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GAO-17-726, Investment Management: Key Practices Could Provide More Options for Federal Entities and Opportunities for Minority- and Women-Owned Asset Managers, September 13, 2017

Wed, 20 Sep 2017 13:00:00 -0400

What GAO Found According to asset managers and industry associations with which GAO spoke, minority- and women-owned (MWO) asset managers face challenges when competing for investment management opportunities with institutional investors, such as retirement plans and foundations. For example, institutional investors and their consultants often prefer to contract with large asset managers with brand recognition and with whom they are familiar. Also, small firms, including MWO firms, are often unable to meet minimum requirements set by institutional investors, such as size (assets under management) and past experience (length of track record). State, local, and private retirement plans and foundations GAO interviewed addressed these challenges in a variety of ways, such as asking their consultants to include MWO firms in their searches. Many plans also lowered their minimum threshold requirements so that the requirements were proportional to the size of the firms while maintaining the same performance requirements for all asset managers in their selection processes. Federal retirement plans, the endowment, and the insurance program GAO reviewed invest in asset classes in which MWO asset managers have a market presence, but overall use of MWO firms varied. For example, some retirement plans either did not use any MWO firms or did not track this information. The endowment and insurance program reported using some MWO asset managers. GAO identified four key practices institutional investors can use to increase opportunities for MWO asset managers. These practices are consistent with federal interests in increasing opportunities for MWO businesses. Top leadership commitment . Demonstrate commitment to increasing opportunities for MWO asset managers. Remove potential barriers. Review investment policies and practices to remove barriers that limit the participation of smaller, newer firms. Outreach. Conduct outreach to inform MWO asset managers about investment opportunities and selection processes. Communicate priorities and expectations. Explicitly communicate priorities and expectations about inclusive practices to investment staff and consultants and ensure those expectations are met. Some federal entities we reviewed, such as the Federal Reserve System, have used all the practices, but others made partial, limited, or no use of the practices. The Federal Retirement Thrift Investment Board does not intend to use the practices in its planned mutual fund window platform. The Navy Exchange Service Command and Tennessee Valley Authority Retirement System used one practice, but have not used the others. The Army and Air Force Exchange Service has used two practices, and partially used two practices. By using the key practices, the entities GAO reviewed could widen the pool of candidates in their asset manager searches and help ensure that they find the most qualified firms. In keeping with federal interests, the practices could also help address barriers MWO firms face and increase opportunities for them. Why GAO Did This Study Asset management firms registered in the United States manage more than $70 trillion. MWO firms manage less than 1 percent of those assets. The federal government has an interest in increasing opportunities for MWO businesses. Questions have been raised about how often federal entities use MWO asset managers and the transparency of their selection processes. GAO was asked to examine, among other things, (1) competitive challenges MWO firms face and how institutional investors address them, (2) selected federal entities' use of MWO firms, and (3) the entities' asset manager selection processes, including their use of key practices. GAO reviewed investment policies and financial statements of 8 entities that manage or sponsor federal retirement plans, an endowment, and an insurance program. GAO also interviewed 14 state, local, and private retirement plans and foundations and 10 MWO asset managers (selected based on size and other factors). What GAO Recom[...]



GAO-17-555, Higher Education: Education Should Address Oversight and Communication Gaps in Its Monitoring of the Financial Condition of Schools, August 21, 2017

Wed, 20 Sep 2017 13:00:00 -0400

What GAO Found The Department of Education (Education) reviews the annual audits of postsecondary schools to assess compliance with financial responsibility standards for schools that participate in federal student aid programs and increases its oversight of schools that do not meet these standards. In school year 2014-15, Education reviews found that about 450 of approximately 6,000 schools that participate in federal student aid programs did not receive a passing financial composite score (a measure of schools' financial health). Education may secure financial assurances from schools that do not meet the standards, in the form of a letter of credit, to help cover federal costs if a school closes and students become eligible to have their federal student loans forgiven. Education has also taken steps to expand its oversight of certain large schools and companies that own multiple schools through more frequent monitoring and additional reporting requirements. School closures are relatively rare, but limitations of Education's composite score hamper its effectiveness at identifying at-risk schools. About 95 schools closed in school year 2015-16, according to Education data. The vast majority of closures in the past 5 years were small schools (less than 500 students), but recent closures of several large schools affected thousands of students and resulted in over half a billion dollars in federal losses from unrepaid student loans. The composite score has been an imprecise risk measure, predicting only half of closures since school year 2010-11, although schools can close for nonfinancial reasons as well. GAO identified three key limitations of the composite score: Accounting changes: It does not reflect updates in accounting practices. Outdated financial measures: It does not incorporate new financial metrics that would provide a broader indication of schools' financial health, such as liquidity, historical trend analysis, or future projections. Vulnerability to manipulation: It allows some schools to take advantage of a feature of the composite score calculation to inflate their scores by taking out loans, thereby avoiding requirements to post letters of credit. Despite these limitations, Education has not updated the composite score since it was first established 20 years ago. Identifying and responding to risks is a key component of federal internal control standards, and Education's failure to update its key financial measure makes it harder for Education to identify and manage schools at risk of closure. Education does not fully explain to schools key aspects of its financial oversight nor does it disclose complete results to the public. Effective communication is a key principle of federal internal control standards. However, Education's guidance to schools does not sufficiently detail how it calculates the composite score; administrators GAO interviewed at 7 of 10 selected schools expressed confusion about their scores' calculations. Schools that are unable to accurately estimate their scores may not be able to effectively plan for the costs of obtaining a letter of credit. Further, the most recent composite scores publicly released by Education left out 17 percent of schools, whose students received over $8 billion in federal student aid. As a result, students do not have access to available information on whether their schools are financially sound so they may confidently invest their time and money. Why GAO Did This Study Education oversees the financial condition of about 6,000 postsecondary schools whose students received $125 billion in federal student aid in fiscal year 2016. With the recent closures of several large schools, GAO was asked to review Education's financial oversight of schools. This report examines (1) how Education oversees the financial condition of schools; (2) the extent to which Education's oversight has been effective at identifying schools at risk of closure; and (3) the extent to which Education informs schools and the publi[...]



GAO-17-756, Commercial Aviation: Information on Airline Fees for Optional Services, September 20, 2017

Wed, 20 Sep 2017 13:00:00 -0400

What GAO Found Since 2010, selected U.S. airlines have introduced a variety of new fees for optional services and increased some existing fees. For example, each of the 11 U.S. airlines that GAO examined introduced fees for “preferred” seating, which may include additional legroom or a seat closer to the front of the economy cabin. Some of these airlines have also introduced new fees for other optional services, such as fees for carry-on baggage and priority boarding. Since 2010, many of the selected airlines have also increased existing fees for some optional services, including fees for checked baggage and for changing or cancelling a reservation. From 2010 to 2016, U.S. airlines' revenues from these two fees—the only optional service fees for which revenues are separately reported to the Department of Transportation (DOT)—increased from $6.3 billion in 2010 to $7.1 billion in 2016 (in constant 2016 dollars). Airline officials cited competition from other airlines and customer demand, among other things, as factors they consider when deciding whether and how much to charge for optional services. According to officials from 9 of the 10 selected airlines GAO interviewed, the process of “unbundling” allows passengers to customize their flight by paying for only the services that they value. Airline officials said that charging fees for optional services allows the airlines to offer lower base airfares to customers. For customers traveling with bags, however, GAO's review of airline-related economic literature showed that on average customers who paid for at least one checked bag paid more in total for the airfare and bag fees than they did when airfares included checked baggage. Officials from the 10 airlines said they also consider customer demand and willingness to pay when setting prices for optional services, and officials from 8 of these airlines noted that competitors' prices for similar services are another factor used in determining the amount of fees. Since 2010, DOT has taken or has proposed a range of actions to improve the transparency of airlines' fees for optional services. These actions include: (1) monitoring and enforcing airlines' compliance with existing transparency regulations; (2) collecting, reviewing, and responding to consumers' complaints; (3) collecting additional data on revenue generated from fees; and (4) educating airlines and consumers about existing regulations and consumer rights related to optional service fees. Consumer and industry stakeholders, such as online travel agents' representatives, told GAO that DOT's regulations requiring certain airlines to disclose optional service fees on their websites have improved consumer transparency. However, these stakeholders also told GAO that there are additional transparency challenges, such as when consumers search for and book flights through online travel agents. Because optional services are not always available for purchase and because fees for such services are not always disclosed through online travel agents, these stakeholders argue that consumers are not always able to determine the full cost of their travel and compare costs across airlines before they purchase their tickets. While transparency challenges still exist, DOT has ongoing regulatory proceedings, some in response to prior GAO recommendations that may resolve some of these issues. Why GAO Did This Study Since 2008, U.S passenger airlines have increasingly charged fees for optional services that were previously included in the price of a ticket, such as checked baggage or seat selection. Consumer advocates have raised questions about the transparency of these fees and their associated rules. In April 2011, DOT issued a final rule requiring, among other things, that certain U.S. and foreign airlines disclose information about optional service fees on their websites. GAO was asked to review issues related to optional service fees in the U.S. aviation industry. This report describes: (1) how select[...]



