, which is also funded by the statewide fee on wireless subscribers. These borrowed funds were repaid within 18 months, as required by Illinois law.\nMaine. As part of personnel service reduction initiatives, the state reported imposing across-the-board furloughs and benefit reductions on state employees, including personnel in the state 911 office, and a little less than $25,000 was transferred from the state’s 911 fund to the state’s general fund in 2010 and 2011. Because the salaries and benefits for employees in the state 911 office are paid for exclusively through 911 funds, the funds that went to the state’s general fund for the furlough days and benefit reductions constituted using 911 funds for purposes other than 911, in accordance with state law according to the state’s submission to FCC. As a result, Maine was ineligible for 911 grant funds from NHTSA and NTIA.\nNew York. According to state officials, New York transferred $45 million from the State Wireless Telephone Emergency Account to the state’s general fund, and made similar transfers to the general fund in 2009 and 2010. According to state officials, the transfer of these funds, authorized by state statute, did not affect the ability of the state to reimburse municipalities for approved 911 expenditures or to otherwise support its 911 programs.\nRhode Island. Per the state’s method of funding 911, as provided for in state statute according to state officials, revenues from the state’s 911 fees are deposited into the state’s general fund, and the 911 program receives its budget from the general fund. In 2011, approximately $17.3 million was collected, but only approximately $4.8 million was appropriated for the 911 program leaving about $13 million in the general fund. Fee revenues were similarly distributed in 2010 and 2011.\nThe District of Columbia and Louisiana did not report to FCC on their use of 911 fees and charges for calendar year 2011. We made several attempts to obtain this information, but officials did not respond to us. However, we can provide information from their reports to FCC in previous years.\nDistrict of Columbia. The District of Columbia reported to FCC in 2011 and 2010 on its collection and use of 911 taxes and fees. FCC did not report that funds were used for purposes other than 911.\nLouisiana. Louisiana did not submit a report to FCC on its taxes and fees in 2010, but did in 2011. In that report, Louisiana did not directly state whether funds were used for anything other than 911 purposes, and FCC did not report that the state had used funds for other purposes.\nWe have previously reported that misalignment between fees and services for which they are charged reduces both equity and economic efficiency. Moreover, stakeholders in other industries have reported that misalignment between the amount of fee collections and expenditures undermines the credibility of the fee. As states collect funds for 911 purposes and then use those revenues for other purposes, there is risk of confusing stakeholders and members of the public who pay these fees and undermining the credibility of 911 fees. However, states occasionally pass laws allowing the use of 911/E911 fees for non-E911 purposes. FCC officials have stated that they do not have the authority to override state law in this regard.", "We have identified three features of FCC’s approach to collecting and reporting information from states that are contrary to best practices set forth in our previous reports on data collection and analysis, which have limited the usefulness of FCC’s reports. Specifically, in its approach, FCC (1) uses only open-ended questions to solicit information from states, (2) lacks written guidelines for interpreting states’ responses and ensuring that results can be reproduced, and (3) does not describe the methodology used to analyze the information in states’ reports.\nFCC has used only open-ended questions to solicit information on state fees and charges for 911 services. FCC officials stated that they regard this approach as the most effective way to elicit responsive information from the states because it requires the states to explain their definitions and procedures in plain language rather than responding to “yes/no” questions or submitting purely quantitative data. We have previously reported that while open-ended questions may be unavoidable when engaged in exploratory work and can be useful to obtain responses that might further clarify the meaning of answers to close-ended questions, When answering open- open-ended questions have several limitations.ended questions, respondents may provide wide-ranging responses that vary and may result in inconsistent information, making it very difficult to consistently and completely tabulate or aggregate responses. Closed- ended questions, on the other hand, can yield data that may be easier to meaningfully track and compare. FCC asks states to report, among other things, the amount of 911 fees or charges imposed and the total amount collected. States’ responses to this question varied widely and respondents often omitted relevant information. For example, some states clearly identified the services—wireline, wireless, pre-paid, and VoIP—to which fees applied, while other states did not specify the services to which fees applied. Because states were not specifically asked whether they collected fees for specific services, it is unclear whether these counts are inclusive or exclusive of these specific services. If FCC had asked closed-ended questions that required respondents to address such distinctions, FCC would have been better able to consistently track fees for various services over time, which could address matters such as whether 911 funding is evolving with changing technology. However, since this information has not been asked in a way that it can be tracked, trend analysis is not possible.\nMoreover, when reporting the total amount of funds collected, states vary widely in their manner of reporting. Some states provide a total amount without any distinguishing features. Some states break out the amount collected by state and local authorities; others break out the amount collected by type of service. Some states provide an actual number whereas others provide an estimate. Because of the open-ended question format, it is nearly impossible to aggregate these results in a useful manner. FCC does provide all state responses in an appendix to its annual reports, and FCC officials stated that doing this facilitates public review and discussion. The inclusion of these state submissions can support public review, particularly in examining the relationship among responses in a particular state. However, the provision of the state reports may not readily lend itself to obtaining specific or discrete types of information from the responses to the open-ended questions. For example, one item asks whether the state has written criteria regarding the allowable uses of the collected funds. This item is embedded in a request for multiple pieces of information. If any interested parties wanted to know how many states and which ones reported having written criteria, they would have to read through all the responses to that item for all submitting entities to obtain the information sought. A closed-ended item could readily capture which state does and does not have written criteria.\nWe have previously reported that with open-ended questions, the responses are often textual and not easily tabulated, and a process called “content analysis” must be used to classify or code the responses. As part of the process of conducting content analysis, a coding manual should be prepared for use by those classifying the responses. A good coding manual is viewed as indispensible in ensuring coding of the highest quality, and an important measure for judging the quality of a content analysis is the extent to which the results can be reproduced. However, FCC officials told us that, while they describe the methodology used to collect the data from states, they do not have an internal written coding manual or similar document that describes how the content of a state’s responses are interpreted or coded. FCC officials noted that this had not been problematic to date because the same FCC staff members had conducted the analysis each year but indicated that development of such a manual would be helpful to ensure future continuity. Because there is no written documentation on how this analysis was conducted, nor the decisions rules that FCC followed in developing its summary classification of responses, there is no basis for independently reproducing the results of FCC’s analysis.