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GAO-17-373, Foot-And-Mouth Disease: USDA's Evaluations of Foreign Animal Health Systems Could Benefit from Better Guidance and Greater Transparency, April 28, 2017

Fri, 28 Apr 2017 13:00:00 -0400

What GAO Found The U.S. Department of Agriculture's (USDA) Animal and Plant Health Inspection Service's (APHIS) process for evaluating the animal health systems of countries seeking to export beef to the United States consists of five steps: A country requests that APHIS evaluate its animal health system. APHIS gathers information about the country's system, including documents identifying (1) veterinary control and oversight programs, (2) vaccination programs, (3) animal identification and movement controls, (4) laboratory diagnostic capabilities, and (5) animal-disease emergency-response measures. APHIS conducts in-country visits to verify and supplement this information. APHIS does a risk analysis to determine whether the country's beef products pose a risk to U.S. livestock and begins to draft a risk analysis report. APHIS determines an estimated risk level, which is included in the risk analysis report with a description of any mitigation measures the country must implement to ensure the safety of its beef exports. A report is completed and made public only for countries whose beef presents low risk. Countries whose beef poses a greater risk will not be eligible to export beef to the United States. APHIS could strengthen its evaluation of foreign animal health systems by improving transparency to stakeholders, including the public. APHIS guidance instructs staff to adhere to timeframes for carrying out evaluations to ensure a lengthy process is completed efficiently. But the guidance does not instruct staff how to ensure evaluations are fully transparent. For example, APHIS guidance does not direct staff to document their analysis of country information and include all problems and concerns identified and how they were resolved; direct staff how to effectively document results of in-country visits, although the guidance requires these visits be documented; and indicate how to incorporate guidance on transparency from USDA's Chief Information Officer and the Office of Management and Budget into final risk analysis reports. Without sufficient guidance instructing staff to document such items, it is unclear (1) how APHIS verifies country information and assesses its reliability; (2) how problems identified are ultimately addressed to APHIS's satisfaction; and (3) what methodologies, sources, assumptions, and uncertainties may influence its risk analysis. Further, according to the World Organisation for Animal Health, because risk analysis is inherently subjective, the process must be documented transparently. During GAO's review, APHIS acknowledged the weaknesses in its guidance and formed a team to begin work to address them. By completing this effort, APHIS may be better able to ensure that it has assessed risks fairly and consistently across countries and over time, and that the process is transparent to the public and other stakeholders. Why GAO Did This Study Foot-and-mouth disease (FMD) is a virus that causes painful lesions, making it difficult for livestock to stand or eat and greatly reducing meat and milk production. No FMD cases have been recorded in the United States since 1929. Federal regulations restrict fresh beef imports from countries where the disease is present because the disease may survive in untreated, uncooked beef (beef), and can be costly to control and eliminate. According to USDA, an outbreak of FMD could cause grave damage to the U.S. beef industry, which had a retail value of $95 billion in 2014. GAO reviewed (1) USDA's process for evaluating the animal health systems of countries seeking to export beef products to the United States, and (2) how this process could be improved. GAO analyzed documentation supporting seven countries' requests for FMD animal health system evaluations. GAO also reviewed federal regulations, guidance, and a key trade agreement; and interviewed knowledgeable USDA and industry officials. What GAO Recommends GAO is making three recommendations including that USDA clarify its guidance on how staff sh[...]



GAO-17-496, DATA Act: As Reporting Deadline Nears, Challenges Remain That Will Affect Data Quality, April 28, 2017

Fri, 28 Apr 2017 13:00:00 -0400

What GAO Found Internal control weaknesses and other challenges pose risks to data quality. Material weaknesses and significant deficiencies reported in agencies' financial audits and other challenges reported in Inspectors General (IG) readiness review reports show several widespread and longstanding issues that present risks to agencies' abilities to submit quality data as required by the Digital Accountability and Transparency Act of 2014 (DATA Act). These issues fall into three categories: (1) accounting and financial management, (2) financial management systems, and (3) information technology security and controls. GAO has also reported weaknesses and challenges in government-wide financial management systems used for DATA Act reporting. Challenges with guidance will impact data quality. Challenges related to how agencies report certain intragovernmental transactions, reconcile recipient address information, and align required DATA Act files with missing data continue to present risks to the quality of data displayed on USASpending.gov. The Office of Management and Budget (OMB) and the Department of the Treasury (Treasury) have stated that they do not expect to resolve these challenges before the May 2017 reporting deadline. Unresolved challenges affecting data quality could lead policymakers and the public to draw inaccurate conclusions from the data. This challenge underscores the need for OMB to address GAO's open recommendation that it provide agencies with additional guidance to address data quality issues. GAO will continue to assess how OMB, Treasury, and agencies address data quality issues moving forward. Limitations exist with data quality assurance processes. OMB guidance directs senior accountable officials at each agency to rely on existing assurance processes when they certify that their agencies' DATA Act submissions are valid and reliable. However, GAO identified concerns regarding some existing assurance processes. For example, OMB directed agencies to use a General Services Administration assurance statement attesting to the quality of data in two source systems, but the assurance statement focuses on data security rather than data quality, and it is unclear whether it applies to both procurement and financial assistance data. OMB is aware of these issues and expects to finalize the assurance process in time for the May 2017 reporting deadline. Accordingly, GAO is not making a recommendation at this time but will assess the quality of the assurance process in future work. Efforts to establish a data governance structure are still at an early stage. OMB has taken some actions to improve its data governance framework, but efforts to establish a fully functioning data governance structure are at an early stage with many specifics yet to be worked out. OMB formally chartered the Data Standards Committee as an advisory body in November 2016 to focus on clarifying existing data element definitions and identifying needs for new standards. The charter states that the committee will promote transparency by making the topics and outcomes of its proceedings public, but OMB has not kept records of the committee's meetings nor has the committee produced a work plan for moving forward. Public information about the committee's activities and outcomes would facilitate consultation with stakeholders, as required by the act. Why GAO Did This Study Across the federal government, agencies are making final preparations to submit the required data by the DATA Act's May 2017 deadline. This represents the culmination of almost 3 years of effort by OMB, Treasury, and federal agencies to address many policy and technical challenges. Moving forward, attention will increasingly focus on another critical goal of the act: improving the quality of the data produced. Consistent with GAO's mandate under the act, this is the latest in a series of reports reviewing the act's implementation. This report examines (1) risks to data quality related to known material weaknesses and other de[...]



GAO-17-240, U.S. Manufacturing: Federal Programs Reported Providing Support and Addressing Trends, March 28, 2017

Thu, 27 Apr 2017 13:00:00 -0400

What GAO Found GAO identified 58 programs in 11 federal agencies that reported providing support to U.S. manufacturing by fostering innovation through research and development, assisting with trade in the global marketplace, helping job seekers enhance skills and obtain employment, and providing general financing or business assistance. Twenty-one of these programs reported using all of their obligations in fiscal year 2015 to support U.S. manufacturing. For these 21 programs, obligations of each program ranged from $750,000 to $204 million in fiscal year 2015, the most recent full year of data. Twenty-six other programs reported using funding to support manufacturing—in addition to other sectors—and provided ranges of estimates for the obligations directly supporting manufacturing. The remaining 11 programs either did not provide an estimate of their support to manufacturing or reported no program obligations in fiscal year 2015. GAO also identified nine tax expenditures that can provide benefits to manufacturers, amounting to billions of dollars in incentives for both the manufacturing sector and other sectors of the economy. Most (51) of the 58 programs reported addressing trends toward an increase in advanced manufacturing (e.g. activities using automation, software, or cutting edge materials), the need for a higher-skilled workforce, and more global trade competition for U.S. manufacturers by providing funds and resources, sharing information, and promoting coordination. Survey responses from the 58 programs indicated that more than two-thirds of them are addressing the shift toward advanced manufacturing, approximately half are taking steps to address increased globalization and competition, and fewer than half are addressing the need for a higher skilled workforce. Forty-four of the 58 programs reported having performance goals or measures related to the support of manufacturing, but agencies that comprise an interagency group have not identified the information they will collect from agencies and use to report progress in supporting advanced manufacturing. Ten of the 11 agencies that administer programs GAO reviewed participate in a federal interagency initiative to coordinate activities and report on progress in the area of advanced manufacturing. The Subcommittee on Advanced Manufacturing—co-chaired by the Office of Science and Technology Policy (OSTP) and that coordinates advanced manufacturing efforts—supports the updating and reporting on a National Strategic Plan for Advanced Manufacturing. The plan, which was published in 2012, identifies objectives and potential measures that could be used to assess progress. The subcommittee plans to report in 2018 on progress in achieving the strategic plan's objectives, as required by the Revitalize American Manufacturing and Innovation Act of 2014. However, OSTP has not worked with the subcommittee member agencies to identify the information needed to report progress in achieving the strategic objectives, such as what measures will be used. While subcommittee officials said the subcommittee does not provide top-down direction to federal agencies on how to measure effectiveness, specifying the information it will collect from federal agencies would better position it to report consistent and comprehensive information on the progress in achieving the plan's objectives. Why GAO Did This Study The U.S. manufacturing sector—representing about 12 percent of the economy and employing 12 million workers in 2015—has undergone changes over the last several decades. With increased productivity and technological innovation, the sector experienced a decreasing number of jobs and share of the economy. GAO was asked to examine how the federal government supports manufacturing. This report examines (1) how selected federal programs and tax expenditures provide support to U.S. manufacturing; (2) how programs are addressing manufacturing trends; and (3) the extent to which agencies measure performance and [...]