GAO-17-807T, Budget Issues: Budget Uncertainty and Disruptions Affect Timing of Agency Spending, September 20, 2017

Wed, 20 Sep 2017 13:00:00 -0400

What GAO Found Agency responses to budget uncertainties affect timing of spending. Due to uncertainties about the total funding ultimately available in a given year, prior GAO work has found that agency officials limit their spending early in the fiscal year because final funding decisions may be less than anticipated. GAO's prior work has identified three key sources of budget uncertainty and disruption. Continuing resolutions. In all but 4 of the last 40 years, Congress has passed continuing resolutions (CR) to enable agencies to continue operating if all regular appropriation bills have not been enacted on time. In 2009, GAO reported that challenges caused by CRs continued at the selected agencies reviewed even after they had received their full year appropriations. Officials from selected agencies reported that they delayed hiring or contracts during the CR period, potentially reducing the level of services these agencies provided and increasing costs. Agency officials reported taking varied actions to manage inefficiencies resulting from CRs, including shifting contract and grant cycles to later in the fiscal year to avoid repetitive work. Sequestration. In 2014, GAO reported that agencies that historically obligated most of their funding in the latter half of the fiscal year had more flexibility to implement sequestration. Lapse in appropriations. In 2014, GAO reported on the effects of a 2013 lapse in appropriations (or government shutdown) on agencies' ability to manage their resources. In managing the implementation of the shutdown, the agencies GAO reviewed experienced budget and programmatic delays. GAO has also previously reported that while agency managers leverage flexibilities available to them as they execute their budgets, Congress has established controls that agencies must follow throughout the year to ensure accountability and fiscal control. Legal constraints regarding the purpose, amount, and time of the funds available affect how the funds can be spent throughout the year. These include: The fiscal characteristics of the funding, including the period of availability of the funds, influence how agencies manage their resources. An agency may not obligate current appropriations for the needs of future fiscal years. Commonly referred to as the bona fide needs rule, an agency must point to a genuine need for the expenditure, not a mere need to use up remaining dollars before the end of the fiscal year. Two laws in particular require agencies to walk a fine line throughout the fiscal year, avoiding both over-obligating and under-obligating funds. The Antideficiency Act prohibits an agency from incurring obligations or expenditures in advance of or in excess of an appropriation. Conversely, the Impoundment Control Act generally bars agencies from refusing to obligate the amounts that Congress has appropriated for their use. Sometimes obligation delays are due to legitimate programmatic reasons or the result of outside forces not under the agency's control. Why GAO Did This Study Given the fiscal pressures facing the nation, the need to identify opportunities for savings, better leverage resources, and increase accountability has become even more critical to the success of federal agencies and the programs they administer. At the same time, federal decision makers must effectively and efficiently manage resources in an era of considerable budget uncertainty. Congress exercises its constitutional power of the purse by appropriating funds and prescribing conditions governing their use. As funds approach the end of their period of availability for obligation, a “use-it or lose-it” mentality can set in, creating an incentive to rush to obligate. However, higher obligations in the fourth quarter of a fiscal year do not necessarily indicate a problem with wasteful spending—such spending may be the result of planned spending intended by Congress and the agencies. This statement is pri[...]



GAO-17-809T, Navy Readiness: Actions Needed to Address Persistent Maintenance, Training, and Other Challenges Affecting the Fleet, September 19, 2017

Tue, 19 Sep 2017 13:00:00 -0400

What GAO Found GAO's prior work shows that the Navy has increased deployment lengths, shortened training periods, and reduced or deferred maintenance to meet high operational demands, which has resulted in declining ship conditions and a worsening trend in overall readiness. The Navy has stated that high demand for presence has put pressure on a fleet that is stretched thin across the globe. Some of the concerns that GAO has highlighted include: Degraded readiness of ships homeported overseas: Since 2006, the Navy has doubled the number of ships based overseas. Overseas basing provides additional forward presence and rapid crisis response, but GAO found in May 2015 that there were no dedicated training periods built into the operational schedules of the cruisers and destroyers based in Japan. As a result, the crews of these ships did not have all of their needed training and certifications. Based on updated data, GAO found that, as of June 2017, 37 percent of the warfare certifications for cruiser and destroyer crews based in Japan—including certifications for seamanship—had expired. This represents more than a fivefold increase in the percentage of expired warfare certifications for these ships since GAO's May 2015 report. The Navy has made plans to revise operational schedules to provide dedicated training time for overseas-based ships, but this schedule has not yet been implemented. Crew size reductions contribute to sailor overwork and safety risks: GAO found in May 2017 that reductions to crew sizes the Navy made in the early 2000s were not analytically supported and may now be creating safety risks. The Navy has reversed some of those changes but continues to use a workweek standard that does not reflect the actual time sailors spend working and does not account for in-port workload—both of which have contributed to some sailors working over 100 hours a week. Inability to complete maintenance on time: Navy recovery from persistently low readiness levels is premised on adherence to maintenance schedules. However, in May 2016, GAO found that the Navy was having difficulty completing maintenance on time. Based on updated data, GAO found that, in fiscal years 2011 through 2016, maintenance overruns on 107 of 169 surface ships (63 percent) resulted in 6,603 lost operational days (i.e., the ships were not available for training and operations). Looking to the future, the Navy wants to grow its fleet by as much as 30 percent but continues to face challenges with manning, training, and maintaining its existing fleet. These readiness problems need to be addressed and will require the Navy to implement GAO's recommendations—particularly in the areas of assessing the risks associated with overseas basing, reassessing sailor workload and the factors used to size ship crews, managing investments to modernize and improve the efficiency of the naval shipyards, and applying sound planning and sustained management attention to its readiness rebuilding efforts. In addition, continued congressional oversight will be needed to ensure that the Navy demonstrates progress in addressing its maintenance, training, and other challenges. Why GAO Did This Study Since January 2017, the Navy has suffered four significant mishaps at sea that resulted in serious damage to its ships and the loss of 17 sailors. Three of these incidents involved ships homeported in Japan. In response to these incidents, the Chief of Naval Operations ordered an operational pause for all fleets worldwide, and the Vice Chief of Naval Operations directed a comprehensive review of surface fleet operations, stating that these tragic incidents are not limited occurrences but part of a disturbing trend in mishaps involving U.S. ships. This statement provides information on the effects of homeporting ships overseas, reducing crew size on ships, and not completing maintenance on time on the readiness of the Navy and summari[...]



GAO-17-716, Iraqi and Syrian Cultural Property: U.S. Government Committee Should Incorporate Additional Collaboration Practices, September 19, 2017

Tue, 19 Sep 2017 13:00:00 -0400

What GAO Found GAO's examination of 17 cultural property investigations shows that the Departments of Homeland Security (DHS) and Justice (DOJ) have taken a number of actions to enforce laws and regulations related to restricted Iraqi and Syrian cultural property. DHS's Customs and Border Protection (CBP) has taken actions such as monitoring shipments and detaining and seizing suspected items of restricted cultural property. CBP coordinates with DHS's Immigration and Customs Enforcement (ICE), which investigates objects; detains, seizes, and obtains forfeiture of items found to be in violation of U.S. law; and repatriates cultural property to its rightful owner. For example, ICE conducted an investigation into an Iraqi ceremonial sword for sale at an auction in the United States and then seized, obtained forfeiture of, and repatriated it to Iraq in July 2013 (see fig.). DOJ actions to address restricted Iraqi and Syrian cultural property include activities by the Federal Bureau of Investigation (FBI) and DOJ attorneys to investigate and prosecute criminal violations, as well as actions related to the forfeiture and repatriation of cultural property items. Ceremonial Sword Repatriated to Iraq by Department of Homeland Security in 2013 The Cultural Heritage Coordinating Committee (CHCC), established in November 2016 with nine participating federal entities and led by the Department of State (State), has followed several of the key collaboration practices identified by GAO but has not demonstrated others. GAO has previously identified key practices for organizations to enhance and sustain their collaborative efforts. The CHCC has followed key practices of identifying leadership; including relevant participants; bridging organizational cultures, such as agreeing on common terminology; and addressing resource issues. Most participants also reported that the CHCC was a helpful forum for sharing information. However, the CHCC has not fully demonstrated other key practices for enhancing collaboration. First, the CHCC and two of its three working groups have not developed short- and long-term goals. Moreover, the CHCC has not clarified participants' roles and responsibilities on the committee or its working groups. Finally, CHCC participants have not documented agreements related to collaboration, such as developing written materials to articulate common objectives. Incorporating these practices could help participants work collectively, focus on common goals, and organize joint and individual efforts to protect cultural property as the CHCC continues its efforts beyond its first year. Why GAO Did This Study The conflicts in Iraq and Syria that began in 2003 and 2011, respectively, have led to the destruction, looting, and trafficking of cultural property by Islamic State of Iraq and Syria (ISIS) and others. The United Nations called these events the worst cultural heritage crisis since World War II and reported that ISIS has used the sale of looted Iraqi and Syrian cultural property to support its terrorist activities. Congress authorized and the President imposed import restrictions on archaeological or ethnological material of Iraq in 2008 and Syria in 2016. The act directing Syrian restrictions also includes a sense of Congress that the President should establish an interagency committee to coordinate executive branch efforts on international cultural property protection. GAO was asked to review U.S. efforts to protect Iraqi and Syrian cultural property. This report examines (1) actions DHS and DOJ have taken to enforce U.S. laws and regulations involving restrictions on such property and (2) the extent to which CHCC participants collaborate to protect cultural property. GAO reviewed documents related to 17 DHS- or DOJ-led cultural property investigations, interviewed officials, and assessed the extent of CHCC collaboration using GAO's key practices. What GAO Recommends [...]