\nWe also found that FCC has not been consistent in how it makes certain characterizations in its report. For example, we identified three states— Georgia, Maine, and New York—that provided similar responses each year but FCC characterized the responses differently in different years. For example, Maine reported that it had transferred funds from the 911 fund to the general fund in calendar years 2010 and 2011 as part of a statewide personnel reduction initiative, as described above. FCC characterized Maine as using 911 funds for other purposes in its 2012 report but not in its 2011 report. In another example, Georgia reported that 911 fees on prepaid wireless devices remained in the state’s general fund rather than being allocated for 911 use in its 2010, 2011, and 2012 reports to FCC. FCC identified Georgia as having used funds for other purposes in its 2010 and 2012 reports but not in its 2011 report. FCC officials acknowledged that these three states should have been identified as using funds for other purposes in its 2011 report, but that officials corrected this in the 2012 report. However, FCC did not indicate in the 2012 report that a mistake was made in the 2011 report. A reader who noted that the states were not listed as having used funds for other purposes in the 2011 report, might believe that these states changed their practices from one year to the next, when, in fact, the states reported essentially the same information each year.\nWe also identified inconsistent characterizations in FCC’s summary table, which indicates whether states used 911 fees or charges for other purposes. In 2012, FCC used four ways of coding whether states used funds for other purposes—”Yes,” “No,” “No information,” and “DNP” (defined in FCC’s report as “did not provide”). However, “DNP” was used in three very different circumstances: when the state did not submit a report to FCC, such as in Louisiana and the District of Columbia; when the state did not provide an answer to the question of whether the state used funds for other purposes; or when the state indicated that all or a portion of the funds are controlled by local entities and that the state could not be certain how the funds were used. As an example of this last case, several states indicated that local entities control some expenditure decisions, which in some cases received the “DNP” designation, but in other cases received the designation “No” or “No information.” If FCC had written guidelines for interpreting state responses, it could have ensured more consistent characterization of state responses.\nAccording to FCC’s Information Quality Guidelines—which are meant to ensure that all data FCC disseminates reflect a level of quality commensurate with the nature of the information—quality is demonstrated through the incorporation of a methodological section or appendix that describes, at a minimum, the design and methods used during the creation, collection, and processing of the data, as well as the compilation or analysis of the data in products including reports prepared In its annual reports, FCC included a detailed description for Congress.of its methodology for collecting responses from states. For example, FCC describes how, in addition to the public notices, FCC sent letters to the Office of the Governor of each state and territory and the Regional Directors of the Bureau of Indian Affairs requesting the information sought in the public notices. FCC sent second notice letters and placed calls to those states and territories that had not responded. However, FCC has not published its methodology for how the report’s analysis was conducted. In particular, FCC has not included in its annual report a description of the decision rules used in determining whether a state used 911 funds for other purposes. As stated in the previous section, FCC does not have an internal written procedures manual or similar document that describes how the content of a state’s responses are interpreted or coded. If FCC had one, it could use information from that coding manual to explain its analysis and decision rules in its annual report.\nThe lack of a description of the methodology for FCC’s analysis is particularly problematic as FCC officials told us that FCC changed its method of making analysis decisions in its most recent report. FCC officials stated that based on their experience with the first three information collections and associated reports, FCC revised the questions included in their 2012 information request. Specifically, one question was modified to elicit specific information on the programs and activities for which 911 funds were used along with how those programs and activities support 911. According to FCC officials, this modification enabled FCC to classify states’ responses with greater accuracy. While FCC’s 2012 report clearly states that modifications were made to the questions and each annual report includes the questions included in that year’s information request, the effects of these changes are not clear to the reader. In some cases, this methodological change resulted in differing characterizations from reports issued in 2011 to 2012, and it is not clear to the reader whether states no longer characterized as having used funds for other purposes had changed their practices of using funds for other purposes or whether the different characterization was a result of FCC’s change in methodology. For example, in FCC’s 2011 report, FCC identified both Virginia and West Virginia as states that had used 911 funds for other purposes. However, based on the additional information provided by these states in 2012, FCC determined that Virginia and West Virginia spent 911 funds in accordance with their respective state statutes governing 911 funding and therefore were not identified as using funds for other purposes. According to FCC officials, in gathering information for 2012, FCC asked additional questions to identify the specific uses of 911/E911 funds that were authorized under state law. They also characterized a state as using E911 funds for purposes other than E911 only if the state reported that is used 911/E911 funds for purposes not designated by the state’s funding statute. Because FCC has not published its methodology for analysis and decision rules for determining whether a state used 911 funds for other purposes and further never explicitly stated that a different method was used in 2012, this lack of disclosure could lead report users to misinterpret the results shown in the report. In particular, although it would appear that as time has passed, fewer states were using funds for other purposes, at least some of this difference is attributable to FCC’s change of methodology.\nWe have previously reported that results-oriented organizations make sure that the information they collect are sufficiently complete and accurate to support decision making. FCC officials stated that seeking narrative responses from each state and publishing those responses demonstrate transparency. However, several pages of individual and varied responses may have limited usefulness to decision makers, who may need high-level descriptions and aggregated information. Furthermore, FCC is missing an opportunity to analyze funding trends because its method of asking questions does not result in answers that can be readily tracked from year to year. FCC is also missing an opportunity to provide more detailed aggregated information in its reports—such as amounts of fees, services covered, and total amount of funds collected—that would be helpful to decision makers who are trying to understand current methods of financing 911. FCC officials told us that they are seeking comment from stakeholders on FCC’s required annual report to Congress, as well as on information provided by states and other reporting entities, and that they will use this information to improve reporting.", "", "To implement NG911 nationwide, states must address technology, regulatory, and funding challenges, according to multiple government officials. For example, technological changes need to be made at PSAPs since existing call centers are incapable of some critical functions, such as linking with one another during emergencies. As such, PSAP calls currently cannot be transferred so PSAPs have limited means to act as back-up for one another when operations in one part of the country become overloaded or shut down because of circumstances such as hurricane evacuations or wildfires, according to DOT’s Research and Innovative Technology Administration. With respect to regulatory challenges, current laws and regulations in most states do not effectively enable the implementation of new technologies or allow the level of coordination and partnerships among government and public safety stakeholders, service and equipment providers, PSAPs, and 911 authorities that is necessary to implement IP-enabled 911 systems, according to NHTSA. Moreover, in the National Broadband Plan, FCC noted many of the existing state and federal regulations governing 911 were written before the technological capabilities of NG911 existed and For example, have therefore hampered the implementation of NG911.state, association, and industry officials have expressed concern about uncertainty regarding liability protection related to NG911. Stakeholders also expressed concerns about funding mechanisms for NG911. State revenues from long-established funding methods tied to wireline services are decreasing as more consumers disconnect their traditional home phones in favor of wireless devices or other services such as mobile VoIP.