GAO-17-233, Strategic Human Capital Management: NRC Could Better Manage the Size and Composition of Its Workforce by Further Incorporating Leading Practices, April 27, 2017

Thu, 27 Apr 2017 13:00:00 -0400

What GAO Found The Nuclear Regulatory Commission (NRC) has made efforts to enhance its strategic human capital management to ensure the agency has the right number and composition of staff; however, these efforts do not incorporate some leading practices. Leading practices—identified by GAO and others—indicate that using forward-looking strategies, setting goals, using data-driven planning and accountability systems, and ensuring that employees have relevant knowledge to carry out their responsibilities are essential for strategic human capital management. NRC has taken steps through Project Aim—an effort to help the agency respond more strategically to changes in the nuclear industry—and other efforts to manage its human capital, such as developing a strategic workforce plan, conducting workload forecasting, and cross-training employees. However, GAO identified three areas where NRC's efforts do not fully incorporate leading practices. First, NRC has not established agencywide goals for its workforce size or composition—that is, goals for the number of people with specific skillsets and levels of expertise—beyond a 2-year budget cycle. Second, NRC does not have comprehensive employee skills information because it currently does not have a systematic approach or system to track this information. Third, in some cases, NRC has not consistently trained managers or supervisors on strategic human capital management or assessing employees' skillsets. Without incorporating these practices, NRC cannot determine the most appropriate size and composition of the agency's workforce, and it risks being unable to respond to changes in the nuclear industry. NRC has reduced its staff by 587 FTEs since its peak in 2011 (see figure), but if not carefully managed, imprecise reductions could lead NRC to miss efficiencies in matching its workforce with expected demand for services. Total Allocated Nuclear Regulatory Commission Full-Time Equivalent Employees, Fiscal Years 2005 through 2017 Why GAO Did This Study After the passage of the Energy Policy Act of 2005, which included tax incentives for nuclear energy, NRC significantly expanded its workforce to meet the demands of an anticipated increase in workload that ultimately did not occur. More recently, a forecast for reduced growth in the nuclear industry prompted NRC to develop plans for changing its structure and workforce to better respond to changes in the nuclear industry. Strategic human capital planning is one of several actions the agency is taking. The explanatory statement accompanying the Consolidated Appropriations Act for fiscal year 2016 included a provision for GAO to report on NRC's workforce management. GAO examined NRC's strategic human capital management efforts and the extent to which these efforts incorporate leading practices. GAO reviewed NRC's strategic workforce plan and other related documents and interviewed knowledgeable NRC officials. What GAO Recommends GAO recommends that NRC (1) set agencywide goals for workforce size and skills composition to meet workload demands that extend beyond the 2-year budget cycle, (2) establish a systematic approach for tracking employee skills, and (3) consistently train managers and supervisors in strategic human capital management and assessing employee skillsets. NRC generally agreed with these recommendations. For more information, contact Frank Rusco at (202) 512-3841 or ruscof@gao.gov.



GAO-17-414, NASA Human Space Exploration: Delay Likely for First Exploration Mission, April 27, 2017

Thu, 27 Apr 2017 13:00:00 -0400

What GAO Found With less than 2 years until the planned November 2018 launch date for its first exploration mission (EM-1), the National Aeronautics and Space Administration's (NASA) three human exploration programs—Orion Multi-Purpose Crew Vehicle (Orion), Space Launch System (SLS), and Exploration Ground Systems (EGS)—are making progress on their respective systems, but the EM-1 launch date is likely unachievable as technical challenges continue to cause schedule delays. All three programs face unique challenges in completing development, and each has little to no schedule reserve remaining between now and the EM-1 date, meaning they will have to complete all remaining work with little margin for error for unexpected challenges that may arise. The table below lists the remaining schedule reserve for each of the programs. Schedule Reserve to Exploration Mission 1 for Orion Multi-Purpose Crew Vehicle, Space Launch System, and Exploration Ground Systems Programs Program Schedule reserve to Exploration Mission-1 (in days) Orion Multi-Purpose Crew Vehicle 0 Space Launch System 80 Exploration Ground Systems 28 Source: GAO Analysis of NASA data | GAO-17-414 The programs all face challenges that may impact their remaining schedule reserve. For instance the Orion program's European Service Module is late and is currently driving the program schedule; the SLS program had to stop welding on the core stage—which functions as the SLS's fuel tank and structural backbone—for months after identifying low weld strengths. Program officials stated that welding resumed in April 2017 following the establishment of a corrective action plan; the EGS program is considering performing concurrent hardware installation and testing, which officials acknowledge would increase complexity; and each program must integrate its own hardware and software individually, after which EGS is responsible for integrating all three programs' components into one effort at Kennedy Space Center. Low cost reserves further intensify the schedule pressure. Senior NASA officials said they are analyzing the launch schedule and expect that the EM-1 date will have to slip, but they have yet to make a decision on the feasibility of the current date or report on their findings. With budget discussions currently ongoing for fiscal year 2018, the last year prior to launch, Congress does not yet have insight into the feasibility of the EM-1 launch date, or the repercussions that any cost increase or delays could have in terms of cost and schedule impacts for NASA's entire portfolio. Unless NASA provides Congress with up-to-date information on whether the current EM-1 date is still achievable, as of the time the agency submits its 2018 budget request, both NASA and Congress will continue to be at risk of making decisions based on less than the entire picture and on likely unachievable schedules. Why GAO Did This Study NASA is undertaking a trio of closely related programs to continue human space exploration beyond low-Earth orbit: the SLS vehicle; the Orion capsule, which will launch atop the SLS and carry astronauts; and EGS, the supporting ground systems. NASA's current exploration efforts are estimated to cost almost $24 billion—to include two Orion flights and one each for SLS and EGS—and constitute more than half of NASA's current portfolio development cost baseline. All three programs are necessary for EM-1 and are working toward a launch readiness date of November 2018. In a large body of work on this issue, including two separate July 2016 reports, GAO has found that these programs have a history of working to aggressive schedules. The House Committee on Appropriations report accompanying H.R. 2578 included a provision for GAO to assess [...]



GAO-17-324, IRS Return Selection: Improved Planning, Internal Controls, and Data Would Enhance Large Business Division Efforts to Implement New Compliance Approach, March 28, 2017

Thu, 27 Apr 2017 13:00:00 -0400

What GAO Found The Internal Revenue Service's (IRS) Large Business and International division (LB&I) uses a variety of methods, such as computer models and staff reviews of returns, to identify tax returns for audit consideration. From the returns identified, managers and auditors in LB&I field offices select the returns to be audited. For the eight methods LB&I uses for identifying and selecting tax returns for audit (selection methods) that GAO analyzed, LB&I documentation on its procedures and policies generally reflected 4 of the 10 internal control principles GAO reviewed. For example: Related to the internal control principle of demonstrating commitment to integrity and ethical values, LB&I auditors who identify tax returns for audit consideration are prohibited from auditing those returns themselves or assigning them to specific individuals for audit. In addition, all LB&I staff completed a required training on ethics and impartiality in 2015, the latest available data. Related to the internal control principle of demonstrating a commitment to competence, LB&I's procedures and manuals generally documented its training to help assure the competence of staff involved in audit selection. This training included courses on basic skills as well as instruction on more specific topics. However, for the other 6 internal control principles GAO reviewed, there were gaps in documentation that limit LB&I's assurance that its selection methods are being implemented as designed and are supporting its objectives. For example: Related to the internal control principle of identifying, analyzing, and responding to risk, LB&I documentation did not specify procedures or a process for how to respond to changing circumstances, such as a change in the law, in selecting returns for audit. Related to the internal control principle of reporting on issues and remediating related deficiencies, LB&I documentation indicated that problems identified with selection methods were discussed in meetings, but not that corrective action was taken to address them. GAO also found that LB&I has monitoring directives, but it does not have a standard process for monitoring field staff's audit selection decisions. Without such a process, LB&I lacks reasonable assurance that decisions are made consistently. LB&I is in the process of implementing a new approach for addressing taxpayer compliance, including how it identifies tax returns for audit. LB&I plans to implement what officials call “campaigns,” which are projects focused on a specific compliance-related issue, such as partnerships underreporting certain income, rather than projects focused on the characteristics of whole tax returns. According to LB&I officials, campaigns could include conducting audits as well as other efforts, such as reaching out to taxpayers and tax professionals, issuing guidance, and participating in industry events. LB&I officials said certain audit selection methods that existed prior to the development of campaigns will operate while LB&I implements its campaign approach, and campaigns may subsume some of those methods. GAO found that LB&I made some progress in implementing its new compliance approach, such as by involving stakeholders in plans and implementing the process for submitting proposals for campaigns. However, LB&I has not fully met five project planning principles set forth in prior GAO work (see table below). Until it fully meets these principles, LB&I management lacks reasonable assurance that its new compliance approach will succeed in accomplishing its overall objectives of encouraging voluntary compliance and fair treatment of taxpayers. Large Business and International (LB&I) Division's Plans for New Compliance Approach Assessed against Project Planning Principles as of December 2016 Why GAO Did [...]