GAO-17-700, Employee Relocation: VA Strengthened Appraised Value Offer's Controls, but Can Improve Efforts to Track Effects on Retention and Recruitment, September 19, 2017

Tue, 19 Sep 2017 13:00:00 -0400

What GAO Found About 80 percent of federal agencies' home sale transactions to support employee relocations are through the contract that the General Services Administration (GSA) manages with relocation management companies. To support relocations, agencies can use an Appraised Value Offer (AVO). Under an AVO, the relocation management company buys a relocating employee's home for its appraised value if it cannot be sold during a stated period of time. From fiscal years 2012 to 2016, use of AVO varied for federal agencies, including the Department of Veterans Affairs (VA). For example, in fiscal year 2012, the federal agencies that used GSA's contract spent over $66 million on 936 homes and in fiscal year 2016 they spent over $42 million on 601 homes. In response to GAO's questionnaire (which was not sent to VA), most of the 20 agencies that were using AVO identified the following two types of critical internal controls as part of their AVO policies. First are transaction control activities, which are actions built directly into operational processes to support the entity in achieving its objectives and addressing related risks. For example, 18 agencies reported that the AVO approval process must be complete before payments are made. Second is assessing and responding to misconduct risks by considering how misuse of authority or position can be used for personal gain. For example, 19 agencies reported that their AVO had safeguards to prevent it from being used for the personal gain of employees. An agency could require an independent review of its permanent change of station program. While none of the 20 agencies reported they had evaluated whether AVO improved recruitment and retention of employees, 12 of the 20 agencies provided examples of how AVO had been beneficial. For example, four agencies noted the use of AVO had helped them recruit the most qualified employees or assisted with hard-to-fill positions. GSA officials also identified six good practices based on lessons learned from their role, which includes managing the relocation contract that they believe agencies should incorporate into their AVO. When GAO compared these good practices to VA's AVO process, it found that all of these good practices had been adopted by VA. For example, VA offers pre-decision counseling and VA employees work with the relocation company before their home is put on the market. Since fiscal year 2016, VA has strengthened the administration of AVO by implementing new policies that include internal controls, but does not track data on whether AVO improves recruitment and retention. For example, VA revised its policies to require approval prior to initiating recruitment efforts and that a relocating employee's participation cannot be approved by the employee's subordinates. VA officials stated AVO is beneficial for hard-to-fill Senior Executive Service positions and for mission critical skills occupations, however, VA does not track data to determine whether AVO improves the recruitment and retention of employees. VA officials stated the agency does not have the resources or capabilities to track such data. These data could be useful in identifying trends and options for targeting certain occupations or skill sets that may improve the agency's use of home sales to support relocation. Without tracking these data, VA will be unable to determine whether AVO has improved recruitment and retention. Why GAO Did This Study Employee relocation is a critical tool to help agencies position skilled employees optimally and for workforce recruitment, retention, and development. Agencies can facilitate the sale of a relocating employee's home when the relocation of a specific employee to a different location is in the interest of the government. After a 2015 VA Inspector General report found that two VA employees abused AVO to relocate for their personal benefit, VA suspende[...]



GAO-17-742, Broadband: Additional Stakeholder Input Could Inform FCC Actions to Promote Competition, September 19, 2017

Tue, 19 Sep 2017 13:00:00 -0400

What GAO Found Selected experts and stakeholders told GAO that infrastructure costs and other factors can limit broadband deployment and the extent of broadband competition. Factors these individuals identified included providers' costs to deploy antennas, install wires or cables, and obtain permits to access existing infrastructure. Such infrastructure includes utility poles needed for deploying wired components of broadband networks. These costs can limit competition, particularly in non-urban and less populated areas, where providers' return on investment can be lower due to fewer potential customers. Experts and stakeholders also identified industry consolidation and increasing similarity of fixed and mobile broadband as factors that are likely to affect broadband competition moving forward. Fixed Broadband Providers Reporting Download Speeds of at Least 25 Megabits per Second, as of December 2015, by Percentage of U.S. Population, as of 2010 Note: Analysis combines FCC broadband deployment data from providers reporting at least 25 megabits per second download speeds and 3 megabits per second upload speeds, as of December 2015, with population data from the 2010 U.S. Decennial Census, which is the most recent nation-wide population count available. The Federal Communications Commission (FCC) has undertaken rulemakings, spectrum auctions, and merger reviews to help promote competition, but lacks information on how well these actions promote competition. Despite such actions, about half of Americans have access to only one fixed provider (see figure). FCC has a process for seeking stakeholders' and others' input on broadband-related topics and annually reporting on these views, but does not solicit such input on its actions to promote competition. Such input could help FCC determine if any changes are needed to its actions to support competition relative to current and emerging factors in the broadband market. Further, FCC's annual reports contain some information on consumers' experience with broadband competition, such as the number of provider options. However, these reports do not include stakeholder input on how the number of provider options affects prices and service. Some stakeholders said that competition was important to securing lower prices and better service, while others said competition does not necessarily lead to these benefits because some providers offer the same pricing and service quality everywhere regardless of whether they face competition in a particular location. Regularly seeking stakeholder input on how varying levels of broadband deployment affect price and service quality, could help FCC to better focus its efforts to secure lower prices and higher service quality service for consumers. Why GAO Did This Study FCC has a role in promoting competition in the market for broadband, which provides consumers with high-speed Internet through fixed service at home and mobile service through devices such as smartphones. FCC data indicate that about 90 percent of Americans had access to fixed service as of December 2015, but that less than half had more than one choice for such service. As of that time, FCC reported that multiple providers offered mobile broadband coverage to most Americans. Mobile service increasingly allows access to Internet content that was previously accessed primarily through fixed service. GAO was asked to examine factors affecting broadband competition. This report covers (1) selected experts' and stakeholders' views on factors affecting broadband competition and (2) how FCC promotes broadband competition and examines consumers' experience with it. GAO analyzed FCC data as of December 2015; reviewed relevant statutes and FCC documentation; interviewed FCC officials and 23 stakeholders selected to include various types of broadband providers and associations representin[...]



GAO-17-267, Information Technology Modernization: Corporation for National and Community Service Needs to Develop a System That Supports Grant Monitoring, August 17, 2017

Mon, 18 Sep 2017 13:00:00 -0400

What GAO Found The Corporation for National and Community Service's (CNCS) information technology (IT) modernization projects are currently planned to align with the agency's business and management needs for its existing process, but are not yet defined for a future risk-based process. The projects include the development of a modernized system in two versions. The first version was planned to provide support for business needs of the agency's existing grant monitoring process. The second version is to provide additional functionality to support monitoring within a yet-to-be-defined risk-based process. CNCS officials and the development contractor responsible for delivering the first version of the system agreed to a set of requirements that address business needs for improving outcomes of the existing monitoring process. However, because business needs for a risk-based monitoring process have not been determined, OIT officials and system stakeholders have not defined requirements for the second version of the future system, as intended by CNCS's IT modernization plans. CNCS has taken steps to help avoid continued delays, but progress toward delivering the system has been limited. In July 2015, CNCS initiated a project that was to deliver the first version of the system in April 2016. After subsequent delays, agency officials updated plans to reflect a September 2016 delivery. However, as of July 2017, this version had not been delivered, and the delivery date was changed to October 2017. Successful development and delivery of IT systems relies on adherance to key practices for managing project schedules and testing. However, weaknesses in CNCS's practices introduced risks to successful delivery of the system. In particular, the system development project schedules could not be used to track progress because they did not include actual dates when activities were started and finished. In addition, although CNCS and its contractor conducted testing according to plans, the grant monitoring system was not included in all phases of testing. Agency officials used other tools to track progress, and plans did not require them to conduct all stages of testing for the system. However, unless CNCS officials improve system development practices for managing project schedules and testing, they will continue to introduce risks to successful delivery of system functionality that supports grant monitoring. The grant monitoring system development project experienced delays when CNCS did not initially conduct oversight needed to ensure that the contractor took corrective actions as planned. In monitoring the contractor's performance during system development and testing, agency officials enhanced oversight to avoid continued delays. In ongoing management reviews of the project, CNCS officials reported that, since the last corrective action plan was provided by the contractor in December 2016, performance has improved and the project is on track to deliver the first version of the grant monitoring system in October 2017. However, successful delivery of system functionality that supports the agency's grant monitoring process will remain at risk unless CNCS takes steps to correct weaknesses in system development practices for managing project schedules and testing. Further, CNCS's grant monitoring officers will continue to rely on an outdated legacy system to support the processes they follow for monitoring the use of millions of dollars of grant funds awarded each year. Why GAO Did This Study CNCS engages more than five million Americans yearly in national volunteer service by awarding grants to programs such as AmeriCorps and Senior Corps. In fiscal year 2016, CNCS received almost $800 million in appropriations to fund approximately 2,300 grants. The agency is taking steps to modernize its outdated IT infrastr[...]