\nDespite NG911 implementation challenges, many states have started funding preliminary NG911 activities, and some areas have developed regional NG911 projects. For example, in responding to FCC’s data collection effort, 33 states reported that expenditure of 911/E911 funds for NG911 activities is permissible under current state law. Of these, 16 states reported that funds had been expended in 2011 for some NG911 activities including planning, network development, and equipment acquisition. As examples of regional NG911 projects, the Counties of Southern Illinois Next Generation 911 project has been identified by NENA as an early adopter of a regional approach to NG911. The project includes connecting 21 PSAPs through an Emergency Service IP Network, creating identical data centers in 2 counties, and obtaining NG911 equipment and information for a 15-county region in southern Illinois. Similarly, the state of Texas is conducting an NG911 project that is partially funded with federal grants from NHTSA and NTIA. The project involves constructing a detailed geospatial database of over 200 Texas counties that will be needed for a statewide NG911 system. The database should allow the new system to pinpoint the PSAP that needs to respond to a caller based on location.", "Even though 911 services remain primarily a state and local government responsibility and NG911 overall is in the early planning stages, FCC is working with federal, state, and private sector partners to help states address NG911 implementation challenges. For example, one of FCC’s federal advisory committees—the Communications Security, Reliability, and Interoperability Council (CSRIC)—makes recommendations to FCC to promote reliable 911 service and issued a report in March 2011 framing the transitional issues to NG911. CSRIC members are selected from public safety agencies, consumer or community organizations or other nonprofit entities, and the private sector. FCC also released a 5- point plan, based on recommendations made in the National Broadband Plan, to encourage NG911 implementation and to help states address some of the technology, regulatory, and funding challenges to implementation. Key elements of FCC’s 5-point plan include:\nDevelop location accuracy mechanisms for NG911. Existing location technologies do not perform effectively in all environments. For example, global positioning technologies may not work deep inside a steel-and-concrete building, or even in a suburban residential basement, but may work in wood frame construction or near office windows. FCC officials said CSRIC plans to release a report in 2013 on indoor location accuracy.\nEnable consumers to send text, photos, and videos to PSAPs. In December 2012, FCC issued a notice of proposed rulemaking examining rule changes meant to enable people to send text messages to 911. The proposal was based on the voluntary commitment by the four largest U.S. wireless carriers to make text-to- 911 available to their customers by May 15, 2014. The proposed rulemaking would also require all wireless carriers and interconnected text-messaging providers to send automatic “bounce back” error messages by June 30, 2013, to consumers attempting to text 911 when the service is not available in order to inform consumers and prevent confusion.\nAdditionally, NHTSA and NTIA have made more focused efforts to address NG911 technology challenges. As required in the New and Emerging Technologies 911 Improvement Act of 2008, NHTSA’s and NTIA’s National E911 Implementation Coordination Office developed a national plan in September 2009 for migrating to IP-Enabled 911 Systems, which lays a foundation for addressing technological challenges associated with enabling consumers to send text, photos, and videos to PSAPs.\nFacilitate completing and implementing NG911 technical standards.\nCSRIC has identified technical standards, related technical gaps, and the overall readiness of the NG911 applications. In addition, CSRIC has classified the importance and urgency of resolving the identified technical gaps.\nDevelop a governance framework for NG911. As required by the Next Generation 911 Advancement Act of 2012, FCC released a report in March 2013 with detailed recommendations to Congress to create a new legal and regulatory framework for transitioning from legacy 911 to NG911 networks. The report includes detailed information on the major NG911 challenges and 24 specific recommendations to Congress and others, such as state and local public safety authorities, to address the challenges. For example, FCC recommended that Congress promote a consistent nationwide approach to key elements of NG911 deployment, including standards that support seamless communication among PSAPs and between PSAPs and emergency responders; appropriate liability protection to encourage technological innovation and rapid deployment of NG911; and provisions to make NG911 fully accessible to people with disabilities. In addition, NHTSA has developed guidelines for state NG911 legislative language to help address state regulatory challenges. In doing so, NHTSA obtained input from local, regional, state, and federal public-sector stakeholders, as well as private-sector industry representatives and advocacy associations. NHTSA has also worked with the National Conference of State Legislatures to create a database of 911 bills that have been introduced in the 50 states and the District of Columbia. The information is updated bi-weekly and includes information on multiple topics including funding and appropriations.\nDevelop a funding model for NG911. Based on a CSRIC recommendation, NHTSA is currently working with a contractor with expertise in economics and a Blue Ribbon Panel to help states develop new options for funding 911. According to NHTSA officials, a report on this effort is expected to be released in 2014. In addition, in FCC’s 2013 report to Congress on the legal and regulatory framework for NG911 services, FCC made three recommendations to Congress for updating NG911 funding mechanisms. Specifically, FCC recommended that Congress should (1) develop incentives for states to broaden the base of contributors to NG911 funding to more accurately reflect the benefits derived from NG911 service, (2) encourage states to provide funding for NG911 as well as legacy 911 purposes as part of any existing or future funding mechanism, and (3) condition grants and other appropriate federal benefits on a requirement that funds collected for 911/NG911 funding be used only for 911 or NG911 purposes and provide for appropriate enforcement of such requirements.", "Most of the country has now implemented wireless E911 services, but this took over a decade to accomplish. New technology and eroding funding mechanisms have highlighted the need for 911 to evolve to a new system that can accommodate next generation technologies and that is based on an adequate source of funding to maintain the system. For NG911 to avoid the slow start that wireless E911 experienced, networks will need to be formed that will require regulatory changes at multiple levels of government. Although NG911 is still in nascent form, FCC, DOT, and others in the federal government are working together to conduct the research and planning needed to provide the foundation for states to address the technology, regulatory, and funding challenges to implement NG911 more efficiently than they implemented E911. Notably, FCC’s March 2013 report identified potential steps for Congress to take to create a legal and regulatory environment that will assist states, PSAPs, service providers and other stakeholders in accelerating the nationwide transition from legacy 911 to NG911. The report provided 24 specific recommendations to Congress and others, such as state and local public safety authorities, to address the challenges of implementing NG911.