GAO-17-425, Flood Insurance: Comprehensive Reform Could Improve Solvency and Enhance Resilience, April 27, 2017

Thu, 27 Apr 2017 13:00:00 -0400

What GAO Found Based on discussions with stakeholders and GAO's past work, reducing federal exposure and improving resilience to flooding will require comprehensive reform of the National Flood Insurance Program (NFIP) that will need to include potential actions in six key areas (see figure below). Comprehensive reform will be essential to help balance competing programmatic goals, such as keeping flood insurance affordable while keeping the program fiscally solvent. Taking actions in isolation may create challenges for some property owners (for example, by reducing the affordability of NFIP policies) and therefore these consequences also will need to be considered. Some of the potential reform options also could be challenging to start or complete, and could face resistance, because they could create new costs for the federal government, the private sector, or property owners. Nevertheless, GAO's work suggests that taking actions on multiple fronts represents the best opportunity to help address the spectrum of challenges confronting NFIP. Six Areas That Constitute Comprehensive Flood Insurance Reform Through its work, GAO identified the following interrelationships and potential benefits and challenges associated with potential actions that could be taken to reform NFIP in the six areas: Outstanding debt. The Federal Emergency Management Agency (FEMA), which administers NFIP, owed $24.6 billion as of March 2017 to the Department of the Treasury (Treasury) for money borrowed to pay claims and other expenses, including $1.6 billion borrowed following a series of floods in 2016. FEMA is unlikely to collect enough in premiums to repay this debt. Eliminating the debt could reduce the need to raise rates to pay interest and principal on existing debt. However, additional premiums still would be needed to reduce the likelihood of future borrowing in the long term. Raising premium rates could create affordability issues for some property owners and discourage them from purchasing flood insurance, and would require other potential actions to help mitigate these challenges. Premium rates. NFIP premiums do not reflect the full risk of loss, which increases the federal fiscal exposure created by the program, obscures that exposure from Congress and taxpayers, contributes to policyholder misperception of flood risk (they may not fully understand the risk of flooding), and discourages private insurers from selling flood insurance (they cannot compete on rates). Eliminating rate subsidies by requiring all rates to reflect the full risk of loss would address an underlying cause of NFIP's debt and minimize federal fiscal exposure. It also would improve policyholder understanding of flood risk and encourage private-sector involvement. However, raising rates makes policies less affordable and could reduce consumer participation. The decreases in affordability could be offset by other actions such as providing means-based assistance. Affordability. Addressing the affordability issues that some consumers currently face, or might face if premium rates were raised, could help ensure more consumers purchase insurance to protect themselves from flood losses. GAO previously recommended that any affordability assistance should be funded with a federal appropriation (rather than through discounted premiums) and should be means-tested. Means-testing the assistance could help control potential costs to the federal government, and funding with an appropriation would increase transparency of the federal fiscal exposure to Congress. Many industry and nonindustry stakeholders with whom GAO spoke said affordability assistance should focus on helping to pay for mitigation—such as elevating buildings—because mitigation permanently reduces flood risk (thus reducing premium rates). Mitigation efforts can have high up-front costs, and may not be feasible in all c[...]



GAO-17-593T, Commonwealth of the Northern Mariana Islands: Preliminary Observations on the Implementation of Federal Immigration Laws, April 27, 2017

Thu, 27 Apr 2017 13:00:00 -0400

What GAO Found If all foreign workers in the Commonwealth of the Northern Mariana Islands (CNMI) with CNMI-Only transitional worker (CW-1) permits, or 45 percent of total workers in 2015, were removed from the CNMI's labor market, GAO's preliminary economic analysis projects a 26 to 62 percent reduction in CNMI's 2015 gross domestic product (GDP)—the most recent GDP available. In addition, demand for foreign workers in the CNMI exceeded the available number of CW-1 permits in 2016—many approved for workers from China and workers in construction occupations. The construction of a new casino in Saipan is a key factor in this demand (see photos taken both before and during construction in 2016). Meanwhile, by 2019, plans for additional hotels, casinos, and other projects estimate needing thousands of new employees. When the CW-1 permit program ends in 2019, GAO's preliminary analysis of available data shows that the unemployed domestic workforce, estimated at 2,386 in 2016, will be well below the CNMI's expected demand for labor. To meet this demand, CNMI employers may need to recruit U.S.-eligible workers from the U.S. states, U.S. territories, and the freely associated states (the Federated States of Micronesia, Republic of the Marshall Islands, and Republic of Palau). Construction of New Casino in Saipan, Commonwealth of the Northern Mariana Islands Federal and CNMI efforts to address labor force challenges include (1) job training programs and (2) employment assistance funded by the U.S. Department of Labor and implemented by the CNMI's Department of Labor. The Department of Homeland Security (DHS) collects the $150 vocational education fee assessed for each foreign worker on a CW-1 petition and transfers the fees to the CNMI government. Results of GAO's ongoing work indicate that to support vocational education curricula and program development in fiscal years 2012 through 2016, DHS transferred to the CNMI Treasury about $9.1 million in CW-1 fees. During this period, GAO's preliminary analysis shows that the CNMI government allocated about $5.8 million of the $9.1 million to three educational institutions: Northern Marianas College, Northern Marianas Trades Institute, and the CNMI's Public School System. In 2016, a U.S.–CNMI consultative process resulted in a report to Congress with six recommendations related to the CNMI economy, including one to raise the cap on CW-1 foreign worker permits and extend the permit program beyond 2019. Why GAO Did This Study In 2008, Public Law 110-229 established federal control of CNMI immigration. It required DHS to create a transitional work permit program for foreign workers in the CNMI and to decrease the number of permits issued annually; it presently requires that DHS reduce them to zero by December 31, 2019. To implement this aspect of the law, in 2011, DHS created a CW-1 permit program for foreign workers. In 2015, foreign workers totaled 12,784, making up more than half of the CNMI workforce. GAO was asked to review the implementation of federal immigration laws in the CNMI. This testimony discusses GAO's preliminary observations from its ongoing work on (1) the potential economic impact of reducing the number of CNMI foreign workers to zero and (2) federal and CNMI efforts to address labor force challenges. GAO reviewed U.S. laws and regulations; analyzed government data, including CNMI tax records since 2001; and conducted fieldwork in Saipan, Tinian, and Rota, CNMI. During fieldwork, GAO conducted semistructured interviews and discussion groups with businesses, CW-1 workers, U.S. workers, and current and former job training participants. GAO also interviewed officials from the CNMI government, DHS, and the U.S. Departments of Commerce, the Interior, and Labor. What GAO Recommends GAO is not making any recommendations at this time. GAO plans to issue a fina[...]



GAO-17-228, SSA Disability Benefits: Comprehensive Strategic Approach Needed to Enhance Antifraud Activities, April 17, 2017

Wed, 26 Apr 2017 13:00:00 -0400

What GAO Found The Social Security Administration (SSA) has taken steps to establish an organizational culture and structure conducive to fraud risk management in its disability programs, but its new antifraud office is still evolving. In recent years, SSA instituted mandatory antifraud training, established a centralized antifraud office to coordinate and oversee the agency's fraud risk management activities, and communicated the importance of antifraud efforts. These actions are generally consistent with GAO's Fraud Risk Framework, a set of leading practices that can serve as a guide for program managers to use when developing antifraud efforts in a strategic way. However, SSA's new antifraud office, the Office of Anti-Fraud Programs (OAFP), faced challenges establishing itself as the coordinating body for the agency's antifraud initiatives. For example, the OAFP has had multiple acting leaders, but SSA recently appointed a permanent leader of OAFP to provide accountability for the agency's antifraud activities. SSA has taken steps to identify and address fraud risks in its disability programs, but it has not yet comprehensively assessed these fraud risks or developed a strategic approach to help ensure its antifraud activities effectively mitigate those risks. Over the last year, SSA gathered information about fraud risks, but these efforts generally have not been systematic and did not assess the likelihood, impact, or significance of all risks that were identified. SSA also has several prevention and detection activities in place to address known fraud risks in its disability programs such as fraud examination units, which review disability claims to help detect fraud perpetrated by third parties. However, SSA has not developed and documented an overall antifraud strategy that aligns its antifraud activities to its fraud risks. Leading practices call for federal program managers to conduct a fraud risk assessment and develop a strategy to address identified fraud risks. Without conducting a fraud risk assessment that aligns with leading practices and developing an antifraud strategy, SSA's disability programs may remain vulnerable to new fraud schemes, and SSA will not be able to effectively prioritize its antifraud activities. SSA monitors its antifraud activities through the OAFP and its National Anti-Fraud Committee (NAFC), which serves as an advisory board to the OAFP, but the agency does not have effective performance metrics to evaluate the effect of such activities. The OAFP has responsibility for monitoring SSA's antifraud activities and establishing performance and outcome-oriented goals for them. It collects metrics to inform reports about its antifraud initiatives, and the NAFC receives regular updates about antifraud initiatives. However, the quality of the metrics varies across initiatives and some initiatives do not have metrics. Of the 17 initiatives listed in SSA's 2015 report on antifraud initiatives, 10 had metrics that did not focus on outcomes, and 4 did not have any metrics. For example, SSA lacks a metric to help monitor the effectiveness of its fraud examination units. Leading practices in fraud risk management call for managers to monitor and evaluate antifraud initiatives with a focus on measuring outcomes. Without outcome-oriented performance metrics, SSA may not be able to evaluate its antifraud activities, review progress, and determine whether changes are necessary. Why GAO Did This Study SSA's Disability Insurance (DI) and Supplemental Security Income (SSI) programs provide cash benefits to millions of Americans with disabilities who are unable to work. Collectively, payments from DI and SSI were about $200 billion in fiscal year 2015. Although the extent of fraud in these programs is unknown, recent high-profile cases have highlighted instances in which indiv[...]