GAO-17-500, Army Corps of Engineers: Better Data Needed on Water Storage Pricing, August 18, 2017

Mon, 18 Sep 2017 13:00:00 -0400

What GAO Found Based on GAO's review of the U.S. Army Corps of Engineers' (Corps) municipal and industrial (M&I) water storage agreement data stored in the Operations and Maintenance Business Information Link (OMBIL) database and discussions with agency officials, GAO could not determine the extent to which storage prices varied because Corps' data were not sufficiently reliable for such an analysis. Specifically, some data contained errors or were missing, and inconsistencies existed in how some data were recorded in OMBIL. Corps officials said that they do not systematically review the data, such as regularly tracing data in OMBIL back to the originating agreement to ensure the data are accurate. Instead, Corps officials said they conducted a limited quality control review of the M&I water storage agreement data in OMBIL but have not resolved all the errors they identified to help ensure complete and accurate information, as called for by federal standards for internal control. Without systematically reviewing and correcting the data in OMBIL, the Corps and users of the information may not have access to reliable M&I water storage agreement data. Corps officials also said they do not currently have plans to systematically review the M&I water storage agreement data in OMBIL because the agency does not have a policy and implementing guidance requiring review of the data, which is inconsistent with federal internal control standards. Without developing a policy and implementing guidance on how staff should systematically review and correct M&I water storage agreement data, the Corps will continue to have issues with the reliability of the data. While GAO could not determine the extent of variability in prices, Corps officials and M&I water users and stakeholders said that M&I water storage agreement prices vary. Agency officials identified factors that may contribute to the variation, including a project's original construction costs and the year the M&I water storage agreement was signed, given that inflation may increase prices charged for storage. Many M&I water users GAO interviewed were generally satisfied with the Corps' M&I water storage pricing process. However, many M&I water users and stakeholders also highlighted concerns with their water storage agreements, primarily the length of time it took to complete the process for establishing agreements that reassign storage at existing projects from one use, such as hydropower generation, to use for M&I water supply. For example, one M&I water user GAO interviewed said it took the Corps 16 years to finalize its study for the water user's storage request and in that time the community faced a drought that jeopardized the ability to meet water storage needs of a local power plant. Corps officials could not provide estimates of the time it takes to complete the process because the agency does not systematically track this information. Under federal standards for internal controls, management should design control activities to achieve objectives and respond to risks. Such activities include promptly recording all transactions to maintain their relevance and value to management in controlling operations and making decisions. Without collecting and analyzing data on the length of time it takes to complete the process, the Corps does not have the information to identify areas that may hinder its ability to complete the water storage pricing process in a timely manner. Why GAO Did This Study The Corps is to implement the water storage provisions of the Water Supply Act of 1958 at Corps' projects, such as reservoirs, across the United States. Under the act, the Corps enters into agreements with M&I water users, such as local water utilities, for storage space in the pr[...]



GAO-17-727, Telecommunications: FCC Updated Its Enforcement Program, but Improved Transparency Is Needed, September 14, 2017

Thu, 14 Sep 2017 13:00:00 -0400

What GAO Found The Federal Communications Commission (FCC) has taken actions in the last 5 years to update its enforcement data collection and processes. In 2012, FCC implemented a new enforcement data system, which combined five previously separate databases and contains pertinent information related to each enforcement case. In 2014, FCC launched a new consumer complaints portal that FCC officials can use to identify trends and determine whether to investigate a particular company or practice. FCC also updated its internal enforcement program guidance, which includes case prioritization policies as well as timeliness goals for case resolution. Lastly, FCC completed its reorganization of the Enforcement Bureau's field office division in January 2017, closing 11 of 24 field offices and decreasing personnel from 108 to 54. FCC officials stated they do not anticipate a decline in enforcement activity because FCC is taking steps to use the anticipated annual cost savings of $9 to $10 million from the reorganization to invest in training, equipment, and technology that will improve efficiency. Given the recent changes, it is too early to determine the impact these actions will have on enforcement efforts. FCC has not quantified most of its enforcement performance goals and measures. FCC officials told GAO that in 2009 the Chairman's Office decided that narrative examples, rather than quantifiable goals and related measures, were the most appropriate way to report on the enforcement program. For example, FCC's 2016 Annual Performance Report describes details of settlements or fines levied without reporting such goals or measures. Although such metrics can be difficult to develop, GAO found that other enforcement agencies report quantified performance goals and related measures and that FCC has the data it would need to develop such goals and measures. Without meaningful program performance goals and measures, FCC lacks important tools for assessing and reporting on the progress of its enforcement efforts and determining whether it should make changes to its program. FCC also may be missing an opportunity to help promote transparency and support congressional oversight by clearly communicating enforcement priorities. Most of the selected stakeholders GAO interviewed affirmed the importance of enforcement, but cited concerns about FCC's current enforcement process and communication efforts with stakeholders. Fourteen of 22 selected stakeholders said enforcement is important for deterring violations of federal statutes and FCC rules. However, 17 of 22 also expressed concerns regarding the transparency or fairness of the enforcement process or regarding FCC's emphasis on generating publicity by proposing high dollar fines for potential violators. FCC does not have a formal communications strategy that outlines its enforcement purposes and processes. Instead, FCC tailors the extent of its communications to stakeholders on a case-by-case basis. FCC officials told GAO that information about the enforcement process is sensitive and could undermine their cases. However, leading practices on enforcement highlight the importance of disclosing agency enforcement processes, including how to challenge and appeal conclusions, as a way to foster fair and consistent enforcement. Increased communication from FCC could improve transparency and stakeholder perceptions of FCC enforcement actions. Why GAO Did This Study FCC's Enforcement Bureau is primarily responsible for ensuring the telecommunications industry's compliance with federal statutes and the Commission rules and orders designed to protect consumers, ensure public safety, and encourage competition. Some industry stakeholders have raised questions about the transparency and fairness of the Enforcement B[...]



GAO-17-805T, Telecommunications: Additional Action Needed to Mitigate Significant Risks in FCC's Lifeline Program, September 14, 2017

Thu, 14 Sep 2017 13:00:00 -0400

What GAO Found In its May 2017 report GAO found the Federal Communications Commission (FCC) has not evaluated the Lifeline program's (Lifeline) performance in meeting its goals of increasing telephone and broadband subscribership among low-income households by providing financial support, but it has recently taken steps to begin to do so. FCC does not know how many of the 12.3 million households receiving Lifeline as of December 2016 also have non-Lifeline phone service, or whether participants are using Lifeline as a secondary phone service. FCC revamped Lifeline in March 2016 to focus on broadband adoption; however, broadband adoption rates have steadily increased for the low-income population absent a Lifeline subsidy for broadband. Without an evaluation, which GAO recommended in March 2015, FCC is limited in its ability to demonstrate whether Lifeline is efficiently and effectively meeting its program goals. In a March 2016 Order, FCC announced plans for an independent third party to evaluate Lifeline design, function, and administration by December 2020. FCC and the Universal Service Administrative Company (USAC)—the not-for-profit organization that administers the Lifeline program—have taken some steps to enhance controls over finances and subscriber enrollment. For example, FCC and USAC established some financial and management controls regarding billing, collection, and disbursement of funds for Lifeline. To enhance the program's ability to detect and prevent ineligible subscribers from enrolling, FCC oversaw completion in 2014 of an enrollment database and, in June 2015, FCC adopted a rule requiring Lifeline providers to retain eligibility documentation used to qualify consumers for Lifeline support to improve the auditability and enforcement of FCC rules. Nevertheless, in its May 2017 report, GAO found weaknesses in several areas. For example, Lifeline's structure relies on over 2,000 Eligible Telecommunication Carriers that are Lifeline providers to implement key program functions, such as verifying subscriber eligibility. This complex internal control environment is susceptible to risk of fraud, waste, and abuse as companies may have financial incentives to enroll as many customers as possible. On the basis of its matching of subscriber to benefit data, GAO was unable to confirm whether about 1.2 million individuals of the 3.5 million it reviewed, or 36 percent, participated in a qualifying benefit program, such as Medicaid, as stated on their Lifeline enrollment application. FCC's 2016 Order calls for the creation of a third-party national eligibility verifier by the end of 2019 to determine subscriber eligibility. Further, FCC maintains the Universal Service Fund (USF)—with net assets of $9 billion, as of September 2016—outside the Department of the Treasury in a private bank account. In 2005, GAO recommended that FCC reconsider this arrangement given that the USF consists of federal funds. In addition to addressing any risks associated with having the funds outside the Treasury, FCC identified potential benefits of moving the funds. For example, by having the funds in the Treasury, USAC would have better tools for fiscal management of the funds. In March 2017, FCC developed a preliminary plan to move the USF to the Treasury. Until FCC finalizes and implements its plan and actually moves the USF funds, the risks that FCC identified will persist and the benefits of having the funds in the Treasury will not be realized. Why GAO Did This Study Created in the mid-1980s, FCC's Lifeline program provides discounts to eligible low-income households for home or wireless telephone and, as of December 2016, broadband service. Lifeline reimburses telephone companies that offer discounts through the [...]