\nFCC has been collecting and reporting information on states’ use of 911 and E911 funds on an annual basis for 4 years and, as mandated by law, will continue to do so. Collecting and reporting this information requires resources from both FCC and the states, so it is in the best interest of all parties for the information to be presented in the most useful way possible. Given that FCC’s future annual reports will likely include information on the transition to NG911 services, it is important that FCC collect information in a way that provides information that can be tracked over time. For example, as the federal government provides information for states as they transition to a potential new funding system, it would be helpful to have information that tracks current trends and patterns in state funding. However, because FCC’s method of asking questions does not result in answers that can be tracked from year to year, there is no federal tool that can be used at this time to understand how or if states are adjusting their funding for the transition to NG911. Furthermore, FCC is missing an opportunity to provide more detailed aggregated information in its reports—such as amounts of fees, services covered, and total amount of funds collected—that would be helpful to decision makers. For example, having more readily accessible, detailed information about the current status of 911 funding would provide decision makers with a better understanding of how to address the challenges that arise in funding NG911 services. Following best practices for data collection and analysis—such as using closed-ended questions when possible and clearly communicating how open-ended information is coded and analyzed—would help ensure that the information FCC collects is measureable and could be tracked, resulting in more useful information for Congress and others who are researching funding mechanisms for the future of 911 services.", "We recommend that the Chairman of FCC follow best practices for data collection and analysis to improve FCC’s current method of collecting and reporting information on states’ use of 911 funds, by, for example, using closed-ended questions when possible, developing written internal guidance for analyzing data, and fully describing the methodology for its report.", "We provided a draft of this report to FCC and DOT for their review and comment. In response, FCC concurred with our recommendation to improve its current method of collecting and reporting information on states’ use of 911 funds. FCC stated that it is examining ways to augment current collection of information to yield more precise information and to provide more quantitative data in future reports. Specifically, FCC noted that it will (1) consider using closed-ended questions as part of future data collections to facilitate tracking and analyzing data, (2) provide greater clarity in its guidelines for analyzing data, and (3) include a more detailed description of its methodology in future reports. FCC further stated that it has taken a variety of steps to enhance the transparency and usefulness of the information it gathers and has sought comment on the accuracy and completeness of state responses to FCC’s information collection. FCC officials believe these steps will also improve the accuracy and efficacy of its reporting. FCC’s written comments are reprinted in appendix II. DOT provided technical comments which we incorporated as appropriate.\nWe are sending copies of this report to the Chairman of FCC, the Secretary of Transportation, and interested congressional committees. In addition, the report is available at no charge on our website at http://www.gao.gov.\nIf you or your staff have any questions concerning this report, please contact me at (202) 512-2834 or [email protected]. 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 III.", "The Next Generation 911 Advancement Act of 2012 mandated that we review states’ collection and use of 911 funds. This report presents information on (1) the progress that has been made in implementing wireless Enhanced 911 (E911) in the last decade, (2) the extent to which states are collecting and using 911 funds for 911 purposes and the usefulness of FCC’s reporting about this issue, and (3) challenges to implementing NG911 services and federal efforts to facilitate its deployment.\nTo address these issues, we interviewed federal, state, regional, and association representatives. We interviewed officials from the Federal Communications Commission (FCC) regarding states’ collection and use of E911 funds and the progress made in deploying wireless E911 and NG911 throughout the country. We also interviewed officials from offices within the Departments of Transportation (DOT) and Agriculture about E911 and NG911 deployment. We interviewed representatives from associations including the National Emergency Number Association (NENA), the National Association of State 911 Administrators, the Association of Public-Safety Communications Officials, CTIA-The Wireless Association, and the Competitive Carriers Association about states’ collection and use of E911 funds and about E911 and NG911 deployment. We visited Illinois, where we interviewed officials from the State 911 Office, officials associated with a regional NG911 project, and representatives from rural counties in southern Illinois that have not yet begun E911 implementation. We obtained and examined relevant reports and materials from these officials and representatives. We selected Illinois because we were informed about the regional NG911 project in southern Illinois from stakeholders and because Illinois reported using 911 funds for other purposes to FCC in its 2010, 2011, and 2012 reports. We also interviewed Texas officials with responsibility for the state’s NG911 pilot project because Texas received the largest E911/NG911 grant from NTIA and NHTSA and because stakeholders mentioned that the state was making progress on implementing NG911. Information obtained from Illinois and Texas is not generalizable to any other states. In addition, we gathered further information from state officials in the five other states that reported using E911 funds for other purposes in their 2012 reports to FCC: Arizona, Georgia, Maine, New York, and Rhode Island.respond to FCC’s request for information—Louisiana, District of Columbia, American Samoa, Northern Mariana Islands, and U.S. Virgin Islands—but none responded to our request.\nIn addition, we attempted to contact jurisdictions that did not To understand the progress that has been made in deploying wireless E911 services throughout the country, we reviewed our previous reports on wireless E911 implementation in 2003 and 2006, and we obtained and analyzed county- and state-level E911 deployment data collected by NENA as of December 2012. To determine the reliability of this data, we reviewed relevant documentation and interviewed cognizant officials about their processes for reviewing the data and ensuring their accuracy. We determined that the NENA data were sufficiently reliable for the purposes of our report. To determine the extent to which states are collecting and using E911 revenues for E911 purposes and the usefulness of FCC’s reporting about this issue, we obtained FCC’s 2010 through 2012 annual reports on state collection and distribution of 911 and E911 fees and charges as well as states’ responses to FCC’s information-collecting effort upon which the FCC’s annual reports are based.information that the states provided to the information FCC reported. We also performed year-to-year comparisons, identifying differences in how FCC characterized states’ responses in different years. To determine the reliability of this data, we reviewed relevant documentation, and interviewed cognizant officials about their processes for reviewing the data and ensuring their accuracy. Except where we have noted some inconsistencies and concerns with FCC’s analysis of state-reported information, we consider the data sufficiently reliable for the purposes of this report. In assessing the usefulness of FCC’s reporting, we reviewed best practices set forth in our previous reports and other professional literature on methods for collecting, analyzing and reporting information We analyzed the states’ reports to FCC, comparing the and data. To identify federal efforts to facilitate NG911 services, we reviewed FCC’s report to Congress entitled Legal and Regulatory Framework for Next Generation 911 Services as well as associated stakeholders’ responses to FCC’s public notice on NG911. In addition, we reviewed relevant laws and regulations pertaining to E911 and NG911, including the Wireless Communications and Public Safety Act of 1999, the ENHANCE 911 Act of 2004, the New and Emerging Technologies 911 Improvement Act of 2008, and various state laws governing the collection and use of 911/E911 fees. We also reviewed relevant reports from FCC, DOT, the Congressional Research Service, industry, and other stakeholders, including FCC’s National Broadband Plan.", "", "", "", "In addition to the contact named above, Sally Moino, Assistant Director; Thomas Beall; Amy Higgins; David Hooper; SaraAnn Moessbauer; Joshua Ormond; Amy Rosewarne; and Rebecca Rygg made key contributions to this report." ], "depth": [ 1, 1, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full h3_full", "h0_full", "h1_title", "", "h1_full", "h1_full", "h2_title h3_title", "h2_full", "h3_full h2_full", "", "", "", "h3_full", "", "", "", "" ] }