GAO-17-585T, SSA Disability Benefits: Antifraud Efforts Need a Comprehensive Strategic Approach, April 26, 2017

Wed, 26 Apr 2017 13:00:00 -0400

What GAO Found The Social Security Administration (SSA) has taken steps to establish an organizational culture and structure conducive to fraud risk management in its disability programs, but its new antifraud office is still evolving. In recent years, SSA instituted mandatory antifraud training, established a centralized antifraud office to coordinate and oversee the agency's fraud risk management activities, and communicated the importance of antifraud efforts. These actions are generally consistent with GAO's Fraud Risk Framework, a set of leading practices that can serve as a guide for program managers to use when developing antifraud efforts in a strategic way. However, SSA's new antifraud office, the Office of Anti-Fraud Programs (OAFP), faced challenges establishing itself as the coordinating body for the agency's antifraud initiatives. For example, the OAFP has had multiple acting leaders, but SSA recently appointed a permanent leader of OAFP to provide accountability for the agency's antifraud activities. SSA has taken steps to identify and address fraud risks in its disability programs, but it has not yet comprehensively assessed these fraud risks or developed a strategic approach to help ensure its antifraud activities effectively mitigate those risks. Over the last year, SSA gathered information about fraud risks, but these efforts generally have not been systematic and did not assess the likelihood, impact, or significance of all risks that were identified. SSA also has several prevention and detection activities in place to address known fraud risks in its disability programs such as fraud examination units, which review disability claims to help detect fraud perpetrated by third parties. However, SSA has not developed and documented an overall antifraud strategy that aligns its antifraud activities to its fraud risks. Leading practices call for federal program managers to conduct a fraud risk assessment and develop a strategy to address identified fraud risks. Without conducting a fraud risk assessment that aligns with leading practices and developing an antifraud strategy, SSA's disability programs may remain vulnerable to new fraud schemes, and SSA will not be able to effectively prioritize its antifraud activities.  SSA monitors its antifraud activities through the OAFP and its National Anti-Fraud Committee (NAFC), which serves as an advisory board to the OAFP, but the agency does not have effective performance metrics to evaluate the effect of such activities. The OAFP has responsibility for monitoring SSA's antifraud activities and establishing performance and outcome-oriented goals for them. It collects metrics to inform reports about its antifraud initiatives, and the NAFC receives regular updates about antifraud initiatives. However, the quality of the metrics varies across initiatives and some initiatives do not have metrics. Of the 17 initiatives listed in SSA's 2015 report on antifraud initiatives, 10 had metrics that did not focus on outcomes, and 4 did not have any metrics. For example, SSA lacks a metric to help monitor the effectiveness of its fraud examination units. Leading practices in fraud risk management call for managers to monitor and evaluate antifraud initiatives with a focus on measuring outcomes. Without outcome-oriented performance metrics, SSA may not be able to evaluate its antifraud activities, review progress, and determine whether changes are necessary. Why GAO Did This Study This testimony summarizes the information contained in GAO's April 2017 report, entitled SSA Disability Benefits: Comprehensive Strategic Approach Needed to Enhance Antifraud Activities (GAO-17-228). For more information, contact Seto J. Bagdoyan at (202) 512-6722 or bagdoyans@gao.gov. 



GAO-17-566T, Small Business Administration: Actions Taken to Help Improve Disaster Loan Assistance, April 26, 2017

Wed, 26 Apr 2017 13:00:00 -0400

What GAO Found The Small Business Administration (SBA) implemented most requirements of the Small Business Disaster Response and Loan Improvements Act of 2008 (2008 Act). For example, in response to the 2008 Act, SBA appointed an official to head the disaster planning office and annually updates its disaster response plan. SBA also implemented provisions relating to marketing and outreach; augmenting infrastructure, information technology, and staff; and increasing access to funds for nonprofits, among other areas. However, SBA has not yet implemented provisions to establish three guaranteed loan programs. In 2010, SBA received an appropriation to pilot one program and performed initial outreach to lenders. However, in 2014, GAO found that SBA had not implemented the programs or conducted a pilot because of concerns from lenders about loan features. GAO recommended that SBA evaluate lender feedback and report to Congress about implementation challenges. In response, SBA sought comments from lenders and sent a letter to Congress that explained remaining implementation challenges. After Hurricane Sandy, SBA further enhanced its planning for disaster response, including processing of loan applications. In a 2014 report on the Disaster Loan Program, GAO found that while SBA encouraged electronic submissions of loan applications, SBA did not expect early receipt of a high volume of applications after Sandy and delayed increasing staffing. SBA also did not update key disaster planning documents to adjust for the effects of such a surge in future disasters. GAO recommended SBA revise its disaster planning documents to anticipate the potential impact of early application submissions on staffing and resources. In response, SBA updated its planning documents to account for such impacts. SBA has taken some actions to enhance information resources for business loan applicants but could do more to improve its presentation of online disaster loan-related information. In 2016, GAO found that SBA took or planned to take various actions to improve the disaster loan program and focused on promoting disaster preparedness, streamlining the loan process, and enhancing online application capabilities. However, GAO found that SBA had not effectively presented information on disaster loans (in a way that would help users efficiently find it), had not consistently described key features and requirements of the loan process in print and online resources, or clearly defined financial terminology used in loan applications. Absent better integration of, and streamlined access to, disaster loan-related information, loan applicants may not be aware of key information and requirements for completing the applications. Therefore, GAO recommended that SBA (1) integrate disaster loan-related information into its web portals to be more accessible to users, (2) ensure consistency of content about the disaster loan process across information resources, and (3) better define financial terminology used in the loan application forms. In January 2017, SBA indicated it was working on a glossary for the application. GAO plans to follow up with SBA about the other two open recommendations. Why GAO Did This Study While SBA is known primarily for its financial support of small businesses, the agency also assists businesses of all sizes and homeowners affected by natural and other declared disasters through its Disaster Loan Program. Disaster loans can be used to help rebuild or replace damaged property or continue business operations. After SBA was criticized for its performance following the 2005 Gulf Coast hurricanes, the agency took steps to reform the program and Congress also passed the 2008 Act. After Hurricane Sandy (2012), questions arose on the extent to which the program had im[...]



GAO-17-517R, SEC Conflict Minerals Rule: 2017 Review of Company Disclosures in Response to the U.S. Securities and Exchange Commission Rule, April 26, 2017

Wed, 26 Apr 2017 13:00:00 -0400

What GAO Found Our review of companies’ conflict minerals disclosures filed with the Securities and Exchange Commission in 2016 found that, in general, they were similar to disclosures filed in prior years. In 2016, a similar number of companies filed conflict minerals disclosures as in 2015 and 2014. Our review of a generalizable sample of 2016 filings found that almost all companies that filed conflict minerals disclosures reported performing inquiries about their conflict minerals’ country of origin, similar to 2014 and 2015. Almost all companies also reported conducting due diligence on the source and chain of custody of their conflict minerals and used the Organization for Economic Cooperation and Development’s (OECD) internationally recognized framework for their due diligence in 2016. After conducting due diligence, an estimated 39 percent of the companies reported in 2016 that they were able to determine that their conflict minerals came from covered countries or from scrap or recycled sources, compared with 23 percent in 2015. Almost all of the companies that reported conducting due diligence in 2016 reported that they could not determine whether the conflict minerals financed or benefited armed groups, as in 2015 and 2014. Why GAO Did This Study The Dodd-Frank Act included a provision for GAO to report, beginning in 2012 and annually thereafter, on the effectiveness of the SEC rule in promoting peace and security in the DRC and adjoining countries, among other things. For more information, contact Kimberly Gianopoulos at (202) 512-8612 or GianopoulosK@gao.gov.