GAO-17-754R, K-12 Education: High School Sports Access and Participation, September 14, 2017

Thu, 14 Sep 2017 13:00:00 -0400

What GAO Found Access to and participation in sports varied more across different types of schools than by sex, according to GAO's analysis of Department of Education (Education) data. In school year 2013-14--the most recent year of data available--77 percent of public high schools offered sports, and these schools served 88 percent of all public high school students in the nation. According to GAO's analysis, access to public high school sports was lower in charter, urban, high-poverty and high-minority schools compared to other types of schools. Smaller percentages of students attended schools of those types that offered sports, and students in those school types had access to fewer sports teams per capita than students in other schools. Participation rates (i.e., participation as a percentage of enrollment) were also lower than average at charter, urban, high-poverty and high-minority schools. For example, in traditional schools, students participated in sports at a rate of 39 percent, compared with 19 percent for charter schools. In public high schools that offered sports in school year 2013-14, boys and girls had similar access to sports and teams, but more boys participated in sports. About 50 percent of public high school sports and teams were for boys and about 50 percent were for girls. However, a larger percentage of the students who participated in sports were boys (57 percent boys versus 43 percent girls). Also, in terms of participation as a percentage of enrollment, boys participated at a higher rate than girls (43 percent and 34 percent, respectively). The relationship between girls' and boys' participation rates varied among schools. Among all students attending public high schools that offered sports, the majority (77 percent) attended schools where girls' participation rates were lower than boys' participation rates. However, 19 percent of students attended schools where girls' participation rates were equal to or higher than their male peers. Why GAO Did This Study Organized sports have long been a part of the American high school experience for boys. However, the same has not been historically true for girls, who began playing high school sports in large numbers only after the passage of Title IX of the 1972 Education Amendments (Title IX). Title IX prohibits discrimination on the basis of sex in education programs and activities by recipients of federal financial assistance, with limited exceptions. The Department of Education's Title IX regulations require schools to provide equal athletic opportunities for members of both sexes. However, researchers have found that girls' access to and participation in high school interscholastic sports programs has not reached parity with boys. In light of Title IX requirements and interest in the opportunities available to students in public high schools, GAO was asked to examine access to and participation in high school interscholastic sports programs. This report describes how, if at all, access to and participation in public high school interscholastic sports vary by certain school characteristics and sex. Title IX applies to elementary, middle, and high schools that receive federal financial assistance. However, the scope of this report is limited to high school interscholastic sports programs because accurate and reliable data are available for public high schools. To conduct this review, GAO analyzed school year 2013-14 data from two Education datasets. GAO analyzed data from Education's Civil Rights Data Collection (CRDC) on whether public high schools offered sports, and the number of sports and teams they offered to determine students' access to sports. GAO also analyzed CRDC data to determine students' participation in s[...]



GAO-17-804T, Veterans Benefits: GAO's Proposed Role in Reviewing Efforts to Protect Veterans from Financial Exploitation, September 13, 2017

Wed, 13 Sep 2017 13:00:00 -0400

What GAO Found In prior work, GAO has found that veterans who applied for Department of Veterans Affairs (VA) pension benefits could be targeted for financial exploitation. For example, in 2012, GAO identified over 200 organizations, such as financial planners, that marketed their services to help veterans qualify for needs-based VA pensions. GAO found that some organizations offered veterans products and services that could adversely affect them by transferring their assets to lower their net worth. For example, some organizations sold veterans deferred annuities that might limit access to funds during their expected lifetimes. Additionally, in 2013, GAO reported shortcomings in VA's process for ensuring that representatives approved to assist veterans with the VA claims process were adequately knowledgeable about the process and were of good moral character, as required by law. GAO made 8 recommendations to VA to address these and other shortcomings and a matter for congressional consideration to establish a look-back and penalty period for veterans who transfer assets before applying for pension benefits. VA has implemented all 8 of these recommendations and is taking actions to establish a look-back and penalty period. As currently drafted, the proposed Veterans Care Financial Protection Act of 2017 contains three provisions that GAO will comment on today: (1) VA would be required to develop and submit standards that protect veterans from dishonest and predatory practices to the Senate and House Committees on Veterans' Affairs within 180 days of enactment. (2) GAO would be required to submit a report to those committees containing standards that GAO determines would be effective in protecting individuals should VA not meet this deadline. (3) GAO would be required to complete a study on the standards implemented under the proposed act. GAO's observations on each of these three proposed requirements follow. The proposed legislation does not clearly specify whether the standards are intended to be legally binding. Clarifying whether the standards are intended to be legally binding is important for determining what steps VA would need to take and whether completing these steps within 180 days is feasible. If VA does not meet the 180 day deadline, the proposed legislation requiring GAO to report on standards is problematic because it could hamper GAO's ability to meet the audit standards by which GAO conducts its audits. These audit standards require GAO to maintain independence and identify and mitigate threats to its independence. For example, threats include GAO reviewing a service or work that it has previously performed for an agency; in this case, recommending standards. If GAO develops standards that VA then implements, this could hamper GAO's ability to audit in an independent manner subsequent VA efforts in this area. In addition, it would be inappropriate for GAO to set these types of standards for VA, an executive agency. Thus, GAO recommends removing this proposed provision. The proposed legislation would also require GAO to conduct a study on the standards VA implemented to protect these veterans. By itself, this requirement is an appropriate role for GAO. Why GAO Did This Study The proposed Veterans Care Financial Protection Act of 2017 seeks to address the financial exploitation of aging and disabled veterans who are eligible for certain VA benefits. VA pension benefits are available to certain wartime veterans and their surviving spouses with limited means. Those who need additional assistance with everyday living activities may also be eligible to receive VA Aid and Attendance benefits, which increase the amount of the monthly pe[...]



GAO-17-347, Technology Assessment: Medical devices: Capabilities and challenges of technologies to enable rapid diagnoses of infectious diseases, August 14, 2017

Wed, 13 Sep 2017 13:00:00 -0400

What GAO Found Commercially available multiplex point-of-care technologies (MPOCTs) have a range of performance characteristics that describe, among other things, the ability of the technology to correctly identify the presence or absence of a pathogen. Some of these characteristics are used by the FDA to evaluate the technologies prior to approval; other attributes are considered by developers in designing and marketing their technologies. Technologies GAO examined have varying features such as physical size, number of diseases being tested for at the same time, and throughput – or the number of patient samples that can be simultaneously run. The amount of time it took for the technologies to return results to users ranged from 20 minutes to 2 hours. Among available technologies offered by the eight developers that GAO visited, procurement costs ranged from $25,000 to $530,000, and per-test operational costs ranged from $20 to $200. Developers identified several technical challenges to developing multiplex assays that can slow MPOCT development and raise costs. For example, challenges include lack of patient sample access or reliable genetic databases for developing the assays. Modifying multiplex assays poses another challenge, because developers have to consider possible new interactions based on the modification and go through FDA review before the modified test can be marketed. Further, limitations in the number of targets—the part of the pathogen being detected—that can be detected, and identification of genetic targets used for detecting the pathogen, can constrain the performance of these technologies, in part as a result of design limitations. Potential benefits of MPOCTs include improved patient health care and management, more appropriate use of antibiotics, improved ability to limit the spread of disease, and health care cost savings. However, developers and users disagreed on the strength of evidence showing the extent of MPOCT improvement on patient outcomes. Some stakeholders GAO spoke to identified the need for more clinical studies to establish the benefits of these technologies. Implementation challenges included reluctance by medical users to adopt these technologies, due to factors such as (1) lack of familiarity with such technologies, (2) costs and resources to use them, and (3) reluctance to order, and pay for, all of the tests for a given multiplex assay. Further, in some situations, positive test results for rare diseases are more likely to be false positives; thus systematic testing for such diseases may result in wasted resources to address all patients who test positive. Developers told us additional implementation challenges include the regulatory review process for getting approval or clearance to market their technologies. Another challenging aspect of the regulatory review process developers identified is in applying for waivers to allow untrained users to use their technologies. In some cases, selected developers believed that the performance by an untrained user may need to surpass the performance by trained users for such waivers. FDA officials confirmed that this could occur but nevertheless believed that their review process is necessary to ensure the technologies are safe and effective, while being accurate and simple to use when waived. Why GAO Did This Study Infectious diseases continue to represent a threat to the health and livelihoods of people worldwide. Many infectious diseases can initially present with similar symptoms, making diagnosis challenging. To address this challenge, federal agencies have identified technologies that can help diagnose infectious diseases by using multipl[...]