{ "question": [ "To what extent are 911 call centers capable of receiving Phase I and Phase II information?", "How has wireless Enhanced 911 improved since 2003?", "What areas lack wireless E911?", "What states reported using 911 services funds for other purposes?", "What are the risk associated with this practice?", "Why are the FCC's reporting methods problematic?", "What is NG911?", "What are some regulatory challenges for implementing Next Generation 911?", "What step FCC is planning to take in order to address these concerns?", "What is Wireless E911?", "How does this compare to the current E911 system?", "Why does the FCC report 911 funding?", "What did GAO address in their report?", "How did GAO collect information for this report?" ], "summary": [ "Currently, according to the National Emergency Number Association (NENA), nearly 98 percent of 911 call centers, known as Public Safety Answering Points (PSAPs), are capable of receiving Phase I location information, and 97 percent have implemented Phase II for at least one wireless carrier.", "This represents a significant improvement since 2003 when implementation of Phase I was 65 percent and Phase II was 18 percent. According to NENA's current data, 142 U.S. counties (representing roughly 3 percent of the U.S. population) do not have some level of wireless E911 service.", "The areas that lack wireless E911 are primarily rural and tribal areas that face special implementation challenges, according to federal and association officials.", "Six states--Arizona, Georgia, Illinois, Maine, New York, and Rhode Island--reported using a total of almost $77 million of funds collected for 911 implementation for other purposes (e.g., transferring 911 funds to the general fund) in 2011.", "Using funds in this way is permissible by state law in these states, but it creates the risk of undermining the credibility of 911 fees in those states.", "In particular, contrary to best practices for collecting and analyzing data, FCC uses only open-ended questions to solicit information from states, lacks written guidelines for interpreting states' responses and ensuring that results can be reproduced, and does not describe the methodology used to analyze the data it collects. As a result, FCC is missing an opportunity to analyze trends and to provide more detailed aggregated information that would be useful to decision makers.", "Next Generation (NG911) will enable the public to reach PSAPs through voice and data, such as text messages, but stakeholders have identified a variety of technical, regulatory, and funding challenges to implementing it.", "For example, many of the existing state and federal regulations governing 911 were written before the technological capabilities of NG911 existed.", "FCC's plan includes (1) developing location accuracy mechanisms for NG911; (2) enabling consumers to send text, photos, and videos to PSAPs; (3) facilitating the completion and implementation of NG911 technical standards; (4) developing a governance framework for NG911; and (5) developing a funding model for NG911.", "Wireless E911 service refers to the capability of 911 call takers to automatically receive location information from 911 callers using mobile phones.", "The current E911 system is not designed to accommodate emergency communications from the range of new technologies in common use today that support text, data, and video.", "Although deploying wireless E911 and NG911 is the responsibility of state and local governments, FCC is required by law to report annually on the funds states collect to provide 911 services such as E911. The Next Generation 911 Advancement Act of 2012 required GAO to review states’ collection and use of 911 funds.", "In this report, GAO presents information on (1) progress implementing wireless E911 in the last decade, (2) states’ collection and use of 911 funds and the usefulness of FCC’s reporting on this issue, and (3) challenges to implementing NG911 services and federal efforts to facilitate its deployment.", "GAO reviewed FCC’s annual reports, states’ responses to FCC’s information-collecting efforts, and documents from FCC and DOT regarding E911 and NG911." ], "parent_pair_index": [ -1, 0, 0, -1, 0, -1, -1, 0, 1, -1, 0, -1, -1, 3 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 3, 3, 3, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "Current Situation", "Haiti's Development Needs", "Short-Term Strategy for Addressing Haiti's Needs", "Medium-Term Strategy for Addressing Haiti's Needs", "Long-Term Strategy for Addressing Haiti's Needs", "Critiques of the Poverty Reduction Strategy Process", "The Bush Administration Strategy", "Moving Forward on Haitian Development", "Statistical Overview of Conditions of Poverty12", "Political Governance Data: Police and Penitentiary Institutions", "Economic Data: Stability, Electricity, Private Sector Development, Transportation, and Environmental Indicators", "Access to Basic Services Data: Water, Sanitation, Health, Nutrition, and Education" ], "paragraphs": [ "This report provides a brief analysis of Haiti's development needs. It examines the current situation in Haiti, Haiti's development needs, and what is being done by the Haitian government, the United States, and foreign donors to meet those needs. It also addresses priority areas for Haitian development. Haiti and its multilateral and bilateral donors developed an international assistance strategy, known as the Interim Cooperation Framework (ICF), to address Haiti's short-term needs following the collapse of the government of President Jean-Bertrand Aristide in February 2004. The Cooperation Framework has been extended through 2007, and is the basis from which a long term Poverty Reduction Strategy is being developed. The second part of the report uses the Interim Cooperation Framework's outline to organize statistics related to the priority needs that have been established. These statistics illustrate the challenges posed by current conditions of poverty in Haiti for achieving Haiti's development goals.", "Haiti's poverty is massive and deep. Over half the population (54%) of 8.2 million people live in extreme poverty, living on less than $1 a day; 76% live on $2 or less a day. Poverty among the rural population is even more widespread: 69% of rural dwellers live on less than $1 a day, and 86% live on less than $2 a day. Hunger is also widespread: 81% of the national population and 87% of the rural population do not get the minimum daily ration of food defined by the World Health Organization. In order to reach its Millennium Development Goal of eradicating extreme poverty and hunger by 2015, Haiti's Gross Domestic Product (GDP) would have to grow 3.5% per year, a goal the International Monetary Fund (IMF) says Haiti is not considered likely to achieve. Economic growth for FY2006 is estimated to have been 2.5%. Over the past 40 years, Haiti's per capita real GDP has declined by 30%. Therefore, economic growth, even if it is greater than population growth, is not expected to be enough to reduce poverty.\nThe likelihood that economic growth will contribute to reduction of poverty in Haiti is further reduced by its enormous income distribution gap. Haiti has the second largest income disparity in the world. Over 68% of the total national income accrues to the wealthiest 20% of the population, while less than 1.5% of Haiti's national income is accumulated by the poorest 20% of the population. When the level of inequality is as high as Haiti's, according to the World Bank, the capacity of economic growth to reduce poverty \"approaches zero.