GAO-17-334, Pediatric Trauma Centers: Availability, Outcomes, and Federal Support Related to Pediatric Trauma Care, March 27, 2017

Wed, 26 Apr 2017 13:00:00 -0400

What GAO Found GAO estimates that 57 percent of the 73.7 million children in the United States during the period 2011-2015 lived within 30 miles of a pediatric trauma center that can treat all injuries regardless of severity. Among states, the proportion of children who lived within 30 miles of these pediatric trauma centers varied widely. In areas without pediatric trauma centers, injured children may have to rely on adult trauma centers or less specialized hospital emergency departments for initial trauma care. Some studies GAO reviewed, including nationwide studies, found that children treated at pediatric trauma centers have a lower mortality risk compared to children treated at adult trauma centers and other facilities, while other state-level studies GAO reviewed found no difference in mortality. Further, some studies GAO reviewed and stakeholders GAO interviewed suggest that more information is needed on outcomes other than mortality for children treated at pediatric trauma centers because mortality can be a limited outcome measure, as overall mortality is low among severely injured children. Estimated Percentage of Children Who Lived within 30 Miles of a High-Level Pediatric Trauma Center, by State, 2011-2015 Note: High-level pediatric trauma centers have the resources to treat all injured children, regardless of injury severity. Two agencies within the Department of Health and Human Services (HHS)—the Health Resources and Services Administration (HRSA) and the National Institutes of Health (NIH)—have grant programs and other activities that support hospital-based pediatric trauma care. For example, HRSA's Emergency Medical Services for Children Program provides grants to integrate pediatric emergency care—which encompasses care for both traumatic injury and illness—into states' larger emergency medical services systems. GAO also found that federal activities related to hospital-based pediatric trauma care and other emergency care are coordinated through an interagency group and arrangements among agencies. For example, HRSA and NIH staff participate in the Council on Emergency Medical Care, an interagency group established to coordinate emergency care activities across the federal government by promoting information sharing and policy development. Why GAO Did This Study Pediatric trauma—a severe and potentially disabling or life threatening injury to a child resulting from an event such as a motor vehicle crash or a fall—is the leading cause of disability for children in the United States. More children die of injury each year than from all other causes combined. GAO was asked to examine issues related to pediatric trauma care. This report examines (1) what is known about the availability of trauma centers for children and the outcomes for children treated at different types of facilities, and (2) how, if at all, federal agencies are involved in supporting pediatric trauma care and how these activities are coordinated. GAO analyzed data on the number of pediatric and adult trauma centers in the United States relative to the pediatric population under 18 years of age. GAO used 2015 data on trauma centers from the American Trauma Society's Trauma Information Exchange Program and 5-year population estimates for 2011-2015 from the U.S. Census Bureau's American Community Survey, which were the latest available data at the time of GAO's analysis. GAO also reviewed the existing peer-reviewed, academic literature on outcomes for pediatric trauma patients, interviewed stakeholder group representatives and federal agency officials involved in activities related to hospital-based pediatric trauma care, and reviewed available agency documentation. HHS provided technica[...]



GAO-17-341, National Nuclear Security Administration: Action Needed to Address Affordability of Nuclear Modernization Programs, April 26, 2017

Wed, 26 Apr 2017 13:00:00 -0400

What GAO Found The National Nuclear Security Administration's (NNSA) overall nuclear modernization budget materials and plans for the next 25 years, as presented in the Fiscal Year 2017 Stockpile Stewardship and Management Plan , differ little from those in the fiscal year 2016 plan. Specifically, Budget estimates in the fiscal year 2017 plan increased about 1 percent over the 2016 plan in nominal terms, which is similar to the overall budget increases in the fiscal year 2016 plan compared to the fiscal year 2015 plan. Specific budget estimates changed to a greater degree for certain program areas and individual programs. For example, changes in NNSA's modernization estimates varied across the four program areas that make up the Weapons Activities appropriations account: stockpile; infrastructure; research, development, testing, and evaluation; and other weapons activities. Changes were made in the 25-year budget estimates for the Weapons Activities account as well as at the program level. Reasons for changes include movement of program funding to other areas. For example, the infrastructure area funding decreased 2.7 percent from fiscal year 2016 to fiscal year 2017, in part because about $6.5 billion in strategic materials sustainment funding was moved from the infrastructure area to the stockpile area. In some cases, NNSA's fiscal year 2017 nuclear security budget materials do not align with the agency's modernization plans, both within the 5-year Future-Years Nuclear Security Program (FYNSP)—fiscal years 2017 through 2021—and beyond, raising concerns about the affordability of NNSA's planned portfolio of modernization programs. In particular, for some weapons refurbishments, the low end of NNSA's cost range estimates exceeds the estimates in the budget materials. For example, the W80-4 program's low-range cost estimate for fiscal year 2017 exceeds the budget estimate by about $26.9 million. In addition, the budget estimates for some modernization programs for fiscal years 2018 through 2021 are more than $5 billion below the funding levels NNSA has identified needing. If these needs are not met, NNSA may have to defer certain modernization work. Further, NNSA's budget estimates for fiscal years 2022 through 2026 may exceed out-year funding projections in the President's budget for those same years. GAO identified a similar funding gap in the prior year's budget materials. NNSA's fiscal year 2017 plan concludes that the modernization program is generally affordable in the years beyond the FYNSP, but this conclusion is optimistic, and the NNSA plan does not assess options to align future modernization plans and budgets with or without out-year funding increases. Portfolio management best practices developed by the Project Management Institute state that organizations can optimize their portfolios of programs and projects by assessing their capability and capacity to finance specific portfolio components; determining which portfolio components should receive the highest priority; and identifying components to be suspended, reprioritized, or terminated. By including an assessment of the affordability of its portfolio of modernization programs in future Stockpile Stewardship and Management Plans, NNSA could develop a plan that could bring its estimates of modernization funding needs into alignment with potential future budgets. Why GAO Did This Study To ensure that the nation's existing nuclear weapons remain safe and reliable, the 2010 Nuclear Posture Review identified a set of long-term modernization goals for the nation's nuclear weapons stockpile that include sustaining a safe, secure, and effective nuclear arsenal and investing in a modern inf[...]



GAO-17-400, K-12 Education: Education Needs to Improve Oversight of Its 21st Century Program, April 26, 2017

Wed, 26 Apr 2017 13:00:00 -0400

What GAO Found The Department of Education (Education) awards 21st Century Community Learning Centers (21st Century) grants to states, who in turn, competitively award funds to local organizations, which use them to offer academic enrichment and other activities to improve students' academic and behavioral outcomes. In their most recent grant competitions, states awarded 21st Century funds to nearly 2,400 organizations—including school districts and community-based organizations—based on a variety of criteria, such as the quality of their proposed program designs. Relevant research we reviewed that compared program participants to those of non-participants suggests that the 21st Century program is effective in improving students' behavioral outcomes, such as school-day attendance and reduced disciplinary incidents, more often than their academic outcomes. However, because Education's current 21st Century performance measures primarily focus on students' reading and math scores on state tests, Education lacks useful data about whether the program is achieving its objectives to improve students' behavioral outcomes such as attendance and discipline—the areas where the program most frequently has a positive effect. Education officials have not substantially revised the program's performance measures since 1998, in part because its authorization lapsed from fiscal years 2008 through 2016. Leading practices in performance measurement call for federal agencies to align performance measures with program objectives. 21st Century Community Learning Centers' Objectives and Performance Measures for Student Outcomes Education's technical assistance to states does not adequately address challenges states face in evaluating their 21st Century programs and sustaining them when program funding ends. About a third of states reported in GAO's 50-state survey that they face challenges in evaluating program performance, such as difficulty designing evaluations that shed light on program effects. Further, the 21st Century program was reauthorized twice, which resulted in significant changes to state requirements for evaluating programs. However, Education has not provided states written guidance on developing and conducting high-quality evaluations since 1999. Federal standards for internal control state that when significant changes occur agencies should periodically review policies for continued relevance and effectiveness in achieving their objectives. Absent written guidance to states on conducting high-quality evaluations, Education may miss opportunities to help states improve their capacity to conduct such evaluations to assure the program is meeting its goals. Why GAO Did This Study Education's 21st Century program—funded about $1 billion annually since 2002—supports a broad array of activities outside the school day to improve student outcomes in high-poverty or low-performing K-12 schools. A statement accompanying the Consolidated and Further Continuing Appropriations Act of 2015 included a provision for GAO to review Education programs outside the regular school day. GAO examined (1) how 21st Century funds are awarded and used, (2) what is known about the effectiveness of these programs, (3) how Education manages and uses program data to inform decision making, and (4) Education's technical assistance for evaluating and sustaining programs. GAO conducted a 50-state survey of program officials, obtaining a 100 percent response rate. GAO also reviewed selected state program evaluations and academic studies on student outcomes, and observed program activities and interviewed officials in four states representing a range of grant si[...]