GAO-17-725, Rural Housing Service: Additional Actions Would Help Ensure Reasonableness of Rental Assistance Estimates, September 13, 2017

Wed, 13 Sep 2017 13:00:00 -0400

What GAO Found An interplay of three primary factors contributed to the funding gaps that the rental assistance program of the U.S. Department of Agriculture's Rural Housing Service (RHS) faced in fiscal years 2013–2015: Fiscal year 2013 sequestration and rescissions. An across-the-board cancelation of budgetary resources in March 2013 decreased the program's approximately $907 million budget by about $70 million. Unreliable methods for estimating rental assistance costs. RHS used a state-wide, per-unit average cost to calculate rental assistance agreement amounts. This resulted in some properties receiving more funds than needed, tying up funds that could have been used for other properties. Limited management flexibility. RHS had limited ability to adjust its program management to help prevent funding gaps. For example, RHS does not have authority to fund agreement renewals for less than 1 year. RHS took steps to mitigate the effects of the funding gaps on property owners, but some had negative consequences. For example, to cover fiscal year 2014–2015 gaps, RHS used unexpended rental assistance funds from properties that had exited the program. But, as a result, the program lost the associated rental assistance units and RHS could not re-assign the units to other properties. RHS has taken steps under its existing authorities to help prevent future funding gaps but lacks certain plans and controls to help ensure its estimates of rental assistance costs are reasonable. In fiscal year 2016, RHS began using a new cost model integrated with its program information system that more accurately estimates rental assistance agreement renewals. For instance, the model estimates renewal costs based on property-level data rather than state-wide averages. RHS also began including estimates of agreements that would need two renewals in the same fiscal year (a number of which are to be expected) in budget requests. But, GAO found weaknesses in aspects of RHS's budget estimation and execution of rental assistance. Specifically, RHS: does not have a plan for ongoing monitoring or testing of the new estimation method. Federal internal control standards call for management to establish monitoring activities and evaluate results. lacks controls to detect misestimates of rental assistance, a problem RHS experienced during early use of the model. Federal internal control standards call for control activities for information systems to respond to risks. has not used the appropriate inflation rates in its budget estimates since fiscal year 2009. Office of Management and Budget guidance states budgets should be consistent with the economic assumptions it provides. has not provided staff guidance on their responsibilities for determining whether properties' rental assistance should be renewed. Federal internal control standards call for documenting responsibilities through policies. The weaknesses may exist partly because RHS continues to refine its estimation method, which has been in effect for about 2 years. By addressing them, RHS would have greater assurance that it will develop the best possible estimates. Why GAO Did This Study RHS provides about $1.4 billion annually in rental subsidies to owners of multifamily housing for more than 270,000 low-income rural households. RHS's agreements with property owners provide rental assistance payments estimated to last 1 year. In fiscal years 2013–2015, RHS was unable to renew all its agreements because it ran out of funds. For example, in fiscal year 2015, the funding gap was about $97 million. As a result, some property owners' re[...]



GAO-17-715, Overseas Allowances: State Should Assess the Cost-Effectiveness of Its Hardship Pay Policies, September 13, 2017

Wed, 13 Sep 2017 13:00:00 -0400

What GAO Found The Department of State (State) spent about $732 million for hardship pay and $266 million for danger pay at overseas posts in fiscal years 2011 through 2016. Department of State Spending for Hardship and Danger Pay, Fiscal Years 2011-2016 State has mostly followed its process for determining hardship and danger pay rates at overseas posts. To determine hardship rates, State calculates scores for overseas posts based on information from post surveys and data on factors such as air pollution and crime. GAO reviewed scores for 192 posts and found that State mostly followed its process. However, in 12 of 15 cases where State added points for extreme conditions not captured in its written standards—Director Points—it did not clearly document how posts met these criteria. Without adequate documentation, the department cannot ensure that it is awarding these points consistently. For danger pay, State followed a process that bases rates on threat levels for political violence and terrorism and whether family members are allowed at post. State’s procedures for stopping and starting hardship pay when employees temporarily leave posts—based on several factors—are resource intensive, but State has not assessed their cost-effectiveness. State uses diplomatic cables to adjust hardship pay, but these procedures are resource intensive—requiring 10,000 pay actions each year—and contribute to improper payments, which are costly to recover. State’s procedures for adjusting danger pay through time and attendance, based on whether or not employees are present at posts, are mostly automated. State has not assessed the cost-effectiveness of its hardship pay policies and procedures in accordance with its Foreign Affairs Manual. State identified $2.9 million in improper payments related mostly to hardship pay in fiscal years 2015-2016. State conducts required improper payments audits but has not analyzed available data that could help further identify and recover overpayments related to hardship pay. Guidance from the Office of Management and Budget notes that such data analysis could be part of an internal control program to prevent, detect, and recover overpayments. Why GAO Did This Study State provides hardship and danger pay, among other allowances, as incentives for State personnel to work at challenging overseas locations. Hardship pay compensates employees for service at overseas posts where conditions differ substantially from those in the United States. Danger pay compensates employees for service at posts where civil insurrection, civil war, terrorism, or wartime conditions threaten the health or well-being of an employee. This report examines hardship and danger pay, specifically, (1) State’s spending at overseas posts in fiscal years 2011-2016, (2) the extent to which State has followed its process for determining rates, (3) the procedures State uses to implement its policies for starting and stopping hardship and danger pay, and (4) the extent to which State has identified improper payments. GAO analyzed State data and documents; interviewed State officials in Washington, D.C.; and conducted fieldwork at four posts that receive hardship or danger pay: Islamabad, Pakistan; Mexico City, Mexico; New Delhi, India; and Tunis, Tunisia. What GAO Recommends GAO recommends that State clearly document the use of Director Points for extreme conditions at posts; assess the cost-effectiveness of its policies and procedures for stopping and starting hardship pay for overseas employees; and analyze available data to identify, recover, and prevent improper payme[...]



GAO-17-632, Medicaid Managed Care: CMS Should Improve Oversight of Access and Quality in States' Long-Term Services and Supports Programs, August 14, 2017

Wed, 13 Sep 2017 13:00:00 -0400

What GAO Found In Medicaid, long-term services and supports are designed to promote the ability of beneficiaries with physical, cognitive, or mental disabilities or conditions to live or work in the setting of their choice, which can be in home or community settings, or in an institution such as a nursing facility. States are increasingly delivering such services through managed care, known as managed long-term services and supports (MLTSS). In MLTSS, as with most Medicaid managed care programs, states contract with managed care organizations (MCO) to provide a specific set of covered services to beneficiaries in return for one fixed periodic payment per beneficiary. In addition, beneficiaries have the right to appeal an MCO decision to reduce, terminate, or deny their benefits, or file a grievance with an MCO regarding concerns about their care. The six states GAO reviewed—Arizona, Delaware, Kansas, Minnesota, Tennessee, and Texas—used a range of methods for monitoring access and quality in MLTSS programs. To oversee beneficiaries' care, GAO found that states used—to varying levels—external quality reviews, beneficiary surveys, stakeholder meetings, and beneficiary appeals and grievances data. For example, while all six states used external quality reviews and beneficiary surveys, GAO found that states varied in the extent to which—and how—they used appeals and grievances data to monitor beneficiaries' concerns about quality and access in their MLTSS programs. The Centers for Medicare & Medicaid Services (CMS)—the federal agency responsible for overseeing Medicaid—did not always require the six selected states to report the information needed to monitor access and quality in MLTSS programs. CMS primarily relied on its reviews of state-submitted reports to monitor MLTSS programs for compliance with federal regulations and state-specific reporting requirements, and what states are required to report to CMS can vary by state. Although CMS highlighted certain elements that it deemed essential to developing and maintaining high quality MLTSS programs in its 2013 guidance, GAO found that CMS did not require all selected states to report on these elements—namely, provider network adequacy; critical incidents, which are events that may cause abuse, neglect or exploitation of beneficiaries; and appeals and grievances. CMS did not require three of the six states that GAO reviewed to regularly report on network adequacy or provide summaries of critical incidents. Further, although CMS requires all selected states to report on their quality assurance efforts, GAO found that states often report general descriptions of their planned and ongoing quality assurance activities for MLTSS or their entire comprehensive managed care programs. Consequently, state reporting did not always provide CMS with information needed to assess state oversight of key elements. Gaps in reporting requirements may mean that CMS does not always have information needed to monitor key aspects of MLTSS access and quality among selected states and it may not be able to reliably detect state or MCO practices that do not meet CMS's guidance. Why GAO Did This Study Twenty-two states use MLTSS programs to provide care for Medicaid beneficiaries who need long-term support. Using managed care to deliver long-term services and supports can be a strategy for states to expand home- and community-based care, which many beneficiaries prefer, and to lower costs. However, given the potential vulnerability and needs of beneficiaries in these programs, oversight is crucial to ensure thei[...]