\"\nPresident René Préval, who was inaugurated to a five-year term on May 14, 2006, recently completed his first year in office. He outlined his government's two main missions to be building institutions as provided for in the constitution—including the new municipal posts filled by elections on December 3, 2006—and creating conditions for private investment in order to create jobs. Préval has criticized the donor community for not dispersing funds quickly enough. Some international donors have complained that Préval's government keeps changing priorities - first children's needs, then road-building, then security issues. Crime and kidnapping levels have been high, leading Préval's government and the U.N. Mission in Haiti (MINUSTAH) to focus on improving security.", "Plagued by chronic political instability and frequent natural disasters, the Republic of Haiti remains the poorest country in the Western Hemisphere. The United Nations designates Haiti as one of the fifty \"least developed countries\" in the world.\n\"Least Developed Countries\" (LDCs) [are] a category of States that are deemed highly disadvantaged in their development process..., and facing more than other countries the risk of failing to come out of poverty. As such, the LDCs are considered to be in need of the highest degree of attention on the part of the international community....the UN gives a strong signal to the development partners of these countries, and points to the need for special international support measures and concessions in their favour.\nHaiti has many priorities for development that are deeply interconnected. To address the persistent poverty crisis in the country, the Haitian government and the international donor community, including the United States, are implementing and developing assistance strategies that address many development needs simultaneously. In the short-term, they are trying to implement projects that will boost public and investor confidence. At the same time, the government and donors are pursuing medium-term development plans that will improve living conditions for Haiti's vast poor population and construct government institutions capable of providing services and stability. The Haitian government is working with international donors to develop a long-term poverty reduction plan. Since 2000, in response to unresolved elections disputes and questions of transparency, U.S. and other foreign donors have directed assistance through non-governmental organizations.\nThe interim government (2004-2006) focused on macroeconomic performance. The Préval Administration has continued efforts begun by that government, maintaining fiscal discipline and implementing structural economic reforms. Now that an elected government is in place, donors are looking at how to ensure transparency as they provide funds directly to the government again. In addition, since President Préval took office in May 2006, both the new government and international donors are shifting from a short-term program to carry Haiti through a transition period to a long-term program to help reduce poverty in Haiti.", "Haiti and its multilateral and bilateral donors developed an international strategy for assistance to address Haiti's short-term needs in between the collapse of the government of President Jean-Bertrand Aristide and the time a new government could be elected and installed. The World Bank, the Inter-American Development Bank, the United Nations, and the European Commission convened the International Donors Conference on Haiti in July 2004. Working in conjunction with Haiti's interim government, the conference adopted the Interim Cooperation Framework (ICF), which focused on development goals in four general areas: political governance, economic governance, economic recovery, and access to basic services.\nAt the conference, international donors, including the United States, pledged $1.2 billion from 2004 to 2006 to help Haiti rebuild its infrastructure, strengthen institutions, and improve basic services. According to the IMF, about $960 million of these funds had been disbursed as of December 2006. In July 2006, international donors pledged $750 million to bridge Haiti's budget gap and fund economic, social, and democratic reconstruction projects through September 2007.\nThe Interim Cooperation Framework establishes priority needs and projects that fall under four broad categories. For each of these four strategic axes, the Framework provides a strategy, priority objectives, and monitoring indicators.\nThe \"Strengthen Political Governance and National Dialogue\" axis addresses security, police, and disarmament; the judicial system and human rights; and the electoral process. The \"Strengthen Economic Governance and Institutional Development\" category promotes improved and more transparent management of public finances; strengthening the capacities of public institutions; and decentralization in favor of regional, urban, and local preparation of development strategies. The \"Promote Economic Recovery\" objective aims to reverse Haiti's trend of economic regress by promoting macro-economic stability; providing reliable electricity; reviving the private sector; and providing jobs and access to micro-finance. Economic Recovery programs also aim to help farmers meet their needs; improve roads and transport; and rehabilitate and protect the environment. \"Improve Access to Basic Services\" is the fourth axis. Because basic services are so scarce in Haiti, the priorities in this category are many. They range from immediate goals such as providing emergency humanitarian aid to more long-term goals. Health-related long-term goals include increasing the availability of potable water and lavatories; extending minimal health services and improving access to them, improving the ability to address food security, and improving solid waste management. Programs also include improving the quality of and access to education at all levels; engaging disadvantaged youth; supporting Haitian artisans; and reinforcing the media as a means of promoting pluralism and democracy. Other priorities include improving slums and the government's ability to provide social safety nets and protection.\nProgress has been made toward these objectives since 2004, such as the organization of elections, jobs creation, and broader access to clean water and other services. The economic policies of the strategy focused on restoring macroeconomic stability and establishing good governance practices, and had success in areas such as the preparation of budgets before the commencement of a fiscal year, and improvements in fiscal transparency. But because the emphasis was not on economic growth, results were negligible, according to the Haitian government, and Haitians did not experience an improvement in living conditions.", "Building on drafts created by the interim government (2004-2006), the Préval Administration produced an Interim Poverty Reduction Strategy for the years 2007-2009. This plan calls for actions to be taken with a macroeconomic framework focusing on three goals: maintain macroeconomic stability; target actions to reduce poverty; and create conditions conducive to continuous and sustainable growth driven by private initiative. The strategy notes that programs already outlined need to continue, and that the absence of a sector in this strategy does not mean that sector is not important. Partially in response to criticism that too many priorities were set forth in earlier plans, the Haitian government says this plan focuses on those sectors that can be effectively financed in the first year, considering limitations of time, and human and financial resources.\nThe Interim Poverty Reduction Strategy defines major priorities for 2007-2009 to be infrastructure, energy, education, health and security. The government established these priorities for intervention activities:\nGrowth favorable to the productive sectors, focusing on agriculture, industry, trade, environment, craft industries, transportation, electricity, communications, and tourism; Governance and institutional reforms, addressing justice and rule of law, fiscal transparency, modernization of the management of public affairs, deconcentration, and decentralization; and Development of social sectors, emphasizing health, HIV/AIDS, education, water, sanitation, and housing.