GAO-17-562T, Government Efficiency and Effectiveness: Opportunities to Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits, April 26, 2017

Wed, 26 Apr 2017 13:00:00 -0400

What GAO Found GAO's 2017 annual report identifies 79 new actions that Congress and executive branch agencies can take to improve the efficiency and effectiveness of government in 29 new areas. Of these, GAO identified 15 areas in which there is evidence of fragmentation, overlap, or duplication. For example, GAO found that the Army and Air Force need to improve the management of their virtual training programs to avoid fragmentation and better acquire and integrate virtual devices into training to potentially save tens of millions of dollars. GAO also identified 14 areas to reduce the cost of government operations or enhance revenues. For example, GAO found that the Department of Energy could potentially save tens of billions of dollars by improving its analysis of options for storing defense and commercial high-level nuclear waste and fuel. Congress and executive branch agencies have made progress in addressing the 645 actions that GAO identified from 2011 to 2016. Congressional and executive branch efforts to address these actions over the past 6 years have resulted in roughly $136 billion in financial benefits, of which $75 billion has accrued and at least an additional $61 billion in estimated benefits is projected to accrue in future years. Status of 2011–2016 Actions as of March, 2017 Status 115th Congress number of actions (percentage) Executive branch number of actions (percentage) Total number of actions (percentage) Addressed 36 (38%) 293 (53%) 329 (51%) Partially addressed 9 (9%) 192 (35%) 201 (31%) Not addressed 50 (53%) 65 (12%) 115 (18%) Total 95 (100%) 550 (100%) 645 (100%) Source: GAO. | GAO-17-562T Further steps are needed to fully address the remaining actions GAO identified. GAO estimates that tens of billions of additional dollars would be saved should Congress and executive branch agencies fully address the 395 actions that remain open, including the 79 new actions GAO identified in 2017. While these open actions span the government, a substantial number of them are directed to seven agencies: the Departments of Defense, Health and Human Services, Homeland Security, Veterans Affairs, the Internal Revenue Service, Office of Management and Budget, and the Social Security Administration. For example, the Department of Health and Human Services could potentially save over a billion dollars annually by better aligning its payments to hospitals for the uncompensated care they provide to uninsured and low-income patients. Why GAO Did This Study The federal government faces a long-term, unsustainable fiscal path based on an imbalance between federal revenues and spending. While addressing this structural imbalance will require fiscal policy changes, in the near term opportunities exist in a number of areas to improve this situation, including where federal programs or activities are fragmented, overlapping, or duplicative. To call attention to these opportunities, Congress included a provision in statute for GAO to identify and report on federal programs, agencies, offices, and initiatives—either within departments or government-wide[...]



GAO-17-525T, 2017 Filing Season: New Wage Verification Process Holds Promise but IRS Faced Implementation Challenges, April 26, 2017

Wed, 26 Apr 2017 13:00:00 -0400

What GAO Found To help combat identify theft refund fraud and improper payments, in 2017 the Internal Revenue Service (IRS) implemented provisions of the Protecting Americans from Tax Hikes Act of 2015 (the Act). Consistent with GAO's prior reporting, the Act advanced the deadline for employers filing Form W-2, Wage and Tax Statement (W-2) with the Social Security Administration to January 31, allowing IRS to verify information reported on tax returns (such as wages and withholding) before issuing refunds, a process IRS calls W-2 systemic verification. As of February 17, 2017, IRS received over 214 million W-2 forms (a 125 percent increase over the same time last year). The Act also required IRS to hold refunds until February 15 for taxpayers claiming the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) to provide time to use W-2 data to verify returns. Although IRS applied the verification process to all returns, preliminary data suggest the following: For returns where the taxpayer claimed the EITC or ACTC, IRS verified the wage information for over 35 percent of these returns before February 15. Moreover, the refund hold allowed IRS time to verify returns when it received more W-2 data, resulting in approximately $863 million in additional refunds being identified as potentially fraudulent. However, since not all W-2 data were available before February 15, IRS was unable to verify wage information for over 58 percent (7.7 million) of tax returns with refunds claiming the EITC or ACTC for a total of $38.1 billion. IRS did not hold returns that did not claim the EITC or ACTC because it was not required to do so, although those returns were subject to systemic verification and other checks. Preliminary data show that IRS verified wages reported on 8.6 million (41 percent) returns that did not claim the EITC or ACTC before February 15. However, IRS was unable to verify wage information reported on over 58 percent (12.3 million) of tax returns claiming $28.1 billion in refunds, because not all W-2 data were available. Several issues contributed to delays in availability of W-2 information. IRS processes W-2 electronic data weekly rather than when received due to the age of its computer system, resulting in a lag between when IRS has the data and can use it. In addition, some employers can request and be granted 30-day filing extensions and some file paper W-2s, which take longer to process. IRS continues to analyze the W-2 systemic verification process and its outcomes. IRS's telephone wait times and level of service—those seeking live assistance and receiving it—improved in the 2017 filing season compared to prior years. Average wait time decreased from 9.7 to 6.8 minutes compared to last year, and telephone level of service was more than 77 percent compared to 74 percent. Further, IRS reduced the number of written correspondence that is late, or “overage,” compared to prior years. IRS also experienced minor disruptions during return processing with two brief electronic filing system interruptions. Finally, IRS launched a new online service, but others were unavailable or discontinued due to security concerns. Why GAO Did This Study IRS processes over 100 million tax returns during the filing season. In the past several years, IRS has been confronted with the ongoing problem of identity theft refund fraud and improper payments. Wage information that employers report on Form W-2 had not been available to IRS until after it issued most refunds. As GAO previously reported, earlier access to W-2 wage data—as now provided in recent legislation—cou[...]



GAO-17-460, DATA Act: Office of Inspector General Reports Help Identify Agencies' Implementation Challenges, April 26, 2017

Wed, 26 Apr 2017 13:00:00 -0400

What GAO Found As of January 31, 2017, 30 Offices of Inspector General (OIG) had completed Digital Accountability and Transparency Act of 2014 (DATA Act) readiness reviews for their respective agencies, most of which were completed from June 2016 through November 2016. GAO noted variations across the type of reviews conducted, standards used, and scope of work. For example, 16 OIG reviews focused on agencies' implementation actions to organize and design changes as recommended in the Department of the Treasury's (Treasury) DATA Act Implementation Playbook, while others included additional implementation steps. The OIGs reported varying expectations for agencies' readiness to meet DATA Act requirements (see figure). For 26 of the 30 agencies, the OIGs reported challenges similar to those previously reported in agencies' implementation plans and by GAO, such as systems integration issues and lack of resources. Agencies have continued their implementation efforts since the OIG reviews. OIGs' Reported Expectations of Agencies' Readiness to Meet DATA Act Requirements Office of Management and Budget (OMB) staff make limited use of the OIGs' readiness review reports, and Treasury officials do not use them to monitor agencies' implementation of the DATA Act. Instead, OMB staff and Treasury officials stated that they monitor agency progress through other means, such as meetings with senior accountable officials and agency self-reporting. However, the OIG readiness reviews represent an important independent resource that could be used to validate agencies' self-reported progress, identify government-wide systemic issues, and identify and communicate good practices. By not making greater use of the OIG readiness review results, OMB and Treasury may be missing additional opportunities to identify implementation issues and review information that could help inform their monitoring of agencies' implementation of the DATA Act requirements. Why GAO Did This Study The DATA Act was enacted to increase accountability and transparency and, among other things, expanded on the required federal spending information that agencies are to submit to Treasury for posting to a publicly available website. The act also requires a series of oversight reports by agencies' OIGs and GAO. The objectives of this report are to (1) describe the type of reviews and standards OIGs reported using and scope of the work covered by the DATA Act readiness review reports issued by agency OIGs as of January 31, 2017; (2) describe agencies' readiness to meet the DATA Act requirements, including the May 2017 deadline, as reported by the respective OIGs; and (3) evaluate the extent to which OMB and Treasury used or plan to use the results of the OIG readiness reviews. GAO reviewed 30 OIGs' DATA Act readiness reviews issued on or before January 31, 2017. GAO also interviewed OMB staff and Treasury officials and assessed their actions against project management criteria. What GAO Recommends GAO recommends that OMB and Treasury establish mechanisms to assess the results of independent audits and reviews of agencies' compliance with the DATA Act requirements, including those of agency OIGs. OMB generally concurred and Treasury agreed with the recommendation. The Council of the Inspectors General on Integrity and Efficiency noted that the report will contribute to a greater understanding of OIGs' oversight and agencies' DATA Act implementation efforts. For more information, contact Paula M. Rascona at (202) 512-9816 or rasconap@gao.gov.