GAO-17-790T, High Risk: Status of Prior Recommendations on Federal Management of Programs Serving Indian Tribes, September 13, 2017

Wed, 13 Sep 2017 13:00:00 -0400

What GAO Found As discussed in the 2017 High Risk report, GAO has identified numerous weaknesses in how the Department of the Interior (Interior) and the Department of Health and Human Services (HHS) manage programs serving Indian tribes. Specifically, these weaknesses were related to Interior's Bureau of Indian Education (BIE) and Bureau of Indian Affairs (BIA)—under the Office of the Assistant Secretary-Indian Affairs (Indian Affairs)—in overseeing education services and managing Indian energy resources, and HHS's Indian Health Service (IHS) in administering health care services. GAO cited nearly 40 recommendations in its 2017 High Risk report that were not implemented, and has since made an additional 12 recommendations in two new reports on BIE school safety and construction published in late May of this year. Interior and HHS have taken some steps to address these recommendations but only one has been fully implemented. Education. GAO has found serious weaknesses in Indian Affairs' oversight of Indian education. For example, in 2016, GAO found that the agency's lack of oversight of BIE school safety contributed to deteriorating facilities and equipment in school facilities. At one school, GAO found seven boilers that failed inspection because of safety hazards, such as elevated levels of carbon monoxide and a natural gas leak. In 2017, GAO found key weaknesses in the way Indian Affairs oversees personnel responsible for inspecting BIE school facilities for safety and manages BIE school construction projects. Of GAO's 23 recommendations on Indian education—including recommendations cited in GAO's 2017 High Risk report and in two late May reports—none have been fully implemented. Energy resource management. In three prior reports on Indian energy, GAO found that BIA inefficiently managed Indian energy resources and the development process, thereby limiting opportunities for tribes and their members to use those resources to create economic benefits and improve the well-being of their communities. GAO categorized concerns associated with BIA management of energy resources and the development process into four broad areas, including oversight of BIA activities, collaboration, and BIA workforce planning. GAO made 14 recommendations to BIA to address its management weaknesses, which were cited in the 2017 High Risk report. However, none have been fully implemented. Health care. GAO has found that IHS provides inadequate oversight of its federally operated health care facilities and of its Purchased/Referred Care program. For example, in 2016 and 2017, GAO found that IHS provided limited and inconsistent oversight of the timeliness and quality of care provided in its facilities and that inconsistencies in quality oversight were exacerbated by significant turnover in area leadership. GAO also found that IHS did not equitably allocate funds to meet the health care needs of Indians. Of GAO's 13 recommendations on Indian health care cited in GAO's 2017 High Risk report, one has been fully implemented. Why GAO Did This Study GAO's High-Risk Series identifies federal program areas needing attention from Congress and the executive branch. GAO added federal management of programs that serve Indian tribes and their members to its February 2017 biennial update of high-risk areas in response to serious problems with management and oversight by Interior and HHS. This testimony identifies GAO's recommendations to Interior and HHS from prior GAO reports on the federal management and oversight of Indian education, en[...]



GAO-17-574, Higher Education: Students Need More Information to Help Reduce Challenges in Transferring College Credits, August 14, 2017

Wed, 13 Sep 2017 13:00:00 -0400

What GAO Found Based on GAO's analysis of the Department of Education's (Education) most recently available data, an estimated 35 percent of college students transferred to a new school at least once from 2004 to 2009, and GAO found that students may face challenges getting information or advice about transferring course credits. An estimated 62 percent of these transfers were between public schools. According to stakeholders GAO spoke with, students can face challenges transferring credits between schools that do not have statewide polices or articulation agreements, which are transfer agreements or partnerships between schools designating how credits earned at one school will transfer to another. Stakeholders also said that advising and information may not be adequate to help students navigate the transfer process. The possible financial implications of transferring depend in part on the extent of credits lost in the transfer. Using Education's transfer data, GAO estimated that students who transferred from 2004 to 2009 lost, on average, an estimated 43 percent of their credits, and credit loss varied depending on the transfer path. For example, students who transferred between public schools—the majority of transfer students—lost an estimated 37 percent of their credits. In comparison, students who took some of the less frequent transfer paths lost a relatively higher percentage of their credits. For example, students who transferred from private for-profit schools to public schools accounted for 4 percent of all transfer students but lost an estimated 94 percent of their credits. Transferring can have different effects on college affordability. Students seeking to obtain a bachelor's degree at a more expensive school may save on tuition costs by transferring from a less expensive school. On the other hand, transfer students may incur additional costs to repeat credits that do not transfer or count toward their degree. Transfer students can receive federal financial aid. GAO's analysis showed that almost half of the students who transferred from 2004 to 2009 received Pell Grants and close to two-thirds received Federal Direct Loans. Students who lose credits may use more financial aid to pay for repeated courses at additional cost to the federal government, or they may exhaust their financial aid eligibility, which can result in additional out-of-pocket costs. While GAO estimated that the websites for almost all schools nationwide provided credit transfer policies, as required by Education, about 29 percent did not include a list of other schools with which the school had articulation agreements. Among those schools, GAO found that some did not have any articulation agreements, while others did but did not list partner schools on their websites. Schools must provide such listings, but they are not required to do so specifically on their website. As a result, students may not have ready access to this information to fully understand their transfer options. Moreover, Education provides limited transfer information to students and their families, contrary to federal internal control standards that call for agencies to provide adequate information to external parties. General information on key transfer considerations that are applicable across schools and more complete information on schools' articulation agreements can help students avoid making uninformed transfer decisions that could add to the time and expense of earning a degree. Why GAO Did This Study College students sometimes opt to tran[...]



GAO-17-744R, Weapon Systems Management: Product Support Managers' Perspectives on Factors Critical to Influencing Sustainment-Related Decisions, September 12, 2017

Tue, 12 Sep 2017 13:00:00 -0400

What GAO Found Product support managers' (PSM) principal responsibility is to develop and implement support strategies for Department of Defense (DOD) weapon systems that maintain readiness and control life-cycle costs. PSMs that GAO spoke to in focus groups and interviews identified several factors that helped them to influence sustainment-related decisions during the development and acquisition of their assigned weapon systems. Specifically, they stated that teamwork and collaboration, early implementation of the PSM position, and organizational support and emphasis on sustainment were important to their success as PSMs. These PSMs also stated that they were generally able to perform their PSM duties, but they identified several challenges that hindered their ability to influence sustainment-related decisions. They stated that these challenges include resource constraints, competing priorities, and differing approaches to institutionalizing the PSM position. In 2014, GAO made five recommendations to DOD and the Army on how they could improve the implementation of PSMs in the department. Since then DOD and the Army have implemented two of these recommendations. Specifically, DOD developed a comprehensive career path and associated guidance to develop, train, and support future PSMs, and the Army revised its guidance to clarify the Army-wide roles and responsibilities for the sustainment portion of the life cycle of major weapon systems. However, additional steps are needed to implement the remaining three recommendations. Specifically, DOD has not fully implemented GAO's recommendations to systematically collect and evaluate information on the effects, if any, that PSMs are having on life-cycle sustainment decisions for their assigned major weapon systems and to issue clear, comprehensive, centralized guidance regarding the roles and responsibilities of PSMs. The Army has not fully implemented a recommendation aimed at ensuring that PSMs have visibility over sustainment funding. These recommendations, if fully implemented, could further institutionalize the role of PSMs and thereby help to increase their influence on sustainment-related decisions. Why GAO Did This Study DOD spends billions of dollars each year on operating and support costs for weapon systems, and these costs have historically accounted for approximately 70 percent of a weapon system's total life-cycle cost. While the majority of operating and support costs are incurred after a weapon system has been produced and fielded, these costs result in part from program decisions made earlier in the acquisition process--during system development--and are generally set before production begins. In 2009, as part of legislation aimed at improving the life-cycle management of major weapon systems, Congress required DOD to assign a PSM to each major weapon system program. The principal responsibility of the PSM is to develop and implement support strategies for weapon systems that maintain readiness and control life-cycle costs. House Report 114-537, accompanying a bill for the National Defense Authorization Act for Fiscal Year 2017, included a provision for GAO to review DOD's progress in implementing PSMs and integrating them in the lifecycle management of major weapon systems. In this report GAO describes factors that PSMs identified as critical to their ability to influence sustainment-related decisions during weapon system development and any challenges to their ability to influence these decisions. GAO also track[...]