\nWith such low, or negative, economic growth over the last forty years, Haiti's per capita income has dropped by about 1% a year. The government does not anticipate that real economic growth alone can alleviate poverty. As a result, the government has called for growth policy that is \"pro-poor,\" and for first priority to be given to investment projects that have social and human benefits.", "International donors are assisting Haiti in developing a long-term Poverty Reduction Plan to succeed the Interim Cooperation Framework. It will build on the priorities, needs, and programs already laid out in the Interim Cooperation Framework and the Interim Poverty Reduction Strategy, as well as lessons learned in implementing those strategies. An important part of this strategy, as it was with the others, is developing the final plan through a participatory process, with the overarching goal of ensuring that the interests of Haiti's most disadvantaged population are taken into account. A participatory process is also intended to strengthen democratic and governance processes by building consensus among various political and civic entities, and promoting Haitian \"ownership\" of the development plan. According to the Haitian government's strategy paper, the participatory process was to begin in the first quarter of 2007. A final Poverty Reduction Strategy Paper is to be submitted to the Haitian Parliament in July 2007, and implementation is to begin in October 2007.", "Some analysts have questioned whether Poverty Reduction Strategies (PRS) in general represent the best development strategy for a country. Poverty Reduction Strategy Papers are required to qualify for debt relief through the World Bank's Heavily Indebted Poor Country (HIPC) initiative and the IMF's Poverty Reduction and Growth Facilities. Therefore, some groups say, fulfilling requirements set by the international financial institutions drives the Poverty Reduction Strategy process, and becomes another type of conditionality, rather than the poverty reduction goals of a country like Haiti driving the formulation of debt relief and loan packages, as the PRS process was supposed to do. ActionAid, an international anti-poverty agency, argues that the World Bank and IMF's focus on poverty \"is limited to lessening the social damage done by the negative impacts of their structural adjustment policy reforms...\", and that alternatives or reforms to structural adjustment are generally precluded from discussion.\nIn a review of earlier Poverty Reduction Strategies in seven countries, including Haiti, ActionAid reported that although there was general support for locally generated poverty reduction strategies, the evidence suggested there was little in-country \"ownership\" of the plans except among some of the bureaucracies that implement them. The study found that \"important constituencies are being excluded through the consultation design or their own lack of capacity.\" The report also concluded that the IMF and the World Bank continued to have significant influence and control over the process and content of the Poverty Reduction Strategies themselves and their subsequent debt relief and loan packages. This influence, the report said, meant that \"largely discredited adjustment instruments and targets have reappeared...,\" leaving the PRS susceptible to \"the charge of new form, same substance, and...same impact on the working poor and excluded.\"\nAnother group, the Bretton Woods Project, which monitors the World Bank and the IMF in collaboration with non-governmental organizations and researchers, says these international financial institutions should broaden their sources for development analysis, and that \"Ministers from indebted countries and prominent academics have recently voiced concerns about the conflicts of interest underlying the Bank's role as analyst and lender.\"\nSome of these groups caution civil society organizations about participating in the public consultations for these Strategies. Poverty Reduction Strategies are not necessarily development strategies, they say, because the public consultation process excludes discussions of other important elements of development policy, such as trade policies, domestic and foreign investment strategies, industrial policies, deficit spending, and other issues. They suggest either broadening the scope of discussion within Poverty Reduction public consultations or supplementing them with public forums led by civil society organizations.", "The U.S. Agency for International Development (USAID)'s primary objective in Haiti for 2007-2009 is, \"Helping to meet the basic needs of Haitian citizens.\" According to USAID's FY2007 Budget Justification, these basic needs include \"better education and healthcare; more jobs and economic opportunities; greater access to equitably applied justice; humanitarian assistance; and institutions capable of providing these basic needs.\" USAID's programs are based on the objectives, strategy, and monitoring indicators established under the Interim Cooperation Framework.\nUSAID began implementing new strategies in three areas in FY2007. Because Haiti's poor have become even more vulnerable by the complex disasters arising out of instability and insecurity, one program is aimed at protecting vulnerable populations. This program includes efforts to: (1) improve emergency preparedness and disaster mitigation; (2) protect and increase the food security of groups such as children under five years of age, and pregnant and lactating women; (3) work with vulnerable populations to increase family income and decrease food insecurity; and (4) promote stability by providing short-term employment opportunities in violence-prone areas, especially for out-of-school youth. The proposed budget for this program for FY2007 was $10.6 million in Development Assistance (DA), and $19 million in Economic Support Funds (ESF). (Congress has passed Continuing Resolutions for FY2007, and funding for FY2007 is still unclear.)\nThe second new strategy involves democracy and governance. This program aims to strengthen civil society organizations so that they can reach out to groups traditionally excluded from the political process, and apply pressure on the Haitian government to create and implement good governance reforms. Judicial reform programs focus on improving the Justice Ministry's capacity to function; providing protection and treatment for victims of organized violence; preventing human trafficking; and providing specialized education and other opportunities for marginalized youth in Haiti's most violent areas. Other programs aim to strengthen the parliament, and help local government institutions be able to incorporate citizen input and deliver services. The proposed FY2007 budget for this program is $8 million in Development Assistance (DA), and $13 million in Economic Support Funds (ESF).\nThe third new strategy involves education. The four elements of this program include (1) investment in primary schools to achieve equitable access to quality basic education; (2) supporting the social integration of adolescents through vocational/technical education; (3) strengthening the capacity of the Ministry of Education; and (4) increasing government oversight of education at the local level. The proposed FY2007 funding for this program is $4.6 million in Development Assistance (DA), and $6 million in Economic Support Funds (ESF).\nOverall, the Bush Administration requested $198 million for Haiti for FY2007. Levels for child survival and health, development assistance, and counternarcotics assistance funds decreased. HIV/AIDS funding increased as part of the President's Emergency Plan for AIDS Relief.\nThe Administration's FY2008 request of $223 million represents increases in Economic Support Funds and HIV/AIDS funding, but decreases in all other categories of aid to Haiti from FY2006 and proposed FY2007 levels. Comparing FY2006 levels to FY2008 requested levels of aid to Haiti, ESF would increase from $49.5 million to $63.5 million; Global HIV/AIDS Initiative funding would increase from $47.3 million $83 million. Child Survival and Health would decrease from $19.8 million to $18.0 million; Development Assistance would decrease from $29.7 million to $14.8 million; Foreign Military Financing from $98,000 to $0; International Military Education and Training from $213,000 to $200,000; International Narcotics Control and Law Enforcement would decrease from $17.5 million to $9 million, and P.L. 480 food assistance would decrease from $39.5 million to $34.5 million.", "According to the IMF Mission Chief for Haiti, the Préval Administration has made concerted efforts to continue the strong macroeconomic performance initiated by the interim government, maintaining fiscal discipline and continuing structural economic reforms, such as passing a new organic budget law. Most analysts agree, however, that even strong macroeconomic performance will not be enough to reduce poverty in Haiti. The IMF points out that enormous political, technical, and institutional challenges must also be overcome before Poverty Reduction objectives can be achieved.