GAO-17-491SP, 2017 Annual Report: Additional Opportunities to Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits, April 26, 2017

Wed, 26 Apr 2017 13:00:00 -0400

What GAO Found GAO’s 2017 annual report identifies 79 new actions that Congress and executive branch agencies can take to improve the efficiency and effectiveness of government in 29 new areas. Of these, GAO identified 15 areas in which there is evidence of fragmentation, overlap, or duplication. For example, GAO found that the Army and Air Force need to improve the management of their virtual training programs to avoid fragmentation and better acquire and integrate virtual devices into training to potentially save tens of millions of dollars. GAO also identified 14 areas to reduce the cost of government operations or enhance revenues. For example, GAO found that the Department of Energy could potentially save tens of billions of dollars by improving its analysis of options for storing defense and commercial high-level nuclear waste and fuel. Congress and executive branch agencies have made progress in addressing the 645 actions that GAO identified from 2011 to 2016. Congressional and executive branch efforts to address these actions over the past 6 years have resulted in roughly $136 billion in financial benefits, of which $75 billion has accrued and at least an additional $61 billion in estimated benefits is projected to accrue in future years.   Status of 2011–2016 Actions as of March, 2017 Status    115th Congress number of actions (percentage)     Executive branch number of actions (percentage)   Total number of actions (percentage)   Addressed    36 (38%) 293 (53%) 329 (51%) Partially addressed 9 (9%) 192 (35%) 201 (31%) Not addressed 50 (53%) 65 (12%) 115 (18%) Total    95 (100%) 550 (100%) 645 (100%) Source: GAO. | GAO-17-491SP Further steps are needed to fully address the remaining actions GAO identified. GAO estimates that tens of billions of additional dollars would be saved should Congress and executive branch agencies fully address the 395 actions that remain open, including the 79 new actions GAO identified in 2017. While these open actions span the government, a substantial number of them are directed to seven agencies: the Departments of Defense, Health and Human Services, Homeland Security, Veterans Affairs, the Internal Revenue Service, Office of Management and Budget, and the Social Security Administration. For example, the Department of Health and Human Services could potentially save over a billion dollars annually by better aligning its payments to hospitals for the uncompensated care they provide to uninsured and low-income patients. Why GAO Did This Study The federal government faces a long-term, unsustainable fiscal path based on an imbalance between federal revenues and spending. While addressing this structural imbalance will require fiscal policy changes, in the near term opportunities exist in a number of areas to improve this situation, including where federal programs or activities are fragmented, overlapping, or duplicative. To call attention to these opportunities, Congress included a provision in statute for GAO to identify and report on federal programs, agencies, offices, and initiatives—either within departments or government-wide—that have duplicative goals or[...]



GAO-17-337, Small Business Research Programs: Additional Actions Needed to Implement Fraud, Waste, and Abuse Prevention Requirements, April 25, 2017

Tue, 25 Apr 2017 13:00:00 -0400

What GAO Found The 11 agencies participating in the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs have varied in their implementation of the fraud, waste, and abuse prevention requirements developed by the Small Business Administration (SBA) after the programs were reauthorized in 2011. SBA, which oversees the programs, amended the SBIR and STTR policy directives in 2012, as required by the reauthorization act, to include 10 minimum requirements to help agencies prevent potential fraud, waste, and abuse in the programs. GAO found that the extent to which the agencies have fully implemented each of the requirements in the directives varies. For example, all 11 agencies have fully implemented 2 requirements, more than half of the agencies have fully implemented 6 other requirements, and 1 and 3 agencies, respectively, have fully implemented the remaining 2 requirements. Officials from 9 agencies told GAO they have implemented other activities beyond the minimum requirements included in the directives, such as conducting site visits to small businesses to confirm that the necessary facilities exist for technical research and development work. Although SBA issued the policy directives, it has taken few actions to oversee agencies' efforts to implement the requirements. SBA officials said they checked on the implementation of one of the requirements, but did not know whether the participating agencies were implementing the other requirements because they had not confirmed this information. Without confirming that each participating agency is implementing the fraud, waste, and abuse prevention requirements in the policy directives, SBA does not have reasonable assurance that each agency has a system in place to reduce its' vulnerability to fraud, waste, and abuse. Similarly, Offices of Inspectors General (OIG) varied in their implementation of the fraud, waste, and abuse prevention requirements specifically assigned to them in the reauthorization act, with between 5 and 11 OIGs implementing each requirement. For example, OIGs at each of the 11 agencies have shared information on fraud, waste, and abuse. Of the 11 participating agencies, the Department of Defense (DOD) is the only one whose oversight and audit responsibilities are separated between its various OIGs and specific investigative services, so that DOD has both an OIG as well as an investigative service as do each of the military services. By law, the OIGs of each military service within DOD—Army, Navy, and Air Force—are each required to implement these requirements. However, GAO found that none of the three military service OIGs had taken actions to implement the requirements, although the DOD OIG had taken some steps to implement them. The division of duties between the military services' OIGs and their respective investigative services makes it difficult to track the implementation of these requirements at DOD. Without the three military services' OIGs implementing the requirements themselves or delegating the implementation of the requirements to the investigative services, the DOD OIGs may not be able to detect fraud, waste, and abuse in DOD's SBIR and STTR programs, which have the largest budgets for these programs. Why GAO Did This Study For about 35 years, federal agencies have made awards to small businesses for technology research and development through the SBIR program and, for the last 25 years, through the STTR program. Following a 2009 congressional hearing about fraud in the pro[...]



GAO-17-426, Federally Owned Vehicles: Agencies Should Improve Processes to Identify Underutilized Vehicles, April 25, 2017

Tue, 25 Apr 2017 13:00:00 -0400

What GAO Found Federal agencies spent more than $1.6 billion to purchase approximately 64,500 passenger vehicles and light trucks through the General Services Administration (GSA) from fiscal years 2011 through 2015. Five departments—Defense (DOD), Homeland Security (DHS), Agriculture (USDA), Justice, and Interior—purchased 90 percent of these vehicles, and spent a comparable percentage of the associated funds. The vehicles cost an average of approximately $25,600 each. GAO determined that the three agencies reviewed—Navy within DOD, Customs and Border Protection (CBP) within DHS, and Natural Resources Conservation Service (NRCS) within USDA—varied in efforts to determine if vehicles were utilized in fiscal year 2015. Navy determined that all of the 3,652 vehicles GAO selected for review were utilized by applying DOD and Navy criteria such as for mileage and individually justifying vehicles. CBP did not determine if 1,862 (81 percent) of its 2,300 selected vehicles were utilized in fiscal year 2015 even though the vehicles did not meet DHS's minimum mileage criteria. CBP officials stated that, contrary to DHS policy, CBP did not have criteria to measure these vehicles' utilization because it was difficult to manually collect the data needed to establish appropriate criteria and assess if vehicles met those criteria. CBP is currently installing devices in many of its vehicles that will allow it to more easily collect such data, but lacks a specific plan for how to ensure these data will allow it to determine if vehicles are utilized. NRCS did not determine if 579 (9 percent) of its 6,223 selected vehicles were utilized in fiscal year 2015. USDA and NRCS fleet officials stated that the agency did not annually assess vehicle utilization, nor did it apply USDA criteria such as mileage or days used. USDA and NRCS officials said they were unaware of USDA's policy requiring these steps because the policy had not been widely discussed or shared within USDA since 2012. CBP and NRCS cumulatively incurred an estimated $13.5 million in depreciation and maintenance costs in fiscal year 2015 for vehicles with unknown utilization (see table). While these costs may not equal the cost savings agencies derive from eliminating underutilized vehicles, without corrective action, agencies are incurring expenses to retain vehicles without determining if they are utilized. Number, Percentage, and Cost of Selected Owned Vehicles That Selected Agencies Did Not Identify as either Utilized or Underutilized in Fiscal Year 2015 Agency Number of owned vehicles selected by GAO Number of selected vehicles with unknown utilizationa Percentage of the agency's selected owned vehicles Estimated cost to retain vehicles, in millionsb Customs and Border Protection 2,300 1,862 81 $12.7 Natural Resources Conservation Service 6,223 579 9 $0.8 Navy 3,652 0 0 $0.0 Total 12,175 2,441 20 $13.5 Source: GAO analysis of agency-provided data. | GAO-17-426 a Selected owned vehicles for each agency in GAO's review covered all passeng[...]



GAO-17-343, Tennessee Valley Authority: Actions Needed to Better Communicate Debt Reduction Plans and Address Billions in Unfunded Pension Liabilities, March 23, 2017

Mon, 24 Apr 2017 13:00:00 -0400

What GAO Found To meet its goal to reduce debt by about $4 billion—from about $26 billion in fiscal year 2016 to about $22 billion by fiscal year 2023—the Tennessee Valley Authority (TVA) plans to increase rates, limit the growth of operating expenses, and reduce capital expenditures. For example, TVA increased rates each fiscal year from 2014 through 2017 and was able to reduce operating and maintenance costs by about 18 percent from fiscal year 2013 to 2016. TVA's plans depend on assumptions that future capital projects will be completed on time and within budget, but TVA's estimated capital costs may be optimistic and could increase. TVA's debt reduction plans and performance information are not reported in a manner consistent with the GPRA Modernization Act of 2010. Specifically, TVA identifies managing its debt and its unfunded pension liabilities as major management challenges but has not reported required performance information in its performance plans or reports on these challenges, thereby reducing transparency and raising questions about how it will meet its goal. As of September 30, 2016, TVA‘s pension plan was about 54 percent funded (plan assets totaled about $7.1 billion and liabilities $13.1 billion). While TVA's debt has remained relatively flat, its unfunded pension liabilities have steadily increased over the past 10 years, as shown below. Tennessee Valley Authority's Debt and Unfunded Pension Liabilities, Fiscal Years 2006 through 2016 Several factors could affect TVA's ability to meet its debt reduction goal, including regulatory pressures, changes in demand for electricity, technological innovations, or unforeseen events. Also, TVA aims to eliminate its unfunded pension liabilities within 20 years, according to TVA officials. However, factors such as market conditions could affect TVA's progress, and no mechanism is in place to ensure it fully funds the pension liabilities if, for example, plan assets do not achieve expected returns. The TVA retirement system rules that determine TVA's required annual pension contributions do not adjust TVA's contributions to ensure full funding and TVA does not plan to contribute more than the rules require. Without a mechanism that ensures TVA's contributions will adequately adjust for actual plan experience, unfunded liabilities could remain and future ratepayers may have to fund the pension plan even further to pay for services provided to prior generations of ratepayers. Why GAO Did This Study TVA, the nation's largest public power provider, is a federal electric utility with revenues of about $10.6 billion in fiscal year 2016. TVA's mission is to provide affordable electricity, manage river systems, and promote economic development. TVA provides electricity to more than 9 million customers in the southeastern United States. TVA must finance its assets with debt and operating revenues. TVA primarily finances large capital investments by issuing bonds but is subject to a statutorily imposed $30 billion debt limit. In fiscal year 2014, TVA established a debt reduction goal. GAO was asked to review TVA's plans for debt reduction. This report examines (1) TVA's debt reduction goal, plans for meeting its goal, and key assumptions; (2) the extent to which TVA reports required performance information; and (3) factors that have been reported that could affect TVA's ability to meet its goal. GAO analyzed TVA financial data and documents and interviewed TVA and federal officials and[...]