GAO-17-800T, Veterans Affairs: Management and Oversight of Mail Operations Could Be Improved, September 12, 2017

Tue, 12 Sep 2017 13:00:00 -0400

What GAO Found The Department of Veterans Affairs (VA) is not managing its outgoing mail effectively as it lacks key elements of an effective mail management program, including reliable data on mail volume and expenditures, agency-wide performance measures for mail operations, and mail managers with appropriate authority and responsibilities. Reporting reliable mail expenditure and volume data: The mail data VA reports to the General Services Administration (GSA) are unreliable, in part because VA's fragmented process for procuring mailing equipment prevents VA from tracking mail volume and expenditures consistently across facilities. Specifically, each fiscal year, hundreds of VA facilities individually enter their mail expenditure and volume data into a GSA database that collects mail data from federal agencies. These data are collected through inconsistent processes. For example, some facilities use mailing equipment and associated software that can automatically track volume and costs by service provider and mail class, while other facilities' equipment may be too old to have this capability or they use spreadsheets, bills, or receipts to track their costs. These processes are inconsistent because VA's different components and facilities contract for mailroom equipment independently of one another. VA lacks an overall plan to procure mailing equipment strategically. Through such procurement, VA could implement a system that would more consistently track data on mail expenditures and volume. This step would not only improve the reliability of these data but could also allow VA to take advantage of price discounts typically available under broader contracts. Measuring performance: VA is unable to evaluate the overall efficiency of its mail program because its mail management policy does not include agency-wide goals and performance measures for its mail operations, and it has inconsistent measures across its facilities. For example, of the 10 VA facilities GAO reviewed, some assessed performance using customer service, efficiency, volume, and cost, while others used annual expenditures, among other measures. Updating the policy to include agency-wide goals and performance measures would allow VA to track progress toward consistent goals and provide it with crucial performance information needed to make programmatic decisions. Mail managers with appropriate authority and responsibilities: VA's ability to oversee mailing practices across its facilities is limited because it has not provided its mail managers with appropriate authority and responsibilities, per federal internal control standards. The agency mail manager's responsibilities are limited to oversight of VA's mail policy, with no operational role in mail management. Additionally, mail managers for the Veterans Health Administration and Veterans Benefits Administration reported that they advise individual facilities on mail management but have no authority to direct their mail operations. Without determining appropriate authority and responsibilities for its mail managers, VA is unable to ensure that its facilities are managing their mail effectively. Why GAO Did This Study This testimony summarizes the information contained in GAO's July 2017 report, entitled Veterans Affairs: Actions Needed to More Effectively Manage Outgoing Mail (GAO-17-581). For more information, contact Lori Rectanus at (202) 512-2834 or rectanusl@gao.gov.  



GAO-17-548, Naval Shipyards: Actions Needed to Improve Poor Conditions that Affect Operations, September 12, 2017

Tue, 12 Sep 2017 13:00:00 -0400

What GAO Found Although the Navy committed to increased capital investment and developed an improvement plan in 2013, the shipyards' facilities and equipment remain in poor condition. GAO's analysis of Navy shipyard facilities data found that their overall physical condition remains poor. Navy data show that the cost of backlogged restoration and maintenance projects at the shipyards has grown by 41 percent over five years, to a Navy-estimated $4.86 billion, and will take at least 19 years (through fiscal year 2036) to clear. Similarly, a Navy analysis shows that the average age of shipyard capital equipment now exceeds its expected useful life. Partly as a result of their poor condition, the shipyards have not been fully meeting the Navy's operational needs. In fiscal years 2000 through 2016, inadequate facilities and equipment led to maintenance delays that contributed in part to more than 1,300 lost operational days—days when ships were unavailable for operations—for aircraft carriers and 12,500 lost operational days for submarines (see figure). The Navy estimates that it will be unable to conduct 73 of 218 maintenance periods over the next 23 fiscal years due to insufficient capacity and other deficiencies. Shipyard Maintenance Delays, Fiscal Years 2000–2016 Note: Aircraft carrier data are incomplete for fiscal year 2016, and submarine data are incomplete for fiscal years 2014 through 2016. Both will likely be higher once these data are complete. Though the Navy has developed detailed plans for capital investment in facilities and equipment at the shipyards that attempt to prioritize their investment strategies, this approach does not fully address the shipyards' challenges, in part because the plans are missing key elements. Missing elements include analytically-based goals and metrics, a full identification of the shipyards' resource needs, regular management reviews of progress, and reporting on progress to key decision makers and Congress. For example, the Navy estimates that it will need at least $9.0 billion in capital investment over the next 12 fiscal years, but this estimate does not account for all expected costs, such as those for planning and modernizing the shipyards' utility infrastructure. Unless it adopts a comprehensive, results-oriented approach to addressing its capital investment needs, the Navy risks continued deterioration of its shipyards, hindering its ability to efficiently and effectively support Navy readiness over the long term.T Why GAO Did This Study The Navy's four public shipyards—Norfolk Naval Shipyard, Portsmouth Naval Shipyard, Puget Sound Naval Shipyard and Intermediate Maintenance Facility, and Pearl Harbor Naval Shipyard and Intermediate Maintenance Facility—are critical to maintaining fleet readiness and supporting ongoing operations involving the Navy's nuclear-powered aircraft carriers and submarines. The condition of these facilities affects the readiness of the aircraft carrier and submarine fleets. Senate Report 114-255, accompanying a bill for the National Defense Authorization Act for Fiscal Year 2017, included a provision for GAO to examine the capital investment in and performance of the Navy's shipyards. GAO evaluated (1) the state of the naval shipyards' capital facilities and equipment, (2) the extent to which shipyard capital facilities and equipment support the Navy's operational needs, and (3) the extent to which the Navy's capital investment pl[...]



GAO-17-258, Health Insurance Marketplaces: CMS Needs to Improve Its Oversight of State IT Systems' Sustainability and Performance, August 15, 2017

Tue, 12 Sep 2017 13:00:00 -0400

What GAO Found The Department of Health and Human Services' (HHS) Centers for Medicare & Medicaid Services (CMS) has offered assistance through providing periodic oversight and issuing regulation and guidance to states transitioning from state-based marketplaces to the federally based marketplace IT platform, including two states that GAO reviewed—Hawaii and Oregon—that had made that transition. While CMS provided these states with assistance, documented CMS transition guidance was not finalized until after the two states had completed their transition. The two states incurred costs of approximately $84.3 million, collectively, to transition to the federal platform. The two states' transition efforts included making changes to their Medicaid systems, with these states mainly relying on Medicaid matching funds from CMS to do this. While the selected states successfully transitioned, they encountered challenges during their transitions, due to accelerated transition time frames, difficulties reassigning marketplace responsibilities, delays in receiving approvals from CMS, and trouble accessing historical consumer data in previous vendor-developed marketplace IT systems. CMS took steps to assist Hawaii and Oregon, as well as two states that GAO selected for review that operated state-based marketplaces, Minnesota and New York, in developing plans for marketplace IT system sustainability. CMS assisted these four states by consulting with the states' officials and providing oversight of their sustainability plans, financial audit reports, and risk assessments. However, CMS did not fully ensure the states provided complete sustainability plans and financial audit reports. Further, CMS did not base its risk assessments on fully defined processes. These weaknesses limit CMS's oversight and assurance that it can be informed of the state marketplaces' sustainability efforts. Although CMS established a process to monitor the performance of state-based marketplaces, CMS did not consistently follow its processes. For example, CMS did not ensure that the two selected states, Minnesota and New York, had developed, updated, and followed their performance measurement plans. Also, CMS did not conduct reviews to analyze the operational performance of these states' marketplace IT systems against an established set of parameters. Further, while CMS collected IT performance metrics from the two states, such as the number of electronic enrollments and website traffic volume, it did not link state metrics to goals or establish targets for performance. These weaknesses limit CMS's ability to determine if states' marketplace systems are performing efficiently, effectively, and to provide early warnings of potential problems (see table). GAO's Evaluation of CMS Sustainability and Performance Oversight For Selected State Health Insurance Marketplaces Sustainability CMS did not fully ensure complete sustainability plans and financial audit reports for Hawaii and Minnesota or fully define its risk assessment processes. Performance CMS did not ensure updated performance measurement plans and metrics were linked to goals for Minnesota or New York or conduct operational analysis reviews for these two states. Source: GAO analysis of Centers for Medicare & Medicaid Services and state data. | GAO-17-258 Why GAO Did This Stu[...]



GAO-17-806T, Financial Technology: Information on Subsectors and Regulatory Oversight, September 12, 2017

Tue, 12 Sep 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. Fintech products and services offer various potential benefits including increased access to financial services, lower costs, increased speed of service, and convenience. Fintech products and services also pose various potential risks including data security and privacy risks, risks posed by the use of alternative data, risk of human error or confusion, and risk posed by incomplete or inaccurate data. Trends have emerged across the fintech landscape such as the creation of partnerships between traditional financial institutions and fintech firms, formation of hybrid services, and establishment of self-regulatory efforts. Regulation of the commonly referenced subsectors depends on the extent to which the firms provide a regulated service and the format in which the services are provided, with responsibilities fragmented among multiple entities that have overlapping authorities. Federal oversight authorities that apply to regulated activities generally include risk management oversight related to services provided to federally regulated depository institutions, consumer protection oversight, and securities and derivatives markets oversight. Some agencies have taken a number of steps to understand and monitor the fintech industry. State licensing laws and oversight mechanisms, including consumer protection, vary by state. Officials from the Conference of State Bank Supervisors we spoke with noted that the states are working on developing tools that can facilitate compliance with state-by-state licensing mechanisms. Why GAO Did This Study Advances in technology and the widespread use of the Internet and mobile communication de[...]