\nThe World Bank and others say that it is highly unlikely that economic growth will reduce poverty as long as Haiti's income inequality remains as high as it is—and by 2030 the income gap is expected to grow. Three factors contributing to income inequality are: a large disparity in the capacity to generate income, with the rural areas having the least capacity; access to education, which only half the population has; and whether or not a household receives remittances from abroad. Analysts say that policy aimed at reducing income inequality in Haiti should address decentralization, to provide more and better infrastructure and services throughout the country.\nAccording to the World Bank, public spending on education that is targeted toward the poor can reduce poverty in both the short- and long-term. Access to education, it says, can reduce poverty relatively quickly by increasing individual productivity and helping to shift poor people from low-paying agricultural employment to better paying jobs in the industrial and service sectors. In the long-term, the Bank says, education can increase poor children's chances of breaking out of the cycle of poverty by gaining access to formal employment. This means, however, that investment and the economy must be strong enough to create job opportunities for newly educated people.\nUSAID defines three groups of challenges facing development efforts in Haiti: public sector institutions with little capacity to govern; a weak private sector whose growth is extremely limited by an atmosphere of insecurity; and the degradation of Haiti's natural resources, which are needed for productive economic activities.\nBecause Haiti's current capacity is so limited, and its needs are so great, the IMF maintains that technical assistance will be crucial in making progress. According to the Haitian government, there has never been a systematic policy for poverty reduction nor a coherent program with precisely defined objectives. Haiti's limited capacity to develop plans and absorb funds, and donors' concerns over transparency of government spending continue to pose obstacles to the execution of development programs. Both donors and the Haitian government share responsibility for addressing problems with the disbursement of funds and the coordination of foreign assistance. The Préval Administration notes in its Interim Poverty Reduction Strategy Paper that the capacities of those who have a stake in the poverty reduction process are also \"generally inadequate for the implementation of such a process,\" and calls for assistance to strengthen those stakeholders' capacities as well.\nUSAID's Office of Transition Initiatives, which provides \"fast flexible short-term assistance targeted at key political transition and stabilization needs,\" worked in Haiti from 2004 to 2006. Its mission identified three ingredients necessary to increase security in Haiti's most violence-prone areas: community ownership, development assistance, and rule of law, and said that all three elements must be present. It also said that programs targeted at reducing violence must address \"spoilers,\" whether political or criminal, who want to incite disorder to promote their own interests.\nThe Millennium Development Goal that the Haitian government agreed to in 2000 for environmental sustainability was to reverse losses by 2015. According to the IMF, this will be difficult to achieve, as losses have continued over the last decade, and environmental policies are weak. Currently, only 3.8% of total land area is forested.\nA weak political structure combined with ongoing political tensions, violence, massive poverty, and income inequality have made it difficult to pursue the goals of interim development and poverty reduction plans, and will do so for the successor Poverty Reduction Plan as well, if not adequately addressed.", "Several indices show Haiti lagging far behind countries in the region and the world in terms of development. As mentioned earlier, the United Nations designates Haiti as one of the fifty \"least developed countries\" in the world. The Economist Intelligence Unit ranked Haiti second-to-last in its 111-country Quality-of-Life Index. The Quality-of-Life Index uses the weighted measure of nine quality-of-life indicators to determine a country's quality-of-life score on a progressive scale from 1 to 10. With a score of 4.090, Haiti trailed behind the other 21 Latin American and Caribbean countries included in the study.\nThe United Nations Development Program's Human Development Index (HDI) measures a country's indicators for life-span, education, and income against established goalposts, yielding a score along a progressive scale from 0 to 1. Haiti's HDI score is 0.482, behind the Latin American and Caribbean regional score of 0.795. Haiti ranked 154 th out of 177 countries (177 being the least developed), the only country in the Americas or the Caribbean to fall in the category of countries of \"low human development.\"\nThis section uses the Interim Cooperation Framework's outline to organize statistics related to some of the priority needs that have been established. These figures and tables put international efforts into the context of Haitian poverty, drawing a statistical overview to convey the extent of the poverty in Haiti and the obstacles that must be overcome in order for development to occur there.", "", "", "" ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 1, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h2_title h1_full", "h1_full", "", "h2_full", "h2_full", "h2_full", "", "", "", "", "" ] }

{ "question": [ "How extreme is Haiti's poverty rate?", "What economic growth would be necessary to eradicate extreme poverty?", "Why is economic growth is not going to be enough to address Haiti's poverty?", "How is Haiti planning to reduce poverty?", "What role will international aid play in this plan?", "What are the four ICF axes?", "What is the most important part of this long term plan?", "What is the expected timeline for the implementation of this plan?", "What are possible shortcomings of this plan?" ], "summary": [ "Over half the population (54%) of 8.2 million people live in extreme poverty, living on less than $1 a day; 76% live on less than $2 a day.", "In order to reach Haiti's goal of eradicating extreme poverty and hunger by 2015, its Gross Domestic Product (GDP) would have to grow 3.5% per year, a goal Haiti is not considered likely to achieve.", "In the past 40 years, Haiti's per capita real GDP has declined by 30%. Therefore economic growth, even if greater than population growth, is not expected to be enough to reduce Haiti's endemic poverty.", "Since Haiti's 2006 elections, the new government and international donors are shifting from a short-term program to carry Haiti through a transition period to a long-term program to help reduce poverty in Haiti.", "Haiti and its multilateral and bilateral donors developed an international aid strategy to address Haiti's short-term needs in between the collapse of President Jean-Bertrand Aristide's government and the installation of a new, elected government.", "The ICF places priority needs and projects into four broad \"axes\": political governance and national dialogue; economic governance and institutional development; economic recovery; and access to basic services, with a strategy, priority objectives, and monitoring indicators for each.", "International donors are assisting Haiti in developing a long-term Poverty Reduction Plan to build on and succeed the Interim Cooperation Framework (ICF). An important part of this strategy is developing the final plan through a participatory process, with the goals of ensuring that the interests of Haiti's most disadvantaged population are taken into account and that democratic and governance processes are strengthened.", "The PRS is to be completed by July 2007, and implemented beginning in October 2007. The U.S. Agency for International Development's 2007-2009 programs are based on the objectives, strategy, and monitoring indicators established under the ICF.", "Some critics say that the PRS process does not allow adequate country input, uses limited development analysis, and should include discussion of alternative policies and other aspects of development policy." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 3, 3, 3 ] }