GAO-17-351, F-35 Joint Strike Fighter: DOD Needs to Complete Developmental Testing Before Making Significant New Investments, April 24, 2017

Mon, 24 Apr 2017 13:00:00 -0400

What GAO Found Cascading F-35 testing delays could cost the Department of Defense (DOD) over a billion dollars more than currently budgeted to complete development of the F-35 baseline program. Because of problems with the mission systems software, known as Block 3F, program officials optimistically estimate that the program will need an additional 5 months to complete developmental testing. According to best practices, credible estimates are rooted in historical data. The program's projections are based on anticipated test point achievements and not historical data. GAO's analysis—based on historical F-35 flight test data—indicates that developmental testing could take an additional 12 months (see table below). These delays could affect the start of the F-35's initial operational test and evaluation, postpone the Navy's initial operational capability, and delay the program's full rate production decision, currently planned for April 2019. Assumptions Used to Determine Delays in F-35 Completion of Developmental Testing Assumptions F-35 program office GAO Monthly test point execution rate 384 220 Test point additions 42 percent 63 percent Test point deletions 13 percent 10.8 percent Schedule growth estimates     Developmental test completes October 2017 May 2018 Month slip 5 months 12 months Source: GAO analysis and presentation of Department of Defense data. | GAO-17-351 Program officials estimate that a delay of 5 months will contribute to a total increase of $532 million to complete development. The longer delay estimated by GAO will likely contribute to an increase of more than $1.7 billion, approximately $1.3 billion of which will be needed in fiscal year 2018. Meanwhile, program officials project the program will need over $1.2 billion in fiscal year 2018 to start two efforts. First, DOD expects it will need over $600 million for follow-on modernization (known as Block 4). F-35 program officials plan to release a request for Block 4 development proposals nearly 1 year before GAO estimates that Block 3F—the last block of software for the F-35 baseline program—developmental testing will be completed. DOD policy and GAO best practices state that requirements should be approved and a sound business case formed before requesting development proposals from contractors. Until Block 3F testing is complete, DOD will not have the knowledge it needs to present a sound business case for Block 4. Second, the program may ask Congress for more than $650 million in fiscal year 2018 to procure economic order quantities—bulk quantities. However, as of January 2017 the details of this plan were unclear because DOD's 2018 budget was not final and negotiations with the contractors were ongoing. According to internal controls, agencies should communicate with Congress, otherwise it may not have the information it needs to make a fully informed budget decision for fiscal year 2018. Completing Block 3F development is essential for a sound business case and warrants funding priority over Block 4 and[...]



GAO-17-372, Aviation Research and Development: FAA Could Improve How It Develops Its Portfolio and Reports Its Activities, April 24, 2017

Mon, 24 Apr 2017 13:00:00 -0400

What GAO Found The Federal Aviation Administration's (FAA) actions are not fully consistent with requirements, agency guidance, and leading practices related to the management of its research and development (R&D) portfolio. GAO assessed FAA's actions to manage its R&D portfolio in three key areas: (1) developing its portfolio of R&D projects, (2) tracking and evaluating these projects, and (3) reporting on the portfolio. We found that FAA could be more strategic in how it develops its R&D portfolio, chiefly in identifying long-term research needs and in improving disclosure of how projects are selected. As a result, FAA management cannot be assured that the highest priority R&D is conducted. GAO also found that while FAA tracks and evaluates its research projects consistent with leading practices, it does not fully address all statutory reporting requirements, such as identifying long-term research resources in the National Aviation Research Plan ( NARP ) or preparing the R&D Annual Review in accordance with government performance-reporting requirements. These reporting deficiencies can limit the usefulness of the reports to internal and outside stakeholders. FAA has begun to examine how it can improve the usefulness and timeliness of its R&D reports, but has not identified specific changes needed. FAA's and the National Aeronautics and Space Administration's (NASA) aviation R&D coordination generally reflects selected leading practices for interagency collaboration that GAO has previously identified. GAO found that FAA and NASA have: (1) written agreements that define the scope and conditions for collaboration; (2) defined the roles and responsibilities of collaboration leaders and participants; (3) defined desired outcomes and accountability mechanisms; (4) bridged their two organizational cultures through coordinating bodies and joint activities; and (5) identified and leveraged resources through agreements. FAA and NASA officials that GAO interviewed reported that they coordinated on R&D. Such coordination is exemplified by the types of technology that have been transferred from NASA to FAA. For example, NASA developed software that improves air-traffic departure efficiency. NASA Then then tested the software alongside FAA's, before transferring it to FAA for use by air traffic controllers at airports. FAA and the private sector cooperate on R&D activities through formal and informal mechanisms. Through funding agreements FAA uses private sector expertise and technology-transfer partnerships to share facilities, equipment, and staff. These agreements and partnerships are intended to extend FAA's capabilities and resources and expand the U.S. technology base. FAA also tracks private sector R&D activities through advisory committees and more informal relationships. In developing the R&D portfolio, FAA does not formally consider the impact of its R&D activities on the private sector because the FAA and the private sector have different research goals. According to three large private-sector firms GAO interviewed and to academic literature GAO reviewed, there is little evidence that FAA's activities have crowded out or precluded private firms from undertaking their own R&D. Why GAO Did This Study The federal government conducts aviation R&D to advance U.S. technological leadership, foster a dynamic aerospace industry, and improv[...]



GAO-17-361, Financial Technology: Information on Subsectors and Regulatory Oversight, April 19, 2017

Wed, 19 Apr 2017 13:00:00 -0400

What GAO Found The financial technology (fintech) industry is generally described in terms of subsectors that have or are likely to have the greatest impact on financial services, such as credit and payments. Commonly referenced subsectors associated with fintech include marketplace lending, mobile payments, digital wealth management, and distributed ledger technology. Marketplace lenders connect consumers and small businesses seeking online and timelier access to credit with individuals and institutions seeking profitable lending opportunities. Marketplace lenders use traditional and may use less traditional data and credit algorithms to underwrite consumer loans, small business loans, lines of credit, and other loan products. Mobile payments allow consumers to use their smartphones or other mobile devices to make purchases and transfer money instead of relying on the physical use of cash, checks, or credit and debit cards. There are different ways to make mobile payments, including the use of a mobile wallet. Digital wealth management platforms use algorithms based on consumers' data and risk preferences to provide digital services, including investment and financial advice, directly to consumers. Digital wealth management platforms provide services including portfolio selection, asset allocation, account aggregation, and online risk assessments. Distributed ledger technology was introduced to facilitate the recording and transferring of virtual currencies, specifically using a type of distributed ledger technology, known as blockchain. Distributed ledger technology has the potential to be a secure way of conducting transfers of digital assets in a near real-time basis potentially without the need for an intermediary. Regulation of these subsectors depends on the extent to which the firms provide a regulated service and the format in which the services are provided. For example, a marketplace lender may be subject to: federal regulation and examination by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency in connection with certain services provided to depository institutions by the lender; state licensing and regulation in the states in which the lender conducts business; securities offering registration requirements administered by the Securities and Exchange Commission if the lender publicly offers securities; and/or enforcement actions by the Bureau of Consumer Financial Protection and the Federal Trade Commission for violations of certain consumer protection laws. To learn about the fintech industry, some agencies hosted forums, formed working groups, and published whitepapers and regulatory guidance. Why GAO Did This Study Advances in technology and the widespread use of the Internet and mobile communication devices have helped fuel the growth in fintech products and services, such as small business financing, student loan refinancing, mobile wallets, virtual currencies, and platforms to connect investors and start-ups. Some fintech products and services offer the potential to expand access to financial services to individuals previously underserved by traditional financial institutions. GAO was asked to review a number of issues related to the fintech industry, including how fintech products and services are regulated. [...]